Mar

31

Posted by : Matthew Wild | On : March 31, 2010

The Supreme Court held today that district courts must follow Fed.R.Civ. 23 in class actions alleging violations of state law even though the state statute prohibits prosecution of the claim as a class action.  In Shady Grove Orthopedic Assoc. v. Allstate Insurance Co., No. 08-1008, 2010 WL 1222272 (Mar. 31, 2010), the Court held that Rule 23 trumps NY CPLR 901(b), which prohibits class actions under New York statutes authorizing a claim for statutory or multiple damages.  That statute has barred claims under New York’s antitrust statute (the Donnelly Act) as well its Deceptive Trade Practices Act.  Numerous state consumer protection statutes likewise have prohibitions on class actions.  Shady Grove breathes life into class actions in federal court under those statutes.

Feb

06

Posted by : Matthew Wild | On : February 6, 2009

In a significant victory to antitrust victims, the United States Court of Appeals for the Second Circuit refused to enforce a bar in arbitration contracts that prohibited collective actions.  In re American Express Merchants’ Litigation, No. 06-1871-cv (2d Cir. Jan. 30, 2009) (Amercian Express Merchants Litigation attached).  Plaintiffs were merchants who alleged that American Express tied acceptance of its charge card to its credit cards – it required merchants to accept both cards rather than allowing them to choose to accept only the charge card.  The merchants claim that this tying scheme allowed American Express to charge them supracompetitive fees on American Express credit card purchases in violation of Section 1 of the Sherman Act.  The merchant agreements had an arbitration provision, which also barred class or collective actions whether in arbitration or otherwise.  The Second Circuit held that such clauses are unenforceable where as here the amount of the potential claims are so small that it would effectively preclude plaintiffs from bringing antitrust actions or arbitration proceedings on their own.  The Court expressly chose not to address whether such restrictions are per se unenforceable in antitrust actions.