In re American Express Merchants' Litigation

Case Updates

The Second Circuit Court denied rehearing en banc.

NCLC urged the U.S. Court of Appeals for the Second Circuit to rehear en banc a case involving the enforceability of mandatory bilateral arbitration agreements. In this case, a proposed class of merchants claimed that American Express violated antitrust laws with respect to its merchant fees for credit and charge card transactions. Each merchant in the proposed class action had previously entered into an agreement with American Express that included an arbitration clause precluding class-wide resolution of disputes in favor of mandatory, bilateral arbitration. On three separate occasions, a Second Circuit panel refused to enforce the arbitration agreements on the theory that arbitration agreements are not enforceable if they do not allow classwide arbitration of federal statutory claims.

In its amicus brief, NCLC argues that the panel's reasoning contravenes the pro-arbitration legislative policy reflected in the Federal Arbitration Act and is inconsistent with decades of Supreme Court precedent endorsing arbitration, including two recent Supreme Court decisions, Stolt-Nielsen v. AnimalFeeds Int'l. and AT&T Mobility v. Concepcion.NCLC argues that by agreeing to arbitrate with their counterparties, companies avoid costly and time-consuming litigation when disputes arise. In its place, companies adopt a dispute resolution mechanism that is speedy, fair, inexpensive, and effective.