June 20, 2013

Supreme Court Overturns Second Circuit in AMEX v Italian Colors

By Jill Gross

The Supreme Court released today its eagerly-awaited decision (at least in the ADR world) in AMEX v. Italian Colors.  In overturning the Second Circuit’s refusal to enforce a class action waiver on the ground that plaintiffs could not vindicate their statutory rights under the federal antitrust laws, the Court, in a 5-3 opinion authored by Justice Scalia (public enemy #1 of class arbitation), eliminated virtually the only viable doctrine remaining to litigants to challenge class action waivers in consumer contracts.

While the Court recognized the validity of the vindicating rights doctrine generally, it held that, in this case, 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.”  Because the class action waiver in the merchants’ credit card services agreement with American Express did not eliminate the right to pursue individual claims under the antitrust laws, the Court deemed the waiver enforceable.  Of course, the right to pursue a remedy is meaningless and hollow if, as a practical matter, it is not financially possible to pursue.

More detailed analysis to follow, particularly of Justice Kagan’s scathing dissent.

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