This article was originally published in the New York Law Journal.
The U.S. Court of Appeals for the Second Circuit will not rehear en banc a decision that holds a class action arbitration waiver provision between American Express and its merchants unenforceable as against public policy. Cementing a split in the circuits that makes review by the U.S. Supreme Court all the more likely, a majority of active judges on the circuit voted against full rehearing in In Re American Express Merchants Association, where Judges Rosemary Pooler and Robert Sack found in February that merchants and supermarkets could not be forced into individual arbitration by Amex. You can read the order here.
Five judges publicly dissented from the denial of rehearing en banc: Dennis Jacobs, Jose Cabranes, Debra Ann Livingston, Reena Raggi, and Richard Wesley.
The merchant and supermarket plaintiffs in two consolidated class actions claim Amex is violating the Sherman Act in the “honor all cards” provision in its credit card acceptance agreement. They allege the provision forces them to accept all American Express credit and debit cards as the cost of doing business with the company and is thus an illegal tying arrangement under the act.
