Among the excitement and publicity surrounding recent U.S. Supreme Court decisions, many have overlooked American Express Co. v. Italian Colors Restaurant, which has made in more difficult for plaintiffs to bring class action suits against corporate defendants. The Court held in a 5-3 decision supported by “freedom to contract” advocates that courts cannot invalidate arbitration agreements which waive class actions, unless there is an express congressional statement that class-action proceedings are so necessary to a federal claim as to preempt the Federal Arbitration Act (“FAA”).
The case hinged on whether Italian Colors and several other small restaurants could file a class-action suit against American Express for their allegedly excessive charges and hidden fees for allowing customers to use their American Express cards to pay for their meals. Each claim would have cost more to arbitrate individual than they worth, so this decision terminates any chance of holding American Express accountable. All of the restaurants had signed a contract specifically waiving their right to class-action arbitration.
Justice Elena Kagan, dissenting with Justices Ginsburng and Breyer, argued:
“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 to insist on a contract effectively depriving its victims of all legal recourse. And here is the nutshell version of today’s opinion, admirably flaunted rather than camouflaged: Too darn bad.”
This was one of several recent Supreme Court decisions that benefited large corporations to the extreme and unjust detriment of small businesses and individuals, including individual workers.