A recent United State Supreme Court decision has made it almost impossible for small businesses and individuals to bring class action lawsuits against large corporations who may be in violation of antitrust laws. Not only did the case fly under the mass media radar, it also may allow corporations to use contractual language to insulate them from many other federal laws. I am talking about the American Express v. Italian Colors case that was decided by a 5-3 margin. What the Supreme Court majority did here was to allow American Express to force its small business customers to sign a contract that included language that precluded those same customers from having any viable access to judicial review of American Express’ business practices.
The Washington Post provides a good synopsis of the case. “In a second case, American Express Co. v. Italian Colors Restaurant , the same five justices ruled that corporations can insulate themselves from liability for violating federal law by inserting clauses in their contracts that prohibit class-action arbitration. A group of small merchants argued that American Express had violated antitrust laws by using its monopoly power to charge credit card fees 30 percent higher than those of its competitors. But American Express had used the same monopoly power to draft a form contract that directed all legal disputes into arbitration — and then forbade arbitration on a class-wide basis. The merchants argued that because antitrust claims are so expensive to prove, they are not worth pursuing on an individual basis and can be vindicated only through collective, class-wide proceedings.
The Supreme Court previously ruled that contracts may require arbitration rather than court litigation only if the arbitration proceeding provides an adequate forum for individuals to vindicate their rights. In Italian Colors, the court’s majority conceded that requiring individual arbitrations would make it too expensive to challenge American Express’s conduct, but, as Justice Elena Kagan paraphrased the majority’s response in her dissent: “Too darn bad.”by