Case Information
UNITETTSTATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
X IN RE AMERICAN EXPRESS ANTI-STEERING i RULES ANTITRUST LITIGATION
MEMORANDUM & ORDER This Document Relates to: ll-MD-2221 (NGG) (RER) The Consolidated Class Action
ANIMAL LAW, INC., IL FORNO, INC., ITALIAN
COLORS RESTAURANT, JASA INC., LOPEZ-
DEJONGE, INC., PLYMOUTH OIL CORP. d/b/a
LIBERTY GAS STATION, CLAM LAKE
PARTNERS, LLC, QWIK LUBE, LLC, and
LAJOLLA AUTO TECH, INC., on behalf of
themselves and all others similarly situated.
Plaintiffs,
-against-
AMERICAN EXPRESS COMPANY and
AMERICAN EXPRESS TRAVEL RELATED
SERVICES COMPANY, INC.,
Defendants.
X
NICHOLAS G. GARAUFIS, United States District Judge.
Plaintiffs bring claims against Defendants American Express Company and American Express Travel Related Services Company, Inc. (together, "Amex") on behalf of two putative classes: (1) a class of merchants who accept Amex cards pursuant to a Card Acceptance Agreement ("CAA") with Amex (the "Amex Class"); and (2) a class of merchants who do not accept Amex cards and who have no contract with Amex (the "Non-Amex Class"). fSee Second Amended Consolidated Class Action Complaint ("SAC") (Dkt. 864).) Currently pending before the court are two motions: (1) Amex's motion to stay proceedings and compel arbitration of all the Amex Class's claims; and (2) Amex's motion to dismiss all of the Non-Amex Class's claims under Federal Rules of Procedure 12(b)(1) and 12(b)(6), (See Mot. to Compel & Mot. to Dismiss ("Mot.") (Dkt. 875).)
For the following reasons, Amex's motion to compel arbitration is GRANTED and its motion to dismiss is GRANTED as to the Non-Amex Class.
1. BACKGROUND
This action challenges non-discrimination provisions (the "Anti-Steering Rules") contained in the CAAs. (SAC ^1.) Plaintiffs allege that the Anti-Steering Rules unreasonably restrain interbrand price competition among general purpose credit and charge card networks ("credit card networks") because they: "(1) stifle competition among the networks; (2) impose supracompetitive merchant fees, with corresponding offsetting credit card user economic benefits; (3) increase the overall price of credit card transactions above competitive levels; and (4) raise consumer retail prices throughout the country, thereby reducing output." (Id.)
The backgroimd of this case—^including the procedural history, the restraints on
competition, the workings of the credit-card market in general, and Amex's platform in
particular, etc.—^have been discussed at great length in this court's previous opinions in this
matter and in the related case brought by the federal government.
In re Am. Exp. Anti-
Steering Rules Antitrust Litig..
Co. ("Ohio"),
A. The Parties
The class representatives fall into two groups. The representatives of the Amex Class, which accept Amex cards, are: (1) Animal Land, Inc., a Georgia corporation; (2) II Fomo, Inc., a California corporation; (3) Italian Colors Restaurant, a California business; (3) Jasa Inc., a Louisiana corporation; (4) Lopez-Dejonge, Inc., an Alabama corporation; (5) Plymouth Oil Corp. d^/a Liberty Gas Station, a Pennsylvania corporation, and (6) Clam Lake Partners, LLC (successor in interest to previous class representative Firefly Air Solutions, LLC), a Minnesota corporation. (Id. 5-11). The representatives of the Non-Amex Class, which do not accept Amex cards, are: (1) Qwik Lube, LCC, a New York corporation and (2) LaJoUa Auto Tech, Inc., a California corporation. (Id. 12-13.) Plaintiffs also assert the existence of two California Subclasses: A California Amex Subclass and a California Non-Amex Subclass. (Id ^ 104(c).) The California Amex Subclass is represented by II Fomo, Inc. and Italian Colors Restaurant, and the California Non-Amex Subclass is represented by LaJolla Auto Tech., Inc. (Id) All Plaintiffs are merchants. (Id ^ 104.)
Defendant American Express Company is a New York corporation. (Id ^ 14.) Defendant American Express Travel Related Services Company, Inc. is a Delaware corporation with its principal place of business in New York, New York. (Id ^ 15.) It is a wholly owned subsidiary of American Express Company. (Id)
B. The Relevant Market
Plaintiffs lay out two geographic markets: (1) the United States for Counts One, Two, and Three; and (2) California for Counts Four and Five. (SAC ^ 22.) The relevant product market is the two-sided credit card market, including all transactions provided by Amex and its competitors, MasterCard, Discover, and Visa. (Id ^ 23.)
C. The Credit Card Industry
Amex is one of four significant competitors in the nationwide credit card market. (SAC
K 25.) The others are Visa, MasterCard, and Discover; in 2018, the Supreme Court described
their market shares as Visa 45%, Amex 26.4%, MasterCard 23.3%, and Discover 5.3%. (Id ^51
(citing Ohio.
Credit card companies provide services both to cardholders, who use the cards to
purchase goods and services, and to merchants, who accept those cards as payment in exchange
for goods and services. These credit card companies thus operate a two-sided platform, offering
services to two, distinct groups (merchants and consumers) and facilitating transactions between
them.
Ohio.
As Plaintiffs allege, "[w]hen a consumer uses a credit card, the merchant's point of sale terminal transmits a record of the transaction to the card's network." (Jd. ^ 20.) The network then pays, or facilitates the payment of, money for that transaction to the merchant, consisting of the purchase price charged to the customer minus the fee that network or bank charges merchants. (Id.) Consumers may also pay fees to use their credit cards and get rewards for making purchases with a particular card. (Id K 21.) Unlike its competitors, who charge variable merchant fees depending on the particular card the individual consumer is using, "Amex charges a single, typically higher merchant fee for all Amex credit cards." (Id ^ 32.) Plaintiffs further allege that, unlike its competitors, "Amex's revenues are primarily dependent on its merchant fees." 041134.)
D. The CAA
1. Relevant Version of the Agreement According to Amex, the "current, operative" form of the CAA between Amex and the merchants in the Amex Class has been in effect since October 2018. (Mot. at 5.) Plaintiffs do not state whether they disagree or disagree with this assertion, but do note:
In the [SAC], Plaintiffs assert that Amex arbitration agreements also state ". . . die arbitrator's authority to make awards is limited to awards to you and us alone." SAC K 90. For years, this language was contained in the Amex arbitration agreement, but was removed by Amex in the 2018 edition of the agreement. Notwithstanding this change, the 2018 agreement continues to prohibit Plaintiffs from obtaining market-wide injunctive relief against Amex.
(Pis. Resp. Mem. in Opp'n to Mot. ("Opp'n") (Dkt. 879) at 2 n.6.) Amex does not dispute this characterization of the changes made in 2018, and agrees with Plaintiffs that the agreement prohibits Plaintiffs from obtaining market-wide injunctive relief fsee Amex May 24,2019 Letter (Dkt. 894)). The court will therefore cite to the 2018 version of the CAA Amex has provided.
All members of the Amex Class are bound by this agreement. tSee SAC HH 47, 90.)
2. Arbitration Provisions
The CAA provides, inter alia:
You or we may elect to resolve any Claim by individual, binding arbitration.
If arbitration is chosen by either party, neither you nor we will have the right to litigate that Claim in court or have a jury trial on that Claim. Further, you and we will not have the right to participate in a representative capacity or as a member of any class pertaining to any Claim subject to arbitration. . . . The arbitrator's decisions are as enforceable as any court order and are subject to very limited review by a court. Except as set forth below, the arbitrator's decision will be final and binding.
(2018 CAA (Dkt. 877-3) § I.e.) The provision defines "Claim" as:
[A]ny claim (including initial claims, counterclaims, cross-claims, and diird-party claims), dispute, or controversy between you and us arising from or relating to the Agreement or prior Card acceptance agreements, or the relationship resulting therej&om, whether based in contract, tort (including negligence, strict liability, fraud, or otherwise), statutes, regulations, or any other theory, including any question relating to the existence, validity, performance, construction, interpretation, enforcement, or termination of the Agreement or prior Card acceptance agreements, or the relationship resulting thereform, except for the validity, enforceability, or scope of section 7.c of the General Provisions.
04 § I.e.)
3. Anti-Steering Rules Amex's Anti-Steering Rules provide that merchants may not: • indicate or imply that they prefer, directly or indirectly, any Other PajTnent Products over [Amex] Card[s]; • try to dissuade cardholders from using [their Amex] Card; • criticize or mischaracterize [the Amex] Card or any of [Amex's] services or programs;
• try to persuade or prompt cardholders to use any Other Payment Products or any other method of payment (e.g., payment by check);
• impose any restriction, conditions, or disadvantages when the Card is accepted that are not imposed equally on all Other Payment Products, except for ACH funds transfer, cash, and checks;
• engage in activities that harm [Amex's] business or the American Express Brand (or both);
• or promote any Other Payment Products (except the Merchant's own private label card that they issue for use solely at their Establishments) more actively than the Merchant promotes Amex.
(SAC 146.)
£. Related Actions
In 2008, some merchants first brought suit against Amex in this court (initiating the "MP
Actions").
In re Amex.
Exp. Co.. No. lO-CV-4496 (NGG),
' Visa and MasterCard entered into consent decrees with the Government on the same day that the Government
Action was initiated; only Amex remained as a defendant. See In re Amex.
On September 26, 2016, the Second Circuit reversed this court's judgment in the
Government Action, holding that the court erred in excluding the market for cardholders from its
definition of the relevant market. S^ U.S. v. Amex.
Following the Supreme Court's affirmance of the dismissal of the Government Action,
matters resumed in the MP Actions. The court granted Amex's motion for partial summary
judgment in January of 2019, s^ In re Amex.
213 in Case No. 08-CV-2315).)
F. The Consolidated Class Actions
The procedural history of the consolidated class actions is complex and need not be repeated in full here. For a detailed accounting of the development of the class action component of the litigation, see the court's 2015 Memorandum and Order denying approval of the Class Settlement Agreement. (Aug. 4, 2015 Mem. & Order (Dkt. 657).) After a variety of stays and other proceedings, most notably the Supreme Court's decision in Ohio. 138 S. Ct.
2274, Plaintiffs filed their Second Amended Consolidated Class Action Complaint (the "Second Amended Complaint") on December 17, 2018. (SAC.) The Second Amended Complaint asserts the following claims for relief: on behalf of the Amex Class for violation of § 1 of the Sherman Act, based on the Anti-Steering Rules (SAC 111-22); on behalf of the Non-Amex class for violation of § 1 of the Sherman Act, based on the Anti-Steering Rules (SAC 123-26); on behalf of the Amex class for violation of § 1 of the Sherman Act, based on the aspect of the CAA's arbitration provisions disallowing collective action (SAC 127-29); and on behalf of the California subclasses for violation of California Antitrust Laws and the California Unfair Competition Law (SAC 130-40).
On March 15, 2019, Amex filed its fully briefed motion to compel arbitration of the Amex Class's claims and motion to dismiss the Second Amended Complaint. (Mot.; Opp'n; Defs. Reply in Further Supp. of Mot. ("Reply") (Dkt. 882).) On May 22, 2019, Plaintiffs filed a supplemental letter notifying the court of the Supreme Court's decision in Lamps Plus. Inc. v.
Varela.
11. MOTION TO COMPEL ARBITRATION
A. Legal Standard
The Federal Arbitration Act ("FAA") provides that written agreements to arbitrate are "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. The FAA "is a congressional declaration of a liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary." Moses H. Cone Mem'l Hosp. v. Mercurv Constr. Corp..
In deciding a motion to compel arbitration, "the court applies a standard similar to that
applicable to a motion for summary judgment." Bensadoun v. Jobe-Riat.
B. Discussion
The Supreme Court's decision in Italian Colors controls. In that case, the Supreme Court
considered the enforceability of the same arbitration provision as that at issue here.
Plaintiffs argue that this case is different from Italian Colors because, "[u]nlike here, the plaintiffs in Italian Colors did not assert that market-wide injunctive relief was necessary to vindicate their statutory rights." (Opp'n at 6.) In so arguing, Plaintiffs rely on the "effective vindication" exception to the FAA, which allows courts to "invalidate, on public policy grounds, arbitration agreements that operate as a prospective waiver of a party's right to pursue statutory remedies." Id at 235 (alterations adopted) (quotation marks, emphasis, and citations omitted).
But Italian Colors is clear that Rule 23 does not establish an entitlement to class proceedings for
the vindication of preexisting statutory rights.
Plaintiffs are correct that, under Italian Colors, the effective vindication exception "would certainly cover a provision in an arbitration agreement prohibiting the assertion of certain statutory remedies." Id at 236. But the text of the CAA does not prohibit the assertion of any statutory remedies. Plaintiffs' primary argument seems to be that market-wide equitable relief is necessary for effective vindication of their rights under the Clayton Act, and that foreclosing their ability to access that relief effectively prohibits their assertion of those rights. (Opp'n at 3- 4.) This cannot be true. As the Supreme Court observed in Italian Colors:
The antitrust laws do not evince an intention to preclude a waiver of class-action procedure.... The Sherman and Clayton Acts make no mention of class actions. In fact, they were enacted decades before the advent of Federal Rule of Civil Procedure 23, which was designed to allow an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only.
Plaintiffs also submitted a supplemental letter arguing that the Supreme Court's recent decision in Lamps Plus further supports their position that the court should not compel arbitration. (Pis. May 22,2019 Letter at 1.) It does not. As Amex noted in response (Amex May 24,2019 Letter), all parties agree that class arbitration is not permitted under the CAA.
rSee id; Opp'n at 4.) The Lamps Plus holding—^that class arbitration may be compelled under
the FAA only when it is affirmatively specified in the parties' agreement—^is therefore irrelevant.
See Lamps Plus,
Finally, Plaintiffs argue that the Seventh Amendment prohibits irrevocable arbitration
agreements. (See Opp'n at 8-9.) This argument is unavailing. It is true that the Seventh
Amendment "preserve[s]" the right to trial by jury, U.S. Const, amend. VII, but the Constitution
permits waivers of this right via arbitration agreements between two private parties, see, e.g.,
Desiderio v. NatU Ass'n of Sec. Dealers, Inc.,
The court therefore grants Amex's motion to compel arbitration of the Amex Class's claims.
III. MOTION TO DISMISS
The court will now address Amex's motion to dismiss the Non-Amex Class's claims under both federal and California law.^
A. Federal Claims
Section 4 of the Clayton Act establishes a private right of action to enforce Section 1 of
the Sherman Act. 15 U.S.C. § 15. At the pleading stage, "[a]n antitrust plaintiff must show both
constitutional standing and antitrust standing." Gelboim v. Bank of Am. Corp.,
At the motion to dismiss stage, "a private antitrust plaintiff must plausibly allege (a) that
it suffered a special kind of antitrust injury, and (b) that it is a suitable plaintiff to pursue the
alleged antitrust violations and thus is an efficient enforcer of the antitrust laws." In re London
Silver Fixing. Ltd.. Antitrust Litig.,
(quotation marks omitted)). Because the court finds that Plaintiffs are not efficient enforcers of the antitrust law, it will not address whether they have plausibly alleged antitrust injury.
As the Second Circuit has described:
The efficient enforcer inquiry turns on: (1) whether the violation was a direct or remote cause of the injury; (2) whether there is an identifiable class of other persons whose self-interest would normally lead them to sue for the violation; (3) whether the injury was speculative; and (4) whether there is a risk that other plaintiffs would be entitled to recover duplicative damages or that damages would be difficult to apportion among possible victims of the antitrust injury.
Gelboim.
Moreover, "[tjhese four factors need not be given equal weight," and "the relevant significance
of each factor will depend on the circumstances of the particular case." 10 Dental Supplv, Inc. v.
Henrv Schein. Inc..
1.
Directness
This factor cuts against Plaintiffs. "Directness in the antitrust context means close in the
chain of causation." Gatt.
Nonetheless, a plaintiff who is not a customer or competitor may suffer a direct injury if
it is "a participant in 'the very market directly distorted by the antitrust violation'" and its injury
is "inextricably intertwined with the injury the [defendants] sought to inflict." Id. at 159,160
(quoting Blue Shield of Va. v. McCreadv.
Plaintiffs are indisputably participants in the two-sided credit card market—^the very market allegedly distorted by Amex's actions. The question for the court is thus whether their supposed injury is inextricably intertwined with the injury Amex sought to inflict. It is not.
Amex furst argues that Plaintiffs have not alleged a direct injury and instead present only a so-called "umbrella" theory of liability. (Mot. at 12-14.) Although the Second Circuit has not directly addressed the question,^ district courts in this circuit to have considered such a theory of liability—^under which "a consumer who deals with non-defendants ... alleges injury by virtue of the defendants' conspiracy"—^have determined that it cannot create antitrust standing.
FrontPoint Asian Event Driven Fund. L.P. v. Citibank. N.A.. 16-CV-5263 (AKH), 2018 WL
^ The Second Circuit has not yet explicitly addressed the viability of antitrust claims that rely on an umbrella theory
of liability, but it has expressed concems about allowing such claims to proceed. See Gelboim.
4830087, at *6 (S.D.N.Y. Oct. 4, 2018) (citing Gelboim.
"Umbrella standing concerns are most often evident when a cartel controls only part of a
market, but a consumer who dealt with a non-cartel member alleges that he sustained injury by
virtue of the cartel's raising of prices in the market as a whole." Gelboim,
Arguments about the umbrella theory of liability aside, Plaintiffs' alleged injuries are indirect. In Gatt. the Second Circuit considered an alleged "bid-rigging" or "bid rotation" scheme regarding the sale of radios to New York City and State government agencies. S^ 711 F.3d at 72. Plaintiff, a radio merchant, alleged that Defendants determined which radio merchant would submit the lowest bid and what the price would be. Id The remaining dealers would then either "refrain from bidding or submit artificially inflated 'dummy quotations' for the contract." Id. Any merchant who refused to cooperate with the process would lose their license to deal the Vertex radios used by both the City and State governments. Id The plaintiff refused to comply and, as a result, was no longer permitted to sell Vertex-brand radios. Id The Second Circuit determined that this was an indirect injury because the plaintiff "was only incidentally harmed by the conspiracy" and "[i]t did not pay higher prices by virtue of the conspiracy; it merely lost the right to sell to one brand of radio." Id at 78-79. Here, unlike in Gatt, Plaintiffs do allege that the Non-Amex Class actually paid higher prices because of Amex's conduct. Nonetheless, as in Gatt, their alleged injury is only incidental—^Amex was not, according to the allegations in the complaint, using its market power to force its competitors to charge higher merchant fees across the board. Nor did it enter into a horizontal price-fixing agreement with those competitors.
What it allegedly did, rather, was force those merchants who did accept its cards to refrain from steering customers towards other cards and, in so doing, insulated its ability to charge those merchants ultracompetitive fees. Plaintiffs may be right that this had an effect on the fees other credit card networks charged to the Non-Amex Class, but any such effect was incidental to Amex's alleged anticompetitive behavior.
In arguing to the contrary. Plaintiffs rely on three cases: In re DDAVP Direct Purchaser
Antitrust Litigation,
Dennis and Namenda provide somewhat more analogous situations. The relevant plaintiffs in Namenda purchased the generic version of a drug and sued the manufacturer and seller of the name brand version of the drug, alleging that "they paid higher prices for generic memantine because Defendants intentionally restricted and manipulated generic competition" by entering into settlements seeking to delay market entry for some generic versions. Id at 190-94, 213. This is a more direct injury than that alleged by Plaintiffs here: the defendants there directly conspired with one competitor to keep some other competitors out of the relevant market.
id. Amex's Anti-Steering Rules, by contrast, are not a direct agreement with any other party to manipulate or limit entry into the credit network market. At best. Plaintiffs allegations involve Amex's competitors reacting—^perhaps in predictable ways—^to a contractual provision entered into between Amex and the Amex Class.
In Dennis, the plaintiffs alleged that the defendants conspired to manipulate the Bank Bill
Swap Reference Rate (the "BBSW"), a benchmark interest rate used to set the price for some
financial derivatives.
The Second Circuit's most recent decision on the issue, 10 Dental.
2.
Identifiable Class of Other More Direct Victims
"This consideration seems to bear chiefly on whether the plaintiff is a consumer or a
competitor." Gelboim.
The court is aware this factor merely requires "an entity most motivated by self-interest,
not entity most motivated by self-interest" and, therefore, that "[ijnferiority to other potential
plaintiffs can be relevant, but it is not dispositive." PDA VP.
3.
Speculative Nature of Iniurv
The existence of only "highly speculative damages is a sign that a given plaintiff is an
inefficient engine of enforcement." Gelboim.
In 10 Dental, the Second Circuit determined that the nature of the plaintiff s injuries
"render[ed] its potential recovery highly speculative" because its "damages calculation rests on
multiple layers of speculation" and "essentially would require the creation of an 'altemative
universe.'"
4.
Duplicative Recovery and Complex Apportionment
In 10 Dental, the Second Circuit reiterated the importance of this consideration, noting
that "[t]he existence of other plaintiffs who could lay claim to precisely the same damages,
whether in theory or in actuality, indicates that the would-be antitrust plaintiff might not be well
positioned to vindicate the antitmst laws for the benefit of the public."
Amex argues that the court should be concerned because at least some of Plaintiffs have already recovered damages for the alleged lack of competition between the credit card networks. (Mot. at 19; Reply at 8-9.) However, as Plaintiffs respond and Amex does not dispute, these settlements resolved disputes regarding similar provisions Visa and Mastercard allegedly imposed on merchants, not Amex's Anti-Steering Rules at issue here. (See Opp'n at 22.) The fact that some wrongdoers have already agreed to settlements, moreoever, "has nothing to do with the efficient enforcer analysis, particularly Gelbpim's concern with disproportionate damages." In re Foreign Exch. Benchmark Rates Antitrust Litig.. No. 13-CV-7789 (LGS), 2016 WL 5108131, at *7) S.D.N.Y. Sept. 20, 2016). The court is thus unpersuaded by Amex's argument on this point.
The court does note, however, that Gelboim "strongly suggested" that "other enforcement
mechanisms were relevant" to this factor when it "stat[ed] that the fact that the defendants'
alleged manipulation was 'under scrutiny by government organs, bank regulators[,] and financial
*23
regulators bears upon the need for the plaintiffs as instruments for vindicating the Sherman
Act.'" Sonterra,
* * * Because all four of the efficient-enforcer factors cut against Plaintiffs, the court fmds that the Non-Amex Class has not established federal antitrust standing.
B. California Claims
Amex argues that the California Non-Amex Subclass lacks standing to sue under California law for essentially the same reasons it lacks standing under federal law. (Mot. at 20- 21.) Plaintiffs contend that standing under California law must be analyzed independent of federal antitrust standing, and argue that the California Non-Amex Subclass does have standing to pursue their antitrust claims imder California law. (Opp'n at 23-24.) As an initial matter.
Plaintiffs are correct that dismissal of the Non-Amex Class's Sherman Act claims does not necessarily mandate the dismissal of their claims under the California Unfair Competition Law (the "UCL") and California state antitrust law, known as the Cartwright Act. Samsung Elecs.
Co. V. Panasonic Corp.,
1.
The Cartwright Act
The California Supreme Court has not addressed whether antitrust standing under
California state law is properly analyzed under the same framework as that used to determine
*24
federal antitrust standing. See Salveson v. JP Morgan Chase & Co..
2015). While courts have disagreed on the issue—and authority is sparse in either direction—^the court is persuaded by those that have found that the same or substantially similar factors apply.
See Salvesom
This determination is in accordance with the analysis of at least one of California's
intermediate appellate courts. S^ Vinci v. Waste Mgmt., Inc..
Lacking more direct guidance from the California courts, and in light of Vinci, the court will thus apply the federal factors to analyze antitrust standing under California law. As laid out by the Supreme Court, then, the relevant factors are: "(1) the nature of the plaintiffs alleged *25 injury, (2) the directness of the injury, (3) the speculative nature of the harm, (4) the risk of duplicative recovery and (5) the complexity in apportioning damages." Salveson, 166 F. Supp.
3d at 259; see also Associated Gen. Contractors of CaL. Inc. v. Cal. State Council of Carpenters
("AGC"),
Supp. 3d at 259.
As to the nature of the alleged injury, the court must consider "whether the nature of the
injury asserted by a plaintiff is 'the type the antitrust laws were intended to forestall.'" Salveson,
See Harrv v. Total Gas & Power N. Am., Inc.,
[,] thereby causing ^ merchants to pay higher fees, and raising overall transaction costs above
competitive levels." (Opp'n at 13 (emphasis in original).) This is sufficient to have plausibly
alleged that Amex engaged in unlawful anticompetitive conduct, at least to meet the "low bar" of
*26
the inquiry at the standing stage. See 10 Dental.
Next, the court must "isolate and identify [Plaintiffs'] 'actual injury' or 'the ways in which the plaintiff claims it is in a 'worse position' as a consequence of the defendant's conduct." Id, at 63 (quoting Gatt, 711 F.Sd at 76). "Assuming that [Plaintiffs are] operating in a market affected by anticompetitive conduct, the question of actual injury becomes whether [Plaintiffs are] worse off than [they] would be if the market were free of anticompetitive forces." Id. at 64. Taking the allegations in the complaint as true. Plaintiffs have alleged sufficient facts to show that they are in a worse position as a result of Amex's alleged conduct. They allege the following:
On the merchant side of the market, Amex's imposition of increased merchant fees, has, in turn, enabled Visa, MasterCard, and Discover to increase their respective merchants' fees, thereby stifling competition, and causing all credit card accepting merchants to pay supracompetitive merchant fees. This includes merchants who do not accept Amex cards but do accept other credit cards, because the remaining credit card networks do not lower their merchant fees for the generally small merchants that do not accept Amex.
(SAC 182.) Plaintiffs thus allege that they are charged higher merchant fees and are, as a result, worse off than they would be in a genuinely competitive market.
Finally, Plaintiffs "must demonstrate that the Defendants' anticompetitive behavior
caused its actual injury." 10 Dental. 924 F.Sd at 65; see also Brunswick Corp. v. Pueblo Bowl-
0-Mat Inc..
Even assuming that antitrust injury has been established, however, that does not outweigh
the other factors relevant to the antitrust standing analysis, all four of which cut against
Plaintiffs. The court has discussed these factors above—^as a part of its "efficient enforcer"
analysis—^but will address directness again because '"the extent to which antitrust injury is
recognized under the Cartwright Act is enlarged, by statute, in comparison to federal law'
because an action 'may be brought by a person who is injured... by reason of anything declared
unlawful by [the Cartwright Act], regardless of whether such injured person dealt directly or
indirectly with the defendant." Salveson.
Courts applying California law find antitrust standing where, for example, "indirect
purchasers of components had satisfied their burden of pleading directness of injury by alleging
that the cost of the component was traceable through the product distribution chain." Flash
Memory.
Mich. Apr. 9, 2013)), the impact of the statute outside the context of indirect purchasers is unclear.
In any event, California law does not allow recovery for an antitrust injury that is a
"secondary, consequential, or remote" result of the allegedly unlawful conduct. In re WellPoint,
Inc. Out-of-Network UCR Rates Litig., No. 09-MD-2074,
They do not allege that Amex conspired to increase merchant fees across the market, but instead only that Amex's Non-Steering Provisions had that effect. Such allegations, without more, do not sufficiently tie Amex's alleged anti-competitive conduct to the merchant fees of the California Non-Amex Subclass, who did not interact with Amex directly (and, moreover, did not directly interact with any other party that, at any point in the chain of causation, entered into any agreement or transaction with Amex at all).
Even under this more liberal approach to the directness inquiry, therefore, the Non- Amex Class's injuries are simply too remote. This determination, in combination with the factors discussed previously, brings the court to conclude that the California Non-Amex Subclass has failed to allege standing under the Cartwright Act.
2. TheUCL
Finally, the California Non-Amex Subclass asserts claims under the UCL (SAC Ifll 136-
40), alleging that Amex violated the UCL "by entering into contracts in an unreasonable restraint
of trade within the State of California in violation of the Sherman Act and the Cartwright Act"
(id. H 137). The UCL does allow a plaintiff to bring a claim based on conduct that violates other
laws, Cal. Bus. & Prof. Code § 17200, but dismissal of an xmderlying antitrust claim mandates
dismissal of the UCL claim as well, see Dairy Farmers,
2012).
Because the court has dismissed all of the Non-Amex Class's other claims and Plaintiffs *30 have provided no reason that the California Non-Amex Subclass's UCL claims survive independently, the court also dismisses their claims under the UCL.
IV. CONCLUSION
For the foregoing reasons, Amex's (Dkt. 875) motions to compel arbitration and to dismiss are both GRANTED. The court retains limited jurisdiction to enforce any award resulting from any arbitration between Amex and members of the Amex class.
AJl claims asserted by the Non-Amex Class are DISMISSED. The Clerk of Court is respectfully DIRECTED to terminate Qwik Lube, LCC and LaJolla Auto Tech, Inc. and to remove them from the caption.
SO ORDERED.
s/Nicholas G. Garaufis Dated: Brooklyn, New York NICHOLAS G. GARAUFI^
January i H , 2020 United States District Judge