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Antitrust Claims Against Citigroup, Discover Stay Alive

Posted: February 8, 2012
Source: Law360
Practice Areas: Antitrust

A New York federal judge on Wednesday refused to dismiss claims against Discover Bank and Citigroup Inc. in the multidistrict litigation claiming credit card issuers conspired to insert anti-competitive arbitration clauses in their customer agreements.

In awarding summary judgment to the plaintiffs, U.S. District Judge Willam H. Pauley rejected the credit companies' argument that certain evidence relating to a settlement in a similar MDL should not be permitted.

They had argued that the release in the settlement of In re: Currency Conversion Fee Antitrust Litigation limited the evidence on which the plaintiffs rely, specifically evidence related to certain foreign transaction fee conduct. But Judge Pauley said Citigroup had misread the agreement.

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Citigroup and Discover are the only two remaining defendants in the litigation, in which the plaintiffs claim the defendants' compulsory arbitration clauses prevented cardholders from seeking proper legal recourse for the companies' anti-competitive conduct and corporate misconduct.

The cardholders have argued the arbitration clauses would shield the defendants' misconduct from public view, as arbitration proceedings are often held privately and the outcomes are often confidential, adding that arbitration administrators are sometimes partial to credit card companies.

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