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Supreme Court Decision May Have Impact on Employee Class Action Lawsuits

2019-01-09 08:55:44


On Thursday June 20, 2013 the United States Supreme Court issued its decision in the American Express Co. et al v. Italian Colors Restaurant et al case. The case involved merchants who accept American Express cards with an agreement that all disputes between the parties must be resolved by arbitration and the "there shall be no right or authority for any Claims to be arbitrated on a class action basis."  In spite of the arbitration agreement, the Respondents filed a class action against American Express for an anti-trust violation. The Second Circuit held that because of the prohibitive costs respondents would face if they had to arbitrate, the class-action waiver was unenforceable.


The Supreme Court considered the issue of whether a contractual waiver of a class arbitration is enforceable under the Federal Arbitration Act. The Supreme Court held that the Federal Arbitration Act does not permit courts to invalidate a contractual waiver of class arbitration on the ground that the plaintiff's costs of individually arbitrating a federal statutory claim exceeds the potential recovery. As a result, it appears that an employer is free to enter into an enforceable arbitration agreement that would waive the right to bring a class action lawsuit under a federal statutory scheme such as the Fair Labor Standards Act.


Please feel free to contact any of the attorneys at Allen Norton & Blue to discuss this case and the potential use of an arbitration agreement at your workplace.

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