American Express v. Italian Colors Restaurant
In brief
The Supreme Court overturned the Second Circuit: cost alone does not let a court set aside a contract term barring group arbitration of a federal claim.
- Where it stands
- Decided
Decided 5-3 · June 20, 2013 · Opinion by Justice Thomas
- What it’s about
- Italian Colors Restaurant accused American Express of breaking laws against monopolies and argued that merchants should be able to bring claims together because individual arbitration would cost more than any possible recovery.
- Who it affects
- For Italian Colors, high costs alone could not invalidate its contract’s ban on group arbitration.
Summary: written with AI from the case record.
What it's about
The Supreme Court ruled that this cost alone does not let courts invalidate a contract barring group arbitration, overturning the Second Circuit.
Italian Colors accused American Express of using monopoly power to require merchants to accept contract terms that the restaurant said violated antitrust laws.
The Court addressed whether the arbitration contract could be challenged based on the cost of individual claims, not whether American Express violated antitrust law.
Question presented
Is American Express Company's arbitration clause prohibiting class action suits enforceable, even though it would compel arbitration of antitrust claims?
What the Court decided
Holding
The FAA does not permit courts to invalidate a contractual waiver of class arbitration on the ground that the plaintiff’s cost of individually arbitrating a federal statutory claim exceeds the potential recovery. 667 F. 3d 204, reversed.
- Result
- Reversed
The Court's reasoning
The Court said the Federal Arbitration Act does not let courts set aside a group-arbitration waiver just because pursuing a federal claim alone costs more than the possible recovery.
The vote
From the opinions
“Too darn bad. That answer is a betrayal of our precedents, and of federal statutes like the antitrust laws.”
What's next
Lower courts must apply the rule that high individual-arbitration costs alone cannot invalidate a group-arbitration waiver for a federal-law claim. The record does not specify any further step for Italian Colors or American Express.
Documents
Opinions
Audio
Docket activity
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AI analysis generated: Case Briefing
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AI analysis generated: Decision Record
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Audio Recording added: Oral Arguments - American Express Company v. Italian Colors Restaurant
Opinion added: Opinion
More questions
- What was Justice Kagan’s objection?
- She argued that the contract’s barriers could make the antitrust claim too difficult to pursue and leave merchants without legal recourse.
Sources
Primary materials plus reporting. Best-effort analysis: this explainer relies on a mix of primary materials and trusted secondary sources. Official filings and opinions remain authoritative.