AMEX Arbitration Case Goes to the Supreme Court (Again and Again and Again)

I noticed via a post yesterday on the ADR Prof Blog that the Supreme Court has granted certiorari in an arbitration case that I characterized in a post earlier this year as probably the case most affected by the Supreme Court’s recent arbitration decisions (i.e., Stolt-Nielsen v. Animal Feeds and AT&T Mobility v. Concepcion). This will be the third time for the case to make its way to the Supreme Court.

My initial reaction to Concepcion was that it’s not a bad deal for consumers because the tradeoff AT&T had to make to ensure that it wouldn’t be subject to a class action was to provide consumers with better relief than they would likely receive in court. As a (rather cynical) consumer who would expect to receive very little in a class action suit, that seems like a fair tradeoff, as I noted in AT&T Mobility v. Concepcion: Is Class Arbitration Dead?.

I didn’t read Concepcion as standing for the proposition that companies can get out of class actions merely by including a class action waiver in their arbitration agreements, but rather that class action waivers would be upheld if the arbitration process provided consumers with true relief, which was clearly the case in Concepcion. I’ll admit, however, that I’ve become a bit nervous over the past several months as post-Concepcion cases have been decided and as I’ve read commentary by arbitration experts who would clearly disagree with my optimism. AMEX III will test whether my optimism was indeed naive.

In its third time around (the case that the Supreme Court has agreed to hear) the Second Circuit distinguished Concepcion and once again found that the arbitration clause was unenforceable because the practical effect of enforcement would be to preclude the plaintiffs’ ability to vindicate their federal statutory rights. According to the ADR Prof Blog, “The Second Circuit’s efforts to carve out an exception to AT&T Mobility under the ‘vindicating rights’ doctrine are squarely on the line. Since the ‘vindicating rights’ doctrine seemed one of the only valid ‘loopholes’ to AT&T Mobility, the American Express decision will surely be the most important arbitration law case coming out of the Court this term.”

I’ll certainly be watching this case closely, and my money’s on the Second Circuit’s decision to be upheld. At least I’d sleep better at night as a consumer … and as a Monday-morning quarterback.

In Category: U.S. Supreme Court Contract Cases

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