New York Federal Court Holds That Meetings Related To Drafting Arbitration Clauses May Be Probative Of Antitrust Conspiracy Despite Decision Makers' Lack Of Knowledge

In In re Currency Conversion Fee Antitrust Litig., 2012 WL 401113 (S.D.N.Y. Feb. 8, 2012), Judge William H. Pauley III denied a motion for summary judgment by Defendants Discover and Citigroup after finding that a handful of meetings over four years by Defendants' in-house counsel related to drafting and implementing arbitration clauses was probative of an antitrust conspiracy. This was despite Plaintiffs' admitted paucity of evidence, overall weak circumstantial evidence, the absence of discussions of pricing terms, and the lack of knowledge about such meetings by Defendants' decision-makers.

Background Claims and Facts

Plaintiffs, holders of credit or charge cards, alleged that the issuing bank Defendants violated Section 1 of the Sherman Act by conspiring to include mandatory arbitration clauses in cardholder agreements and participating in a group boycott by refusing to issue cards to individuals who did not agree to arbitration.

From 1999 through 2003, in-house counsel from Defendants allegedly met several times and discussed arbitration clauses. Moving Defendants Citigroup and Discover allegedly only attended 3-5 meetings, possibly adopted their arbitration clauses prior to such meetings, and their executives with decision-making authority to implement the arbitration clauses had "no knowledge" of such meetings. In re Currency Conversion Fee Antitrust Litig., 2012 WL 401113, at *1-3. These two remaining Defendants moved for summary judgment, but the Court denied the motion because there were genuine issues of fact to be resolved at trial.

Legal Standards

The Court summarized the familiar antitrust summary judgment standards stated in Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 588 (1986) ("antitrust law limits the range of permissible inferences from ambiguous evidence in a § 1 case. ... [Thus, t]o survive a motion for summary judgment ... a plaintiff [alleging] a violation of § 1 must present evidence that tends to exclude the possibility that the alleged conspirators acted independently.") and Monsanto Co. v. Spray–Rite Serv. Corp., 465 U.S. 752, 764 (1984) (to survive summary judgment, Plaintiffs must proffer "direct or circumstantial evidence that reasonably tends to prove the [defendants] had a conscious commitment to a common scheme designed to achieve an unlawful objective.").

Defendants' adoption of arbitration clauses was sufficiently "parallel" conduct to be probative of an antitrust conspiracy.

The...