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Am. Express Co. v. Italian Colors Rest.

Supreme Court of the United States

February 27, 2013, Argued; June 20, 2013, Decided

No. 12-133

Opinion

 [*231]  Justice Scalia delivered the opinion of the Court.

We consider whether a contractual waiver of class arbitration is enforceable under the Federal Arbitration Act when the plaintiff’s cost of individually arbitrating a federal statutory claim exceeds the potential recovery.

 [**2308]  I

Respondents are merchants who accept American Express cards. Their  [***423]  agreement with petitioners—American Express and a wholly owned subsidiary—contains a clause that requires all disputes between the parties  [****5] to be resolved by arbitration. The agreement also provides that “[t]here shall be no right or authority for any Claims to be arbitrated on a class action basis.” In re American Express Merchants’ Litigation, 667 F. 3d 204, 209 (CA2 2012).

Respondents brought a class action against petitioners for violations of the federal antitrust laws. According to respondents, American Express used its monopoly power in the market for charge cards to force merchants to accept credit cards at rates approximately 30% higher than the fees for competing credit cards. 1 This tying arrangement, respondents said, violated §1 of the Sherman Act. They sought treble damages for the class under §4 of the Clayton Act.

Petitioners moved to compel individual arbitration under the Federal Arbitration Act (FAA), 9 U. S. C. §1 et seq. In resisting the motion, respondents submitted a declaration from an economist who estimated that the cost of an expert analysis necessary to prove the antitrust claims would be “at least several hundred  [****6] thousand dollars, and might exceed $1 million,” while the maximum recovery for an individual plaintiff would be $12,850, or $38,549 when trebled. App. 93. The District Court granted the motion and dismissed  [*232]  the lawsuits. The Court of Appeals reversed and remanded for further proceedings. It held that because respondents had established that “they would incur prohibitive costs if compelled to arbitrate under the class action waiver,” the waiver was unenforceable and the arbitration could not proceed. In re American Express Merchants’ Litigation, 554 F. 3d 300, 315-316 (CA2 2009).

We granted certiorari, vacated the judgment, and remanded for further consideration in light of Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp., 559 U. S. 662, 130 S. Ct. 1758, 176 L. Ed. 2d 605 (2010), which held that a party may not be compelled to submit to class arbitration absent an agreement to do so. American Express Co. v. Italian Colors Restaurant, 559 U. S. 1103, 559 U.S. 1103, 130 S. Ct. 2401, 176 L. Ed. 2d 920 (2010). The Court of Appeals stood by its reversal, stating that its earlier ruling did not compel class arbitration. In re American Express Merchants’ Litigation, 634 F. 3d 187, 200 (CA2 2011). It then sua sponte reconsidered its ruling in light of AT&T Mobility LLC v. Concepcion, 563 U. S. 333, 131 S. Ct. 1740, 179 L. Ed. 2d 742 (2011),  [****7] which held that the FAA pre-empted a state law barring enforcement of a class-arbitration waiver. Finding AT&T Mobility inapplicable because it addressed pre-emption, the Court of Appeals reversed for the third time. 667 F. 3d, at 213. It then denied rehearing en banc with five judges dissenting. In re American Express Merchants’ Litigation, 681 F. 3d 139 (CA2 2012). We granted certiorari, 568 U. S. 1006, 133 S. Ct. 594, 184 L. Ed. 2d 390 (2012), to consider the question “[w]hether the Federal Arbitration Act permits courts . . . to invalidate arbitration agreements on the ground that they do not permit class arbitration of a federal-law claim,” Pet. for Cert. i.

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570 U.S. 228 *; 133 S. Ct. 2304 **; 186 L. Ed. 2d 417 ***; 2013 U.S. LEXIS 4700 ****; 81 U.S.L.W. 4483; 163 Lab. Cas. (CCH) P10,607; 2013-1 Trade Cas. (CCH) P78,432; 24 Fla. L. Weekly Fed. S 337; 2013 WL 3064410

AMERICAN EXPRESS COMPANY, et al., Petitioners v. ITALIAN COLORS RESTAURANT et al.

Notice: The LEXIS pagination of this document is subject to change pending release of the final published version.

Prior History:  [****1] ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

Italian Colors Rest. v. Am. Express Travel Related Servs. Co. (In re Am. Express Merchs. Litig.), 667 F.3d 204, 2012 U.S. App. LEXIS 1871 (2d Cir., 2012)

Disposition: Reversed.

CORE TERMS

arbitration, vindication, arbitration agreement, effective-vindication, effective, federal statute, class action, costs, claimant, rights, Sherman Act, Merchants’, antitrust, courts, anti trust law, class-action, invalidate, parties, arbitration clause, right to pursue, statutory remedy, federal right, antitrust claim, federal law, unenforceable, foreclose, statutory right, arbitral forum, monopoly power, federal claim

Business & Corporate Compliance, Arbitration, Federal Arbitration Act, Scope, Antitrust & Trade Law, General Overview, Sherman Act, Claims, Civil Procedure, Special Proceedings, Class Actions, Clayton Act, Arbitration Agreements, Alternative Dispute Resolution, Arbitrability, Pretrial Matters, Validity of ADR Methods, Waiver