Judge Throws Out Amex Settlement With Merchants

A federal judge rejected a settlement between American Express and merchants over credit card fees after discovering that the merchants' lawyer inappropriately communicated privileged details of the case with an attorney for MasterCard.  The decision, which could have ripple effects for another settlement agreement between many of the same merchants and MasterCard and Visa, means that the merchants and Amex will have to renegotiate the deal or possibly go to trial. 

Under the Amex settlement announced in 2013, the card company agreed to end a company policy regarding surcharges.  Specifically, the settlement stipulated that American Express cold no longer prohibit merchants from charging customers more for using Amex, as long as the merchants impose an identical surcharge on other credit cards.
Merchants involved in the parallel Visa/MasterCard litigation have already filed a motion in that case arguing that case's settlement should also be rejected because of the communications between the two lawyers.  The Merchants Payments Coalition, of which NATSO is a member, contends that neither settlement provides merchants with what they really need, which is greater discretion to add surcharges to help make up the costs associated with credit card fees. 
In his ruling, Judge Nicholas Garufis of the Eastern District of New York (Brooklyn) detailed why the two cases are so closely tied:  Because the Amex settlement permits Amex to require merchants to charge the same prices for goods purchased with Amex as with all other cards, Visa and MasterCard could freely agree in their separate settlement to allow differential surcharges.  In effect, that provision would be negated because Amex is still able to ban it (since many merchants accept both cards).  By sharing details regarding the two cases' settlement negotiations, the judge said, the lawyer for the merchants (who represented the merchants in both cases) and the lawyer for MasterCard inappropriately colluded.
A different federal judge in the Eastern District of New York will rule on the merchants' motion to vacate the nearly $6 billion settlement between merchants and Visa and MasterCard later this year. 
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David Fialkov

David Fialkov is the Vice President of Government Relations, as well as the Legislative and Regulatory Counsel, at NATSO. In this capacity, Mr. Fialkov directs NATSO's legislative, regulatory, and legal strategy on a range of issues, including transportation, energy and fuels, labor, data security, and taxes. Mr. Fialkov also oversees NATSO's political engagement program, including individualized legal and political counsel to member companies. Prior to joining NATSO, Mr. Fialkov was the senior associate in the Government Affairs and Public Policy practice at the law firm of Steptoe and Johnson in Washington, D.C. At Steptoe, Mr. Fialkov advised clients on legislative, regulatory, and political issues, as well as legal concerns. His primary clients included trade associations representing the motor fuel wholesale and retail industries, including the National Association of Convenience Stores and the Society of Independent Gasoline Marketers of America. Mr. Fialkov's focus was not only on the motor fuels business, but also the litany of other issues that retailers confront, including labor matters, foodservice issues, healthcare and employment issues, tax matters and data security. Prior to joining Steptoe, Mr. Fialkov graduated with honors from George Washington University Law School. He received his B.S. Summa cum laude with highest honors from Clark University in Worcester, MA. He lives in Washington, D.C. with his wife Allison and daughter Lilah. More
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