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Bank of America

Posted: December 15, 2009
Practice Areas: Environmental & Mass Tort

PHILADELPHIA, Dec. 15 /PRNewswire/ -- Berger & Montague, P.C. announces a tentative settlement with Bank of America, N.A. and a related company in a 4-year-old lawsuit accusing Bank of America and other credit card companies of unlawfully colluding to require cardholders to arbitrate disputes, including debt collections. The settlement is subject to court approval. The lawsuit remains pending against Capital One, Citibank, Discover, HSBC and the National Arbitration Forum in the United States District Court for the Southern District of New York, as Ross, et al. v. Bank of America, N.A., et al., No. 05-cv-7116 and was brought as a part of In re Currency Conversation Fee Antitrust Litigation, MDL No. 1409, also in the same court. A prior tentative settlement was announced with Chase in November.

Under the tentative settlement, Bank of America will drop the arbitration clause and class action ban from its consumer and small business credit card agreements for at least 3-1/2 years beginning in 2010. Bank of America will also immediately stop enforcing the existing arbitration clauses against cardholders. Bank of America further agrees not to "contract, combine or conspire" with any other credit card company concerning arbitration. Finally, Bank of America will make a payment toward statutory attorneys' fees, costs and expenses. Plaintiffs will release Bank of America from liability for placing arbitration clause in its cardholder agreements. Bank of America will not be released for claims stemming from actual arbitration proceedings.

Bank of America and Chase deny all wrong-doing.

The lawsuit had accused Bank of America, Capital One, Chase, Citibank, Discover, HSBC and others of having secretly met or consulted some 30 times for the purpose of requiring cardholders to arbitrate all disputes with credit card companies in violation of the antitrust laws. Arbitration is an out-of-court dispute procedure where cases are heard, often in secret, by private arbitrators. Consumer advocates criticize credit card arbitration as biased and lacking many safeguards found in court proceedings that protect consumers from over-reaching by businesses. One purpose of the conspiracy, according to the lawsuit, was to prevent class actions from being brought against these card issuing banks. The lawsuit was initially dismissed by the district court but subsequently reinstated by the Court of Appeals. The lawsuit is a class action brought on behalf of the cardholders of the defendant credit card companies. In June, the case was amended to add the National Arbitration Forum as a defendant.

Other counsel for plaintiffs include Coughlin Stoia Geller Rudman & Robbins LLP, Hulett Harper Stewart LLP and Scott + Scott LLP, all of San Diego, California

CONTACT: Berger & Montague, P.C. Merrill G. Davidoff, Esq.

1622 Locust Street

Philadelphia, Pennsylvania 19103