Judge Torpedoes Merchant Settlement with Amex

Aug. 6, 2015

Judge Torpedoes Merchant Settlement with Amex A settlement in a class-action lawsuit between merchants and American Express was scuttled this week by a federal judge in New York City after an attorney working on the case improperly shared information with another attorney representing MasterCard in a similar suit with merchants. The Amex settlement received preliminary approval in Sept. 2014 after four years in court. Final approval would have given merchants that accept American Express the right to surcharge customers who pay using American Express cards.

Judge Nicholas Garaufis denied final approval of the settlement after information surfaced that a lawyer representing merchants in the case against Amex shared details of the settlement proposal with an attorney from MasterCard. The two had previously worked together. Last week, merchants notified the same federal court in Brooklyn that they were seeking to void a $6 billion settlement with MasterCard, Visa and many top credit card issuers in a larger class action because of the conduct of the same two attorneys. Whether that settlement is also in jeopardy remains unclear.

“We are disappointed in the court’s decision to deny final approval to the settlement,” American Express said in a statement. “We continue to believe the agreement is fair to merchants, providing them with additional flexibility while ensuring our card members are treated fairly at the point of sale. We believe we have strong defenses against the merchants’ claims, and will continue to fight our case in court.”