Supremes Uphold Arbitration Clauses that Waive Class Actions
The Supreme Court held that a court may not invalidate a contract’s arbitration provision that waives the right to bring a class action suit. The Court held that a plaintiff may not institute a class action claim, notwithstanding contractual language, just because the individual cost of litigation would exceed the potential recovery. The Court adhered to the language of the Federal Arbitration Act and refused to apply judicially created public policy exceptions. The case itself involved a class action suit by merchants against a charge card company, claiming violations of the antitrust laws. The plaintiffs argued that the arbitration clauses should not restrict plaintiffs asserting their class action rights to enforce the antitrust statutes.
OUR TAKE: This case will significantly restrict a plaintiff’s ability to bypass an arbitration clause and pursue private litigation. It also shows the Supreme Court’s continued pattern of hostility toward class action litigation, as the plaintiffs appeared to make a fairly coherent public policy argument.