High Court to Consider Enforceability of Arbitration Clause’s Class Action Waiver in Antitrust Case

This posting was written by William Zale.

In a case involving merchants’ class antitrust claims against American Express, the U.S. Supreme Court has agreed to decide whether the Federal Arbitration Act permits courts, invoking the “federal substantive law of arbitrability,” to invalidate arbitration agreements on the ground that they do not permit class arbitration of a federal law claim. The Court granted the petition for certiorari in American Express Co. v. Italian Colors Restaurant, Dkt. 12-133, on November 9, 2012.

At issue is a decision of the U.S. Court of Appeals in New York holding unenforceable a class action waiver contained in the mandatory arbitration clause of their commercial contracts with American Express, In re American Express Merchants’ Litigation, 667 F.3d 204 (2nd Cir. 2012).

 If the plaintiffs could not pursue their allegations of antitrust law violations as a class, it would be financially impossible for them to seek to vindicate their federal statutory rights, according to the appeals court. American Express thus would have immunized itself against all such antitrust liability by the expedient of including in its contracts of adhesion an arbitration clause that does not permit class arbitration, irrespective of whether or not the provision explicitly prohibits class arbitration, the court observed.

The petition for certiorari appears here.