Why did the Court interpret the Federal Arbitration Act so strictly in this case? Should courts have more leeway when interpreting statutes?

American Express (Amex) entered into agreements with Italian Colors Restaurant (ICR) and other merchants that accept American Express credit cards. The agreement contains an arbitration clause which requires that all disputes between Amex and ICR be resolved through arbitration and prohibits any claim from being arbitrated on a class-action basis. Nonetheless, ICR and other merchants filed a class-action suit against Amex, alleging violation of federal antitrust statutes. Amex moved to compel individual arbitration, but ICR argued that the clause was invalid because the cost of expert analysis necessary to prove their antitrust allegations would greatly exceed the maximum recovery for each individual merchant plaintiff. The trial court ruled in favor of Amex, but a federal court of appeals reversed the trial court’s ruling and held that the clause was unenforceable because of the prohibitive cost structure. Amex appealed to the U.S. Supreme Court.

The U.S. Supreme Court ruled in favor of Amex. The Court held that the Federal Arbitration Act (FAA) does not permit courts to invalidate a contractual waiver of legal rights based solely on the grounds that a plaintiff’s dispute resolution costs exceed any potential amounts to be recovered. The Court concluded that the FAA reflects the overarching principle that arbitration is a matter of contract and that courts have a responsibility to strictly enforce arbitration agreements according to their terms. The arbitration clause in the agreements between Amex and ICR and between AMEX and the other merchants must be enforced unless the FAA’s mandate has been overridden by a contrary congressional command.

“No contrary congressional command requires us to reject the waiver of class arbitration here. Respondents argue that requiring them to litigate their claims individually—as they contracted to do—would contravene the policies of the anti-trust laws. But the antitrust laws do not guarantee an affordable procedural path to the vindication of every claim. Congress has taken some measures to facilitate the litigation of antitrust claims—for example, it enacted a multiplied-damages remedy. In enacting such measures, Congress has told us that it is willing to go, in certain respects, beyond the normal limits of law in advancing its goals of deterring and remedying unlawful trade practice. But to say that Congress must have intended what-ever departures from those normal limits to advance antitrust goals is simply irrational.”