Credit Card Holders Not Compelled to Arbitrate Antitrust Claims Against Amex

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

Holders of MasterCard and Visa branded credit cards were not required to arbitrate antitrust claims against the American Express Co., the U.S. Court of Appeals in New York City has ruled.

The cardholders alleged that American Express (Amex) participated in a conspiracy with credit card networks and issuing banks to fix foreign currency conversion fees and impose arbitration clauses in cardholder agreements.

The MasterCard and Visa cardholders had agreed to arbitrate claims pursuant to their cardholder agreements with issuing banks. Amex sought to invoke the arbitration clauses in those agreements by equitable estoppel. However, Amex could not avail itself of the arbitration clauses contained in the plaintiffs’ cardholder agreements.

Arbitration was a matter of contract, and the requisite contractual basis for arbitration did not exist, the court explained. The cardholder agreements did not provide a sufficient contractual basis for sending the case to arbitration.

The cardholders were not holders of Amex credit cards, did not seek relief as purchasers of Amex products, and had not entered into any contract with Amex, let alone any contract containing an arbitration clause. Rather, the cardholders entered into standard cardholder agreements with the issuing banks, which had broad arbitration clauses.

The plaintiffs were correct when they asserted that there was “no reason for someone signing up for a Chase Visa card, for example, to believe that he (or she) was entering into any kind of relationship” with Amex, the court noted.

The October 21 decision is Ross v. American Express Co., 2008-2 Trade Cases ¶76,341.