American Exp. Co. v. Italian Colors Restaurant

Whether the Federal Arbitration Act allows a court to invalidate an arbitration agreement which prohibits class arbitration of a federal statutory claim.

Respondents, a group of merchants, brought this action against Petitioners alleging anticompetitive conduct in trade, pursuant to the Sherman and Clayton Acts, 15 U.S.C. § 1 et seq. However, the parties had previously agreed to an arbitration clause, which included a waiver of class action claims. In accordance with this agreement, Respondents were prevented from asserting their claims as a class and were bound to arbitration on all of their substantive antitrust claims.

The district court granted Petitioners’ motion to compel arbitration, but the Court of Appeals for the Second Circuit found that it would be “financially impossible” for Respondents to individually arbitrate their claims and held the arbitration clause unenforceable. According to the court, prohibiting Respondents from pursuing their claim through individual or class judicial action and also prohibiting them from class arbitration stripped Respondents of their substantive rights under the federal antitrust statutes.

On appeal, Petitioners argue the court’s opinion is inconsistent with AT&T v. Concepcion, which held that “conditioning the enforceability of . . . arbitration agreements on the availability of class wide arbitration procedures” violates the Federal Arbitration Act. Respondents argue that pursuant to Mitsubishi Motors Corp. v. Soler Chrysler–Plymouth, Inc., 473 U.S. 614 (1985) and Green Tree Financial Corp. v. Randolph, 531 U.S. 79 (2000), that federal statutory claims may only be resolved through arbitration “so long as the prospective litigant effectively may vindicate its statutory cause of action in the arbitral forum.”