Skip to content

Supreme Court Enforces Arbitration Provision Barring Merchants From Bringing Class Action Antitrust Claims Against American Express

The United States Supreme Court has issued a divided (5-3) decision in American Express Co. v. Italian Colors Restaurant, reaffirming the Court’s long-standing inclination to enforce contractual arbitration agreements. The case has been before the Court three times, and in this round the Court once again found enforceable an arbitration agreement between the merchants and American Express that requires the merchants to arbitrate their disputes with the company individually and barred them from bringing class actions, effectively ending the class action antitrust suit brought by the merchants against the financial services company.

The Supreme Court’s decision in American Express effectively resolves the split among the circuit courts of appeal as to the viability of the “effective vindication” argument, clarifying that this doctrine applies only in very limited circumstances – in cases in which the arbitration agreement specifically forbids a federal statutory claim, for example. From a practical perspective, the impact of American Express is clear: Courts will enforce arbitration agreements in accordance with their terms, including class action waivers, and will reject arguments that the cost of pursuing a claim in arbitration without a class action would serve to thwart a claimant’s statutory right to relief.