Will the U.S. Supreme Court re-interpret the Federal Arbitration Act to give corporations a license to steal? That is the issue in American Express Co. v. Italian Colors Restaurant, to be argued on February 27.
Filed by a group of small merchants, the class action claims that American Express violated the antitrust laws by using its monopoly power in the corporate and premium charge-card market to require them to accept mass-marketed AmEx credit cards, too and then overcharging them by 30 percent. AmEx moved to compel each merchant to arbitrate its claims separately. But the undisputed evidence proved that no plaintiff could possibly do so. The market study necessary would cost each plaintiff hundreds of thousands to millions of dollars, when the claims are worth an average of $5,200 each. So the U.S. Court of Appeals for the Second Circuit found AmEx’s arbitration clause, which bans class actions and information sharing, unenforceable because it violates the Supreme Court’s long-standing effective-vindication rule: An arbitration agreement will not be enforced if enforcement would prevent a party from effectively vindicating his or her rights.
