## Facts

- American Express entered standard-form Card Acceptance Agreements with merchants that required arbitration of disputes and barred class arbitration.
- A group of merchants, led by Italian Colors Restaurant, filed a federal antitrust class action alleging American Express used market power to impose supracompetitive fees through an unlawful tying arrangement in violation of Sherman Act § 1.
- The merchants sought treble damages under Clayton Act § 4.
- The merchants presented evidence that proving the antitrust claim would require costly expert economic analysis that would exceed any single merchant’s potential individual recovery.
- American Express moved to compel individual arbitration under the Federal Arbitration Act (FAA); the district court granted the motion and dismissed the lawsuits.
- The Second Circuit held the class-arbitration waiver unenforceable because individual arbitration would be prohibitively expensive and would effectively prevent vindication of the federal antitrust claims; it reaffirmed this view after remand and en banc rehearing.

## Issues

1. Whether the FAA permits a court to refuse enforcement of an arbitration agreement’s class-action waiver because individual arbitration of a federal statutory claim would cost more than the likely recovery.
2. Whether the antitrust laws or Rule 23 supply a “contrary congressional command” that overrides the FAA’s requirement that arbitration agreements be enforced according to their terms.
3. Whether the “effective vindication” doctrine invalidates a class-arbitration waiver when the economics of individual proceedings make pursuit of the claim impractical.

## Decision

- The Supreme Court reversed the Second Circuit in a 5–3 decision (Justice Scalia).
- The Court compelled enforcement of the arbitration agreement as written, including the class-arbitration waiver.
- The Court held the FAA does not allow invalidation of a class-arbitration waiver on the ground that the cost of individually arbitrating exceeds the potential recovery.
- The Court found no “contrary congressional command” in the antitrust statutes or Rule 23 requiring availability of class procedures.
- The Court limited the effective-vindication exception to provisions that operate as prospective waivers of substantive statutory rights, not provisions that make litigation or arbitration economically unattractive.

## Legal Principles

- Arbitration agreements must be enforced according to their terms under the FAA, including bilateral arbitration requirements and express waivers of class procedures, absent a contrary congressional command.
- Neither Sherman Act enforcement policies nor Rule 23 create a substantive entitlement to class proceedings that overrides the FAA.
- The effective-vindication doctrine addresses provisions that forbid assertion of a federal statutory right or eliminate statutory remedies; it does not invalidate agreements merely because proving a claim would be too costly relative to expected individual recovery.
- The unavailability of an “affordable” procedural path, without statutory text requiring it, is not a basis to refuse enforcement of an arbitration clause under the FAA.

## Conclusion

The Court held that the FAA requires enforcement of an arbitration clause barring class arbitration even when the expense of individual arbitration makes pursuing the claim economically irrational, absent clear congressional direction to the contrary, and it confined the effective-vindication doctrine to true prospective waivers of substantive federal rights.


Am. Express Co. v. Italian Colors Rest., 570 U.S. 228 (2013)