William M. Strom

Switch in Debate Saves the Eight

Atm-1524870_960_720By William M. Strom

On November 17, the U.S. Supreme Court dismissed its review of two related antitrust class actions involving ATM fees and, in an atypical move, explained its reason why. In each of the consumer class actions, Visa, Inc. v. Osborn (No. 15-961) and Visa, Inc. v. Stoumbos (No. 15-962), plaintiffs below had persuaded the D.C. Circuit to allow them to maintain antitrust challenges against credit card company rules preventing independent ATM operators from imposing lower fees for transactions processed on networks that are not owned by Visa or MasterCard.

Petitioners, the credit card companies and associated banks, had argued in their petition for certiorari that allegations of their participation in a business association were not enough to support an action for antitrust conspiracy, and that the D.C. Circuit decisions allowing the challenges to go forward created a direct conflict with the rule in the Ninth Circuit. Certiorari was granted on June 28, 2016, to resolve the question “[w]hether allegations that members of a business association agreed to adhere to the association’s rules and possess governance rights in the association, without more, are sufficient to plead the element of conspiracy in violation of Section 1 of the Sherman Act.” But after making changes to their legal team, petitioners argued in merits briefing that the credit card companies and banks were engaged in a joint venture—a single entity that is incapable of engaging in a conspiracy as a matter of law. The respondent class and the United States as amicus curiae argued in their briefs that petitioners’ shift in legal argument amounted to an abandonment of the position advanced in the petition for certiorari.

The Court agreed and dismissed the petition as improvidently granted. This permits the consumers’ class actions to proceed in the lower courts and leaves the question of Sherman Act liability for the activities of business associations open, at least until another case presents a more appropriate vehicle.

The U.S. Supreme Court’s order of dismissal can be found here. Additional coverage of the cases is available from SCOTUSBlog.

Proposed Health Insurance Consumer Class Denied TRO to Stop Anthem’s Alleged Plan-Switching

MedicalBy William M. Strom

On November 15, plaintiffs lost their TRO motion in a proposed consumer class action alleging that Anthem Blue Cross of California made unannounced benefits cuts for renewing health insurance customers who purchased from Anthem or from the state’s health insurance exchange, Covered California.  Plaintiffs contend that Anthem is switching health insurance customers without warning from Preferred Provider Organizations (PPOs), which cover some out-of-network services, to Exclusive Provider Organizations (EPOs), which offer no out-of-network coverage, in violation of the federal Affordable Care Act (ACA) and California state consumer protection law.  Plaintiffs cite notices Anthem sent to many of its California customers earlier this year assuring customers that their plans would be renewed if they took no action.  In truth, plaintiffs allege, Anthem will switch these customers from PPOs to EPOs.  As a result of these switches, say plaintiffs, some health insurance customers will lose access their physicians.  Plaintiffs seek a court order requiring Anthem to keep customers’ existing health insurance plans in place.

Judge John Shepard Wily, Jr., of the Superior Court of California, Los Angeles County, denied plaintiffs’ motion for TRO on the ground that plaintiffs had yet to suffer injury due to the health-plan changes, which are not scheduled to take effect until January. Plaintiffs have not filed a notice of appeal to date.  Anthem spokesperson Darrel Ng said that the company was pleased with the court’s decision and that state regulators have approved Anthem’s policy changes.

The case is Simon v. Blue Cross of California, Superior Court of California, Los Angeles County, No. BC639205. Click here to read the L.A. Times’ report on the case.