Am. Express Co. v. Italian Colors Rest.
Annotate this Case
570 US ___ (2013)
An agreement between American Express and merchants who accept American Express cards, requires that all of their disputes be resolved by arbitration and provides that there “shall be no right or authority for any Claims to be arbitrated on a class action basis.” The merchants filed a class action, claiming that American Express violated section 1 of the Sherman Act and seeking treble damages under section 4 of the Clayton Act. The district court dismissed. The Second Circuit reversed, holding that the class action waiver was unenforceable and that arbitration could not proceed because of prohibitive costs. The Circuit upheld its reversal on remand in light of a Supreme Court holding that a party may not be compelled to submit to class arbitration absent an agreement to do so. The Supreme Court reversed. The FAA reflects an overarching principle that arbitration is a matter of contract and does not permit courts to invalidate a contractual waiver of class arbitration on the ground that the plaintiff’s cost of individually arbitrating a federal statutory claim exceeds the potential recovery. Courts must rigorously enforce arbitration agreements even for claims alleging violation of a federal statute, unless the FAA mandate has been overridden by a contrary congressional command. No contrary congressional command requires rejection of this waiver. Federal antitrust laws do not guarantee an affordable procedural path to the vindication of every claim or indicate an intention to preclude waiver of class-action procedures. 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.
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321 .
SUPREME COURT OF THE UNITED STATES
AMERICAN EXPRESS CO. et al. v. ITALIAN COLORS RESTAURANT et al.
certiorari to the united states court of appeals for the second circuit
No. 12–133. Argued February 27, 2013—Decided June 20, 2013
An agreement between petitioners, American Express and a subsidiary, and respondents, merchants who accept American Express cards, requires all of their disputes to be resolved by arbitration and provides that there “shall be no right or authority for any Claims to be arbitrated on a class action basis.” Respondents nonetheless filed a class action, claiming that petitioners violated §1 of the Sherman Act and seeking treble damages for the class under §4 of the Clayton Act. Petitioners moved to compel individual arbitration under the Federal Arbitration Act (FAA), but respondents countered that the cost of expert analysis necessary to prove the antitrust claims would greatly exceed the maximum recovery for an individual plaintiff. The District Court granted the motion and dismissed the lawsuits. The Second Circuit reversed and remanded, holding that because of the prohibitive costs respondents would face if they had to arbitrate, the class-action waiver was unenforceable and arbitration could not proceed. The Circuit stood by its reversal when this Court remanded in light of Stolt-Nielsen S. A. v. AnimalFeeds International Corp., 559 U. S. 662 , which held that a party may not be compelled to submit to class arbitration absent an agreement to do so.
Held: The FAA does not permit courts to invalidate a contractual waiver of class arbitration on the ground that the plaintiff’s cost of individually arbitrating a federal statutory claim exceeds the potential recovery. Pp. 3–10.
(a) The FAA reflects the overarching principle that arbitration is a matter of contract. See Rent-A-Center, West, Inc. v. Jackson, 561 U. S. ___, ___. Courts must “rigorously enforce” arbitration agreements according to their terms, Dean Witter Reynolds, Inc. v. Byrd, 470 U. S. 213 , even for claims alleging a violation of a federal statute, unless the FAA’s mandate has been “ ‘overridden by a contrary congressional command,’ ” CompuCredit Corp. v. Greenwood, 565 U. S. ___, ___. Pp. 3–4.
(b) No contrary congressional command requires rejection of the class-arbitration waiver here. The antitrust laws do not guarantee an affordable procedural path to the vindication of every claim, see Rodriguez v. United States, 480 U. S. 522 –526, or “evince an intention to preclude a waiver” of class-action procedure, Mitsubishi Motors Corp. v. Soler-Chrysler-Plymouth, Inc., 473 U. S. 614 . Nor does congressional approval of Federal Rule of Civil Procedure 23 establish an entitlement to class proceedings for the vindication of statutory rights. The Rule imposes stringent requirements for certification that exclude most claims, and this Court has rejected the assertion that the class-notice requirement must be dispensed with because the “prohibitively high cost” of compliance would “frustrate [plaintiff’s] attempt to vindicate the policies underlying the antitrust” laws, Eisen v. Carlisle & Jacquelin, 417 U. S. 156 –168, 175–176. Pp. 4–5.
(c) The “effective vindication” exception that originated as dictum in Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U. S. 614 , also does not invalidate the instant arbitration agreement. The exception comes from a desire to prevent “prospective waiver of a party’s right to pursue statutory remedies,” id., at 637, n. 19; but 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. Cf. Gilmer v. Interstate/Johnson Lane Corp., 500 U. S. 20 ; Vimar Seguros y Reaseguros, S. A. v. M/V Sky Reefer, 515 U. S. 528 . AT&T Mobility LLC v. Concepcion, 563 U. S. ___, all but resolves this case. There, in finding that a law that conditioned enforcement of arbitration on the availability of class procedure interfered with fundamental arbitration attributes, id., at ___, the Court specifically rejected the argument that class arbitration was necessary to prosecute claims “that might otherwise slip through the legal system,” id., at ___. Pp. 5–9.
667 F. 3d 204, reversed.
Scalia, J., delivered the opinion of the Court, in which Roberts, C. J., and Kennedy, Thomas, and Alito, JJ., joined. Thomas, J., filed a concurring opinion. Kagan, J., filed a dissenting opinion, in which Ginsburg and Breyer, JJ., joined. Sotomayor, J., took no part in the consideration or decision of the case.