Corporate Accountability

Adding Some Spice to an Otherwise Bland Day: American Express v. Italian Colors Restaurant

The Supreme Court disappointed a great many people on Thursday.  No affirmative action.  No voting rights.  No marriage equality.  Nevertheless, the Court did issue an opinion in an important business case – a business-on-business dispute that shouldn’t be ignored, American Express v. Italian Colors Restaurant.

 

The case involved a set of consolidated antitrust suits brought by an Oakland restaurant and other small merchants against American Express.  The plaintiffs accused the credit card giant of using “its monopoly power in the market for charge cards to force merchants to accept credit cards at rates approximately 30% higher than the fees for competing credit cards.”  The plaintiffs had entered into an agreement with American Express that required them to arbitrate any disputes with the company and that prohibited any attempts to pursue their claims through class arbitration.  At the same time, the expert evidence required to win an individual antitrust claim was likely to cost more than any individual claimant was likely to recover in an individual action.

 

Simply put, American Express had many of the hallmarks of your typical under-the-radar, but highly important, business case in the Roberts Court. The U.S. Chamber of Commerce filed an amicus brief.  The Court divided closely along ideological lines.  And the Chamber’s side prevailed.

 

American Express also had one interesting, atypical feature that’s worthy of note.  While the Chamber usually files briefs siding with businesses over ordinary citizens, in American Express the Chamber actually took sides in a business-on-business dispute – siding with a big business over a number of smaller ones.  It did so in order to advance a key part of their long-term agenda, using arbitration agreements to make it harder for small claimants – whether they’re ordinary Americans or small businesses – to bring claims in court against large companies.  In an opinion authored by Justice Scalia and joined by his conservative brethren, the Court heeded the Chamber’s call in American Express, holding that arbitration agreements (and, with them, any class arbitration waivers) must be enforced, even if “the plaintiff’s cost of individually arbitrating a federal statutory claim exceeds the potential recovery.”

 

Justice Kagan fired back against the majority with a snappy (and highly readable) dissent, joined by Justices Breyer and Ginsburg.  (Justice Sotomayor was recused from the case.)  Calling any attempt by individuals to vindicate their claims in such a circumstance “a fool’s errand,” Justice Kagan explained that “[n]o rational actor would bring a claim worth tens of thousands of dollars if doing so meant incurring costs in the hundreds of thousands.”  Instead, in Justice Kagan’s view, the Court’s conservatives had left the merchants with a troubling choice: “Spend way, way, way more money than your claim is worth, or relinquish your Sherman Act rights.”  Justice Kagan concluded that the Court’s conservatives had transformed the Federal Arbitration Act, which had traditionally “conceived of arbitration as a ‘method of resolving disputes,’” into “more nearly the opposite – a mechanism easily made to block the vindication of meritorious federal claims and insulate wrongdoers from liability.”

 

With Thursday’s win in American Express, the Chamber improved its record before the Court this Term to 10 wins and 3 losses, with an undefeated record in closely divided cases like American Express.  With a barrage of blockbuster decisions on deck next week, it would be easy to simply ignore the rest of the Court’s business docket.  However, four important business cases remain, and, based on the distribution of opinions so far this Term, it looks like the Court’s conservatives are poised to write many – if not all – of them.  These cases shouldn’t be ignored.

 

In a Term dominated by high-profile cases on the meaning of equality, two important (and still-pending) civil rights cases remain on the Court’s business docket – Vance v. Ball State University and University of Texas Southwestern Medical Center v. Nassar – both of which have flown underneath the radar.  Furthermore, during a Term when everyone keeps asking whether the Court will keep faith with Justice O’Connor’s pragmatic approach to affirmative action, a little-noticed case – Koontz v. St. Johns River Water Management District – raises the same question in the takings context.  Finally, even as Court-watchers have closely tracked similar drug-safety cases in previous Terms, few have paid notice to Mutual Pharmaceutical Co. v. Bartlett.

 

Taken together, these four cases will greatly affect the lives of countless Americans nationwide.  They’ll determine whether ordinary Americans can hold their employers accountable for alleged civil rights violations (Vance and Nassar), whether state and local governments have the flexibility they need to both protect the environment and promote development (Koontz), and whether an individual harmed by a generic drug’s side-effects can recover damages from a drug manufacturer under state law (Bartlett).  With so much at stake, it’s critical that these important cases don’t get buried in the end-of-Term avalanche.

 

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