35 F. Supp. 3d 407
S.D.N.Y.2014Background
- Plaintiffs allege a cartel among credit card issuers to adopt and maintain class-action-barring arbitration clauses in violation of the Sherman Act and seek injunctive relief.
- After extensive MDL proceedings and currency-conversion fee settlements, many banks settled and removed arbitration clauses, but Amex, Citi, and Discover did not yield on the issue.
- The cases were consolidated for a bench trial after substantial document production, depositions, and motions, spanning years of multidistrict litigation.
- Industry groups and in-house counsel formed the Arbitration Coalition (1999–2001) and related Working Groups to study arbitration, share information, and advocate for its use.
- Discover adopted a class-action-barring arbitration clause in 1999; Amex did so in 1998–1999; Citi began considering or adopting in 2000–2001, with multiple meetings and internal memos evidencing coordinated activity.
- The court ultimately dismissed plaintiffs’ antitrust claims, finding no proven concerted action to adopt or maintain arbitration clauses, and held standing allowing market-injury analysis but insufficient antitrust injury.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to sue Amex | Plaintiffs have Article III standing and antitrust injury via market effects. | Plaintiffs lack injury-in-fact and antitrust injury; Amex disputes standing. | Plaintiffs have Article III standing; but antitrust standing not proven. |
| Conspiracy to adopt arbitration clauses | Parallel meetings and communications show a conscious plan to adopt and maintain arbitration. | Actions reflect independent corporate strategies in an oligopolistic market; no evidence of an agreement. | Plaintiffs failed to prove a concerted conspiracy to adopt and maintain arbitration clauses. |
| Unreasonableness of any alleged restraint | If a conspiracy existed, it would be an unreasonable restraint on trade under Sherman Act. | Even if a conspiracy existed, evidence insufficient to show unreasonable restraint under rule of reason/quick look. | Given absence of a proven conspiracy, issue moot; quick look analysis condemns if proven, but here not established. |
Key Cases Cited
- Ross v. Bank of America, N.A., 524 F.3d 217 (2d Cir.2008) (injury-in-fact in market from alleged collusion; reduced consumer choice and card value)
- State Oil Co. v. Khan, 522 U.S. 3 (U.S. 1997) (unreasonableness of restraints analyzed under rule of reason)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (U.S. 1986) (heightened standard for inference of conspiracy; require evidence tending to exclude independent action)
- In re Currency Conversion Fee Antitrust Litig., 773 F. Supp. 2d 351 (S.D.N.Y.2011) (antitrust standing and market injury analysis in currency conversion fees MDL)
- United States v. Visa U.S.A., Inc., 344 F.3d 229 (2d Cir.2003) (per se and rule-of-reason frameworks for restraints in payments industry)
- Drayer v. Krasner, 572 F.2d 348 (2d Cir.1978) (arbitration agreements and competition context; non-per se treatment)