American Express Wins Dismissal In Costco Court Case

American Express has won the dismissal of a lawsuit against them stemming from the 2015 loss of their co-branding relationship with Costsco.  The firm has been accused of defrauding shareholders about the coming end of the relationship.

U.S. District Judge Paul Gardephe in Manhattan found that American Express has not, as they were accused, improperly understated risks or troubles in its 16-year relationship with Costco, nor did it make an effort to hide the fact that the warehouse chain represented 18 percent of its revenue and 20 percent of its loans.

The judge further found that while Costco’s opinion of AmEx was as “just another vendor” and one that could be  replaced with a “cheaper” rival, that only gave American Express reason to believe Costco would drive a tough bargain in negotiation — not quit negotiation and find a new vendor.

The plaintiffs were led by the Plumbers and Steamfitters Local 137 Pension Fund in Springfield, Illinois. Its lawyers did not immediately respond to requests for comment.

American Express execs confirmed through a spokesperson they are pleased with the ruling.

Despite escaping this lawsuit without issue, it is hard to overstate how much losing Costco really cost Amex. Amex stock price lost $8 billion in value in the two days after the loss of the Costco contract was disclosed. The stock, however, has climbed back — as the company has moved its model to attract a larger user base.  American Express shares closed Monday up 8 cents at $90.54, roughly 6 percent below their all-time high set in 2014.



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