Newspaper article International New York Times

Judge Rejects Settlement in American Express Case

Newspaper article International New York Times

Judge Rejects Settlement in American Express Case

Article excerpt

Citing "egregious conduct" in messages between two lawyers, a federal judge scrapped the proposed settlement with a group of retailers.

It sounded like an innocuous message: "Amex negotiation has gotten crazy," Gary Friedman, representing merchants in a lawsuit against American Express, said in a text message to his friend and fellow lawyer Keila Ravelo two years ago. "Gmailed u the issue."

On Tuesday, a federal judge called the text, as well as emails from Mr. Friedman to Ms. Ravelo, "egregious conduct," citing them as the basis for rejecting a proposed $75 million class-action settlement between American Express and a group of retailers that have been fighting for the right to charge consumers more for using Amex's credit cards.

The decision could have ripple effects for another settlement, a nearly $6 billion agreement between many of the same merchants and Visa and MasterCard in 2013.

At the time, Ms. Ravelo was a partner at Willkie Farr & Gallagher, a New York law firm representing MasterCard. In his 44- page decision on Tuesday, Judge Nicholas G. Garaufis of United States District Court in Brooklyn said Mr. Friedman's communications to Ms. Ravelo included confidential information that could have jeopardized the fairness of the proposed American Express settlement.

"Ravelo was not merely a third party who was unentitled to receive the materials that were sent to her by Friedman," Judge Garaufis wrote, later adding that "with respect to the settlement of the Amex class actions, Friedman consulted Ravelo at what appears to be every step along the way."

In at least two emails, Mr. Friedman had written "burn after reading."

A spokeswoman for American Express, Marina H. Norville, said the company was "disappointed" with the judge's decision. "We believe we have strong defenses against the merchants' claims, and will continue to fight our case in court," she said.

The merchants are seeking an alternative resolution of the case that will provide greater discretion in passing the fees they pay for accepting American Express cards on to consumers, among other terms.

The judge's ruling removed Mr. …

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