The U.S. Supreme Court is poised to hear a case that has the potential to change the landscape of class actions throughout the country. Two years ago the Court delivered a major blow to consumer class actions in AT&T Mobility v. Concepcion, when it held that federal law prohibits states from banning class action waivers in consumer contracts. In other words, the Supreme Court held that businesses are allowed to include provisions in consumer contracts, such as cell phone contracts and credit card agreements, whereby the consumer waives his or her right to take legal action via classwide arbitration. When class action arbitration waivers are in place, consumers are required to initiate individual arbitration proceedings against the company in order to resolve any disputes.
In the upcoming term, the Supreme Court will hear another class action waiver case – American Express Co. v. Italian Colors Restaurant. In this case, the Supreme Court will be asked to decide whether an arbitration agreement that includes a class action waiver is unenforceable because it prevents merchants suing American Express from effectively protecting their antitrust rights protected by federal statute.
The standard American Express card acceptance agreement includes a mandatory arbitration clause that requires disputes to be settled via arbitration and not in a court of law. Nonetheless, several small business merchants sued American Express in a class action lawsuit in federal court, alleging that American Express had violated federal antitrust laws by using its market influence to compel merchants to accept the company’s mass-market credit and debit cards at higher merchant-fee rates than charged by other companies.
The district court ordered the dispute to be settled via arbitration, but the Second Circuit reversed that decision, holding that the merchants “would incur prohibitive costs if compelled to arbitrate under the class action waiver.”
What Does This Case Mean for Consumers?
Many experts worry that, if the Supreme Court decides in favor of American Express and allows the inclusion of class action waivers in its consumer contracts, the decision could reduce public confidence in the legitimacy of the arbitration process for dispute resolution and could trigger Congress to take legislative action to place stricter restrictions on arbitration.
Consumer advocates also worry that allowing the class action waiver provisions to remain in adhesive consumer contracts would eliminate consumers’ rights to vindication for alleged wrong-doing since pursuing individual claims is often cost-prohibitive in consumer contracts. In other words, the litigation costs of pursuing a claim far outweigh the amount of the claim itself, so consumers would choose to forego legal action to protect their rights.
The Chicago class action attorneys at Ankin Law Office, LLC are dedicated to protecting consumer rights. We are knowledgeable and experienced in handling class action suits of all kinds. If you would like to learn more about class action waivers or have a potential class action lawsuit, contact us today at (312) 600-0000 schedule a free consultation with one of our knowledgeable Chicago consumer class action lawyers.