Supreme Court Holds Class Arbitration Waiver is Enforceable Even if Claims are Too Expensive to Prosecute on an Individual Basis
On June 20, 2013, the United States Supreme Court reinforced the business community's ability to limit its exposure to costly class actions through use of class arbitration waivers in American Express Co. v. Italian Colors Restaurant. In Italian Colors, the Court rejected the notion that plaintiffs may bypass a class arbitration waiver where the cost of proving their individual claims would exceed their potential recovery. At the same time, the Court recognized that invalidating an arbitration clause might be appropriate where the clause imposed onerous requirements or administrative costs specific to arbitration, or prohibited a plaintiff from pursuing his or her statutory rights in arbitration.
Italian Colors is just the latest in a line of recent arbitration-related cases handed down by the Supreme Court. As this area of law is quickly-evolving, businesses are advised to review their contracts to assess whether arbitration clauses should be added or revised to reflect the guidelines imposed by recent court decisions.
For further information, please contact a Greensfelder, Hemker & Gale, P.C. attorney.