<http://www.nytimes.com/2013/06/21/business/justices-back-use-of-arbitration-over-class-actions.html>
June 20, 2013 Justices Support Corporate Arbitration By BINYAMIN APPELBAUM WASHINGTON — The Supreme Court on Thursday reinforced the ability of corporations to write their own rules for resolving disputes with customers, finding that a group of merchants were bound by an arbitration agreement with American Express even if the terms made it prohibitively expensive to pursue some types of claims against the company. Businesses generally regard arbitration as a cheaper and more efficient way to resolve disputes. Consumer advocates say the terms of the agreements can allow companies to escape accountability. The courts increasingly have sided with the companies, steadily limiting the circumstances in which customers can pursue claims outside of the arbitration process. Thursday’s 5-to-3 ruling limits the ability of customers to pursue class actions. The conservative majority held that companies could require individual arbitration even if a class action is the only way to make the claim economically viable. The law, Justice Antonin Scalia wrote, does not “guarantee an affordable procedural path to the vindication of every claim.” Business groups hailed the ruling as the end of a long legal battle. “The Supreme Court today eliminated the last significant obstacle to adoption of fair, efficient arbitration systems that increase access to justice for consumers while reducing transaction costs for everyone,” Andrew J. Pincus, a lawyer at Mayer Brown who won a related Supreme Court arbitration case in 2011, said in a statement after the announcement. Consumer advocates, by contrast, said the court was infringing on a longstanding principle that arbitration agreements must allow “effective vindication” of rights. “The upshot of that is that companies like American Express can use these forced arbitration clauses to give themselves immunity from federal laws,” said F. Paul Bland Jr. of Public Justice, a nonprofit consumer advocacy group. The case, American Express Company v. Italian Colors Restaurant, began when the merchants sued American Express over the fees they were required to pay each time a customer charged a purchase. American Express is a dominant provider of the charge cards that are favored by many corporations and affluent individuals. Businesses wishing to accept those cards must also agree to accept American Express credit cards, which are less popular. And American Express charges the merchants higher fees on each credit card transaction than Visa or MasterCard. (Charge card transactions must be paid in full each month; credit cards allow customers to carry a balance.) The merchants argued that American Express was violating antitrust laws. Their contracts required such claims to be submitted to individual arbitration, but the merchants argued that the potential winnings were too small to justify the cost of mounting individual antitrust cases. They sought judicial approval to pursue the claim as a class action. The United States Court of Appeals for the Second Circuit ruled in their favor. In overturning that decision, Justice Scalia wrote that the individual arbitration requirement was not a barrier to pursuing claims, but a limitation on the terms of pursuit. He cited high filing fees as an example of the kind of requirement that, by contrast, might not be allowed. Justice Elena Kagan, writing for the three dissenters, said the effect was the same. “If the arbitration clause is enforceable, Amex has insulated itself from antitrust liability — even if it has in fact violated the law,” she wrote. “The monopolist gets to use its monopoly power to insist on a contract effectively depriving its victims of all legal recourse.” She summarized the majority’s response as “too darn bad.” Justice Sonia Sotomayor, who was a member of the Court of Appeals when it ruled on the case, did not participate in the Supreme Court decision. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
