In re American Express Merchants’ Litigation: Second Circuit Strikes Down Class Action Waiver

A federal appellate court has further limited the application of the U.S. Supreme Court’s ruling in Concepcion v. AT&T.  The Second Circuit has invalidated a class action waiver contained in the arbitration agreement between American Express and the merchant plaintiffs.  See In re American Express Merchants’ Litigation, No. 06-1871-cv (2nd Cir. Feb. 1, 2012) (available here).  The agreement precluded the merchants from having any claim arbitrated on a collective basis.  Slip op. at 8-12 (discussing Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 130 S. Ct. 1758, 1775 (2010) (holding that parties cannot be compelled into classwide arbitration absent a clear contractual basis)).  The appellate court held that the waiver was unenforceable despite Concepcion, because a prohibition against collective actions would impair the plaintiffs’ ability to enforce their statutory rights under the Sherman Act.  Slip op. at 24.  Specifically, “the cost of plaintiffs’ [sic] individually arbitrating their dispute with Amex would be prohibitive, effectively depriving plaintiffs of the statutory protections of the antitrust laws.”  Slip op. at 21-22.  The panel remanded the case to the district court with instruction to deny American Express’ motion to compel arbitration.  Slip op. at 25.