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U.S. Supreme Court Rules for American Express, Upholding the Federal Arbitration Act Which Favors Big Business

In final arbitration good for big business, the conservatives ruled the Supreme Court in a vote of 5-3 that businesses could not join together in a collective suit against American Express Co. This is the latest in cases that test the effectiveness of wily arbitration clauses, contract parameters that have been kept businesses out of the courts in contract disputes.

In this case, the gripe various merchants have with American Express regard a 2003 suit that American Express violated antitrust law by making them have to accept their credit cards as a condition of accepting their charge cards. A charge card is paid in full at the end of the billing cycle, whereas a credit card required only a portion of a payment, and the rest can build interest on it.

Merchants, including restaurants and retailers, don’t like such stipulations, but the Supreme Court has prevented them from banding together to address it, and this based on the Federal Arbitrations Act. The arbitration clause prevents anything but an individual claim against the company, and as nobody can afford an individual claim against such a large company as American Express, they are off scot free.

Scalia, who wrote for the majority, said, as reported by Reuters, that “the antitrust laws do not guarantee an affordable procedural path to the vindication of every claim.” If you sign an arbitration clause with a company, arbitration is what you get.



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And with this, American Express of course agreed. “We believe the Supreme Court’s ruling confirms the viability of the Federal Arbitration Act and prior Supreme Court decisions on arbitration.” A rather obvious thing to believe, but they are happy, nonetheless.

Justice Elena Kegan said in her dissent that this effectively made it “a fool’s errand” for individuals to pursue antitrust claims.

“And here is the nutshell version of today’s opinion, admirably flaunted rather than camouflaged: Too darn bad.”

The merchant’s attorney, Deepak Gupta, at least has not given up hope, saying that “the Supreme Court may not have the last word on this,” suggesting that regulators and legislators will review such arbitration that favors big business on sheer brawn and muscle power.

As major corporations use more arbitration agreements in their contracts, they can escape redress and have more freedom to impose their will as they prefer: perhaps further legislation will limit this?

The case is American Express Co et al v. Italian Colors Restaurant et al, U.S. Supreme Court, No. 12-133.

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Daniel June Posted by on June 20, 2013. Filed under Business News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

 

 

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