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Big Credit Card Issuers Defeat Collusion Lawsuit in U.S. | Reuters EDITION: U.S. SIGN IN REGISTER Search News & Quotes HOME BUSINESS MARKETS WORLD POLITICS TECH OPINION BREAKINGVIEWS MONEY LIFE PICTURES VIDEO Live Coverage: Acting Ukraine president open to a referendum Safari Power Saver Click to Start Flash Plug-in Big credit card issuers defeat collusion 1 Separatist unrest spreads in Ukraine; lawsuit in U.S. ultimatum ends with no crackdown | BY JONATHAN STEMPEL 2 Suspect in Kansas Jewish center killings NEW YORK Thu Apr 10, 2014 2:42pm EDT faces hate crime charges 1 COMMENTS Tweet 31 Share 2 Share this 0 Email Print 3 Malaysia Airlines search heads deep underwater in new phase | 4 Nigerian bus station bombing kills 71 on edge of capital 5 Saudi Arabia says seizes drugs worth $267 million, arrests six Safari Power Saver Click to Start Flash Plug-in American Express and American Express corporate cards are pictured in Encinitas, California October 17, 2011. American Follow Reuters Express Co will report its quarterly earnings on October 19. CREDIT: REUTERS/MIKE BLAKE Facebook Twitter RSS YouTube RELATED TOPICS (Reuters) - Consumers suffered a setback on Thursday as three Regulatory News » big credit card issuers won the dismissal of U.S. lawsuits accusing RECOMMENDED VIDEO Breakingviews » them of colluding to require that disputes be settled in arbitration rather than class action lawsuits. U.S. District Judge William Pauley in Manhattan said cardholders failed to show that American Express Co, Citigroup Inc and Discover Financial Services conspired to violate the Sherman antitrust law. PS4 buys Sony some Canadian found guilty of extra lives - for now webcam murder The plaintiffs had argued that the conspiracy ran from May 1999 to October 2003, when 10 card-issuing banks and their lawyers held 28 meetings to discuss how to impose mandatory arbitration clauses in cardholder agreements. Pauley said his decision in the decade-old case was a close call, given the "conscious parallel Breakingviews: Russia Model held over Briton's action" among the biggest card issuers to include the clauses. would pay heavy price … death "It was only by a slender reed that plaintiffs failed to demonstrate that the lawyers who FINANCIAL COMMENTARIES AND GUIDES organized these meetings had spawned a Sherman Act conspiracy among their clients," Our toolkit helps you understand the essentials of Pauley wrote in a 92-page decision, following a 2013 non-jury trial. estate planning. (Wells Fargo Advisors) Class action litigation can allow consumers to pool resources and obtain greater recoveries National Financial can help you reinvent your approach to drive growth (Fidelity) at lower cost than individual arbitrations. Will the Stock Index Futures rally into 2014? (ADM "This is a big dent for consumer rights," said Curtis Arnold, a consumer advocate and Investor Services) founder of CardRatings.com in Little Rock, Arkansas. "Class action lawsuits have over the years kept this industry in check. Individuals don't have much recourse taking on card Want to hedge your equity position? Forex reports from FXCM can help. (FXCM) giants by themselves." The guide that will help you understand technical Cardholders had sought to force American Express, Citigroup and Discover to remove analysis (RJO Futures) arbitration clauses from their cardholder agreements for eight years. Content from sponsors Merrill Davidoff, a partner at Berger & Montague representing the plaintiffs, said his clients Merrill Edge® Trading were "obviously disappointed" and strongly disagreed with Pauley's decision. He said it is merrilledge.com premature to address whether there will be an appeal. $6.95 Everyday Trade Pricing w/ No Minimum Account Balance. Start Now. Robert Sperling, a partner at Winston & Strawn representing Discover, said the cardholders "never came close to proving collusion." Citigroup spokeswoman Emily Collins said that the bank is pleased with the decision. Spokeswomen for American Express did not respond to 10 Best Credit Cards 2014 requests for comment. creditkarma.com/BestCreditCards See the Best Credit Cards of 2014. Compare American Express, Citigroup and Discover collectively held about 31.1 percent of U.S. Top Offers & Apply Online. outstanding credit card balances in 2013, according to the Nilson Report. AVOIDING A BACKLASH In April 2010, Bank of America Corp, Capital One Financial Corp, HSBC Holdings Plc and JPMorgan Chase & Co settled with the plaintiff cardholders by agreeing to remove their arbitration clauses for 3-1/2 years. The U.S. Consumer Financial Protection Bureau estimated in December that just over 50 percent of outstanding credit card loans remain subject to the clauses. It said the percentage would have been 94 percent absent the earlier settlements. Other industries also use arbitration clauses. The U.S. Supreme Court in 2011 upheld contracts used by AT&T Inc requiring consumers to arbitrate disputes individually. In his decision, Pauley noted that of the 10 banks that had been part of the litigation, just two had mandatory arbitration clauses at the start of the alleged collusion. He found "compelling evidence" that cardholders would have little economic incentive to fight alleged abuses absent class actions, and said that the banks' "need to parry consumer backlash and temper any 'rogue' players" established a motive to conspire. "A motive to conspire, however, does not mean that a conspiracy existed," he said. "This court is convinced that the evidence is just as consistent with legitimate activity in furtherance of the issuing banks' independent self interests." Pauley said the case also offered a "cautionary lesson" to lawyers, given that the banks' cost to defend against the lawsuits offset potential savings from the arbitration clauses. "In retrospect, the issuing banks' short-term goal of lowering litigation costs eluded them," he wrote. The cases are in the U.S. District Court, Southern District of New York. They are Ross et al v. American Express Co et al, No. 04-05723; and Ross et al v. Bank of America NA et al, No. 05-07116. (Reporting by Jonathan Stempel in New York; Editing by Lisa Von Ahn, Jonathan Oatis and Bernard Orr) FILED UNDER: REGULATORY NEWS BREAKINGVIEWS Recommend 26 people recommend this. Tweet this Link this Share this Digg this Email Print Reprints More From Reuters Sponsored Financial Content (?) Desperate for Our toolkit helps you understand the credit, China essentials of estate planning. Wells Fargo importers default Advisors on soy cargoes National Financial can help you reinvent your | 10 Apr approach to drive growth Fidelity Individuals targeted RJO Futures can help you learn more about as San Francisco technical analysis RJO Futures tech money protests intensify Why Stock Index Futures Will Rally into 2014 | 11 Apr ADM Investor Services Just because it's How Trading Forex Can Help You Hedge Your sweet and sticky Equity Position FXCM doesn't mean it's 'honey' -U.S. FDA | 8 Apr Little Internet users can do to thwart 'Heartbleed' bug | 9 Apr Russia's Lavrov says NATO forces in Eastern Europe would violate agre… | 10 Apr From The Web Sponsored Content by Taboola How Men 40+ Are These Are The Best Little Known Way to Pay Must Have Appliances Boosting Their Free T… Credit Cards For 2014 Off Mortgage Being sold For Next T… Better By The Minute Next Advisor One Smart Penny QuiBids Homeowners May Be In Economist: "Obama Best Associate's Jessica Biel's Wedding for a Rude Awakening... 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