With the Supreme Court poised to hear arguments in a case involving arbitration, Professor Richard Frankel filed an amicus brief on behalf of a collection of professional arbitrators and prominent arbitration scholars urging the justices to uphold a ruling by U.S. Court of Appeals for the Second Circuit in American Express v. Italian Colors Restaurant.
The case, which the court will hear on Feb. 27, revolves around language in a contract that the restaurant owners and other merchants must sign in order to receive customer payments through American Express credit cards.
Under the contract, the merchants agree to resolve any disputes that arise with American Express through individual arbitration. But the merchants argued successfully before the U.S. Court of Appeals for the Second Circuit that the arbitration provision prevents them from obtaining a just resolution to an ongoing dispute with American Express, since the cost of pursuing arbitration is prohibitively expensive for individual retailers.
In the amicus brief, Frankel argued that the Supreme Court has long held that federal claims can be arbitrated, as long as the process offers a fair resolution or “effective vindication.”
Forcing the merchants to arbitrate their claims if the arbitration clause prevents them from vindicating their rights has the potential to undermine the legitimacy of arbitration, Frankel argued.
“Arbitration is not supposed to be a license to cheat people out of their rights,” Frankel said.