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Keywords

plaintiffdefendantarbitrationmotiontrustclass actionantitrustvisaarbitration clausearbitrator
defendantarbitrationtrialmotiontrustcorporationantitrustvisaarbitration clausearbitratorjury trialmotion to dismisspiracy

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In re Currency Conversion Fee Antitrust Litigation, 265 F.Supp.2d 385, 2003-2 Trade Cases P 74,099

Facts

The case consolidates over twenty class actions challenging the foreign currency conversion policies of VISA and MasterCard, along with their member banks. The plaintiffs allege that these entities engaged in price-fixing conspiracies regarding currency conversion fees, which they claim violate the Sherman Act and the Truth in Lending Act (TILA). The defendants moved to dismiss the complaints and compel arbitration based on cardholder agreements that included arbitration clauses.

The underlying complaints challenge alleged foreign currency conversion policies by VISA and MasterCard, the two largest credit card networks, and their member banks, including Citigroup, Inc., Bank of America Corporation, Bank One Corporation, J.P. Morgan Chase & Company, Providian Financial Corp., and Household International, Inc.

Issue

The main legal issues include whether the cardholders can avoid arbitration with non-signatories of the cardholder agreements, whether the claims are arbitrable, and whether the arbitration clauses are unconscionable.

The court held that: (1) cardholders were estopped from avoiding arbitration with non-signatories of cardholder agreements; (2) question of arbitrability was for arbitrator, and, in any event, claims were within scope of arbitration clause; (3) Truth in Lending Act (TILA) violations were within scope of clause; (4) horizontal price-fixing antitrust claims were arbitrable; (5) arbitration clauses were not unconscionable; (6) arbitration did not violate cardholders' Seventh Amendment right to jury trial; (7) complaint sufficiently alleged claim of antitrust conspiracy; (8) complaint did not state TILA claim against networks or non-card issuing bank defendants; and (9) there is no private right of action for conspiracy to violate TILA or aiding and abetting TILA violations.

Rule

The court applied principles of estoppel regarding arbitration, determined that the question of arbitrability was for the arbitrator, and found that the claims fell within the scope of the arbitration clauses.

On a motion to dismiss, the allegations in the Complaint are accepted as true.

Analysis

The court found that the cardholders were estopped from avoiding arbitration with non-signatories because the claims arose from the same transaction and were closely related to the agreements. It ruled that the arbitration clauses were valid and enforceable, and that the claims, including those under TILA and antitrust laws, were within the scope of the arbitration agreements.

The court found that the cardholders were estopped from avoiding arbitration with non-signatories because the claims arose from the same transaction and were closely related to the agreements.

Conclusion

The court granted the motions to compel arbitration and denied the motions to dismiss in part, allowing some antitrust claims to proceed while compelling arbitration for others.

Motions granted in part, and denied in part.

Who won?

The defendants prevailed in compelling arbitration, as the court found that the arbitration agreements were enforceable and that the claims fell within their scope.

The court granted the motions to compel arbitration and denied the motions to dismiss in part, allowing some antitrust claims to proceed while compelling arbitration for others.

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