Enforceability of Arbitration Agreement in Antitrust Context Sharply Divides Second Circuit

Originally published May 30, 2012

Keywords: FAA, arbitration agreements, class-wide arbitration

Last Term, the US Supreme Court held in AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), that the Federal Arbitration Act (FAA) prohibits states from conditioning enforceability of arbitration agreements on the availability of class-wide arbitration. In the wake of Concepcion, a two-judge panel of the Second Circuit reaffirmed its view that agreements to arbitrate disputes on an individual basis need not be enforced when a plaintiff establishes that the costs of vindicating a federal claim make it unrealistic to pursue such a claim without the class-action procedure. See In re: American Express Merchants' Litig., 667 F.2d 204 (2d Cir. 2012) ("AmEx III"). Concluding that the cost of obtaining the "antitrust study" necessary to pursue the plaintiffs' claims would far exceed the possible damages award, the panel declared that the plaintiffs' agreement to