In a blow to the class-action lawsuit speculators, the U.S. Supreme Court today upheld the validity of arbitration provisions in business contracts. The ruling is a victory for consumers, businesses and the U.S. economy.
In the case American Express v. United Italian Colors, the court ruled that restaurants and other merchants could not band together in a class action suit against American Express, which in its contracts required the companies to accept Amex credit cards if they also used the company's charge cards. The contracts with the merchants precluded class-action litigation, requiring disputes be settled through arbitration. (OpinionScotusblog coverage.)
In August 2012, Business Roundtable joined the U.S. Chamber of Commerce, National Association of Manufacturers, and the American Bankers Association in filing an amicus brief (here) supporting American Express' position. The groups argued that arbitration agreements eliminate huge litigation costs, resulting in benefits for consumers, employees and the national economy. In addition, arbitration is generally is undertaken with an individual party, not a class. The plaintiff in this case, the brief contended, were attempting to circumvent these reasonable limits on litigation by inventing a federal anti-trust claim.
News coverage ...
- Reuters, "Supreme Court rules for American Express in class action case."
- Washington Post, "Supreme Court makes it harder to bring class-action lawsuits." (A tendentious headline. No, the Supreme Court reaffirmed the validity of the law, which set justifiable restrictions on class-action suits.)
- Wall Street Journal, "Supreme Court Stops Merchant Class-Action Suit vs. American Express."
- Bloomberg, "Supreme Court Blocks American Express Antitrust Lawsuit."
- The Atlantic Wire, "The Problem with the Supreme Court's AmEx Decision, Class Action, and You"
UPDATE (10:40 a.m. Friday): From Walter Olson at Overlawyered, "American Express v. Italian Colors: arbitration waiver of class actions":
For years, organized trial lawyers have been publicly campaigning against arbitration — which keeps money out of their pockets by diverting disputes from knock-down litigation — claiming that it is unfair and one-sided. But many studies support the view that disputants’ overall satisfaction in arbitration compares very favorably to that in litigation, in part because it is a speedier and less acrimonious process. And consumers and small businesses by millions sign away their class action rights not because they are all hoodwinked or coerced, but because at some level they have rational grounds to recognize that those class-action rights are very unlikely to pay off for them in durable future benefits (as opposed to benefits for participants in the litigation industry). Congress will be asked to overturn Supreme Court decisions like Amex v. Italian Colors and the earlier, related AT&T Mobility v. Concepcion. It should resist. (expanded from an earlier post at Cato at Liberty.)
More news, commentary:
- James Copland, Manhattan Institute, Point of Law blog, "American Express v. Italian Colors: Reversal (5-3)." Copland concludes, "[The] resolution of this case turns out to be rather narrow."
- Business Journals, "Supreme Court sides with big business in arbitration case"
- U.S. Chamber of Commerce news release, "U.S. Chamber Commends Supreme Court for Preserving Availability of Arbitration to Consumers and Business"
- American Association for Justice (the always-nuanced trial lawyers association) statement: " SCOTUS decides corporations can grant themselves a license to steal and violate the law"
- Washington Post, "Supreme Court sides with American Express on arbitration"
- Associated Press, "Court rules for Amex in dispute with merchants"