Skip to Content

The rise (and fall?) of credit-card arbitration clauses

Posted: February 10, 2012
By: Allison Frankel
Source: Thompson Reuters News and Insight
Practice Areas: Antitrust, Consumer Protection

Litigation over arbitration clauses is as ubiquitous as Marc Jacobs frocks at Lincoln Center during New York's Fashion Week. (Not a fashionista? Then let's just say we here at On the Case can't stop writing about plaintiffs trying to get around mandatory arbitration clauses.) But rarely do we stop to think about how such clauses became standard in consumer contracts.

An order issued Wednesday by U.S. District Judge William Pauley of Manhattan federal court tells the story -- or, at least, plaintiffs' version of the story -- of how arbitration clauses ended up in the contracts governing all those credit cards in your wallet. Pauley seems to believe it's an important tale. He refused to grant a motion for summary judgment by Citigroup and Discover, who asked him to dismiss class action claims that credit card companies engaged in collusion to make arbitration clauses the industry standard. If lead class counsel Merrill Davidoff of Berger & Montague continues to have things go his way, the post-trial outcome could be a removal of the credit-card arbitration clauses altogether.

View the full article here.