If there was any doubt that the U.S. Supreme Court takes a dim view of class actions, it vanished with this term’s decision in American Express v. Italian Colors Restaurant, where the court once again considered the enforceability of a class action waiver contained in an arbitration agreement. The American Express decision is the latest in a string of Supreme Court decisions, beginning with Stolt-Nielsen v. AnimalFeeds Int’l, 559 U.S. 662 (2010), that are both pro-arbitration and anti-class action. And although arising in the commercial context, American Express sends a clear signal that the court is not willing to tolerate efforts by lower courts to create exceptions or obstacles to the enforcement of arbitration agreements according to their terms. For employers, who already have these agreements in place or are considering them, American Express should come as welcome relief, particularly in California where many state courts have resisted enforcing class action waivers.
Pre-’American Express’ Decisions
As noted, the American Express decision is just the latest in a string of recent Supreme Court rulings emphasizing that the Federal Arbitration Act generally requires enforcement of an arbitration agreement according to its terms. Just three years ago, for example, in Stolt-Nielsen, the court vacated an arbitration panel’s decision that allowed for class arbitration, notwithstanding the fact that the parties had agreed that the arbitration agreement in question was silent on the availability of class arbitration. The Stolt-Nielsen court held that class arbitration may not be compelled unless there is some contractual basis for concluding that the parties had agreed to it. Further, class arbitration is not a term that may be inferred solely from the fact that the parties agreed to arbitrate given that class arbitration so fundamentally changes the nature of arbitration.
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