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In In re American Express Merchants Litigation, the Second Circuit held that the class action waiver clause within the arbitration afreement between American Express and corporations found in both New York and California made the agreement unenforceable because recourse to class action was essential to protecting the corporations' statutory rights under the federal antitrust statutes. The court also decided that under the Supreme Court's decision in Stolt-Nielsen S.A. v. AnimalFeeds International Corp., the court, not the arbitrator, continued to be responsible for determining the validity of a class action waiver in an agreement to arbitrate. The court reasoned that the class action waiver in the arbitration agreement would disincentivize plaintiffs from bringing individual suit under the federal antitrust statutes because of the high costs associated with antitrust litigation and the marginal recovery that each individial plaintiff would receive if successful. Because the court viewed the private enforcement of the antitrust laws as essential to the underlying congressional intent, any attempt to limit this intent would go against public policy, and would be void as such. By disincentivizing private enforcement, the class action waiver in the arbitration provision prevented plaintiffs from enforcing their rights under federal antitrust statutes, vioding the agreement as against public policy.
Recommended Citation
Dustin Morgan, The Battle Over Class Action: Second Circuit Holds that Class Action Waiver for Antitrust Actions Unenforceable Under the Federal Arbitration Act, 4 Arb. L. Rev. 230 (2012).