570 U.S. 228 (2013), 12-133, American Express Co. v. Italian Colors Restaurant

Docket Nº:12-133
Citation:570 U.S. 228, 133 S.Ct. 2304, 186 L.Ed.2d 417, 81 U.S.L.W. 4483, 24 Fla.L.Weekly Fed. S 337
Opinion Judge:SCALIA, Justice
Party Name:AMERICAN EXPRESS CO., et al., Petitioners v. ITALIAN COLORS RESTAURANT et al.
Attorney:Michael Kellogg, Washington, DC, for Petitioners. Paul D. Clement, Washington, DC, for Respondents. Malcolm L. Stewart, for the United States as amicus curiae, by special leave of the Court, supporting the Respondents. Louise M. Parent, Mark G. Califano, Bernadette Miragliotta, American Express T...
Judge Panel:SCALIA, J., delivered the opinion of the Court, in which ROBERTS, C.J., and KENNEDY, THOMAS, and ALITO, JJ., joined. THOMAS, J., filed a concurring opinion. KAGAN, J., filed a dissenting opinion, in which GINSBURG and BREYER, JJ., joined. SOTOMAYOR, J., took no part in the consideration or decisi...
Case Date:June 20, 2013
Court:United States Supreme Court
 
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Page ___

___ U.S. ___ (2013)

133 S.Ct. 2304

AMERICAN EXPRESS COMPANY, ET AL., PETITIONERS

v.

ITALIAN COLORS RESTAURANT ET AL.

No. 12-133

United States Supreme Court

June 20, 2013

Argued February 27, 2013

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

[133 S.Ct. 2306] Syllabus [*]

An agreement between petitioners, American Express and a subsidiary, and respondents, merchants who accept American Express cards, requires all of their disputes to be resolved by arbitration and provides that there "shall be no right or authority for any Claims to be arbitrated on a class action basis." Respondents nonetheless filed a class action, claiming that petitioners violated §1 of the Sherman Act and seeking treble damages for the class under §4 of the Clayton Act. Petitioners moved to compel individual arbitration under the Federal Arbitration Act (FAA), but respondents countered that the cost of expert analysis necessary to prove the antitrust claims would greatly exceed the maximum recovery for an individual plaintiff. The District Court granted the motion and dismissed the lawsuits. The Second Circuit reversed and remanded, holding that because of the prohibitive costs respondents would face if they had to arbitrate, the class-action waiver was unenforceable and arbitration could not proceed. The Circuit stood by its reversal when this Court remanded in light of Stolt-Nielsen S. A. v. Animal Feeds International Corp., 559 U.S. 662, 130 S.Ct. 1758, 176 L.Ed.2d 605, which held that a party may not be compelled to submit to class arbitration absent an agreement to do so.

Held:

The FAA does not permit courts to invalidate a contractual waiver of class arbitration on the ground that the plaintiffs cost of individually arbitrating a federal statutory claim exceeds the potential recovery. Pp. 2308–2312.

(a) The FAA reflects the overarching principle that arbitration is a matter of contract. See Rent-A-Center, West, Inc. v. Jackson, 561 U.S. __, __, 130 S.Ct. 2772, 177 L.Ed.2d 403. Courts must "rigorously enforce" arbitration agreements according to their terms, Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 221, 105 S.Ct. 1238, 84 L.Ed.2d 158, even for claims alleging a violation of a federal statute, unless the FAA's mandate has been " 'overridden by a contrary congressional command, '" CompuCredit Corp. v. Greenwood, 565 U.S. __, __, 132 S.Ct. 665, 181 L.Ed.2d 586. Pp. 2308–2309.

(b) No contrary congressional command requires rejection of the class-arbitration waiver here. The antitrust laws do not guarantee an affordable procedural path to the vindication of every claim, see Rodriguez v. United States, 480 U.S. 522, 525-526, 107 S.Ct. 1391, 94 L.Ed.2d 533, or "evince an intention to preclude a waiver" of class-action procedure, Mitsubishi Motors Corp. v. Soler-Chrysler-Plymouth, Inc., 473 U.S. 614, 628, 105 S.Ct. 3346, 87 L.Ed.2d 444. Nor does congressional approval [133 S.Ct. 2307] of Federal Rule of Civil Procedure 23 establish an entitlement to class proceedings for the vindication of statutory rights. The Rule imposes stringent requirements for certification that exclude most claims, and this Court has rejected the assertion that the class-notice requirement must be dispensed with because the "prohibitively high cost" of compliance would "frustrate [plaintiffs] attempt to vindicate the policies underlying the antitrust" laws, Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 167-168, 175-176, 94 S.Ct. 2140, 40 L.Ed.2d 732. Pp. 2309-2310.

(c) The "effective vindication" exception that originated as dictum in Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 105 S.Ct. 3346, 87 L.Ed.2d 444, also does not invalidate the instant arbitration agreement. The exception comes from a desire to prevent "prospective waiver of a party's right to pursue statutory remedies, " id., at 637, n. 19, 105 S.Ct. 3346; but the fact that it is not worth the expense involved in proving a statutory remedy does not constitute the elimination of the right to pursue that remedy. Cf. Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 32, 111 S.Ct. 1647, 114 L.Ed.2d 26; Vimar Seguros y Reaseguros, S. A. v. M/V Sky Reefer, 515 U.S. 528, 530, 534, 115 S.Ct. 2322, 132 L.Ed.2d 462. AT&T Mobility LLC v. Concepcion, 563 U.S. __, 131 S.Ct. 1740, 179 L.Ed.2d 742, all but resolves this case. There, in finding that a law that conditioned enforcement of arbitration on the availability of class procedure interfered with fundamental arbitration attributes, id., at __, 131 S.Ct. 1740, the Court specifically rejected the argument that class arbitration was necessary to prosecute claims "that might otherwise slip through the legal system, " id., at __, 131 S.Ct. 1740. Pp. 2309-2312.

667 F.3d 204, reversed.

Michael Kellogg, Washington, DC, for Petitioners.

Paul D. Clement, Washington, DC, for Respondents.

Malcolm L. Stewart, for the United States as amicus curiae, by special leave of the Court, supporting the Respondents.

Louise M. Parent, Mark G. Califano, Bernadette Miragliotta, American Express Travel Related Services, Inc., New York, NY, Julia B. Strickland, Stroock & Stroock & Lavan LLP, Los Angeles, CA, Michael K. Kellogg, Counsel of Record, Derek T. Ho, Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C, Washington, DC, for Petitioners.

Deepak Gupta, Brian Wolfman, Gregory A. Beck, Jonathan E. Taylor, Gupta Beck PLLC, Washington, DC, Paul D. Clement, Counsel of Record, Michael H. McGinley, Bancroft PLLC, Washington, DC, for Respondents.

SCALIA, J., delivered the opinion of the Court, in which ROBERTS, C. J., and Kennedy, Thomas, and Alito, JJ., joined. Thomas, J., filed a concurring opinion. KAGAN, J., filed a dissenting opinion, in which GlNS-BURG and BREYER, JJ., joined.

OPINION

Scalia, JUSTICE

We consider whether a contractual waiver of class arbitration is enforceable under the Federal Arbitration Act when the plaintiff's cost of individually arbitrating a federal statutory claim exceeds the potential recovery.

[133 S.Ct. 2308] I

Respondents are merchants who accept American Express cards. Their agreement with petitioners-American Express and a wholly owned subsidiary-contains a clause that requires all disputes between the parties to be resolved by arbitration. The agreement also provides that "[t]here shall be no right or authority for any Claims to be arbitrated on a class action basis." In re American Express Merchants' Litigation, 667 F.3d 204, 209 (C.A.2 2012).

Respondents brought a class action against petitioners for violations of the federal antitrust laws. According to respondents, American Express used 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.1 This tying arrangement, respondents said, violated §1 of the Sherman Act. They sought treble damages for the class under §4 of the Clayton Act.

Petitioners moved to compel individual arbitration under the Federal Arbitration Act (FAA), 9 U.S.C. §1 et seq. In resisting the motion, respondents submitted a declaration from an economist who estimated that the cost of an expert analysis necessary to prove the antitrust claims would be "at least several hundred thousand dollars, and might exceed $1 million, " while the maximum recovery for an individual plaintiff would be $12, 850, or $38, 549 when trebled. App. 93. The District Court granted the motion and dismissed the lawsuits. The Court of Appeals reversed and remanded for further proceedings. It held that because respondents had established that "they would incur prohibitive costs if compelled to arbitrate under the class action waiver, " the waiver was unenforceable and the arbitration could not proceed. In re American Express Merchants' Litigation, 554 F.3d 300, 315-316 (C.A.2 2009).

We granted certiorari, vacated the judgment, and remanded for further consideration in light of Stolt-Nielsen S. A. v. Animal Feeds Int'l Corp., 559 U.S. 662, 130 S.Ct. 1758, 176 L.Ed.2d 605 (2010), which held that a party may not be compelled to submit to class arbitration absent an agreement to do so. American Express Co. v. Italian Colors Restaurant, 559 U.S. 1103, 130 S.Ct, 2401, 176 L.Ed.2d 920 (2010). The Court of Appeals stood by its reversal, stating that its earlier ruling did not compel class arbitration. In re American Express Merchants' Litigation, 634 F.3d 187, 200 (C.A.2 2011). It then sua sponte reconsidered its ruling in light of AT&T Mobility LLC v. Concepcion, 563 U.S. __, 131 S.Ct. 1740, 179 L.Ed.2d 742, (2011), which held that the FAA preempted a state law barring enforcement of a class-arbitration waiver. Finding AT&T Mobility inapplicable because it addressed preemption, the Court of Appeals reversed for the third time. 667 F.3d, at 213. It then denied rehearing en banc with five judges dissenting. In re American Express Merchants' Litigation, 681 F.3d 139 (C.A.2 2012). We granted certiorari, 568 U.S. __, 133 S.Ct. 594, 184 L.Ed.2d 390 (2012), to consider the question "[w]hether the Federal Arbitration Act permits courts ... to invalidate arbitration agreements on the ground that they do not permit class arbitration of a federal-law claim, " Pet. for Cert. i.

II

Congress enacted the FAA in response to widespread judicial hostility to [133 S.Ct. 2309] arbitration. See AT&T Mobility, supra, at __, 131 S.Ct., at 1745. As relevant here, the Act provides:

"A written provision in any maritime transaction or contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid...

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