SCOTUS: Yes, You Can Waive Class-Action Handling of Future Disputes

Walter Olson Today’s Supreme Court decision in American Express Company v. Italian Colors Restaurant is a victory for freedom of contract, a boost for arbitration as an alternative to litigation, and a step forward in the Court’s ongoing recognition that the class action is just one legal vehicle among many, not some priority express train to be favored over other traffic. The restaurant had agreed with American Express to settle disputes by way of arbitration, and to waive any rights to have future disputes handled through class actions. When a potential antitrust claim arose, it nonetheless sought to slip out of its contractual agreement and invalidate the waiver. Split along familiar ideological lines with Justice Sotomayor not participating, the court ruled 5-3 that the Second Circuit erred in striking down the waiver as inconsistent with the Federal Arbitration Act. While the Court has previously held that arbitration agreements must be construed to provide “effective vindication” of statutory claims, the class action format – which did not even exist for these purposes until decades after the Sherman Act’s passage – was not so crucial to the restaurant’s legal rights as to be unwaivable.  For years, organized trial lawyers have been publicly campaigning against arbitration – which keeps money out of their pockets by diverting disputes from knock-down litigation – claiming that it is unfair and one-sided. But...
Source: Cato-at-liberty - Category: Health Medicine and Bioethics Commentators Authors: Source Type: blogs