US: American Express antitrust settlement tossed

In a move that could portend trouble for a similar settlement between merchants, Visa and MasterCard, a federal judge has thrown out a proposed settlement of merchant antitrust claims against American Express.

US District Judge Nicholas Garaufis had preliminarily approved a $79 million class action settlement of merchant antitrust claims against American Express in a case that was similar, but not identical, to an antitrust case involving merchants, Visa and MasterCard.

Garaufis threw the proposed settlement out after documents surfaced that reflected improper communication between the merchant’s lead attorney in the case, Gary Friedman, and a leading MasterCard attorney, Kiela Ravelo.

Merchants that were unhappy with the settlement made a motion, which the court accepted, that the communication that took place between Friedman and Ravelo had compromised the settlement negotiations.

“Whether Friedman exchanged confidential and/or privileged materials with Ravelo and consulted with her regarding these actions for financial reasons, out of personal loyalty, due to a misplaced sense that her advice would in fact benefit the merchant class and was not improper, and/or for some other reason(s), is something this court cannot currently, and need not, determine,” Garaufis wrote in his decision.

American Express said in a statement that it was disappointed in the ruling because it considered the settlement agreement fair.

Full content: The Wall Street Journal

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