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Supreme Court To Rule Again On Arbitration, Class Action Lawsuits in Amex Case

2013-03-05 21:58:00 (GMT) (JusticeNewsFlash.com - Justice News Flash, Press Release)

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03/05/2013 // San Francisco, California, US // Keller Grover LLP // Carey Been // (press release)

There are two highly significant questions to be answered by the US Supreme Court that may profoundly affect the future of class action lawsuits and arbitration agreements in the American Express vs. Italian Colors Restaurant case, reports LA consumer protection attorney Carey Been.

The first, according to Forbes.com is “if the cost of pursuing a lawsuit exceeds its value to an individual plaintiff, is it a bad thing?” And the second, adds Forbes.com, is “how far can businesses go in asking their customers to sign agreements prohibiting them from joining in class actions, which would solve the problem?”

In this case the Supreme Court will render a decisions that goes to the very core of American antitrust law and will affect consumers and small businesses alike.

Lawyers for the Italian Colors Restaurant accuse Amex of antitrust violations because it forces holders of its merchant agreements to accept debit and credit cards for the same fees. Because the damages done to each individual merchant are in the thousands of dollars and the cost to litigate could be millions, the only way to resolve this fight in court is through a class action lawsuit. Unfortunately, the same merchant agreements provide that disputes be resolved in arbitration. A ruling in favor of big business could have fallout for every consumer and small business.

In a brief submitted in the case, the U.S. Solicitor General agreed, “The United States …has a substantial interest in ensuring that arbitration agreements are not used to prevent private parties from obtaining redress for violations of their federal statutory rights. While the central issue involves an arbitration contract, this case is really about the economics of class actions, which allow lawyers to bundle together hundreds or millions of small claims into a very powerful weapon to induce companies to settle on their terms.”

Amex disagrees, arguing, “Aggregation can distort the underlying substantive law by creating hydraulic pressure to settle even meritless claims.”

In recent rulings, the conservative majority on the Supreme Court has sided with arbitration, especially since its landmark AT&T vs. Concepcion decision, which affirmed bans on class actions in take-it-or-leave-it consumer contracts.

There may be some hope for the plaintiffs in this case. Public Citizen, the American Antitrust Institute and the National Retail Federation, who are standing up for the rights of regular citizens rather than corporate entities, have joined the Solicitor General in support. Other merchant groups have filed friend of the court briefs to voice their concerns that failure to allow these businesses to have their day in court would result in damages to the public interest on numerous occasions.

Amex also has some strong forces on their side as well, such as the U.S. Chamber of Commerce, the American Bankers Association, and other groups sympathetic to big business who believe that arbitration is more cost effective and minimizes marginal claims versus bringing class actions.

The Amex vs. Italian Colors case is scheduled to be argued late February, with a decision expected by summer. This case provides the court with the opportunity to return to a more balanced legal system, which has been skewed in favor of big business at the expense of average consumers, says Been, a Los Angeles consumer protection lawyer at the Consumer Protection law firm of Keller Grover, LLP.

http://www.forbes.com/sites/danielfisher/2013/02/04/supreme-court-asked-when-is-a-class-action-the-only-way-to-sue/



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