According to CNN, a California federal judge declined to dismiss a federal class action lawsuit against American Express, Discover, Mastercard, and Visa. The plaintiffs in the suit, four grocery stores in California, Florida, and New York, allege that the major credit card companies forced countless small businesses to adopt chip-readers for credit cards at their checkout counters. Many businesses would have preferred not to upgrade to these chip-readers due to the expense as well as the fact that many consumers find them confusing. According to the plaintiffs, the major credit card companies conspired amongst themselves, trade groups, banks, and select retailers to design terms that penalize businesses who don’t use these chip-readers – Stores that don’t install chip readers are held responsible whenever someone swipes a stolen credit card.
Banks previously shouldered this burden, and the lawsuit alleges that these harsh terms result from collusion among the major credit card companies. The plaintiffs assert that, but for this collusion, any individual credit card company could have offered the plaintiffs better terms relating to use of their services. Thus, they claim, such collusion is an unfair trade practice that disrupts free market competition.
As evidence of the collusion, the plaintiff grocery store owners point toward the fact that Visa’s CEO admitted to analysts in 2014 that Visa met with fellow credit card companies, trade groups, banks, and retailers to “come up with a plan” relating to introduction of these chip-readers. This fact surprised U.S. District Judge William Alsup, who has a history of trying antitrust cases as a lawyer – he claims that it is rare for a CEO to admit something so incriminating in a suit of this nature.
Should the class of small businesses in this case be certified, lawyers on the case estimate that up to 8 million small businesses across the United States might participate in the suit. They further estimate that damages could reach as much as $6 billion, the collective cost of upgrading to the chip system.
The federal Sherman Act makes illegal any “contract…or conspiracy in restraint of trade or commerce”. If you or someone you know has knowledge of a corporation or other entity acting in ways that disrupt free trade, resulting in financial harm to businesses or individuals, please contact our office.
On September 1, U.S. District Judge Edward Chen in San Francisco granted Uber drivers class action status in a lawsuit to determine the drivers’ classification as independent contractors or employees. There are many factors, including behavioral, financial, and type of relationship, that can determine whether a worker is considered an independent contractor or employee.
Three drivers are suing Uber, claiming they are employees and entitled to reimbursement for expenses — which include gas and car maintenance. The drivers currently pay those costs out of pocket.
Under the ruling, Judge Chen stated that drivers can sue as a group. This means the lawsuit may cover over 160,000 California drivers, which could provide plaintiffs with additional leverage to negotiate a settlement rather than going to trial.
According to Reuters Legal, “The results of Uber’s legal battle could reshape the sharing economy, as companies say the contractor model allows for flexibility that many see as important to their success. An ultimate finding that drivers are employees could raise Uber’s costs beyond the lawsuits’ scope and force it to pay Social Security, workers’ compensation, and unemployment insurance.”
In June 2015, a California labor commissioner ruled that an Uber driver was an employee, not a contractor. Uber appealed this decision.
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