Rejected $79M AmEx settlement was 'fatally tainted' by lawyer's conduct, judge rules
Last year, a federal judge gave preliminary approval to a proposed $79 million settlement in an antitrust class action between American Express Co. and merchants over credit-card transaction fees.
But that was before U.S. District Judge Nicholas Garaufis found out about emails between one of the lead lawyers for the plaintiff merchants and an attorney who at the time was a partner at a BigLaw firm representing MasterCard Inc. in another case involving many of the same merchants.
In an opinion released Tuesday in the Brooklyn, New York, case, Garaufis nixed the settlement and axed the lead attorney, reports the Wall Street Journal (sub. req.) The court “concludes that the improper and disappointing conduct of co-lead class counsel Gary B. Friedman has fatally tainted the settlement process,” the judge wrote.
The judge said the conflict of interest and violation of confidentiality provisions demonstrated by the emails were so clearcut that Friedman wrote “burn after reading” in at least two of the emails, reports Reuters.
Friedman’s counsel could not immediately be reached for comment, the articles say. It isn’t clear from news coverage what will likely happen concerning some $75 million in attorney’s fees that were to be paid to Friedman and other plaintiffs’ law firms under the settlement.
In a written statement, AmEx said it was disappointed by the ruling and thought the proposed settlement was fair to merchants. They would not have received money under the settlement, but would have been allowed to impose a surcharge on AmEx card users, Reuters reports.
Related coverage:
ABAJournal.com: “Merchants say lawyer should lose $32M fee award over alleged email contact with opposing counsel”
