American Express (AMEX)

Judge Nicholas Garaufis (E.D.N.Y.) appointed Hausfeld new lead counsel in this multidistrict litigation, following an unsuccessful proposed settlement. 

We assumed representation of a class of American Express-accepting merchant plaintiffs (the “Amex Class”) who have challenged American Express Company’s and American Express Travel Related Services Company, Inc.’s (collectively, “Amex”) Non-Discrimination Provisions (or “Anti-Steering Rules”). Plaintiffs originally alleged that as a result of these Anti-Steering Rules and the oligopolistic nature of the credit card market, Amex has been able to raise and maintain high merchant fees, stifling price competition among credit card networks. Plaintiffs further allege that through the imposition of its Anti-Steering Rules, Amex has increased merchant fees to supracompetitive prices without corresponding offsetting credit card user economic benefits, increased the overall price of credit card transactions above competitive levels, and raised consumer retail prices throughout the economy, reducing overall output.

The case was stayed pending a decision by the Supreme Court in a similar case brought by the DOJ Antitrust Division against Amex. See United States v. Am. Express Co., 88 F. Supp. 3d 143 (E.D.N.Y. 2015), rev’d United States v. Am. Express Co., 838 F.3d 179 (2d Cir. 2016), aff’d sub nom. Ohio v. Am. Express Co., 138 S. Ct. 2274 (2018). In the government’s case, the Supreme Court affirmed the Second Circuit’s ruling, holding that the relevant market and the Court’s antitrust analysis needed to be based on a two-sided market for credit card transactions as a whole. See id.

In December 2018, however, Hausfeld led Plaintiffs in filing a Second Amended Consolidated Class Action Complaint on behalf of two classes: (i) the Amex-accepting class of merchants, which included allegations responsive to the two-sided market analysis expected by the Supreme Court’s decision, and (ii) a “V/MC/D Class” of merchants accepting Visa, MasterCard, and/or Discover credit cards but not Amex cards. The V/MC/D Class asserted that Amex’s conduct had, among other things, created an elevated price “umbrella” marketwide and stifled price competition among other card networks.

In January 2020, Judge Garaufis granted Amex’s motion to compel arbitration of the Amex Class’ claims, and he dismissed the V/MC/D Class’ claims.

Plaintiffs subsequently moved for entry of partial final judgment as to the V/MC/D Class’ claims, in order to take an appeal addressing umbrella liability, an issue of first impression before the Second Circuit. Eighteen scholars, including the author of the leading antitrust treatise, filed an amicus brief in support of the V/MC/D Class. Oral argument was heard in December 2020, and the keenly-watched appeal is pending.

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