Reactions to Amex III

Last week’s U.S. Supreme Court decision in American Express Co. v. Italian Colors Restaurant, 570 U. S. ___ (2013) has occasioned diverse responses, ranging from the usual “nothing to see here” from more Pollyanic plaintiffs’ advocates, to the defense bar proclaiming that Amex III is apocalypse, again, for class actions, after having predicted roughly the same thing following the Supreme Court’s Dukes, Concepcion, and Comcast decisions.

The always thoughtful Paul Bland, of Trial Lawyers for Public Justice, has titled his piece on Amex III “Worst Supreme Court Arbitration Decision Ever,” and focuses on the Amex III majority’s candid embrace of class arbitration waivers as de facto exculpatory clauses: “You see, until now, the Supreme Court has said that courts should only enforce arbitration clauses where a party could ‘effectively vindicate its statutory rights.’ Today, in a sleight of hand, the five conservative justices said that this means that arbitration clauses should be enforced even when they make it impossible for parties to actually vindicate their statutory rights, so long as they have a theoretical ‘right’ to pursue that remedy.” 

Kimberly Kraweloc’s respected and much-watched UCL Practitioner also accentuated the negative, noting that “the Court held 5-3 that the arbitration clause was enforceable even though an arbitration proceeding would provide no effective means to vindicate the plaintiffs’ statutory rights under the federal antitrust laws.”

However, recalling the extreme predictions that immediately followed earlier decisions concerning similar subject matter, Paul Karlsgrodt is more measured in his ultimate assessment, asking “Will Amex III finally be the case to end class actions as we know them?” and responding: “Concepcion hasn’t, so I doubt Amex III will either.”

Blogger Michael Fox described the most likely practical consequence of Amex III for employers as follows: “a large number of employers who have not implemented arbitration plans will be re-thinking the decision.” With the Supreme Court also having recently endorsed class-wide arbitration in Oxford Health Plans LLC v. Sutter, employers will likely seek to provide for a waiver of class actions along with mandatory arbitration clauses.

Finally, the ever-florid Cato Institute proclaimed that Amex III “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.”

One wonders, though, whether the Scalia-led arbitration crusade even views class actions as “just one legal vehicle,” or aims to consign class actions to something even less significant. And while prior legislative responses have stalled, efforts such as the Arbitration Fairness Act of 2013, which would among other things prohibit arbitration agreements and class action waivers as a condition of employment, are drafted and ready to be acted on should the Supreme Court overreach.