Dissent’s Nutshell of Opinion: “Too Darn Bad”
The United States Supreme Court, in a 5-3 opinion, has now held that the Federal Arbitration Act does not permit courts to invalidate a contractual waiver of class arbitration just because the plaintiff’s cost of individually arbitrating a federal statutory claim exceeds the potential recovery. American Express Co. et al. v. Italian Colors Restaurant et al., No. 12-133 (June 20, 2013).
Evidently class arbitration is a highly charged topic capable of dividing the Supreme Court along a neat political line. Big business favors arbitration, but not class arbitration. Justice Scalia delivered the opinion of the Court, in which Chief Justice Roberts, and Justices Kennedy, Thomas, and Alito joined, with Justice Thomas filing a concurring opinion. Justice Kagan filed a dissenting opinion, in which Justices Ginsburg and Breyer joined. Justice Sotomayor did not participate in the decision.
Italian Colors Restaurant claimed that Amex had violated the Sherman Act, Section 1, by using its monopoly power to force merchants to accept credit cards charging very high fees – an illegal tying agreement. Here’s the rub: an economist estimated the cost of an expert analysis to prove antitrust claims would be several hundred thousand dollars and might exceed $1 million, whereas individual payouts would be --- when trebled – $38,549. Hence, if class arbitration was unavailable, plaintiffs would be left without a way to affordably vindicate rights under the Sherman Act.
Wrote Justice Kagan, dissenting: “And here is the nutshell version of today’s opinion, admirably flaunted rather than camouflaged: Too darn bad.”
The dissent paints a stark picture: “So if the arbitration clause is enforceable, Amex has insulated itself from antitrust liability-even if it has in fact violated the law. The monopolist gets to use its monopoly power to insist on a contract effectively depriving its victims of legal recourse.”