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U.S. judge rejects class action settlement involving American Express

An American Express sign is seen on a restaurant door in New York July 22, 2010. REUTERS/Brendan McDermid

NEW YORK (Reuters) - A U.S. judge on Tuesday rejected a proposed class action settlement between American Express Co (AXP.N) and merchants who sued the company over swipe fees, ruling that a lawyer for the merchants compromised the fairness of the agreement.

U.S. District Judge Nicholas Garaufis in Brooklyn, New York, ruled that lawyer Gary Friedman acted improperly by talking about the case and sharing confidential information with a friend who represented MasterCard Inc (MA.N) in a parallel class action against MasterCard and Visa Inc (V.N).

Garaufis ordered Friedman removed as co-lead counsel for the merchants and ordered a new round of written briefs to be filed in the case by Sept. 8.

(Reporting by David Ingram; Editing by Chizu Nomiyama)