In opinion today announcing findings from a bench trial, Judge Pauley rejected claims that American Express, Citi and Discover colluded to add arbitration clauses barring class actions to their standard card agreements. He found that the defendants acted individually, not collusively:
[T]his Court finds that Plaintiffs have failed to carry their burden to demonstrate an agreement among the Issuing Banks to implement and maintain arbitration clauses. While the extensive record of inter-firm communications among competitors would give any court pause, this Court cannot infer an illegal agreement based on the evidence marshalled at trial. The opportunity to collude does not translate into collusion. . . . It is clear that the Issuing Banks had an agreement to explore collective advocacy efforts aimed at expanding the enforceability of arbitration clauses and to establish class-action-barring arbitration as an industry norm. Direct evidence of this agreement abounds in meeting agendas, solicitations to fund amicus briefs and research, and willingness to explore joint action . . . . But Plaintiffs ask this Court to read evidence of that benign agreement as evidence of a separate, illegal agreement to collusively adopt and maintain class-action-barring arbitration clauses. Because the policy undergirding antitrust condemns interference with lawful competitive behavior, Plaintiffs’ theory is a bridge too far. . . . Undoubtedly, avoiding class actions through arbitration was in each Issuing Banks’ independent self interest, regardless of whether its competitors also adopted such a provision. Though an illegal agreement to collusively adopt arbitration would have given the Issuing Banks comfort on their journey to make arbitration an industry standard, they were just as likely to travel that road alone.
Judge Pauley ended the opinion with a cautionary note, and emphasized that the defendants’ win was only by a “slender reed”:
These actions are the latest installment in multidistrict litigation that spanned more than a decade and raised a spate of novel issues. They offer a cautionary lesson to all lawyers who labor under inexorable pressure to generate new business. When outside counsel convene meetings of competitors in the hope of propelling themselves to the forefront of an emerging trend — in this case, class-action-barring consumer arbitration agreements — they do so at their professional peril. When the first meeting convened, only two defendants had class-action barring arbitration clauses in their card member agreements. By the time the last meeting concluded, all ten of the Issuing Banks, accounting for approximately 87% of all credit card transactions in the United States, had adopted class-action-barring arbitration clauses in their card member agreements. It was only by a slender reed that Plaintiffs failed to demonstrate that the lawyers who organized these meetings had spawned a Sherman Act conspiracy among their clients. In retrospect, the Issuing Banks’ short-term goal of lowering litigation costs eluded them. Undoubtedly, retaining some of the most esteemed antitrust lawyers in the nation to counter the extraordinary talents of Plaintiffs’ counsel imposed a significant burden on the Issuing Banks. Only the passage of time will reveal whether the Issuing Banks’ longer-term goal of avoiding the expense of class action lawsuits can be achieved.