Second Circuit Refuses to Stay Injunction During American Express Appeal

On Tuesday, the U.S. Court of Appeals for the Second Circuit rejected American Express Co.’s request to stay an injunction ordered by a judge in the Eastern District of New York which prevented Amex from imposing certain anti-steering rules on merchants. U.S. et al. v. American Express Co., et al., Case No. 15-1672. In 2010, the U.S. Department of Justice brought suit against Amex alleging that the anti-steering rules were anticompetitive, and, after a seven week trial held during the summer of 2014, District Judge Nicholas Garaufis agreed. Case No. 1:10-cv-04496. In February 2015, using a rule-of-reason analysis, Judge Garaufis, determined that the policies caused an adverse effect on competition and, thus, violated the Sherman Act. On April 30, 2015, he entered an injunction to “allow[] Merchants to attempt to influence the [credit card] that a Customer uses.” Therefore, the injunction prohibited Amex from adopting or enforcing any rule that prevented merchants from offering discounts or incentives to customers for using a particular card; from promoting the use of a particular card; from expressing a preference for the use of a particular card; or from explaining to the customer the costs that the merchant incurred by the use of a particular card (Order Entering Permanent Injunction as to the American Express Defendants at 5-6 (No. 638)). Amex appealed Judge Garaufis’s ruling to the Second Circuit. It also asked the Second Circuit to stay the injunction pending the appeal, arguing that the injunction would cause irreparable harm to Amex through the loss of sales and market share. The request was denied.