Supreme Court's Amex Decision Creates High Hurdle For Plaintiffs Seeking To Invalidate Arbitration Agreements With Class Action Waivers

In American Express Co. v. Italian Colors Restaurant, No. 12-133 (June 20, 2013), the U.S. Supreme Court reversed a Second Circuit opinion and held that the Federal Arbitration Act (FAA) does not permit a court to invalidate an arbitration agreement with a class action waiver on the ground that the plaintiff's cost of individually arbitrating a federal statutory claims exceeds the potential recovery. 

In a 5-3 decision,¹ the Supreme Court reiterated that courts "must rigorously enforce" arbitration agreements according to their terms, including terms that "specify with whom [the parties] choose to arbitrate their disputes."  Relying on its decision last year in CompuCredit Corp. v. Greenwood, 132 S. Ct. 665 (2012), the Court stated this was true even for claims brought under a federal statute, "unless the FAA's mandate has been overridden by a contrary congressional command."