American Express v. Italian Colors Restaurant

Class Actions – Standards and Cases
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Supreme Court
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In American Express v. Italian Colors Restaurant, American Express sought to enforce an arbitration agreement that prohibited merchants that accepted its charge cards from filing class actions or otherwise sharing the cost of legal proceedings against it. The merchants attempted to hold American Express liable for a tying arrangement that violated the antitrust laws (American Express insisted that they accept its unpopular credit cards if they wanted to accept its popular charge cards), but because expensive expert testimony would be required to prove the claims, the cost of arbitrating an individual case would dwarf any possible recovery. Public Citizen’s amicus brief argued that arbitration agreements that actually prevent arbitration by making it impossible to assert statutory rights are not enforceable under the Federal Arbitration Act. The Supreme Court held that a class action ban in an arbitration agreement is enforceable even where, as here, individual arbitration is economically impossible.