Interviews on American Express Co. et al. v. Italian Colors Restaurant et al. with Appellate Litigator Deepak Gupta and Professor Margaret Jane Radin
Interviews on American Express Co. et al. v. Italian Colors Restaurant et al. with Appellate Litigator Deepak Gupta and Professor Margaret Jane Radin:
In the week following the Court’s decision in American Express Co. et al. v. Italian Colors Restaurant et al., Fair Contracts asked the experienced appellate advocate who argued the case on behalf of Italian Colors, Deepak Gupta, Principal of Gupta Beck, PLLC (and one of our advisory board members) his reaction to the opinion. Gupta—who also argued on behalf of the Concepcion plaintiff/appellees in 2010 in AT & T Mobility v. Concepcion—said that it was “hard to improve on Justice Kagan’s dissent,” the importance of which he stressed for future legislative efforts in Congress. Gupta noted that “the Supreme Court has always said they were enforcing arbitration clauses as a matter of consent,” but that this decision shows this to be “an empty fiction.”
In this case “one party (Amex) was able to use its much greater market power to force other parties (small businesses) with lesser market power to agree” to contract terms that undermined their rights. The principle of “effective vindication (of substantive federal rights) is a fig leaf,” Gupta states; he said Justice Scalia’s logic, that “you have the right to pursue the claim, but that doesn’t mean that arbitration can’t be used to foreclose any way of actually vindicating the claim in an affordable way,” shows how far the Court is willing to go to protect arbitration, and reminded him of Anatole France’s quote about “In its majestic equality, the law forbids the rich and poor alike from sleeping under the bridges….”
Professor Margaret Jane Radin, the Henry King Ransom Professor of Law at the University of Michigan, and author of Boilerplate, The Fine Print, Vanishing Rights, and the Rule of Law (Princeton University Press) (and a Fair Contracts Advisory Board member):
Q: How does the decision in A: Well, there is more than one thesis in Boilerplate, but one of the main ideas is that judges should evaluate the enforceability of boilerplate using three parameters: the nature of the right; the quality of consent of the recipient; and the extent of social dissemination. Here the majority opinion makes no analysis whatever of the validity of the “contract,” but just assumes it. My analysis would have a judge give much stricter scrutiny to a purported contract that destroys a core right (such as legal remedy), especially if imposed by a monopolist and against many recipients.
Another thesis in my book is that stricter scrutiny, even market-inalienability would especially be appropriate for rights that are not salient to individuals at the time the boilerplate is imposed, but nevertheless are important for society as a whole. In other words, individual choice by recipients is absent from much of boilerplate, but even if individual choice is thought to exist, there are some rights that individuals should not be able to waive on an individual basis. I think antitrust law and anti-discrimination law are obvious cases for this principle.
Q: Are we now at the point that a theoretical, but no practical right to vindicate federal substantive rights is all that remains?
A: It looks that way, doesn’t it? At least as long as the Scalia-Roberts-Alito-Thomas-Kennedy junta is in power. Scalia did seem to say that the “effective vindication of rights” doctrine is a mere dictum (although it appears that he might allow a “contract” to be unenforceable if it forecloses remedy in exactly the same way as the prior cases cited). Nevertheless, Scalia said that the mere fact that antitrust law exists to protect customers from monopolistic practices does not mean that the fact that the harm cannot be proved is enough to invoke this doctrine. And he took the trouble to repeat what he said in Concepcion) or to the federal law (in this case) must be ignored whenever an arbitration “contract” is in the picture. As Justice Kagan says in her dissent, when other rights are rendered impossible to vindicate, according to Scalia that is just too darn bad.
Unfortunately, it is also just too darn contrary to the rule of law.
Q: Has the Supreme Court basically said that arbitration policy is more important than all other areas of the federal rights, e.g. antitrust, discrimination, etc.?
A: Well, they don’t say that outright, but I certainly think so. I’m reminded of the Lochner era, when the magic word “contract” could effectively trump other rights.
Q: Do you think Justice Kagan was writing her dissent for Congress, e.g. to pass the Arbitration Fairness Act of 2013?
A: I don’t know. But I hope Congress will wake up, now that the 5-Justice majority has said that Congress’s own laws are rendered inoperable by boilerplate imposed by a monopolist on its customers.
Q: Should lawyers now try a test scenario that consists of dozens/hundreds of individual arbitration cases that could easily be brought as one, efficient class action lawsuit, to make a point of how inefficient multiple arbitrations will be?
A: Oh, yes, indeed. Perhaps corporations like Amex will be out of the frying pan into the fire. We are told in Justice Kagan’s dissent that a confidentiality provision in the boilerplate in this case would have prevented the individual plaintiffs from sharing information and trying to develop proof jointly. I don’t know what clever provisions in the boilerplate will be inserted by corporations in order to avoid this test scenario. Perhaps the test scenario would have to be organized by a third party advertising for those who would be likely plaintiffs.