In re: American Express Merchants’ Litigation
In January 2009 the Second Circuit court overturned a decision by a U.S. District Court in favor of American Express (Amex) citing “compelling” arguments delivered by Nathan Associates’ Senior Vice President Gary French that individual small damages do indeed merit class certification.
In December 2004, a number of complaints filed against charge card issuer American Express (Amex) were transferred and consolidated in the U.S. District Court for the Southern District of New York (see, In re American Express Merchants Litig., No. 03cv9592, 2006 WL 662341 (S.D.N.Y. March 16, 2006) (Daniels, J.)). Plaintiffs complained that Amex violated U.S. antitrust laws by engaging in an illegal tying arrangement that forced merchants to pay the same “elevated” fee structure for revolving debt credit cards as was paid for personal and corporate charge cards. They argued that because Amex’s revolving credit cards do not offer the same level of benefit as personal or corporate cards lower not higher fees were warranted.
Citing the “class action waiver” of its “Card Acceptance Agreement,” Amex argued that any grievance must be brought by merchants individually, not as part of a class action. Plaintiffs claimed that individual lawsuits against Amex would not be economically viable or rational. Senior Vice President Gary French and Principal Economist Doug Young of Nathan Associates conducted research on behalf of plaintiffs concerning the economics of and costs associated with complex antitrust litigation. In June 2004, Dr. French filed a declaration with the district court describing the results of this research. He concluded that the costs associated with economic experts’ research and analysis of liability issues would far outweigh the potential awards for damages incurred by a number of plaintiffs. The district court ruled in favor of defendant Amex.
On appeal, the Second Circuit “reversed and remanded” the district court’s decision. In its January 2009 written opinion, the Second Circuit found Dr. French’s arguments compelling and cited liberally from his declaration.
Click here to read the appeals court decision, with a lengthy citation of Dr. French’s testimony beginning on page 26.