Corporations want a get-out-of-jail-free card for cheating small businesses and individuals
Washington, DC — The U.S. Supreme Court will hear oral arguments today in a case that could provide corporations with unfettered power to evade federal laws by keeping small businesses and individuals out of the courts and forced into a rigged arbitration process. 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.
Forced arbitration occurs when corporations insert a clause into the fine print of contracts stating that all disputes must be resolved on an individual basis in a private system designed by the very corporation the claim is against.
“Corporations use forced arbitration clauses to stack the deck against small businesses and individuals by eliminating access to justice,” said American Association for Justice (AAJ) President Mary Alice McLarty. “They should not be allowed to get away with bullying and cheating small businesses by manipulating the fine print of non-negotiable contracts.”
In this case, a decision favoring forced arbitration over small businesses could wipe out hope for any access to justice and allow corporations to get away with widespread wrongdoing by eliminating statutory rights with the fine print. Laws at risk include provisions of the Civil Rights Acts of 1964 and 1991, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Family and Medical Leave Act, the Fair Labor Standards Act, the Equal Pay Act, the Fair Pay Act, the Uniformed Services Employment and Reemployment Rights Act, the Truth in Lending Act, the Credit Repair Organizations Act, the Sherman Act, the Securities Act of 1933, the Securities Exchange Act of 1934 and the civil provisions of the Racketeer Influenced and Corrupt Organizations Act.
“It is imperative that Congress and federal agencies act to protect American consumers and small businesses,” commented McLarty. “Unless they step in, corporations will be able to get away with widespread wrongdoing and erase all legislative progress made to protect consumers, employees, and small businesses.”
This case falls on the heels of CompuCredit v. Greenwood and AT&T Mobility v. Concepcion – two of the latest barriers preventing Americans from receiving justice and holding powerful interests accountable.
AAJ joined in filing an amicus brief in support of the small businesses with Public Justice and AARP. This brief can be found online here.
- 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 with other merchants.
- 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.