The U.S. Supreme Court will hear oral arguments on Wednesday in a case that could provide corporations with the power to evade federal laws by keeping small businesses and individuals out of the courts and forced into arbitration. In the case, American Express Co. v. Italian Colors Restaurant, SCOTUS will decide if corporations can force arbitration on small businesses and individuals even when it can be shown that the cost of forced arbitration would make justice unattainable.
Corporations stack the deck against small businesses and individuals by inserting forced arbitration clauses into the fine print of contracts. These clauses mandate that disputes be resolved on an individual basis in a private system designed by the corporation.
A decision favoring forced arbitration over the rights of small businesses and individuals would allow corporations to get away with widespread wrongdoing by eliminating statutory rights with the fine print of contracts.
- In this case, small businesses are seeking to hold AmEx accountable for violating federal antitrust laws.
- The small businesses allege that AmEx is violating antitrust laws with a tying arrangement by using its monopoly power over charge cards to force merchants to take all AmEx-branded credit cards and pay higher fees.
- AmEx’s merchant contracts require individual forced arbitration to resolve disputes. AmEx’s arbitration clauses also do not allow merchants to shift or share the expenses of arbitrating a claim.
- The small businesses presented ample evidence to the court to show that the costs of an individual arbitration would have been many times more than the possible maximum amount of damages that each would recover. The costs of a single antitrust market study necessary for each arbitration claim could exceed $1 million, while each claimant’s potential damages would be no more than a few thousand dollars.
- If small businesses are forced to try to resolve this dispute in individual arbitration, they will not be able to effectively vindicate their rights and AmEx will be allowed to get away with widespread wrongdoing.