U.S. Supreme Court Re-Affirms Class Action Waivers In Arbitration Agreements

Court Rejects 'Effective Vindication' of Statutory Rights as Reason to Invalidate Consent to Individual Arbitration. Again applying the Federal Arbitration Act ("FAA") to uphold agreements requiring parties to arbitrate their disputes rather than litigate them in court, the U.S Supreme Court has held that the FAA prohibits courts from invalidating a contractual waiver of class arbitration because the cost of arbitrating a federal statutory claim individually exceeds the potential recovery, even if the effect of enforcing the waiver is to prevent the claim from being brought¹.

Facts

A group of retail merchants who accept American Express personal and corporate charge cards alleged that American Express used its market power in corporate and personal charge cards to impose an "Honor All Cards" policy, pursuant to which merchants were required to accept the full range of American Express cards, including