Supreme Court to review Amex arbitration case
By Terry Baynes and Jonathan Stempel | November 10, 2012 9:21 AM EST
The Supreme Court on Friday agreed to consider whether American Express Co may invoke an arbitration clause to prevent merchant customers from banding together in an antitrust lawsuit against the company.
The court accepted the credit card and travel services company's appeal from a February ruling by the 2nd U.S. Circuit Court of Appeals in New York that voided the clause, and allowed merchants including the Italian Colors Restaurant in Oakland, California to pursue a class-action lawsuit.
A decision could determine the extent to which companies might rely on arbitration clauses to fend off class-action lawsuits, which can allow litigants to obtain larger recoveries at lower cost.
Since 1999, American Express has required merchant customers to waive their right to sue the company in a class action.
But a group of restaurants, retailers and other customers sued in 2003, saying the New York-based company violated antitrust law in its effort to force them to pay inflated fees on charge card transactions.
A two-judge panel of the 2nd Circuit said the company's mandatory arbitration clause violated antitrust law, because many merchants would find it economically unfeasible to pursue their claims individually.
American Express said that ruling created a "sweeping, unwritten loophole" in federal arbitration law that should be overturned.
The Supreme Court has in recent years shown deference to arbitration clauses, while narrowing the ability of various plaintiffs to bring class-action lawsuits.
In a 2011 case involving AT&T Inc
The same year, the court decertified a class of as many as 1.5 million female workers at Wal-Mart Stores Inc
The Supreme Court will likely hear oral arguments in the American Express case early next year, with a decision to follow by the end of June.
Justice Sonia Sotomayor, who was involved with the case when she was a federal appeals court judge, did not take part in the decision to accept American Express' appeal.
The case is American Express Co et al v. Italian Colors Restaurant et al, U.S. Supreme Court, No. 12-133.
(Reporting by Terry Baynes and Jonathan Stempel in New York; Editing by Kevin Drawbaugh and Nick Zieminski)
Most Popular Slideshows
- Slow-Moving Yet Unrelenting Hawaii Lava Now Only Inches Away From Pahoa Homes
- Emma Watson Gets 'Squished' In 'Colonia Dignidad' [PHOTOS]
- Kate Middleton Expecting A Baby Boy For The Second Time Around – Reports [PHOTOS]
- 2014 MLB World Series Game 4: San Francisco Giants 11, Kansas City Royals 4 [PHOTOS]
Join the Conversation
- Tourre on stand says email in SEC case 'not accurate'
- Syrian authorities blocking access to needy in Homs - Red Cross
- Faith in European Union at low ebb, EU poll says
- Former UBS banker gets 18 months, $1 million fine, for muni bid-rigging scheme
- U.S. judge halts challenges to Detroit's bankruptcy bid
- NATO: Russia's Been Conducting Too Many Military Flights Over Europe
- Moto X 2014 vs. Motorola DROID Turbo - Specifications, Features And Price Showdown
- Nokia Lumia 730 v. Sharp Aquos Crystal – Specifications, Features And Price Showdown
- Apple iPhone 6 Plus vs Motorola Droid Turbo: Comparsion On Processor, Software And Battery
- Dismantling Of Fukushima Reactor 1 Faces Delays, US Judge Gives Sailor Go Signal To Push Through Lawsuit Against TEPCO Over Radiation
- ISIS Has Been Equipped With Advanced Anti-Aircraft Missiles
- Samsung Galaxy Note 4 vs Motorola Droid Turbo – S-Pen Is Note’s 4 USP But Droid Turbo Can Outshine With Larger Battery