As it has in most recent cases involving arbitration, the court split along ideological lines, with Justice Antonin Scalia writing for the majority.
“The antitrust laws do not guarantee an affordable procedural path to the vindication of every claim,” Scalia wrote, saying that courts must “vigorously enforce” arbitration contracts according to their terms.
Experts in the field said it has become clear that a majority of the high court will make it hard to pursue class-action arbitration claims.
“The Supreme Court took another big step down the road of permitting companies to use arbitration agreements to entirely insulate themselves from class-
action liability,” said Brian Fitzpatrick, a law professor and class-action expert at Vanderbilt University. “The writing is on the wall now more clearly than ever: There is little future for consumer and employment class actions, and even shareholder class actions may not survive.”
The U.S. Chamber of Commerce praised the decision, saying that the “only people who lose under today’s decision are those in the plaintiffs’ bar who want to cash in by forcing disputes into already overburdened courts.”
Paul Bland, senior attorney with the nonprofit consumer group Public Justice, called the ruling “catastrophic.”
The retailers, led by a California restaurant called Italian Colors, objected to American Express’s requirement that they accept all versions of the company’s credit cards, including those that do not require the entire balance be paid each month. The merchants said American Express used its monopoly power to force them to accept the cards at rates about 30 percent higher than competing companies.
But the standard contract with American Express requires that disputes be handled through individual arbitration. The merchants said that would not be economically feasible, that the expert analysis necessary to prove their case could cost up to $1 million, while the most an individual retailer could hope to recover was about $40,000.
An appeals court agreed that the only way to enable the merchants to pursue their right to challenge antitrust actions was to allow them to band together.
But Scalia said there was nothing in the Federal Arbitration Act to allow the merchants out of their obligation to individual arbitration. “The fact that it is not worth the expense involved in proving a statutory remedy does not constitute the elimination of the right to pursue that remedy,” he wrote.
He was joined by Chief Justice John G. Roberts Jr. and Justices Anthony M. Kennedy, Clarence Thomas and Samuel A. Alito Jr.
Justice Elena Kagan wrote a scathing dissent for the court’s liberals. “The monopolist gets to use its monopoly power to insist on a contract effectively depriving its victims of all legal recourse,” Kagan wrote. “And here is the nutshell version of today’s opinion, admirably flaunted rather than camouflaged: Too darn bad.”
She was joined by Justices Ruth Bader Ginsburg and Stephen G. Breyer. Justice Sonia Sotomayor, who has involvement with the case as an appellate judge, recused herself.
The case is American Express v. Italian Colors.