American Express Co. v. Italian Colors Restaurant, 133 S. Ct. 2304 (2013)
American Express Co. v. Italian Colors Restaurant, 133 S. Ct. 2304 (2013)
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
No. 12133
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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,
315316 (CA2 2009).
We granted certiorari, vacated the judgment, and remanded for further consideration in light of Stolt-Nielsen
S. A. v. AnimalFeeds Intl Corp., 559 U. S. 662 (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
(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 (CA2 2011). It then sua sponte reconsidered its
ruling in light of AT&T Mobility LLC v. Concepcion, 563
1 A charge card requires its holder to pay the full outstanding balance
at the end of a billing cycle; a credit card requires payment of only a
portion, with the balance subject to interest.
The effective vindication exception to which respondents allude originated as dictum in Mitsubishi Motors,
where we expressed a willingness to invalidate, on public
policy grounds, arbitration agreements that operat[e] . . .
as a prospective waiver of a partys right to pursue statutory remedies. 473 U. S., at 637, n. 19 (emphasis added).
Dismissing concerns that the arbitral forum was inadequate, we said that so long as the prospective litigant
effectively may vindicate its statutory cause of action in
the arbitral forum, the statute will continue to serve both
its remedial and deterrent function. Id., at 637. Subsequent cases have similarly asserted the existence of an
effective vindication exception, see, e.g., 14 Penn Plaza
LLC v. Pyett, 556 U. S. 247, 273274 (2009); Gilmer v.
Interstate/Johnson Lane Corp., 500 U. S. 20, 28 (1991),
but have similarly declined to apply it to invalidate the
arbitration agreement at issue.2
And we do so again here. As we have described, the
exception finds its origin in the desire to prevent prospective waiver of a partys right to pursue statutory remedies, Mitsubishi Motors, supra, at 637, n. 19 (emphasis
added). That would certainly cover a provision in an
arbitration agreement forbidding the assertion of certain
statutory rights. And it would perhaps cover filing and
administrative fees attached to arbitration that are so
high as to make access to the forum impracticable. See
2 Contrary
3 The
assertion to the contrary cites not the opinion on appeal here, but an
earlier opinion that was vacated. See In re American Express Merchants Litigation, 554 F. 3d 300 (CA2 2009), vacated and remanded,
10
RESTAURANT
Opinion of the Court
It is so ordered.
JUSTICE SOTOMAYOR took no part in the consideration
or decision of this case.
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RESTAURANT
KAGAN, J., dissenting
RESTAURANT
KAGAN, J., dissenting
would?
The answer becomes all the more obvious given the
limits we have placed on the rule, which ensure that it
does not diminish arbitrations benefits. The rule comes
into play only when an agreement operate[s] . . . as a
prospective waiverthat is, forecloses (not diminishes) a
plaintiff s opportunity to gain relief for a statutory violation. Mitsubishi, 473 U. S., at 637, n. 19. So, for example,
Randolph assessed whether fees in arbitration would be
prohibitive (not high, excessive, or extravagant). 531
U. S., at 90. Moreover, the plaintiff must make that showing through concrete proof: [S]peculative risks, unfounded assumptions, and unsupported statements will
not suffice. Id., at 9091, and n. 6. With the inquiry that
confined and the evidentiary requirements that high,
courts have had no trouble assessing the matters the rule
makes relevant. And for almost three decades, courts
have followed our edict that arbitration clauses must
usually prevail, declining to enforce them in only rare
cases. See Brief for United States as Amicus Curiae 26
27. The effective-vindication rule has thus operated year
in and year out without undermining, much less destroy[ing], the prospect of speedy dispute resolution that
arbitration secures. Ante, at 9.
And this is just the kind of case the rule was meant to
address. Italian Colors, as I have noted, alleges that
Amex used its market power to impose a tying arrangement in violation of the Sherman Act. The antitrust laws,
all parties agree, provide the restaurant with a cause of
action and give it the chance to recover treble damages.
Here, that would mean Italian Colors could take home up
to $38,549. But a problem looms. As this case comes to
us, the evidence shows that Italian Colors cannot prevail
in arbitration without an economic analysis defining the
relevant markets, establishing Amexs monopoly power,
showing anticompetitive effects, and measuring damages.
And that expert report would cost between several hundred thousand and one million dollars.1 So the expense
involved in proving the claim in arbitration is ten times
what Italian Colors could hope to gain, even in a best-case
scenario. That counts as a prohibitive cost, in Randolphs terminology, if anything does. No rational actor
would bring a claim worth tens of thousands of dollars
if doing so meant incurring costs in the hundreds of
thousands.
An arbitration agreement could manage such a mismatch in many ways, but Amexs disdains them all. As
the Court makes clear, the contract expressly prohibits
class arbitration. But that is only part of the problem.2
The agreement also disallows any kind of joinder or consolidation of claims or parties. And more: Its confidentiality provision prevents Italian Colors from informally
arranging with other merchants to produce a common
expert report. And still more: The agreement precludes
any shifting of costs to Amex, even if Italian Colors prevails. And beyond all that: Amex refused to enter into any
stipulations that would obviate or mitigate the need for
1 The evidence relating to these costs comes from an affidavit submitted by an economist experienced in proving similar antitrust claims.
The Second Circuit found that Amex ha[d] brought no serious challenge to that factual showing. See, e.g., 667 F. 3d 204, 210 (2012).
And in this Court, Amex conceded that Italian Colors would need an
expert economic report to prevail in arbitration. See Tr. of Oral Arg.
15. Perhaps that is not really true. A hallmark of arbitration is its use
of procedures tailored to the type of dispute and amount in controversy;
so arbitrators might properly decline to demand such a rigorous evidentiary showing in small antitrust cases. But that possibility cannot
disturb the factual premise on which this case comes to us, and which
the majority accepts: that Italian Colorss tying claim is an ordinary
kind of antitrust claim; and that it is worth about a tenth the cost of
arbitration.
2 The majority contends that the class-action waiver is the only part
we should consider. See ante, at 78, n. 4. I explain below why that
assertion is wrong. See infra, at 1112.
RESTAURANT
KAGAN, J., dissenting
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RESTAURANT
KAGAN, J., dissenting
4 Gilmer and Vimar Seguros, which the majority relies on, see ante, at
8, fail to advance its argument. The plaintiffs there did not claim, as
Italian Colors does, that an arbitration clause altogether precluded
them from vindicating their federal rights. They averred only that
arbitration would be less convenient or effective than a proceeding in
court. See Gilmer v. Interstate/Johnson Lane Corp., 500 U. S. 20, 31
32 (1991); Vimar Seguros y Reaseguros, S. A. v. M/V Sky Reefer, 515
U. S. 528, 533 (1995). As I have explained, that kind of showing does
not meet the effective-vindication rules high bar. See supra, at 6.
11
12
RESTAURANT
KAGAN, J., dissenting
13
14
RESTAURANT
KAGAN, J., dissenting
15
argument about why the effective-vindication rule precludes this agreements enforcement.
As a result, Amexs contract will succeed in depriving
Italian Colors of any effective opportunity to challenge
monopolistic conduct allegedly in violation of the Sherman
Act. The FAA, the majority says, so requires. Do not be
fooled. Only the Court so requires; the FAA was never
meant to produce this outcome. The FAA conceived of
arbitration as a method of resolving disputesa way of
using tailored and streamlined procedures to facilitate
redress of injuries. Rodriguez de Quijas, 490 U. S., at 481
(emphasis added). In the hands of todays majority, arbitration threatens to become more nearly the oppositea
mechanism easily made to block the vindication of meritorious federal claims and insulate wrongdoers from liability. The Court thus undermines the FAA no less than it
does the Sherman Act and other federal statutes providing
rights of action. I respectfully dissent.