AAI Scores Hit in Second Circuit Decision on Class Action Waivers

The Second Circuit has held that a waiver of a collective action in a mandatory arbitration agreement is unenforceable in a class action brought by small merchants challenging American Express’s “Honor All Cards” requirement on tying grounds.  In re American Express Merchants Litigation, 06-1871-cv, 2009 WL 214525, available here.

In so doing, the court relied on AAI’s amicus brief, quoting AAI’s conclusion that because the cost of an individual action would be prohibitive, “‘[i]f the collective action waiver is enforced, American Express will be shielded from liability, even where it may have violated the antitrust laws. Eradicating the private enforcement component from our antitrust law scheme cannot be what Congress intended when it included strong private enforcement mechanisms and incentives in the antitrust statutes.’”  Slip op. at 33.  The brief was written by AAI Advisory Board Member Dan Gustafson and his partner Karla Gluek, assisted by attorneys Addy Schmitt and Charles Luftig.  A copy of the brief is available here.

The Second Circuit also relied heavily on the expert affidavit of Advisory Board Member Gary French who had compared the likely cost of bringing an individual action against American Express with the likely damages.