Consumer Law

An Olive Branch to Small Business?Courtesy of American Express

By Andy Hoffman

In spite of a minor kerfuffle ThePopTort recently had with some of our small business friends, we?re happy to report that last week, the U.S. Court of Appeals in New York handed small business a well-deserved victory.

The case invalidated the standard agreement between credit card giant AmEx and its merchants, which forced all disputes into arbitration and prohibited class actions.  In this case, small merchants had sued AmEx for antitrust violations, for forcing merchants to charge excessive rates to some of their smaller customers (like students and young adults).  Had these small merchants been prevented from filing a class action against AmEx, the case could never be brought because of the cost for each individual merchant.

Along with the forced arbitration clause, the Court said the class action bar ?would grant Amex de facto immunity from antitrust liability by removing the plaintiffs? only reasonable means of recovery.? 

"This decision means you cannot force a merchant into a situation where the cost of litigation would prevent the case from going forward," said Mark Reinhart, a partner at Reinhardt Wendorf & Blanchfield in St. Paul, Minnesota and a lawyer for the merchants. "The real thrust of the decision is that it struck down an attempt to prevent class-actions anywhere."

Full post as published by ThePopTort on February 03, 2009 (boomark / email).