SCOTUS Decision Re AMEX v Italian Colors: Take It or Leave It
Over these past few weeks, we have heard a lot about SCOTUS’ decision regarding DOMA and the Voting Rights Act. Little attention has focused on the majority’s decision to prevent small businesses from pursuing claims of abuse of monopoly power under the antitrust laws. At root, the Court said the Federal Arbitration Act virtually overrides any other statute.
Before this decision, SCOTUS said that courts should only enforce arbitration clauses where a party could “effectively vindicate its statutory rights.” However, with American Express v. Italian Colors, a majority (composed of the five conservative justices) held that the arbitration clauses are enforceable even if doing so makes it impossible for a plaintiff to actually vindicate its statutory rights.
The plaintiffs in this case were small merchants (think mom and pop shops) and restaurants. These small businesses claimed that Amex was throwing its weight around as a monopoly by requiring them to accept Amex and by extension requiring them to pay higher rates. The evidence now required of them to prove their case would cost them hundreds of thousands of dollars–all for a best case scenario of recovering a small percentage of those costs.