SCOTUS Upholds Enforceability Of Class Action Waiver In Arbitration Agreements

Once again demonstrating its strong support for enforcement of the Federal Arbitration Act, 9 U.S.C. §§ 1-16 (FAA), and class action waivers, the Supreme Court today struck a blow to what had become a potentially promising argument for plaintiffs' counsel. In American Express Co. v. Italian Colors Restaurant, No. 12-133, the Court in a 5-3 decision held that the FAA does not allow a court to strike a class action waiver provision in an arbitration agreement based on evidence that a plaintiff's cost of arbitrating on an individual basis (such as for experts, etc.) is greater than the potential recovery. Justice Sotomayor took no part in the decision.

The Second Circuit, in In re American Express Merchants' Litigation ("American Express"), 667 F.3d 204 (2d Cir. 2012), concluded that an arbitration agreement with a class action waiver was unenforceable based on expert testimony that it would be cost prohibitive for the plaintiffs to pursue their antitrust claims on an