Kia Franklin

NY Reinstates Credit Card Lawsuit

If you don't like pre-dispute, binding mandatory arbitration in credit card agreements, just go with a company that doesn't require it...

Um, yeah, that's what these guys tried to do. They couldn't, so they pursued justice through the civil courts.

From Newsday, a lawsuit reminiscent of Maxed Out, the movie and the book. The gist: credit card holders sued a bunch of banks, including Bank of America, Capital One Bank, J.P. Morgan Chase & Co., Citigroup Inc., Citibank, Universal Bank and MBNA America Bank, alleging collusion to universally impose pre-dispute binding mandatory arbitration on credit card holders. The class action plaintiffs sought a court order telling the banks to stop imposing bma on consumers (injunctive relief), invalidating those that are already in force, and ordering the banks to withdraw any current arbitration actions raised under these binding mandatory arbitration agreements.

These consumers assert that by conspiring to impose binding mandatory arbitration on consumers, the banks inflicted anti-trust injury. They're basically saying that the credit card companies killed market-based competition amongst these big card companies, limited consumers' choice by eliminating their ability to shop around for non-bma cards, and diminished the quality of the service provided by reducing an effective incentive for banks to treat customers fairly.

Well, the class action was filed in 2005, then squashed, and now it has been reinstated by the New York State Court of Appeals.

Civil justice system: one point.

Kia Franklin: Author Bio | Other Posts
Posted at 4:11 PM, Apr 25, 2008 in Arbitration | Consumer Rights
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Posted by: Shelley | April 25, 2008 5:34 PM

Not the New York State Court of Appeals, it was the U.S. Court of Appeals for the Second Circuit.

And the plaintiffs haven't won the lawsuit, just the right to pursue it. They will still have to prove that the banks colluded instead of all deciding to do this independently.

Posted by: Elliot | April 25, 2008 7:31 PM

The gist: credit card holders sued a bunch of banks, including Bank of America, Capital One Bank

Posted by: friendcredit | April 25, 2008 9:52 PM

The gist: the Second Circuit decided to ignore the Supreme Court decision in Twombly, and let a meritless lawsuit go forward; attorneys will be able to inflict millions of dollars of legal expenses on banks in the hopes of extorting a settlement before the banks successfully move for summary judgment.

Posted by: Ted | April 26, 2008 5:45 AM

"...; attorneys will be able to inflict millions of dollars of legal expenses on banks..."

No. Banks are fictitious entities. They have no feelings, don't care about litigation, and pass on all costs. The money comes from the real public, every penny.

Posted by: Supremacy Claus | April 26, 2008 4:00 PM

Dr. T brings up another point. Equal pay for equal training.

I find it offensive that a pediatrician at the level of a new partner makes half the lawyer's salary at the level of an intern or resident. A med student has examined hundreds of patients, written orders, assisted in operations, done emergency work for 2 years prior to graduation from school. The law student has never written a demand letter in anger, has zero experience in the real world. Yet, they make $24,000 for summer jobs, and $160,000 upon graduation. There is something shady going on. For example, the fee to the client for any work done by an associate, the equivalent of a medical intern should be $80 plus overhead cost. If the work gets charged under a partner's name or at the same rate as that of a partner, consumer fraud has taken place.

Posted by: Supremacy Claus | April 27, 2008 7:29 AM