After signing off on most of the restrictions the federal government had sought in an injunction against AmEx, U.S. District Judge Nicholas G. Garaufis asked the class plaintiffs supporting their own 2013 settlement with the company to weigh in on what the ruling meant for their case.
Both the merchants and the U.S. Department of Justice had claimed that AmEx's rules barring retailers from encouraging consumers to use cheaper credit card brands limited competition.
The merchants won preliminary approval for a deal that will allow them to charge customers more for paying with credit cards than with debit or cash as long as they put the same charge on all credit card brands they accept.
The DOJ, meanwhile, convinced Judge Garaufis after a weeks-long trial that the steering rules were anti-competitive, and on Thursday the court largely signed off on the injunction the government had sought.
Though the judge refused to "put words into American Express's mouth" by specifying new language for its contracts with merchants, he did block the company from banning merchants from offering discounts, expressing preferences or otherwise encouraging customers to use one type of card over another. The company will likewise have to alert merchants of their rights under the injunction.
Several of the retailers in the private litigation sought to weigh in on the injunction in the government's case, and on Thursday the judge asked the proponents of the private settlement to explain how his rulings in the government suit affected how their deal should be reviewed.
He also asked for feedback on the revelation that a former Willkie Farr & Gallagher LLP attorney working for MasterCard may have disclosed confidential materials to one of the plaintiffs' attorneys involved in the credit card antitrust cases.
AmEx said in a statement Friday that it still believed the 2013 settlement in the private suit balanced the interests of its cardholders with merchants who accept its cards.
An attorney for the private plaintiffs was not immediately available for comment.
The DOJ originally sued Visa Inc. and MasterCard Inc. along with AmEx, claiming their policies blocking the merchants who accept their credit cards from steering customers toward cheaper payment methods violated federal antitrust law.
While the other two credit card giants agreed to change their policies in settlements signed before the suit was filed, AmEx opted to fight the DOJ through a bench trial in summer 2014.
In February, Judge Garaufis concluded that AmEx's rules were anti-competitive even though he had reservations about telling a credit card company how to run its business.
The court concluded that AmEx's rules led to a situation where there was nothing counterbalancing the incentives for AmEx and the other credit card providers to charge merchants "inflated prices" to process transactions. The result, the judge said, was higher costs for consumers.
On Thursday, the judge once again voiced disappointment that the parties couldn't iron out most of a solution in the case themselves and largely signed off on the DOJ's proposal.
"Although the court invited American Express to play an active role in the construction of the permanent injunction, American Express’s core proposals were, considering the record before the court, too narrow or unwieldy to effectuate the remedial objectives of a permanent injunction under the Sherman Act," the judge wrote.
The plaintiffs are represented by Reinhardt Wendorf & Blanchfield, Friedman Law Group LLP and Patton Boggs LLP.
AmEx is represented by Boies Schiller & Flexner LLP and Cravath Swaine & Moore LLP.
The cases are American Express Anti-Steering Rules Antitrust Litigation (NO II), case number 1:11-md-02221, in the U.S. District Court for the Eastern District of New York, and Marcus Corp. v. American Express Co. et al., case number 1:13-cv-07355, in the same court, which was formerly case number 1:04-cv-05432, in the U.S. District Court for the Southern District of New York.
--Additional reporting by Abigail Rubenstein. Editing by Brian Baresch.
