by Nicole Flatow
The U.S. Supreme Court’s decision last year in AT&T Mobility v. Concepcion was a major blow to consumers’ ability to file class actions and hold corporations accountable. In the 5-4 decision, the majority rejected a lower court ruling that an arbitration clause was unconscionable because it barred class actions.
But a recent federal appeals court decision that considered Concepcion as precedent may pave a way forward for litigants seeking to challenge corporate action as a class, writes Philadelphia litigator Joshua D. Wolson on The Legal Intelligencer Blog.
In In re American Express Merchants Litig., the Second Circuit held that an arbitration clause containing a class action waiver was unenforceable. The case was twice reversed by the U.S. Supreme Court for reconsideration in light of Concepcion and another limiting Supreme Court precedent, and twice more, the court maintained its holding.
In striking down the class action waiver, the court relied on an affidavit from an economist, which showed that no rational plaintiff would bear the cost alone of winning such a complicated antitrust case, when the potential payout was so comparatively small.
“The evidence presented by plaintiffs here establishes, as a matter of law, that the cost of plaintiffs' individually arbitrating their dispute with Amex would be prohibitive, effectively depriving plaintiffs of the statutory protections of the antitrust laws,” the judges wrote.
If plaintiffs can overcome class action bans by providing affidavits from economic experts, perhaps there is a future for consumer class actions, Wolson writes. But, he cautions, “it seems likely that the Supreme Court will have the last word.”