* Court to review mandatory arbitration clause
* Merchants say should be able to sue as a class
By Terry Baynes and Jonathan Stempel
Nov 9 The U.S. Supreme Court on Friday agreed to
consider whether American Express Co may invoke an
arbitration clause to prevent merchant customers from banding
together in an antitrust lawsuit against the company.
The court accepted the credit card and travel services
company's appeal from a February ruling by the 2nd U.S. Circuit
Court of Appeals in New York th at vo ided the clause, and allowed
merchants including the Italian Colors Restaurant in Oakland,
California to pursue a class-action lawsuit.
A decision could determine the extent to which companies
might rely on arbitration clauses to fend off class-action
lawsuits, which can allow litigants to obtain larger recoveries
at lower cost.
Since 1999, American Express has required merchant customers
to w aive thei r right to sue the company in a class action.
But a group of restaurants, retailers and other customers
sued in 2003, saying the New York-based company violated
antitrust law in its effort to force them to pay in flated fees
on ch arge card transactions.
A two-judge panel of the 2nd Circuit said the company's
mandatory arbitration clause violated antitrust law, because
many merchants would find it economically unfeasible to pu rsue
their claims individually.
American Express said that ruling created a "sweeping,
unwritten loophole" in federal arbitration law that should be
The Supreme Court has in recent years shown deference to
arbitration clauses, while narrowing the ability of various
plaintiffs to bring class-action lawsuits.
In a 2011 case involving AT&T Inc, the court gave
businesses a big victory by upholding contracts that required
customers to submit to individual arbitrations to resolve
disputes, and waive their right to pursue class-action
litigation. A California law had prohibited such waivers.
The same year, the court decertified a class of as many as
1.5 million female workers at Wal-Mart Stores Inc who
alleged gender bias in pay and promotions.
The Supreme Court will likely hear oral arguments in the
American Express case early next year, with a decision to follow
by the end of June.
Justice Sonia Sotomayor, who was involved with the case when
she was a federal appeals court judge, did not take part in the
decision to accept American Express' appeal.
The case is American Express Co et al v. Italian Colors
Restaurant et al, U.S. Supreme Court, No. 12-133.