Class Action Waiver has Uncertain Future
In an important case – one in which the opposing parties brought many, many lawyers to the fight – a federal appeals court (the Second Circuit Court of Appeals) rejected a contractual provision aimed at barring merchants from bringing class action claims against AMEX. LINK
The Court concluded that the expense to be incurred by a single plaintiff merchant bringing such a claim (in this case, an antitrust claim) meant that only an aggregation of plaintiffs and their claims could make it feasible for such claims to be brought at all. Consequently, the Court concluded, the contractual class action waiver at issue “should not be enforced because enforcement of the clause would effectively preclude an action seeking to vindicate the statutory rights asserted by the plaintiffs.”
While the Court emphasized that it was “concerned solely with the class action waiver contained in the contract between the parties before us,” it is not difficult to make the argument, inevitably to be made by plaintiff attorneys, that the Court’s reasoning necessarily applies to most of the class action waivers utilized in consumer transactions because only a small percentage of consumer transactions involve sufficient potential damages that a single plaintiff, bearing the cost of attorney’s fees and expert costs, could “economically” litigate such claims.
I would be stunned if this case is not presented to the Supreme Court. It is of great important to a lot of powerful interests.
