In re Am. Express Anti-Steering Rules Antitrust Litig., 11-MD-2221 (NGG) (RER)

Decision Date14 January 2019
Docket Number11-MD-2221 (NGG) (RER)
Parties IN RE: AMERICAN EXPRESS ANTI-STEERING RULES ANTITRUST LITIGATION This Document Relates to: All Individual Merchant Plaintiff Actions 08-CV-2315(NGG)(RER) 08-CV-2316 (NGG) (RER) 08-CV-2317 (NGG) (RER) 08-CV-2380 (NGG) (RER) 08-CV-2406 (NGG) (RER) 11-CV-0337(NGG)(RER) 11-CV-0338(NGG)(RER)
CourtU.S. District Court — Eastern District of New York

NICHOLAS G. GARAUFIS, United States District Judge.

In this set of consolidated antitrust actions (the "MP Actions"), the Merchant Plaintiffs (the "MPs")1 challenge under Sections 1 and 2 of the Sherman Antitrust Act, 15 U.S.C. §§ 1 - 2, the contracts that they have entered into with Defendants American Express Travel Related Services Company, Inc. and American Express Company (together, "Amex"). (See Am. Compl. (Dkt. 814).) Specifically, the MPs challenge Amex's anti-steering rules, referred to as the Non-Discrimination Provisions ("NDPs"), which are contained in merchant agreements entered into between Amex and each MP. The MPs seek an order enjoining Amex from enforcing the NDPs, as well as treble damages for the injuries the MPs allege they have sustained on account of the NDPs. (See id. ¶ 11.)

Pending before the court is Amex's motion seeking summary judgment as to the MPs' allegations of a one-sided market and the MPs' allegations of an Amex-only market. (See Notice of Mot. to Dismiss (Dkt. 835).) For the following reasons, Amex's motion is GRANTED.


The facts of this case—the procedural history, the restraints on competition, the workings of the credit-card market in general and Amex's platform in particular, etc.—have been discussed at great length in this court's previous opinions in this matter and in the related case brought by the federal government. See In re Am. Exp. Anti-Steering Rules Antitrust Litig. (In re Amex ), No. 11-MD-2221 (NGG), 2016 WL 748089, at *1-4 (E.D.N.Y. Jan. 7, 2016) ; United States v. Am. Exp. Co. (U.S. v. Amex ), 88 F.Supp.3d 143, 149-67 (E.D.N.Y. 2015), rev'd, 838 F.3d 179 (2d Cir. 2016), aff'd sub nom. Ohio v. Am. Exp. Co. (Ohio ), ––– U.S. ––––, 138 S.Ct. 2274, 201 L.Ed.2d 678 (2018). The court repeats certain facts and aspects of the procedural history here as necessary to introduce and to decide the instant motion.

A. Factual Overview

The MPs are retail merchants that have each entered into an American Express Card Acceptance Agreement (the "Agreement") with Amex. (Am. Compl. ¶ 1.) In those Agreements, "and in virtually every other such Agreement that Amex has entered into with a merchant," Amex has included the NDPs, which prevent the merchant "from differentially pricing the use of payment cards, stating a preference for any form of payment, or allowing the retail customer to use different payment cards on differing terms or conditions established by the merchant." (Id.; see id. ¶¶ 2-3 (describing the NDPs).) The MPs claim that these restraints are anticompetitive "because they nullify the operation of the price mechanism, impede competition among credit card networks and suppress output." (Id. ¶ 4; see id. ¶¶ 4-6.) As a result, the MPs allege, "merchant fees and the net two-sided transaction price for Amex and other credit card networks are higher than the competitive level and higher than they otherwise would be in the absence of Amex's anticompetitive restraints [and] the number of credit card transactions is lower than it otherwise would be in the absence of the Amex restraints." (Id. ¶ 7.)

The MPs allege that the NDPs "have had an actual adverse effect on competition as a whole ... in that they have reduced output, quality and consumer choice and increased price and barriers to entry in each of the relevant markets and/or submarkets." (Id. ¶ 53.) The MPs seek to proceed to trial with respect to four formulations of the relevant market:

1. a one-sided, all-general purpose credit card ("GPCC") market;
2. a one-sided, Amex-only market;
3. a two-sided, all-GPCC market; and
4. a two-sided, Amex-only market.

(Id. ¶ 11, see id. ¶¶ 56-57, 64.) The MPs assert claims under each cause of action with respect to all four formulations of the relevant market and submarket. (See id. ¶¶ 68-85.)

B. Procedural History

In 2008, certain of the MPs brought suit against Amex in this court. See In re Amex, 2016 WL 748089, at *2 & n.3. As stated above, the MPs allege that the anti-steering rules Amex imposes on merchants that participate in its network are an anticompetitive restraint on trade in violation of the Sherman Act. See Rite Aid Corp. v. Am. Exp. Travel Related Servs. Co., 708 F.Supp.2d 257, 261-62 (E.D.N.Y. 2010). After answering each MP's complaint, Amex moved for judgment on the pleadings, arguing that all of the MPs' claims were barred by the Sherman Act's four-year statute of limitations, On March 3, 2010, the court denied the motion. Id. at 264 ; see In re Amex, 2016 WL 748089, at *2.

Meanwhile, in October 2010, the Department of Justice and the attorneys general of eighteen states filed suit against Amex, MasterCard, and Visa (the "Government Action").2 The MP Actions and the Government Action proceeded to coordinated discovery. In late 2013, Amex moved for summary judgment in both the Government Action and the MP Actions, and moved to consolidate the actions for trial. The court denied Amex's motion for summary judgment in the Government Action in May 2014. See United States v. Am. Exp. Co., 21 F.Supp.3d 187 (E.D.N.Y. 2014). Separately, the court denied Amex's motion to consolidate the actions for the purpose of trial (Feb. 11, 2014, Order (Dkt. 335) ), and stayed the MP Actions during the pendency of a motion for final settlement approval in consolidated class actions that comprise part of the MDL and in which the MPs are putative class members (see Apr. 9, 2014, Order). The court reserved judgment on Amex's motion for summary judgment in the MP Actions.

The Government Action proceeded to a bench trial during the summer of 2014. On February 19, 2015, the court found by a preponderance of the evidence that the specific NDPs challenged by the Government violate Section 1 of the Sherman Act. After receiving additional briefing from the parties to the Government Action, as well as other interested parties including the MPs, the court issued a permanent injunction on April 30, 2015. United States. v. Am. Exp. Co., No. 10-CV-4496 (NGG), 2015 WL 1966362 (E.D.N.Y. Apr. 30, 2015), rev'd, 838 F.3d 179, aff'd sub nom. Ohio, 138 S.Ct. 2274. The court denied Amex's motion to stay the permanent injunction pending appeal. United States v. Am. Exp. Co., No. 10-CV-4496 (NGG), 2015 WL 13735045 (E.D.N.Y. May 19, 2015). Amex then filed a notice of appeal and sought a stay pending appeal from the Second Circuit. Although a three-judge panel of the Second Circuit initially denied Amex's motion to stay (Order of USCA (Dkt. 687 in No. 10-CV-4496) ), the Second Circuit ultimately entered a temporary stay of the permanent injunction and a temporary stay of the Government Action in this court (Order of USCA (Dkt. 697 in No. 10-CV-4496) ).

On September 26, 2016, the Second Circuit reversed this court's judgment in the Government Action, holding that the court erred in excluding the market for cardholders from its definition of the relevant market. See U.S. v. Amex, 838 F.3d at 197, 206-07. Because the Second Circuit found that the Government could not, on the facts of the case, prove net harm to both cardholders and merchants, it directed this court to enter judgment in favor of Amex. Id. at 207. Certain state plaintiffs then sought certiorari, which the Supreme Court granted.3 Ohio v. Am. Exp. Co., ––– U.S. ––––, 138 S.Ct. 355, 199 L.Ed.2d 261 (Mem) (2017). On June 25, 2018, the Supreme Court affirmed the Second Circuit, holding that this court should have included both sides of the Amex platform when defining the relevant market. Ohio, 138 S.Ct. at 2285-86.

Following the Supreme Court's affirmance of the dismissal of the Government Action, matters resumed in the MP Actions. The court granted the MPs leave to file an amended complaint—intended to address some of the deficiencies with the Government Action raised by the Court in Ohio—and set a briefing schedule on various anticipated motions for summary judgment by Amex. (July 10, 2018, Order (Dkt. 811).) The MPs filed the amended complaint on July 27, 2018. (Am. Compl.) Under the original briefing schedule set by the court, Amex was to serve its motions for summary judgment—one as to the allegations of one-sided and Amex-only markets, and one "additional" motion as to the allegation of a two-sided market that includes all GPCCs—on the Merchant Plaintiffs by no later than August 17, 2018. (See July 10, 2018, Order.) On August 6, 2018, Amex requested that it "be given leave to file a summary judgment motion directed to the Merchant Plaintiffs' allegations regarding competitive harm in a two-sided market after the new discovery is complete." (Aug. 6, 2018, Letter (Dkt. 815) at 2.) The court granted Amex's request and set the briefing schedule on the motion for summary judgment as to the Merchant Plaintiffs' claims on the two-sided, all-GPCC market to take place following the completion of additional fact discovery. (See Aug. 6, 2018, Min. Entry; Aug. 17, 2018, Order.)

On August 17, 2018, Amex served on the Merchant Plaintiffs a motion to dismiss or, in the alternative, for summary judgment. (Amex Mem. in Supp. of Mot. to Dismiss (Dkt. 828 at ECF p.6).) Amex did not answer the amended complaint. The MPs subsequently sought an order from this court compelling Amex to file its answer and defenses to the amended complaint. (Mot. to Compel (Dkt. 828 at ECF p.1).) On September 26, 2018, the court held that, because Amex did not "seek to dismiss any ‘claims’ in the amended complaint," its motion could not be considered a motion to dismiss, but rather one for summary judgment. In re Am. Exp. Anti-Steering Rules Antitrust Litig. (In re Amex ), 343 F....

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