U.S. Supreme Court rules in American Express case that arbitration agreements can prevent class action claims

In a decision released yesterday, the U.S. Supreme Court ruled  5-3, with Justice Sonia Sotomayor recused, that the Federal Arbitration Act "does not permit courts to invalidate a contractual waiver of class arbitration on the ground that the plaintiff's cost of individually arbitrating a federal statutory claim exceeds the potential recovery." In American Express Co., et al. v. Italian Colors Restaurant, et al., a district court dismissed a class action filed by merchants who accept American Express cards that had signed an arbitration agreement requiring that "all of their disputes be resolved by arbitration." The Ninth Circuit Court of Appeals reversed and remanded, holding that "because of the prohibitive costs respondents would face if they had to arbitrate, the class-action waiver was unenforceable and arbitration could not proceed." The case was then argued before the U.S. Supreme Court on February 27, 2013. For more, read the full decision.

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