Dismissal of AmEx Lawsuit Reversed

2nd Circuit Reverses Dismissal of American Express Class Action Lawsuit - MSNBC Wire Services - msnbc.com

ST. PAUL, Minn., Jan. 30, 2009 (GLOBE NEWSWIRE) -- The United States Second Circuit Court of Appeals today reversed the dismissal of a massive antitrust class action brought by merchants against the American Express Company ("Am Ex"). The case alleges that American Express in 1999 began a massive effort to take a share of the standard commodity credit card business away from Visa and MasterCard. However, Am Ex wished to partner with banks in issuing these credit cards. The merchants alleged that Am Ex understood that a high merchant fee would be attractive to the banks; therefore Am Ex illegally forced merchants to pay excessive rates equal to Am Ex's more attractive business and personal charge cards by tying the acceptance of the credit and charge cards together. As a condition of accepting Am Ex's credit and charge cards, Am Ex required merchants to sign away their ability to pursue claims as a class (known as a "class action waiver").

The U.S. District Court in the Southern District of New York granted Am Ex's motion to dismiss the case and send it to arbitration. The small merchants appealed the decision to the Second Circuit Court of Appeals, which found that "the class action waiver . . . cannot be enforced in this case because to do so would grant Amex de facto immunity from antitrust liability by removing the plaintiffs' only reasonably feasible means of recovery."

The policy of putting anti-class action rules in consumer and merchant agreements has been growing enormously in recent years. This case was the first case decided by a U.S. Appellate Court in which it was held that the high costs of the case itself voids such rules because the case could only proceed if all the plaintiffs were allowed to share the costs in a class action. The decision will no doubt be used by plaintiffs in dozens of other cases where defendants have attempted to ban class actions by inserting such a clause in a standard agreement.
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The plaintiffs in the case were represented by Friedman Law Group of Manhattan, NY, Reinhardt Wendorf and Blanchfield of St. Paul, MN and Patton Boggs of Washington, DC.

CONTACT: Friedman Law Group
Gary Friedman
212 680-5150 or 917 568-5024

Reinhardt Wendorf and Blanchfield
Mark Reinhardt
843 883-9333

Source: GlobeNewswire, Inc. 2009