In Am. Express Co. v Italian Colors Restaurant, et al., No. 12-133 (U.S. Jan. 29, 2013), the Department of Justice submitted a Brief for the US as Amicus Curiae Supporting Respondents, urging the US Supreme Court to affirm the US Court of Appeals for the Second Circuit decision in In re American Express Merchants' Litigation, (2d Cir. Feb. 1, 2012) (see Legal update, Second Circuit finds arbitration clause with class action waiver unenforceable).

American Express petitioned for a writ of certiorari for the Supreme Court to review the Second Circuit decision, in which it held that a class action arbitration waiver was unenforceable because individual claims to vindicate federal antitrust statutory rights, rather than a class action, were shown to be financially unfeasible. On 9 November 2012, the Supreme Court granted cert and scheduled argument of the case on 27 February 2013 (see Article, US: arbitration round-up 2012/2013).

The question at issue in the case is whether American Express can enforce an arbitration agreement which precludes class actions, when the plaintiffs allege a collective action problem deterring prospective federal antitrust claims. In the amicus curiae brief, the Department of Justice agreed with the Second Circuit and argued that the American Express arbitration agreement should be considered unenforceable because its practical effect is the foreclosure of effective vindication of federal antitrust laws. The Department of Justice noted that the respondents had carried the burden of invoking the effective-vindication exception, by establishing that the costs of expert assistance in substantiating the anti-trust claims would greatly exceed the amount any named plaintiff could hope to recover in bilateral arbitration.

The Department of Justice emphasised that private actions are an important supplement to the government’s civil enforcement efforts under federal competition laws and other federal statutory schemes. The Department of Justice noted that the government 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. Therefore, the Department of Justice urged that the Supreme Court reaffirm the effective vindication principle, and uphold the Second Circuit decision, to ensure that arbitration agreements permit effective private enforcement of numerous federal statutes.

This brief highlights the ongoing debate over class arbitration waivers and provides insight into the upcoming review of the issue by the Supreme Court.