Free Complaint - District Court of California - California

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Matthew S. Hale, Esq. HALE & ASSOCIATES Calif. State Bar No. 136690 45 Rivermont Drive Newport News, VA 23601 Mailing Address: P.O. Box 1951 Newport News, VA 23601 Telephone No. (757) 596-1143 E-Mail: [email protected] Attorney for Plaintiffs, DAVID J. LEE and DANIEL R. LLOYD UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA DAVID J. LEE, and DANIEL R. LLOYD, ) ) as individuals and, on behalf of others ) similarly situated, ) ) ) Plaintiffs, ) ) vs. ) ) ) AMERICAN EXPRESS TRAVEL ) RELATED SERVICES, INC., a New York ) corporation, AMERICAN EXPRESS ) CENTURION BANK, a Utah corporation, ) AMERICAN EXPRESS BANK, FSB, a ) Utah corporation, and DOES 1, through ) 100, inclusive, ) ) ) ) Defendants. ) ) ) ) ) )
1 David J. Lee et al. v. American Express Travel Related Services, Inc., et al., Complaint

Case No.: C 07-4765 CRB Complaint For: Injunctive And Restitutionary Relief Arising From Violation Of California Bus. & Prof. Code §§ 17200, et seq.; Injunctive and Restitutionary Relief, Punitive Damages Arising From Violation of California Civil Code § 1770 (a)(19); Fraud And Deceit; And, Declaratory Judgment CLASS ACTION

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Plaintiffs allege: I. Introduction 1. The action deals only with American Express charge cards and credit cards,

respectively, for which an annual fee is paid by the card holder and with American Express Gift Cards and Be My Guest Dining Cards {"Dining Card"), respectively, which are purchased for a fee. It presents three overarching issues: (a) Did American Express commit fraud in the inducement of the card holder

agreement arising from its practices and knowing misrepresentations as to the legality and conscionability of the card agreements or portions thereof (excluding the arbitration provision) that were relied upon by Plaintiffs and the persons whom they seek to represent in entering into the agreement and making fee payments thereunder? (b) As a separate matter, do the card holder agreements drafted by American

Express (and excluding any reference to the arbitration provisions they contain) contain unconscionable and illegal terms in violation of various California consumer protection statutes entitling Plaintiffs to statutory remedies? (c) Is the arbitration provision drafted and inserted by American Express in its

card agreements (without reference to the unconscionability of the card agreement itself) unconscionable or illegal, and thereby in violation of various California consumer protection statutes entitling Plaintiffs to statutory remedies? In each instance and as a result of the unconscionability and illegality of the arbitration provision and entire agreement, respectively, that make one or both unenforceable, the feepaying card holder suffered damage by receiving something worth monetarily less than that for
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which he/she contracted and paid (as well as by the loss of use of the fee following its payment). In the context of California's consumer protection laws, Plaintiffs were thereby damaged and suffered an "injury in fact" and a "loss of money or property" entitling them to statutory relief. In the context of the fraud cause of action which is made only with regard to the agreement as a whole (excluding the arbitration provision), 1 receiving less than that for which they paid is the requisite injury necessary to give rise to a right of rescission and restitution, in whole or part, of the fees paid. 2. The payment of the fee for the respective card(s) provides Plaintiffs and similarly

situated persons a contractual right to mandatory arbitration that has pecuniary value: i.e., the right to demand (pursuant to an enforceable arbitration agreement) mandatory arbitration of any "claim" they have against American Express and the business/person supplying the goods or services for which payment was made using the charge card or the credit card or the gift card or the dining card. However, the card holder received something worth monetarily less than that for which he/she paid because of the unconscionability and illegality of American Express' arbitration provision (an amount to which the value of the loss of the use of money paid as fees must be added): e.g., rather than getting a legal and enforceable arbitration provision that endows the card holder with the contractual and legal right to invoke mandatory binding arbitration, they got only an unconscionable and illegal (and thereby unenforceable and invalid) arbitration provision that they can not, as a matter of fact and law and public policy, invoke or use against any one. That is the an "injury in fact" and results in a "loss of money" (which does not constitute recompensable "damages" since "damages" are not allowed under the UCL and

Unless otherwise specified, reference to the "card agreement" or "card agreement in whole" shall refer to and mean "card agreement 2 (excluding the arbitration provision."
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are not sought under the CLRA causes of action) mandating that statutory restitution and injunctive relief be ordered. Relatedly and as a result of a recent amendment to the arbitration provision unilaterally imposed on them by American Express, charge card/credit card/gift/dining card card holders now get even less than that for which they paid since, under that amendment, if any one of specified terms imposed by American Express in its "Restrictions" section (such as the class action waiver, the injunction waiver, the non-consolidation of arbitral claims condition) are successfully challenged and declared to be invalid and unenforceable then the arbitration provision itself provides that the arbitration provision "shall not apply." As a result, rather than getting an enforceable and conscionable arbitration provision they get only a Hobson's Choice: i.e., in order to demand arbitration the card holder must either acquiesce to the use of an unconscionable and illegal arbitration provision (a matter which is against public policy and the law, and which also waives not only their right to object to its unconscionability but the various non-waiveable rights they are given by California law and policy), or have no enforceable right to demand arbitration at all. In each instance, Plaintiffs and similarly situated persons thus suffer not only an "injury in fact" but also a "loss of money or property" as a result of the provision's unconscionability and illegality that also entitle them to statutory restitution and injunctive relief. 3. The scheme from which Plaintiffs' "injury in fact" and resultant monetary loss results

with regard to the arbitration provision is the systematic and continuing violation of California's consumer protection laws resulting from the unconscionability and illegality of its terms. The terms of that provision and, indeed, the provision itself is unconscionable and illegal in that it:

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was imposed on all card holders on a "take it or leave it" basis with no

opportunity by the card holder to negotiate any term thereof; was contained in an adhesive form agreement prepared by American

Express and concerning which American Express was in a much stronger bargaining position than the card holder; provides that all claims "shall be arbitrated on an individual basis" and

that no claim "may be arbitrated on a class action basis or on bases involving Claims brought in a purported representative capacity on behalf of the general public, other Cardmembers [or "gift cardholders" or "dining cardholders"] or other persons similarly situated" in a context where predictably only "small" amounts of money are involved (the fee) and as part of a scheme to deliberately cheat large numbers of its card holders out of the individually "small" amounts represented by the fees paid for the card; provided, until 2005, relative to credit cards and charge cards that an

arbitration is mandated of "any claim, dispute, or controversy arising from or relating to your Account; this Agreement ... and any other related or prior agreement that you may have had with us, or the relationships resulting from any of the above Agreements (`Agreements'), including the validity, enforceability or scope of this Arbitration Provision or the Agreements"; provides with regard to the gift card and the dining card that an arbitration

is mandated of "any claim, dispute, or controversy arising from or relating to your Account; this Agreement ... and any other related or prior agreement that you may have had with us, or the relationships resulting from any of the above

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Agreements (`Agreements'), including the validity, enforceability or scope of this Arbitration Provision or the Agreements"; provides that "claims brought by you against us, or by us against you, may

not be joined or consolidated in arbitration with Claims brought by or against someone other than you" in a context where predictably only "small" amounts of money (the fee) are involved and as part of a scheme to deliberately cheat large numbers of its card holders out of the individually "small" amounts represented by the fees paid for the card; provides a description of the term "us" relating to the non-card holder

parties by whom or against whom a claim can be made that must be arbitrated is so vague and overbroad that it is patently insufficient to establish any reasonable expectation or knowledge of the cardholder as to what matters and persons are covered by the agreement; provides that no injunctive relief may ever been given in that relief under

the agreement can be made only on "an individual basis" not involving "the general public" since the decision maker's "authority is limited to claims between you and us [Defendants and amorphous others] alone" in which relief "is limited to awards to you and us alone. ...."; provides that all "claims of every kind and nature, including but not

limited to, initial claims, counterclaims, cross-claims and third-party claims and claims based upon contract, tort, fraud and other intentional torts, statutes, regulations, common law and equity" must be arbitrated;

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provides that in arbitration "[a]ny Claim shall be resolved ... by

arbitration pursuant to this Arbitration Provision and the code of procedure of the national arbitration organization to which the Claim is referred in effect at the time the Claim is filed. Claims shall be referred to either the National Arbitration Forum (`NAF') or the American Arbitration Association (`AAA') [and with regard to the dining card only, JAMS" without providing the card holder with copies of the rules of those organizations or specifying which of several code of procedure applies to the arbitration; provides no alternative means by which some other arbiter or arbitral

organization may be chosen by the card holder; provides that "[t]he arbitration shall be governed by the applicable Code,

except that (to the extent enforceable under the FAA) this Arbitration Provision shall control if it is inconsistent with the applicable Code" but fails to advise of any specific inconsistency those codes may have with the Arbitration Provision; provides no way for the card holder to know at the time he/she initially

agreed to arbitrate what the rules would be at the time of the arbitration as well as what inconsistencies existed between the agreement and the Code because American Express has given itself the unilateral right to amend the arbitration provision at any time (including before, during, or after any arbitration) and the arbitration provision otherwise makes the applicable arbitration rules those in effect when the arbitration is filed; provides that "[n]o arbitrator's award or decision will have any preclusive

effect as to issues or claims in any dispute with anyone who is not a named party
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to the arbitration" which is against public policy by denying any mutual collateral estoppel or precedental value to any decision rendered against American Express; provided, until 2005, that "[i]f any portion of this Arbitration Provision is

deemed invalid or unenforceable under any principle or provision of law or equity, it shall not invalidate the remaining portions of this Arbitration Provision or the Agreement, each of which shall be enforceable regardless of such invalidity" even though all determinations as to severability of the provision is a matter exclusively reserved for the Courts; provides since 2005 that "should any portion of the "Restrictions on

Arbitration' [section containing the class action waiver, the injunction waiver, the no consolidation of arbitral claims term] be deemed invalid or unenforceable, the entire Arbitration Provision (other than this sentence) will not apply" even though all determinations as to severability of the provision is a matter exclusively reserved for the Courts; and, provides only a vague and overbroad statement of what effect arbitration will

have on the legal rights of card holders. 4. The unconscionable and illegal terms of the arbitration provision is a continuing act or

practice: (a) in violation of California's Unfair Competition Law, Bus. & Prof. Code §§ 17200, et seq. ("UCL"), on the basis that the arbitration provision and its terms are unlawful and unfair; and, (b) in violation of California's Consumer Legal Remedies Act, California Civil Code § 1770(a)(19) ("CLRA"), which makes insertion of an unconscionable provision in a contract an unlawful act. Plaintiffs, on behalf of themselves and/or all other similarly situated consumers and residents, respectively, in California are thus entitled to: (1) a Declaratory Judgment

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declaring the arbitration provision to be unconscionable, illegal and unenforceable, and severable from the remainder of the card agreement; (2) statutorily authorized injunctive and restitutionary relief (including disgorgement of profits) as to the UCL causes of action; (3) statutorily authorized injunctive and restitutionary relief, and punitive damages as to the CLRA causes of action; (4) prejudgment interest; and, (5) attorney's fees (including costs) specifically authorized by the CLRA, and otherwise available in UCL causes of action under the laws and precedents of California. 5. The claim regarding the card agreement as a whole (excluding its arbitration provision)

centers on its inclusion of a variety of terms that are unconscionable and illegal under controlling California and Ninth Circuit law as well as American Express' fraud in inducing card holders to enter the agreement and make payment thereunder. Having paid a fee for that agreement and the rights created thereby, Plaintiffs and similarly situated persons have received something worth monetarily less than that for which they paid: they received only an

unconscionable and unenforceable agreement or terms rather than enforceable and conscionable ones. That creates an "injury in fact" and a resulting "loss of money." On the one hand and reflecting the misrepresentations made by American Express that are of a nature calculated to induce the making of a contract and payment and display a lack of fair dealing, the inclusion of those unconscionable or illegal terms gives rise to a non-statutory cause of action for fraud and deceit that, due to the permeation of the unconscionable terms, requires non-statutory rescission of the agreement as a whole and common law restitution of the fees paid. These unconscionable terms include, in addition to the adhesive nature of the contract itself, such matters as American Express' unilateral right to change any term of the agreement at its will and without any reason (which is denied to the card holder), American Express' unilateral right to take any action

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without waiving its rights under the agreement which is denied to the card holder, and its statement that the laws of Utah (in the case of the charge card and credit card) or New York (in the case of the gift card and dining card) are the controlling laws. On the other hand, the inclusion of those unconscionable and illegal terms in the agreements (without consideration of any fraud in inducing the agreements) is an unlawful and unfair practice, respectively, that has, is and continues to occur: (a) in violation of UCL on the basis that the unconscionable terms are illegal and unfair; and, (b) in violation of the CLRA, which makes insertion of an unconscionable provision in a contract an unlawful act. Similar to the arbitration provision, the card holder simply gets less than that for which he paid due to the inclusion of these unconscionable terms and conditions which, alone or in tandem, render the agreement itself unconscionable and thereby suffers an "injury in fact" and a resulting loss of money. With regard to the consumer statute causes of action, Plaintiffs, on behalf of themselves and/or all other similarly situated consumers and residents, respectively, in California are entitled to: (1) a Declaratory Judgment declaring the card agreement to be unconscionable, illegal and unenforceable; (2) statutorily authorized injunctive and restitutionary relief (including disgorgement of profits) as to the UCL causes of action; (3) statutorily authorized injunctive and restitutionary relief, and punitive damages as to the CLRA causes of action; (4) prejudgment interest; and, (5) attorney's fees (including costs) specifically authorized by the CLRA, and otherwise available in UCL causes of action under the laws and precedents of California.

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II. The Parties 6. Plaintiff David J. Lee ("Lee") is an individual who, at all relevant times herein

mentioned, resided in the City of Kentfield, Marin County, State of California and, hence, within the geographic boundaries of this District Court. 7. Plaintiff Daniel R. Lloyd ("Lloyd") is an individual who, at all relevant times herein

mentioned, resided in the City of Paso Robles, San Luis Obispo County, State of California. 8. Plaintiffs respectively bring this as a class action composed of all similarly situated

consumers (as to the CLRA causes of action) and "persons" (as to all other causes of action) residing in the State of California more fully described in paragraph 140 below. 9. Defendant American Express Travel Related Services Company, Inc. ("Card") is a New

York corporation whose principle place of business is located in the State of New York. 2 It is a wholly owned subsidiary of the American Express Company and is the parent company of American Express Centurion Bank and American Express Bank, FSB, respectively. During some or all of the periods mentioned herein, it has been or is, among other things, in the business of opening American Express charge card accounts with individuals and/or business entities for which an annual fee is paid. It also issues and receives payment for American Express gift cards and dining cards. Card is authorized to conduct business within the State of California. 10. Defendant American Express Centurion Bank ("Centurion Bank") is a Utah corporation,

having it only two offices located in Utah (with no offices located in any other State). It is a wholly owned subsidiary of Card and is, among other things, in the business of issuing Unless otherwise specified, all Defendants are referred to collectively as "American Express." 10
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American Express charge cards and credit cards to persons and/or business entities. As relevant here, at the present time it issues the following American Express charge cards for which an annual fee is paid: American Express Preferred Rewards Green Card, American Express

Preferred Rewards Gold Card, American Express Rewards Plus Gold Card, American Express Platinum Card, and the American Express Centurion [Black] card. It is not authorized to conduct business within the State of California. 11. Defendant American Express Bank, FSB ("FSB"), is a wholly owned subsidiary of

Centurion Bank and is a "d.b.a" for Centurion Bank. Its headquarter is located in New York City, New York. It is also a wholly owned subsidiary of Card pursuant to the Supplemental Servicing Agreement of June 30, 2004 between, among other American Express-related entities, Card and Centurion Bank. At the close of business on April 16, 2004, Centurion Bank sold a portion of its charge and credit card account portfolio to FSB. As relevant here and without limitation, at the present time it issues the following American Express credit cards for which an annual fee is paid: Delta Sky Miles card, Gold Delta Sky Miles card, Platinum Delta Sky Mile card, Skypoint Credit Card of Delta and American Express, Jetblue Card from American Express, One from American Express card, and Starwood Preferred Credit Card from American Express. FSB also issues the following American Express charge cards to persons and/or business entities for which an annual fee is charged: Business Gold Rewards Card, Business Platinum Card, American Express Corporate Card, American Express Business ExtrAA Corporate Card, Corporate Platinum Card, and Executive Corporate Card. Plaintiffs are

informed and believe, and on that basis allege, that FSB is not authorized to do business in California.

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12.

The true names and capacities of the defendants sued herein as Does 1 through 100 are

unknown to Plaintiff who therefore sues them by such fictitious names. Plaintiff will amend this complaint to allege the true names and capacities of these defendants when they have been determined. Each of the fictitiously named defendants is responsible in some manner for the acts alleged herein. 13. At all times mentioned in the causes of action alleged herein, each and every defendant

was an agent and/or employee of each and every other defendant. In doing the things alleged in the causes of action stated herein, each and every defendant was acting within the course and scope of this agency or employment and was acting with the consent, permission and authorization of each of the remaining defendants. All actions of each defendant as alleged in the causes of action stated herein were ratified and approved by every other defendant or their officers or managing agents, and by agreeing to actively conceal the true facts regarding the acts and omissions, as alleged herein, engaged in conspiratorial conduct with each other. III. Jurisdiction and Venue 14. Since Plaintiffs on their own behalf and on behalf of similarly situated consumers and

residents of California, respectively, are requesting restitutionary relief, statutory restitutionary relief (including disgorgement of profits), punitive damages, and prejudgment interest totaling an amount in excess of $5,000,000.00, jurisdiction arises under 28 U.S.C. § 1332 (diversity). 15. Venue is proper in this Court pursuant to 28 U.S.C. § 1391 because: the products at

issue are advertised, promoted, sold and used in the geographic parameters of the United States District for the Northern District of California; Defendants have received substantial compensation from the sale of the products at issue in this District by engaging in acts and

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practices that constitute unfair competition and violation of law within this District and which had an effect in this District; and, Plaintiff Lee is a resident of this District. IV. The Facts A. The Facts Concerning American Express Cards: Charge, Credit, And Gift 16. As relevant here, American Express issues four different kinds of cards: (a) charge cards for which an annual fee is paid by the card holder, that require all charges to the card be due and payable when the monthly billing statement is received, and that has no credit or revolving credit feature (a fee may be charged for late payments, usually $35 or 2.99% of the unpaid monthly balance depending upon State law); (b) credit cards upon which an annual fee is charged but which are revolving credit instruments that do not need to be paid off in full at the end of the monthly billing cycle, upon which no late fee is charged as long as the minimum payment is timely made but which charges a late fee when payment is untimely, and which carries a balance forward as a loan charging interest; (c) gift cards which are a prepaid payment device that comes with a set dollar value printed on the front of the gift card, and which is not a credit card, charge card or debit card; and, (d) "Be My Guest Dining Cards which are a prepaid payment device that comes with a set dollar value printed on the front of the card, and which is not a credit card, charge card or debit card. A true and correct copy of the official American Express Internet website page listing the various "personal" "charge" and "credit" cards, respectively, issued by American Express
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(which

can

be

found

at

http://www201.americanexpress.com/apply/Fmacfservlet?csi=0/0/b/12&us_nu=dd ) is Exhibit 1 hereto and incorporated herein by reference. Charge cards and credit cards are necessities in today's world: they are required to rent a car, reserve an airline ticket, stay at a hotel, make a purchase on the Internet, or cash a third-party check at many banks. 17. American Express charge cards, credit cards, gift cards, and dining cards, respectively,

are means of and used to obtain goods and/or services (including services furnished in connection with the sale or repair of goods) from any person or business who accepts the respective card in payment for the goods or services provided. So-called "business" cards may be and are used to this end. 18. The American Express charge card does not involve "credit" and the purchase of a

cardmembership purchases and provides only a "convenience service" for the card holder. The charge card has distinct advantages over cash, checks, and other means of payment: the

convenience use it provides minimizes the need to carry cash, allows the card holder to defer payment for a short time (until receipt of the monthly billing statement), and establishes a favorable payment record that is important in financial evaluations. 19. The purchase of a cardmembership (for which a fee is paid) relative to a credit card

purchases and provides, at least in great part, a "convenience service" even when "credit" can be implicated if the monthly balance is not paid in full upon receipt of the monthly billing statement. It provides a means of payment which leaves the option open to the card holder to either pay his/her monthly statement in full upon its receipt (and thus not incur any interest indebtedness or otherwise use the "credit" service of the card) or to not pay the bill in full and use the revolving credit feature. Regardless of which option is chosen by the card holder, the

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use of the credit card has distinct advantages over cash, checks, and other means of payment: i.e., the credit card not only minimizes the need to carry cash and allows the user to defer payment and establish a favorable credit history but also, importantly, increases the card holder's ability to purchase goods and services and in so doing avoid the red tape involved in obtaining a personal loan. Plaintiffs are informed and believe, and on that basis allege, that

some holders of credit cards do, from time to time or all of the time, pay the monthly balance in full upon receipt of the monthly billing statement and do not avail themselves of the credit feature of the card. 20. Plaintiffs are informed and believe, and on that basis allege, that American Express

maintains records identifying ­ for at least the last four years preceding the filing of this Complaint -- each holder of a specific credit card, charge card, gift card or dining card and their current/last known address, the amount of fees paid by him/her, the date(s) upon which a card was issued to that person, the charges made by that person on his American Express card, and other means by which each card holder (including persons purchasing Gift Cards and Dining Cards) may be identified. 21. The purchase of an American Express Gift Card purchases and provides a convenience

service since it can be used at retailers, restaurants, amusement parks, sporting events, movie and other theaters, spas, salons and certain other merchants that are located in the United States and that accept the American Express Card, including mail order, online and brick and mortar establishments. It cannot be used at car rentals, cruise lines, for recurring billing purchasers, or at casinos or ATMs. The purchase of an American Express Dining Card purchases and provides a convenience service as well since it can be used not only for dining at restaurants but, according to the official American Express website, can now be used for the same purposes as a

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Gift card. Both the Dining Card and the Gift Card have distinct advantages over cash, checks, and other means of payment: the convenience use it provides minimizes the need to carry cash or checks or in any way incur indebtedness of any type (including credit). 22. 1958. The first American Express travel charge card was introduced on or about October 1, In 1966 American Express introduced the Gold Card and in 1984 the Platinum Card,

both of which were charge cards. In 1987, American Express introduced the Optima card, its first revolving credit credit card product, which was followed in 1999 by the Blue credit card. During the period from 1987 to the present, American Express has introduced a number of credit cards (requiring payment of an annual fee but also involving revolving credit) that were co-branded with various business entities such as Delta Airlines, Jetblue Airlines, and Starwood Hotels. 23. Upon information and belief, Plaintiffs allege that American Express has currently

approximately 40,000,000 charge card and credit card accounts in the United States, approximately and at least ten (10) per cent of which are issued to California consumers and/or residents, respectively. Upon information and belief, Plaintiffs further allege that American

Express receives a "merchant fee" for each charge made on the card, payable by the merchant based on a percentage of the sales price. 24. During some or all of the four years preceding the filing of the Complaint and three

years preceding the filing of the Complaint, respectively, American Express issued "personal" charge cards at the following annual fees: (a) The American Express Card (Green) -- $95.00 annual fee, $30.00 annual fee each for up to 5 additional cards. A true and correct copy of the American Express Internet website page containing the "Terms and Conditions" obtaining to

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this

charge

card

which

can

be

found

at

https://www201.americanexpress.com/cards/Applyfservlet?csi=70/0/b/10/undefin ed/undefined/undefined/undefined&mgmID=undefined is Exhibit 2 hereto and is incorporated herein by reference; (b) American Express Gold Card -- $125.00 annual fee, $35.00 annual fee each for additional cards. A true and correct copy of the American Express Internet website page containing the "Terms and Conditions" obtaining to this charge card which can be found at

https://www201.americanexpress.com/cards/Applyfservlet?csi=76/0/b/10/undefin ed/undefined/undefined/undefined&mgmID=undefined is Exhibit 3 hereto and is incorporated herein by reference; (c) American Express Rewards Plus Gold Card -- $150.00 annual fee. A true and correct copy of the American Express Internet website page containing the "Terms and Conditions" obtaining to this charge card which can be found at https://www201.americanexpress.com/cards/Applyfservlet?csi=13/0/b/10/undefin ed/undefined/undefined/undefined&mgmID=undefined is Exhibit 4 hereto and is incorporated herein by reference; (d) American Express Platinum Card -- $450.00 annual fee, $175.00 annual fee each for additional 3 cards, $45 annual fee for each additional card. A true and correct copy of the American Express Internet website page containing the "Terms and Conditions" obtaining to this charge card which can be found at https://www201.americanexpress.com/cards/Applyfservlet?csi=17/0/b/10/undefin

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ed/undefined/undefined/undefined&mgmID=undefined is Exhibit 5 hereto and is incorporated herein by reference; (e) Fidelity American Express Platinum Card -- $450.00 annual fee, $175.00 annual fee each for additional 3 cards, $45.00 annual fee for each additional card. A true and correct copy of the American Express Internet website page containing the "Terms and Conditions" obtaining to this charge card which can be found at https://www201.americanexpress.com/cards/Applyfservlet?csi=17/11516/b/10/0/ 0/0/n&from=2 is Exhibit 6 hereto and is incorporated herein by reference; (f) Centurion Card (Black) -- $5,000 initial issuance "relationship" fee, $2,500 annual fee. 25. During some or all of the four years preceding the filing of the Complaint and three

years preceding the following the filing of the Complaint, respectively, American Express issued "business" and "corporate" charge cards. A true and correct copy of the official

American Express Internet website page listing the various "business" "charge" and "credit" cards, respectively, issued by American Express (which can be found at

http://www201.americanexpress.com/sbsapp/FMACServlet?request_type=CompareAll&us_nu= dd) is Exhibit 7 hereto and incorporated herein by reference. These charge cards were issued with the following annual fees were charged: (a) Business Gold Rewards Card -- $125.00 annual fee, $45.00 annual fee each for additional cards. A true and correct copy of the American Express Internet website page containing the "Terms and Conditions" obtaining to this charge card which can be found at

https://www201.americanexpress.com/sbsapply/EACQServlet?request_type=appl
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yNow&bos=b&ct=24&eep=16489&iep=38&openria=0 is Exhibit 8 hereto and is incorporated herein by reference; (b) Business Platinum Card -- $395.00 annual fee, $200.00 annual fee per

employee card, $200.00 annual fee each for additional Executive Platinum card, $35.00 annual fee for each additional gold card. A true and correct copy of the American Express Internet website page containing the "Terms and Conditions" obtaining to this charge card which can be found at

https://www201.americanexpress.com/sbsapply/EACQServlet?request_type=appl yNow&bos=b&ct=16&eep=16451&iep=38&openria=0 is Exhibit 9 hereto and is incorporated herein by reference; and, (c) American Express Corporate Card, and American Express Business ExtrAA Corporate Card, Corporate Platinum Card, Executive Corporate Card ­ annual fee determined by contractual agreement based on, among other things, the level of expenses charged, the amount of gross sales of the business, the number of cards issued. 26. During some or all of the four years preceding the filing of the Complaint and three

years preceding the following the filing of the Complaint, respectively, American Express issued the following "business" and "corporate" credit cards (in "partnership" with various nonAmerican Express entities) for which the following annual fees were charged: (a) Delta Sky Miles credit card -- $55.00 annual fee. A true and correct copy

of the official American Express Internet website page containing the "Terms and Conditions" obtaining to this credit card can be found at

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http://www.201.americanexpress/apply/Fmacfservlet?csi=5/15516/b/10/0/0/0/n&f rom=2 is Exhibit 10 hereto and is incorporated herein by reference; (b) Gold Delta Sky Miles credit card -- $85.00 annual fee ($30.00 if the card

holder also holds another qualified American Express card). A true and correct copy of the official American Express Internet website page containing the "Terms and Conditions" obtaining to this credit card can be found at https://www201.americanexpress.com/cards/Applyfservlet?csi=24/24000/b/218/2 510192095/250092909721/20/n&from=0&mgmID=undefined hereto and is incorporated herein by reference; (c) Platinum Delta Sky Miles credit card -- $135.00 annual fee ($80.00 annual is Exhibit 11

fee if cardholder also holds another qualified American Express card). A true and correct copy of the official American Express Internet website page containing the "Terms and Conditions" obtaining to this credit card can be found at https://www201.americanexpress.com/cards/Applyfservlet?csi=36/24000/b/64/25 10192095/250092909721/20/n&mgmID=undefined&from=0 is Exhibit 12 hereto and is incorporated herein by reference; (d) Skypoints credit card from Delta Airlines and American Express -- $49.00

annual fee (no annual fee if the card holder holds another qualified American Express card). A true and correct copy of the official American Express Internet website page containing the "Terms and Conditions" obtaining to this credit card can be found at

https://www201.americanexpress.com/cards/Applyfservlet?csi=14/24000/b/10/25

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10192095/250092909721/20/n&from=0&mgmID=undefined is Exhibit 13 hereto and is incorporated herein by reference; (e) Jetblue Card from American Express -- $40.00 annual fee. A true and

correct copy of the official American Express Internet website page containing the "Terms and Conditions" obtaining to this credit card can be found at https://www201.americanexpress.com/cards/Applyfservlet?csi=82/24000/b/10/25 10192095/250092909721/20/n&from=0&mgmID=undefined is Exhibit 14 hereto and is incorporated herein by reference; and, (f) Starwood Preferred Guest Credit Card from American Express -- $30.00

annual fee. A true and correct copy of the official American Express Internet website page containing the "Terms and Conditions" obtaining to this credit card can be found at

https://www201.americanexpress.com/cards/Applyfservlet?csi=6/24000/b/10/251 0192095/250092909721/20/n&from=0&mgmID=undefined is Exhibit 15 hereto and is incorporated herein by reference. American Express also issued a personal credit card ­ One from American Express ­ which has a $35.00 annual fee (free the first year), a true and correct copy of the "Terms and Conditions" obtaining to that card being Exhibit 16 hereto and is incorporated herein by reference. 27. American Express, through Card, issues the American Express Gift Card and the Dining

Card. The Gift Card costs $3.95 (plus shipping and handling) and comes in denominations of $25.00, $50.00, $100.00, and $200.00, and carries attendant fees ($5.95 for replacement cards, $2.00 monthly service charge if any funds remain on card after one year of purchase date). A true and correct copy of the official American Express Internet website page containing the

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Terms

and

Conditions

obtaining

to

the

Gift

Card

can

be

found

at

http://www10.americanexpress.com/sif/cda/page/0,1641,22147,00.asp?us_nu=leftnav is Exhibit 17 hereto and is incorporated herein by reference. Plaintiffs are informed and believe and on that basis allege that at least 100,000 gift cards have been purchased in California. American Express, through Card, also issues the American Express Dining Card at the cost of $4.95 per chard and it carries attendant fees as well. A true and correct copy of the official American Express Internet website page containing the Terms and Conditions for the Dining Card may be found at http://www10.americanexpress.com/sif/cda/page/0,1641,8521,00.asp, a true and correct copy of which is Exhibit 18 hereto and is incorporated herein by reference. Plaintiffs are informed and believe and on that basis allege that at least 100,000 dining cards have been purchased in California. B. Plaintiffs' Facts 28. Plaintiff Lee obtained a Starwood Preferred Guest Credit Card from American Express

in or about April, 2006 which was accompanied by a cardmember agreement, a true and correct copy of which is Exhibit 19 hereto and which is incorporated herein by reference. No annual fee was charged for the first year (as a result of his accepting an introductory offer). He obtained the card for personal use to purchase, among other things, goods or services (including services furnished in connection with the sale or repair of goods) for his personal or household use. 29. By letter dated November 30, 2006 sent to Kenneth Chenault (President and CEO of

Card) which was identical to letters he to sent to Mr. Poulsen (President and CEO of Centurion Bank) and Mr. Short (President and CEO of FSB), respectively (all of which were sent certified mail, return receipt requested), Plaintiff Lee pointed out the unconscionability and illegality of

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the agreement relating to his Starwood credit card, particularly its arbitration provision, under California law and requested that American Express "'correct, repair, replace or otherwise rectify the goods or services" caused by the violation of California Civil Code § 1770(a)(19) which makes it illegal to "insert[] an unconscionable provision into a contract." True and correct copies of the certified letters to Mr. Chennault, Mr. Poulsen, and Mr. Short are Exhibits 20, 21 and 22 hereto, respectively, and are incorporated herein by reference. 30. While neither Mr. Poulsen nor Mr. Short responded to Plaintiff Lee's letters, Mr.

Chennault did. By letter dated December 11, 2006 from Dina Colton, an assistant to Mr. Chennault, American Express responded to Lee's letters of November 30, 2006. American Express rejected Lee's request, stating only that "Although the credit card laws of California are changing, American Express cards are governed by the laws of the State of Utah," and, resultantly, averring that the arbitration agreement and card agreement were both legal and conscionable. A true and correct copy of that letter is Exhibit 23 hereto and is incorporated herein by reference. 31. On November 2, 2005, the Motion to Compel Arbitration and Stay Action filed by

American Express in Berry v. American Express Publishing Co., et al, Case No. 05CC00049 (Orange County Superior Court), a case exclusively challenging the conscionability and legality of the American Express arbitration provision as a violation of the CLRA for which only injunctive relief was sought, was denied. A true and correct copy of the Notice of Ruling on that Motion is Exhibit 24 hereto and is incorporated herein by reference. The basis for that Ruling was the determination by the Superior Court (Hon. Kim Dunning) that the American Express arbitration provision was unconscionable and that California law provided controlling law. A true and correct copy of pages 1 though 21 of the Reporter's Transcript of the November

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2, 2005 hearing and oral ruling of the Superior Court is Exhibit 25 hereto and is incorporated herein by reference. 32. American Express did not appeal the November 2, 2005 ruling. Plaintiffs are advised

and believe, and thereon allege, that under California law the denial of a motion to compel arbitration is an immediately appealable final order and, further, that the failure by American Express to file an appeal of the November 2 Order rendered that Order final. See California Code of Civil Procedure § 12194(a); Hobbs v. Bateman Eichler, Hill & Richards, 164 Cal.App.3d 174, 191, 210 Cal.Rptr. 387 (1985). 33. Plaintiffs are advised and believe, and thereon allege, that it has been, is and will

continue to be the practice of American Express to uniformly advise its card holders, directly or by implication, that the card holder agreements are conscionable and legal, and governed by the laws of the States of New York and Utah, respectively. 34. In or about May, 2007, after his receipt of American Express' December 11, 2006 letter

and in reliance thereon as well as in reliance on the misrepresentations made by American Express, Plaintiff Lee paid the $30.00 annual fee to American Express for his Starwood credit card. 35. In or about June, 2007, Plaintiff Lee purchased an American Express Gift Card and an

American Express Dining Card, and paid the fee charged therefore (including shipping and handling). He obtained these cards for his personal use and it will be used to purchase, among other things, goods or services for his personal or household use. True and correct copies of the sales receipts for these cards are Exhibits hereto as 26 and 27 and are incorporated herein by reference. Accompanying these cards were cardholder agreements, true and correct copies of

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these agreements are attached hereto as Exhibits 28 and 29 and which is incorporated herein by reference. 36. Plaintiff Lee purchased the gift card and the dining card after his receipt of American

Express' December 11, 2006 letter and in reliance thereon as well as in reliance on the misrepresentations made by American Express specified in this Complaint. 37. Plaintiff Lee obtained an American Express "Green" charge card in or about June 2007

which was accompanied by a cardmember agreement identical (except for the title thereof) to Exhibit 19 hereto. The first year annual fee for that card has been waived by American Express but at the end of the first year, he will be obligated to pay the annual fee should he wish to continue to receive the card's convenience services. He obtained the card for his personal use to purchase, among other things, goods or services (including services furnished in connection with the sale or repair of goods) for his personal or household use. 38. Plaintiff Lee obtained the Green Card after his receipt of American Express' December

11, 2006 letter and in reliance thereon as well as in reliance on the misrepresentations made by American Express. 39. Plaintiff Lloyd obtained an American Express Platinum charge card in 2003. He has

paid the annual fee in each of the years thereafter until the present time. He obtained the card for his personal use to purchase, among other things, goods or services (including services furnished in connection with the sale or repair of goods) for his personal or household use. When he received the credit card from American Express it was accompanied by a cardmember agreement, a true and correct copy of the version of the American Express cardmember agreement supplied to card holders when Plaintiff Lloyd first obtained his charge card is Exhibit

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30 hereto and is incorporated herein by reference. That agreement contained an arbitration provision which specifically did not apply to California residents such as Plaintiff Lloyd. 40. After receiving his American Express Platinum charge card in 2003, Plaintiff Lloyd was

advised by bill-stuffer letter in or about December 2003 that the cardmember agreement was being unilaterally modified by American Express and, as relevant here, that "Cardmembers having California billing addresses will no longer be excluded from the coverage of the section called Arbitration." A true and correct copy of the type of form letter sent to California card holders such as Plaintiff is Exhibit 31 hereto and is incorporated herein be reference. Subsequent unilateral changes in the arbitration provision have been made by American Express and provided to Plaintiff by means of a "bill stuffer." That agreement, including notably its arbitration provision, has from time-to-time been amended by American Express, which amendments were sent to Plaintiff(s) as "bill stuffers." 41. In making the payments of the fees owed by him, Plaintiff Lloyd relied upon the

statements and misrepresentations made by American Express as specifically set forth in this Complaint. 42. In accepting the contractual terms presented to them by American Express on a "take it

or leave it" basis ­ which was effected by the use of the card rather than by formal written agreement or other writing ­ and paying their respective annual fees for the charge card and credit card as well as the purchase price of the Gift Card and Dining Card, respectively, Plaintiffs acted as reasonable consumers who were unwary and trusting of American Express. 43. In accepting the contractual terms presented to them by American Express on a "take it

or leave it" basis, paying their respective annual fees for the charge card and credit card as well as the purchase price of the Gift Card and the Dining Card, respectively, Plaintiffs relied upon

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the honesty of American Express that it would not insert illegal, unconscionable and/or unenforceable terms and conditions in the arbitration provision of the agreement or other terms of the agreement, respectively, since, among other things, they had no duty to and did not suspect the dishonesty of American Express. 44. Plaintiffs, as reasonable consumers, were unaware of the illegality or unconscionability

of the arbitration provision or of the card agreement as a whole, respectively, at the times they entered into their agreement with American Express and paid the fees requested from them. 45 Arbitration, pursuant to a contractual arbitration provision, is a speedy and inexpensive

means of dispute resolution in comparison to judicial proceedings that can, under a conscionable and enforceable arbitration provision, be beneficial to card holders. 46. 47. The arbitration provision is a material term of the American Express card agreement. The ability of Plaintiffs to demand arbitration under an enforceable and legal arbitration

provision is an important and material factor relied upon by them in agreeing to enter into the American Express agreements and to pay their fees. 48. Plaintiffs are advised and believe, and thereon allege, that the right to mandatory

arbitration has a pecuniary value that reflects, in whole or in part, the fees paid by them for their cards and their respective use of their cards. 49. Plaintiffs are advised and believe, and thereon allege, that if the arbitration provision

contained in the agreement relating to their charge and credit cards is unconscionable, illegal and unenforceable, Plaintiffs received something lower in value than that for which they paid and, as a result, they have lost money as a result of the unconscionability, illegality, and unenforceability of the American Express-imposed arbitration provision.

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50.

Plaintiffs are advised and believe, and thereon allege, that the rights provided them by

the card agreement to American Express' charge cards, credit cards, gift cards and dining cards, respectively, have a pecuniary value that reflects, in whole or in part, the fees paid by them for their cards and their respective use of their cards. 51. Plaintiffs are advised and believe, and thereon allege, that if the cardmember agreement,

in whole or in part, is unconscionable, illegal and unenforceable, Plaintiffs received something lower in value than that for which they paid and, as a result, they have lost money as a result of the unconscionability, illegality, and unenforceability of the American Express-imposed card agreement. 52. Plaintiff Lee is advised and believes, and thereon alleges, that the right to mandatory

arbitration contained in the Gift Card and Dining card agreement, respectively, has a pecuniary value that reflects, in whole or in part, the fee paid by for his gift card and dining card, respectively. 53. Plaintiff Lee is advised and believes, and thereon alleges, that if the arbitration provision

relative to the gift card and dining card is unconscionable, illegal and unenforceable, Plaintiff received something lower in value than that for which he paid and, as a result, he has lost money as a result of the unconscionability, illegality, and unenforceability of the American Expressimposed arbitration provision. 54. In accepting the contractual terms presented to them by American Express on a "take it

or leave it" basis and paying their respective annual fees for the charge card and credit card as well as the purchase price of the Gift Card and Dining Card, Plaintiffs contracted with American Express in reliance with their reasonable belief that American Express would not commit an illegal, unfair, or fraudulent act upon them in presenting them with a form agreement on a "take

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it or leave it" basis that contained an arbitration provision and other provisions, respectively, that were and are illegal, unfair, unconscionable, and invalid. 55. Plaintiffs had no meaningful choice of reasonably available alternative sources for

charge cards, credit cards, Gift Cards or Dining Cards (similar to those sold by American Express) free of the terms claimed to be illegal, unconscionable, invalid, and unenforceable: American Express' charge cards are "unique" in that no other issuer issues "charge" cards of the type sold by American Express; American Express' Gift Cards and Dining Cards, which have a national application, are "unique" as well; and, seemingly all credit cards, gift cards, or "charge" cards (assuming that any are issued by other than American Express) issued by American Express and its competitors (including Capital One, Chase, Bank of America, HSBC) contain the same or similar arbitration and other provisions challenged in this action. 56. Plaintiffs, on behalf of themselves and similarly situated persons, have a technically

arbitrable claim against American Express relating solely to the card agreement (without reference to the arbitration provision contained in that provision): i.e., that they were induced to enter into the agreement and paid the fees as a result of American Express' fraud, deceit, and misrepresentations. 57. Plaintiffs, on behalf of themselves and similarly situated persons, are and have been

willing to immediately invoke the American Express arbitration provision so that their fraud claims against American Express would be decided in the arbitral context by an arbitrator if the arbitration provision is conscionable, legal, and enforceable. 58. Plaintiffs are advised and believe, and thereon allege, that their claim of fraud against

American Express in the inducement of the card agreement (without reference to the arbitration provision within that agreement) is an issue that should be decided by an arbitrator under an

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enforceable, valid, and conscionable arbitration provision, and that would be heard and decided by an arbitrator if such a conscionable and enforceable arbitration provision existed here. See, e.g., Nagrampa v. Mailcoups, Inc., 469 F.3d 1257 (9th Cir. 2006); Buckeye Check Cashing Inc. v. Cardegna, 546 U.S. 440, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006); Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1987). 59. Plaintiffs are advised and believe, and thereon allege on behalf of themselves and

similarly situated persons, that their invoking the arbitration provision relative to their fraud claims and seeking arbitration of that claim would be against public policy and would otherwise be an illegal act by seeking to enforce an illegal and unconscionable arbitration provision. Plaintiffs further are advised and believe, and thereon allege, on behalf of themselves and similarly situated persons, that it would be futile to invoke arbitration under the unenforceable arbitration provision and that doing so would be a waste of time and money. See Bertero v.

Superior Court, 216 Cal. App. 2d 213, 230 Cal. Rptr. 719 (1963) (parties improperly ordered to arbitrate "would be put to the unnecessary delay and expense of an arbitration, further court proceedings, and an appeal, after which they would be required to start over"), disapproved on other grounds in St. Agnes Medical Center v. PacifiCare of California, 31 Cal.4th 1187, 1192, 8 Cal. Rptr. 3d 517, 82 P.3d 727 (2003). 60. Plaintiffs are advised and believe, and thereon allege on behalf of themselves and

similarly situated persons, that the exercise of their contractual right to demand mandatory arbitration of their fraud claim against American Express would and/or could waive their right and ability to challenge the unconscionability of the arbitration provision and/or the agreement as a whole, respectively.

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61.

The harm to Plaintiffs' interest, as well as of the interest of similarly situated persons,

arising from the inability to enforce the arbitration provision in order to arbitrate their fraud and consumer statute claims (relating only to the agreement and not the arbitration provision) due to its/their unenforceability/unconscionability/illegality, is actual or imminent. C. The American Express Card Agreements 62. Contained in the 2006 version of the standardized contractual agreement (which is

presently used) entered into between Plaintiff Lee (and similarly situated persons he seeks to represent) and American Express relating to charge cards and credit cards is an Arbitration Provision that, in pertinent part, provides "As used in this Arbitration Provision, the term `Claim' means any claim, dispute or controversy between you and us arising from or relating to your Account, this Agreement ... and any other related or prior agreement that you may have had with us, or the relationships resulting from any of the above Agreements (`Agreements'), except for the validity, enforceability or scope of this Arbitration Provision or the Agreements. For purposes of this Arbitration Provision, `you' and `us' also includes any corporate parent, or wholly or majority owned subsidiaries, affiliates, any licensees, predecessors, successors, assigns, any purchase of any accounts, all agents, employees, directors and representatives of any of the foregoing, and other persons referred to below in the definition of `Claims.' `Claim' includes claims of every kind and nature, including but not limited to, initial claims, counterclaims, cross-claims and third-party claims and claims based upon contract, tort, fraud and other intentional torts, statutes, regulations, common law and equity. `Claim' also includes claims by or against any third party using or providing any product, service or benefit in connection with any account ... The term `Claim' is to be given the broadest possible meaning that will be enforced and includes, by way of example and without limitation, any claim, dispute or controversy that arises from or relates to (a) any of the accounts created under any of the Agreements, or any balances on any such accounts, (b) advertisements, promotions or oral or written statements related to any such accounts, goods or services financed under any of the accounts or the terms of financing, (c) the benefits and services relation to Cardmembership (including fee-based or free benefit programs, enrollment services and rewards programs), and (d) your application for any account. We shall not elect to use arbitration under the Arbit