ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Thursday, February 28, 2013

U.S. Supreme Court Seems Poised to Compel Arbitration -- Again

SCOTUSblog has linked to the transcript from yesterday's oral arguments in American Express Co. v. Italian Colors Restaurants.  SCOTUSblog, as always, has full materials on the case here.  The issue in the case is:

Justice BreyerWhether 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 plaintiffs in the case are merchants who claim that American Express violates antitrust laws by requring it to accept American Express credit cards if they also accept American Express charge cards.  The plaintiffs claim that, since the expense associated with individual arbitrations outweighs the individual recovery that any one merchant can expect, their claims are effectively denied if they cannot bring them as part of a class action lawsuit.  

According to the New York Times' coverage, there are at least six votes on the Court for enforcing the arbitration agreements.   Justice Scalia set the tone for the presumptive majority, stating on page 24 of the transcript, "I dont' see how a Federal statute is frustrated or is unable to be vindicated if it's too expensive to bring a Federal suit.  That happened for years before there was such a thing as class action[s] in Federal courts.  Nobody thought the Sherman Act was a dead letter, that it couldn't be vindicated."  On the Times reading of the tea leaves, that position will be attractive to the five Justices who formed the majority in Concepcion, but this time Justice Breyer (pictured) also seemed inclined to reject the argument that there was no cost-effective way for plaintiffs to bring their claims through arbitration.


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