Berman Tabacco Secures Key Ruling Permitting the Bulk of Consumers’ State Law Claims Against American Express to Proceed

July 13, 2020

On April 30, 2020, U.S. District Court Judge Nicholas G. Garaufis (E.D.N.Y.) decided that consumers may pursue the bulk of their antitrust and consumer protection claims against American Express for barring merchants from steering customers to lower-cost payment alternatives.  The decision is a key procedural victory for the class action plaintiffs and paves the way for this class action on behalf of consumers who do not have an American Express card to proceed with the prosecution of the action.

Within the highly concentrated market for credit card services, American Express is the second-largest competitor in terms of market share.  According to the complaint, American Express’s behavior has unlawfully restrained trade since at least 2010, resulting in higher prices for credit card transactions and higher retail prices on goods and services across the board.  The class action seeks damages from American Express for the overcharges inflicted on consumers caused by its anti-steering rules imposed on merchants.

Earlier this summer, the court appointed Berman Tabacco Co-Lead Counsel.

“This is an important case that is at the cutting edge of competition in the payments industry,” says Berman Tabacco partner Todd A. Seaver.  “We allege that American Express uses its market power to inflict what amounts to a tax on everyone who buys goods or services from U.S. merchants.  In so doing, we argue that American Express has effectively caused all of us to pay higher prices at the cash register so that it can shower rewards and perks on the wealthiest American Express cardholders. ”

The case is captioned Oliver, et al. v. American Express Co., et al., No. 1:19-cv-00566-NGG-SMG (E.D.N.Y.).  The litigation team includes Joseph J. Tabacco, Jr., Todd A. Seaver and Colleen Cleary from Berman Tabacco’s San Francisco office.