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Has the US Supreme Court been subverted by Big Business?

Screen Shot 2013-06-22 at 10.39.42By John Donovan: After the recent historic U.S. Supreme Court precedent setting decision in favour of the evil oil giant Royal Dutch Shell Plc and big business in the Kiobel vs. Royal Dutch Shell case, there is further disturbing evidence this week that the court is siding with multinational corporations against ordinary people and small businesses. WHY? The following extraordinary article by the Editorial Board of The New York Times is published today on page 18 of the New York edition.

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Another Blow to Class Action

This week, the Supreme Court continued its aggressive effort to favor corporations by forcing customers to raise grievances through individual arbitration rather than a class action or some other joint legal challenge.

In American Express Company v. Italian Colors Restaurant, the court ruled 5 to 3 that a group of merchants could not bring a class action against the company even on antitrust grounds because each had signed a contract that required complaints to be taken to individual arbitration.

The decision makes it very hard, if not impossible, to stop bad corporate practices because the potential award for an individual would be too small to justify a suit.

American Express requires merchants that want to accept its corporate and premium charge cards to also accept American Express credit cards, at a fee that is 30 percent higher than other credit cards fees. Italian Colors Restaurant and others claimed that by requiring them to accept the third card the company is subjecting them to a “tying arrangement,” in violation of federal law.

The merchants sought typical damages of $5,000, but it would cost an individual merchant hundreds of thousands of dollars to try to prove an antitrust claim. The arbitration provision in their contracts prohibited them from sharing the cost or from consolidating their claims into one case, so each was left with no way to press a claim.

For the past three decades, the Supreme Court has ruled that individual arbitration is an acceptable way to resolve a dispute only when it gives the challenger a realistic chance of enforcing the claim. But as Justice Elena Kagan explained in her dissenting opinion, there is also a longstanding principle that “when an arbitration agreement prevents the effective vindication of federal rights, a party may go to court.”

The Supreme Court was wrong to bar the class action, asserting that federal law does not guarantee plaintiffs “an affordable procedural path to the vindication of every claim.” By doing so, Justice Kagan said, the majority turns arbitration from a method of resolving disputes into “foolproof way of killing off valid claims.” The decision is one more example of the courts favoring powerful corporations over small businesses and individuals.

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