In a major June 2013 business ruling, the U.S. Supreme Court sided with American Express and against the firms’ retail clients. This is especially significant for smaller retailers.
As reported by Lawrence Hurley and Andrew Longstreth for Reuters:
“The U.S. Supreme Court delivered its latest blow to class-action lawsuits on Thursday when it enforced an arbitration agreement that prevents merchants from banding together to make antitrust claims against American Express. The merchants had challenged the legality of an arbitration clause in a contract with American Express that prevented them from coming together to pursue disputes against the credit card company. Class-action lawsuits typically are filed by individuals or small businesses acting on behalf of large groups.”
“In this case, restaurants and other retailers sued alleging that American Express violated antitrust law by forcing them to accept its credit cards as a condition of accepting its charge cards. Charge cards require their holders to pay the full outstanding balance at the end of a billing cycle; credit cards require payment of only a portion, with the balance subject to interest. The merchants argued that the arbitration clause effectively prevented them from seeking redress because pursuing individual claims against the company would be prohibitively expensive. But American Express argued that the contracts at issue served the dispute-resolution policies established by the Federal Arbitration Act, and the Supreme Court agreed.”
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Credit: Reuters/Mike Blake