The Majority

In this case, a putative class of merchants claim that American Express violated federal antitrust laws (the Sherman and Clayton Act).  Their agreements with AmEx stated “[t]here shall be no right or authority for any Claims to be arbitrated on a class action basis.”  The agreements also precluded any joinder or consolidated actions.  AmEx moved to compel individual arbitration.  The district court granted the motion, but the Second Circuit reversed.  Under the line of Supreme Court cases establishing that an arbitration agreement could be invalidated it if prevented the effective vindication of federal statutory rights, the Second Circuit found the plaintiffs had proven that the costs of arbitrating antitrust claims individually (due largely to the requirement of expert economic analyses) was prohibitive.

The Supreme Court reversed, not by declaring that the entire line of “effective vindication” cases were dicta or overruled (Mitsubishi Motors, 14 Penn Plaza, Gilmer, and Green Tree), but by narrowing its application.  From now on, the doctrine only applies if the plaintiffs “right to pursue” federal statutory remedies is prevented, not if the cost to prove those federal statutory claims makes them irrational to pursue.  As examples, Scalia noted that arbitration clauses outright forbidding certain statutory claims would still be precluded by the “effective vindication” doctrine, as would clauses that involve prohibitively high “filing and administrative fees” in the arbitral forum.

Scalia also directly addressed the interplay between the Concepcion decision (finding California case law invalidating class action waivers in consumer arbitration clauses was preempted by the FAA) and this case by saying Concepcion “all but resolves this case.”  Why?  Because it “rejected the argument that class arbitration was necessary to prosecute claims ‘that might otherwise slip through the legal system.’”