(MintPress) – The U.S. Supreme Court (SCOTUS) began hearing Italian Color v. American Express Wednesday, a case that could cheat the rights of consumers to hold corporations accountable for fraud, antitrust violations or any other abuses of current consumer and worker protection laws. By eliminating the possibility of legal arbitration, consumers and small companies would be […]
(MintPress) – The U.S. Supreme Court (SCOTUS) began hearing Italian Color v. American Express Wednesday, a case that could cheat the rights of consumers to hold corporations accountable for fraud, antitrust violations or any other abuses of current consumer and worker protection laws. By eliminating the possibility of legal arbitration, consumers and small companies would be limited in their ability to bring antitrust lawsuits against major corporations.
The landmark case started with a challenge by a California Italian restaurant claiming that American Express (AMEX) forced the restaurant to accept its bank-issued credit cards as a condition of taking elite American Express cards that can bring in significant revenue for the business.
As a financial services company, American Express offers different types of credit cards directly from their company and through other third parties, including banks. Elite card holders, typically individuals extended more credit by AMEX, can spend more money than those holding bank-issued credit cards.
The credit card giant valued at more than $153 billion pressured companies into accepting these terms, charging the small businesses 30 percent higher fees for the privilege.
Italian Color claimed that it was wrongfully charged around $5,000 by American Express, making the retailer’s case against the credit card giant financially insignificant because legal fees would far exceed any possible settlement. Italian Color attempted to bring a class action suit with other retailers with similar claims against AMEX only to be told that the contract had a provision in the fine print preventing any legal challenge including lawsuits filed as part of a class action suit.
To make matters worse, the companies conducted market research showing that they would have to spend approximately $1 million to collect a possible maximum of $38,000 return, making it impossible to challenge AMEX in lower appeals courts.
After litigation, the restaurants won a hearing in the 2nd Circuit Court of Appeals, which found that the arbitration clause was unconscionable because it prevented the plaintiffs from having their claims heard in any forum.
Justice Sonia Sotomayor recused herself from the proceedings because she helped decide the Italian Color case in a lower federal appeals court.
Outcome of ruling could determine corporations cannot be challenged
If American Express prevails, large companies could be given carte blanche to coerce customers into accepting services they normally would not choose. Critics claim that by virtually eliminating the possibility of any legal challenge, major corporations with large market shares can violate antitrust laws, most notably the Sherman Anti-Trust Act of 1890.
With only a fraction of the financial backing, claims against major corporations relegated to circuit courts would make legal challenges financially impractical for consumers and small businesses.
“If the court rules in favor of Amex, big companies will essentially be able to immunize themselves from any legal accountability, simply by forcing customers and employees to sign a contract to get a job or a cellphone or a bank account,” writes Stephanie Mencimer, a Mother Jones staff reporter.
“Civil and consumer rights laws will stay on the books, but big companies will be able to ignore them,” she adds in an article published this week.
Recent SCOTUS decisions have decidedly favored the rights of corporations in recent years.
In the 2011 AT&T Mobility v. Concepción case, the Roberts court ruled in a 5-4 decision that AT&T could charge consumers $30 for a cellular phone even when advertising suggested that the phone was free with a new contract.
The case began in 2006 when Vincent and Liza Concepcion sued AT&T Mobility contending that the company had deceived their family by falsely claiming that their wireless plan included free cell phones.