Client Alert
American Express Co. v. Italian Colors: Supreme Court Broadens The Impact of Class Action Waivers in Predispute Arbitration Agreements
June 25, 2013
BY KENNETH W. GAGE, JOSEPH R. PROFAIZER, & SEAN M. SMITH
Extending the reach of its 2011 decision in AT&T Mobility v. Concepcion, the U.S. Supreme Court last week held in a 5-3 decision that courts cannot refuse to enforce an arbitration agreement that precludes class-based arbitration because the cost of successfully arbitrating a federal statutory claim on an individual basis exceeds the potential recovery. This decision will make it significantly easier for companies to avoid class litigation of all types through the use of pre-dispute arbitration agreements with class waivers. And in particular, it will provide strong arguments to employers seeking to avoid collective actions under the Age Discrimination in Employment Act, the Equal Pay Act or the Fair Labor Standards Act through the use of pre-dispute arbitration agreements with class waivers.
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