Subscribe Subscribe   Find us on Twitter Follow POL on Twitter  



Amex Wins National Class Action Trial

Class actions, as is well known, are often filed as cudgels to persuade corporate defendants to settle (with little for the class but much for the class's attorneys) to avoid the expense and reputational 'hit' of a trial. Those class actions that are not settled are sometimes dropped, as if the defendant called the plaintiff's bluff.

But the class action against American Express, accusing the credit card company of overcharging 7.5 million current and former American Express cardholders who purchased travel insurance, produced a trial that lasted a whopping seven weeks. This trial [Hoffman v. American Express Travel Related Services Co. Inc., No. 01-022881 (Alameda Co., Calif., Sup. Ct.). ] has just resulted in a summary judgment for Amex, which did not have to put on a defense. Judge George Hernandez of the California Superior Court in Fremont, Calif., ruled on March 26, after hearing 11 weeks of testimony from the class of cardholders in a nonjury trial, that the cardholders failed to prove their case.

The suit had alleged that American Express overbilled on travel insurance for cardholders who charged flights on their charge cards and that it allegedly used deceptive marketing of the program that misrepresented or was unclear about how the system worked.

Amex charged a fee for airline travel purchased on its charge card and would sweep in inappropriate insurance charges for flights consumers later canceled, seat upgrades and baggage fees. Consumers were given the opportunity to seek refunds through a form provided by the company or by calling for a refund. The suit alleged that American Express deceptively marketing the program -- of this Judge George Henderson found no evidence. In a previous phase of the trial Judge Henderson found as a matter of law that the Amex agreement was not unclear, so only the fraud charge remained for this trial.

Perhaps this will lead to more class action trials where warranted. This is a result I would applaud.

Related Entries:



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.