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Joseph Wiltse, Lisbon, N.D., Published July 10 2013

Letter: High court erodes your basic rights

On June 20, the U.S. Supreme Court held in American Express v. Italian Color that if you have a contract with a business in which you agree to arbitrate a dispute, but that agreement says you can’t get together with other plaintiffs in a “class action,” that contract will be enforced, even if it may be too expensive for you to pursue your own claim given the small amounts you might win. Here is the case in a nutshell.

The owner of a small restaurant thinks that American Express has used its monopoly power to force merchants to accept a form contract violating federal anti-trust laws. The restaurateur wants to challenge this, but the same contract’s arbitration clause prevents him from doing so. That clause imposes a variety of procedural bars that would make pursuit of the antitrust claim a fool’s errand, because they could only collect a maximum of $38,000, but the cost of the claim would be well over $1,000,000. So if the arbitration clause is enforceable, American Express has insulated itself from antitrust liability – even if it has in fact violated the law. The monopolist gets to use its monopoly power to insist on a contract effectively depriving its victims of all legal recourse.

The majority of the Supreme Court, falling along ideological lines, basically say, “That’s too bad.” This not only goes against the court’s precedent – called the effective-vindication rule – which prevents arbitration clauses from choking off a plaintiff’s ability to enforce congressionally created rights, but goes against our constitutional right to a fair trial.

An arbitration clause should not be able to frustrate federal law, but the Supreme Court on June 20 said that businesses can. In the future, that means if millions of individuals are harmed by a business, but they have binding arbitration agreements in their contracts (which most do, check your cellphone, credit card or cable bills), you have to take them on individually, even if the experts needed to prove your case would be far too expensive to make it worth your while.

Wiltse is a third-year law student.