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The Supreme Court Just Made It Easier for Big Business to Screw the Little Guy


Business  (tags: SupremeCourt, abuse, americans, business, consumers, corporate, corruption, dishonesty, ethics, finance, government, law, lies, money, society, politics, usa )

JL
- 520 days ago - motherjones.com
The far-reaching consequences of the American Express v. Italian Colors decision.



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JL A. (273)
Tuesday June 25, 2013, 10:31 am


Mother Jones
The Supreme Court Just Made It Easier for Big Business to Screw the Little Guy
The far-reaching consequences of the American Express v. Italian Colors decision.

By Stephanie Mencimer | Thu Jun. 20, 2013 10:19 AM PDT

In a little-known case called American Express v. Italian Colors Restaurant, the Supreme Court today issued yet another decision [1] making it easier for big corporations to use their market power to screw over consumers and small businesses. Thursday's 5-3 decision affirmed the right of big corporations to use mandatory arbitration clauses in contracts to force small businesses to challenge monopolistic practices in private arbitration rather than through class actions in court. The case shows once again that the conservative majority, led by Chief Justice John Roberts, has no problem with judicial activism when it comes to bolstering corporate power.

Here's the background [2] on this decision:

The case, Italian Colors v. American Express [3],was brought by a California Italian restaurant and a group of other small businesses that tried to sue the credit card behemoth for antitrust violations. They allege Amex used its monopoly power to force them to accept its bank-issued knock-off credit cards as a condition of taking regular, more elite American Express cards—and then charging them 30 percent higher fees for the privilege.

The small businesses’ claims were pretty small individually, not more than around $5,000 per shop. So, to make their case worth enough for a lawyer to take it, they banded together to file a class action on behalf of all small businesses affected by the practice. In response, Amex invoked the small print in its contract with them: a clause that not only banned the companies from suing individually but also prevented them from bringing a class action. Instead, Amex insisted the contract required each little businesses to submit to the decision of a private arbitrator paid by Amex, and individually press their claims. (Arbitration is heavily stacked in favor of the big companies, as you can read more about here [4] and here [5].)

The restaurants estimated, with good evidence, that because of the market research required to press an antitrust case, arbitration would cost each of them almost $1 million to collect a possible maximum of $38,000, making it impossible to bring their claims at all. After a lot of litigation, the little guys prevailed in the 2nd Circuit Court of Appeals, which found that the arbitration clause was unconscionable because it prevented the plaintiffs from having their claims heard in any forum. The court said the arbitration contract should be invalidated and that the class action should go forward in a regular courtroom. (Sonia Sotomayor sat on one of the appeals before heading to the high court and is recusing herself from the case as a result.)

The 2nd Circuit repeatedly voted in favor of the merchants. It heard the case at least three times, including once after the high court reversed its original decision in favor of the restaurants, and it seemed fairly united in its belief that the Amex contract was unenforceable. But the Roberts Court has been no friend of small businesses or consumers, particularly those seeking to bring class actions against big companies. The court's conservative majority has made class action litigation much harder to bring, mostly notably in 2011 when it struck down a huge sex discrimination case brought by 1.5 million women working at Walmart.

That's one reason public interest lawyers have sounded the alarm about the Amex case for a year, noting that, given the court's current makeup, the case had potentially awful implications for anyone ripped off while using a credit card or cellphone and for small businesses trying to fend off corporate monopolies.

In an amicus brief submitted in this case on the side of the small businesses, lawyers for AARP, Public Justice, and the American Association for Justice [6] warned that if the court sided with Amex, "statutes intended by Congress to protect weaker parties against stronger parties will essentially be gutted. Small businesses might as well move to a different country where they no longer enjoy the protection of the antitrust laws. At the whim of an employer, workers could be required to prospectively waive their Title VII [anti-discrimination] rights. Consumer protection laws such as the Truth in Lending Act could be silently, but inescapably, repealed by corporations with the stroke of a pen.”

Indeed, if the court ruled that Amex could use an arbitration clause in a contract with a much less powerful party to escape punishment under the Sherman Antitrust Act, there's no reason why a big company couldn't create contracts that prevent people from filing sex discrimination, consumer fraud, or other similar claims in any venue. Laws that Congress passed to protect the public could simply be voided through artfully written arbitration clauses that create expensive hurdles to pressing a claim.

Justice Antonin Scalia, who wrote the majority opinion in the Amex case, seems to believe that this isn't a problem. He said that the law doesn't entitle every potential plaintiff a cheap route into court, noting that litigation outside arbitration is expensive, too, a fact that can keep people from exercising their legal rights. His argument boils down to this: The Federal Arbitration Act, a 1925 maritime law that the court has broadened to cover just about everything, trumps every other law on the books. So if a big company breaks the law and screws you, but you signed a contract with an arbitration clause giving away your right to sue or bring class action, you don't have a case, even if federal law says you do.

In a concurring opinion, Justice Clarence Thomas invoked the fiction that the contract Italian Colors signed agreeing to arbitrate its claims individually with Amex was voluntary. But anyone who's ever tried to open a bank account knows it's virtually impossible to engage in commerce these days without being forced to sign a contract in which you forego your right to sue the company if it rips you off.

Justice Elena Kagan gets this point. In her biting dissent aimed squarely at Scalia, she called the majority opinion a "betrayal of our precedents and of federal statutes like antitrust laws." She observed that the court would never uphold an arbitration agreement that explicitly banned merchants from bringing an antitrust claim, yet that's effectively what the Amex contract does by compelling merchants to give up the option of class actions in court. She noted that by ignoring several precedents, the majority is providing companies "every incentive to draft their agreements to extract backdoor waivers of statutory rights." That is, they will use contracts to immunize themselves from laws they don't like.

Kagan was blunt: "If the arbitration clause is enforceable, Amex has insulated itself from antitrust liability—even if it has in fact violated the law. The monopolist gets to use its monopoly power to insist on a contract effectively depriving its victims of all legal recourse. And here is the nutshell version of today’s opinion, admirably flaunted rather than camouflaged: Too darn bad."
Source URL: http://www.motherjones.com/politics/2013/06/consumers-get-screwed-scotus-american-express-decision-small-biz

Links:
[1] http://www.supremecourt.gov/opinions/12pdf/12-133_19m1.pdf
[2] http://www.motherjones.com/mojo/2013/02/supreme-court-hear-important-corporate-immunity-case
[3] http://www.scotusblog.com/?p=159807
[4] http://www.motherjones.com/politics/2008/03/have-you-signed-away-your-right-sue
[5] http://www.motherjones.com/politics/2007/11/suckers-wanted-how-car-dealers-and-other-businesses-are-taking-away-your-right-sue
[6] http://publicjustice.net/sites/default/files/downloads/In-re-Amex-Merchants-Litigation-Public-Justice-AARP-AAJ-Amicus-Brief-29Jan13.pdf
 

Roseann D. (178)
Tuesday June 25, 2013, 11:10 am
It's time to put these "Supreme Court Injustices" in te slammer for their treasonous decisions. They shouldn't be safe and untouchable via their lifetime appointments. Clearly, they are corrupt, bought and paid for. It's time for them to go! No government pensions, no benefits, no more government entittlements and mooching off the US taxpayers while being hagmaids of corporate power.
 

Kit B. (276)
Tuesday June 25, 2013, 12:17 pm

Kagan took the entire argument and offered a brilliant summation: "Justice Elena Kagan gets this point. In her biting dissent aimed squarely at Scalia, she called the majority opinion a "betrayal of our precedents and of federal statutes like antitrust laws." She observed that the court would never uphold an arbitration agreement that explicitly banned merchants from bringing an antitrust claim, yet that's effectively what the Amex contract does by compelling merchants to give up the option of class actions in court. She noted that by ignoring several precedents, the majority is providing companies "every incentive to draft their agreements to extract backdoor waivers of statutory rights." That is, they will use contracts to immunize themselves from laws they don't like.

Kagan was blunt: "If the arbitration clause is enforceable, Amex has insulated itself from antitrust liability—even if it has in fact violated the law. The monopolist gets to use its monopoly power to insist on a contract effectively depriving its victims of all legal recourse. And here is the nutshell version of today’s opinion, admirably flaunted rather than camouflaged: Too darn bad."

Now we are back to living in the land of "Too darn bad." Thanks SCOTUS, next time at least hand out a jar of Vaseline or give us a kiss.
 

JL A. (273)
Tuesday June 25, 2013, 12:22 pm
You cannot currently send a star to Kit because you have done so within the last day.
 

Alan Lambert (97)
Tuesday June 25, 2013, 1:20 pm
Be patient (if possible) President Clinton 45 will nominate Chief Justice Obama who will overturn it.
 

JL A. (273)
Tuesday June 25, 2013, 1:44 pm
Interesting prescience Alan...
 

Terry V. (30)
Tuesday June 25, 2013, 1:54 pm
Jeez........If I'm going to get "screwed" I want to participate and enjoy it...........................
 

Christeen Anderson (539)
Tuesday June 25, 2013, 1:56 pm
This sure doesn't surprise me.
 

JL A. (273)
Tuesday June 25, 2013, 2:06 pm
You cannot currently send a star to Terry because you have done so within the last day.
 

Jaime A. (32)
Tuesday June 25, 2013, 3:01 pm
Noted, thanks.!!
 

JL A. (273)
Tuesday June 25, 2013, 3:03 pm
You are welcome Jaime
 

Jo S. (512)
Tuesday June 25, 2013, 3:31 pm
Wow, I'm really so surprised.
Noted & shared.
Thanks JL
 

Helen Porter (40)
Tuesday June 25, 2013, 5:17 pm
What do we expect from politicians who fought and bought their way up?
 

Arielle S. (316)
Tuesday June 25, 2013, 5:18 pm
The Freaky Five just keeps racking them up, don't they? I'm ready to get out the voodoo dolls - we so need a couple of these dorks to go.
 

JL A. (273)
Tuesday June 25, 2013, 5:18 pm
You are welcome Joanne
You cannot currently send a star to Zee because you have done so within the last day.
 

Paul Girardin (140)
Tuesday June 25, 2013, 6:46 pm
Bastards! Please excuse my language!
 

Mitchell D. (130)
Tuesday June 25, 2013, 7:01 pm
Once again, the shadows of St. Reagan, and G.W. Bush!
Don't let anyone tell you that it does not matter who is president, as they are all the same!
They are not, and they can easily leave a legacy of shit behind them.
 

JL A. (273)
Tuesday June 25, 2013, 7:08 pm
You cannot currently send a star to Paul because you have done so within the last day.
You cannot currently send a star to Mitchell because you have done so within the last day.
 

Marianne B. (113)
Tuesday June 25, 2013, 8:57 pm
NOT surprised. Our counyry's justice system does not give a damn about the "liitle" guy and companies who are trying to make a living. It is so unfair, and seems hopeless. Just where do we go for help? just keep taxing us to death, let the big banks take our homes, and the CEO's pocket their profits.
 

Sherri G. (113)
Wednesday June 26, 2013, 2:54 am
Thanks Kit for Justice Elena Kagan minority opinion. This is truly a travestry. Schwab has recently sent out discloures that their customer's disputes must now be arbitrated. So watch out if you have Schwab investments and depend on their brokers to give you advice. Arbitration benefits (guess who?) corporations of course. ALEC is getting more and more rights take away by getting corporate beneficial legislation through and then the supreme court followers by making sure the rich get richer and the poor have no rights at all. TY JL Noted.
 

John De Avalon (35)
Wednesday June 26, 2013, 5:44 am
Is it the system or those who manipulate the system?
 

JL A. (273)
Wednesday June 26, 2013, 7:12 am
You are welcome Sherri.
You cannot currently send a star to Sherri because you have done so within the last day.
 

Sheri Schongold (7)
Wednesday June 26, 2013, 1:30 pm
Big business will always "scr**" over the small business and all customers because they can. They have greased the right palms and will not consider any changes because they won't get any benefit from it.
 

Robert K. (31)
Wednesday June 26, 2013, 1:44 pm
As if the corporations needed any help....
 

Winn Adams (199)
Wednesday June 26, 2013, 2:19 pm
A sad day for America.
 

Birgit W. (151)
Wednesday June 26, 2013, 4:09 pm
What else is new? We have no rights anymore, democracy is gone, and we are indeed just little marionettes for the big businesses and the government to play with.
 

Lois Jordan (56)
Wednesday June 26, 2013, 4:15 pm
Noted. Thanks, JL.
This just makes me sick. Can't we get a couple of these justices impeached?
 

JL A. (273)
Wednesday June 26, 2013, 5:15 pm
You are welcome Lois. If the majority shifts in the House that could become more possible Lois.
You cannot currently send a star to Birgit and Lois because you have done so within the last day.
 

Rebecca Y. (26)
Thursday June 27, 2013, 8:12 am
I lost all respect for the Supreme Court when they APPOINTED Bush to the Presidency; Bush did not win that election! I have no faith that the Supreme Court will do what is right and just and I have lost all hope that our Senate will do what is right for our country. Democracy is a losing ideology only necessary to wage war in other countries so THEY can be democratic nations but we are no longer one. I am very sad about our own stupidity, greed, intolerance and lack of morals and ethics....everyone is beating their own drum and have forgotten we are a collective: UNITED we stand...without it, we fall.
 

Dawn Barler (5)
Friday June 28, 2013, 7:38 am
It's not all the judges. If you look at their rulings the liberal judges are still fighting for the people. They are just outnumbered. Just like Congress. The problem boils down to the Republican Party and their belief structure. They are for big business and always have been. That is never going to change until we the voters start sending a very clear message that big business does not run our country. I totally agree with you Becky.
 

JL A. (273)
Friday June 28, 2013, 7:49 am
You cannot currently send a star to Dawn because you have done so within the last day.
 

Mark Botermuc (32)
Monday July 1, 2013, 4:24 am
Thanks ...
 

Mark Botermuc (32)
Monday July 1, 2013, 4:25 am
Ty ...
 

JL A. (273)
Monday July 1, 2013, 8:15 am
You are welcome Mark
 
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