Am. Express Co. v. Italian Colors Rest. :: Justia US Supreme Court Center - 0 views
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Justia.com Opinion Summary: An agreement between American Express and merchants who accept American Express cards, requires that all of their disputes be resolved by arbitration and provides that there “shall be no right or authority for any Claims to be arbitrated on a class action basis.” The merchants filed a class action, claiming that American Express violated section 1 of the Sherman Act and seeking treble damages under section 4 of the Clayton Act. The district court dismissed. The Second Circuit reversed, holding that the class action waiver was unenforceable and that arbitration could not proceed because of prohibitive costs. The Circuit upheld its reversal on remand in light of a Supreme Court holding that a party may not be compelled to submit to class arbitration absent an agreement to do so. The Supreme Court reversed. The FAA reflects an overarching principle that arbitration is a matter of contract and does not permit courts to invalidate a contractual waiver of class arbitration on the ground that the plaintiff’s cost of individually arbitrating a federal statutory claim exceeds the potential recovery. Courts must rigorously enforce arbitration agreements even for claims alleging violation of a federal statute, unless the FAA mandate has been overridden by a contrary congressional command. No contrary congressional command requires rejection of this waiver. Federal antitrust laws do not guarantee an affordable procedural path to the vindication of every claim or indicate an intention to preclude waiver of class-action procedures. The fact that it is not worth the expense involved in proving a statutory remedy does not constitute the elimination of the right to pursue that remedy.
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Remarkable 5-3 Supreme Court decision in favor of the banksters, in effect overruling a line of prior decisions nearly 30 years old. At issue, whether a credit card monopolists' form contract with merchants containing a mandatory arbitration clause could lawfully bar judicial review under the antitrust laws when the arbitration clause barred class arbitration and the amount merchants could hope to recover was less than a tenth of the expense of litigating claims individually. (Antitrust cases are unusually expensive to prosecute.) For nearly three decades, the Court had implied an exception to the Federal Arbitration Act that allowed plaintiffs to litigate claims subject to arbitration clauses in court to vindicate rights under federal law when arbitration would not provide an effective remedy for the violation of federal law. No more. Upholding the "right" of American Express to insist on a 30 percent share of the price of each sale transacted with an American Express card. Read Justice Kagan's dissent, joined by two other justices, to learn what's wrong with the majority's decision. Her nushell version: "here is the nutshell version of today's opinion, admirably flaunted rather than camoflaged: Too darn bad." The majority did, however, leave it open for Congress to amend the Arbitration Act to resolve the issue. But with corporate and bankster influence in Congress, good luck with that. This decision, unfortunately, has major implications for software developers, as well as other merchants. For example, the current crop of "app store" restrictions on competition enforced by technical measures on app developers by monopolists such as Apple and Microsoft, insisting on a 30 per cent cut of each sale. One can rest assured that such contracts contain similar arbitration clauses
