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Various small businesses decided to accept American Express cards as payment in their stores. When a store decides to accept American Express cards, it must enter into a Card Acceptance Agreement. This standard form contract outlines the basic relationship between American Express and the merchant. A clause within the agreement requires arbitration of all claims brought against American Express and prohibits stores from bringing any class action claims. 2 Despite the class-action waiver, the business owners instituted a class-action lawsuit against American Express, alleging violations of certain federal antitrust monopoly laws seeking treble damages. The business owners claimed that American Express used its power in the market for charge cards to force the store owners to accept credit cards at rates 30% higher than the fees for competing credit cards. American Express responded by moving to compel individual arbitration under the provisions of the Federal Arbitration Act (FAA). The store owners sought to invalidate the ban on class arbitration by introducing evidence that the cost of proving the antitrust claims via expert testimony would range from “at least” several hundred thousand dollars to more than one million dollars while, and that the maximum recovery for an individual plaintiff would be only about $12,500 ($38,500 awarded treble damages).

Should the cost of proving a claim be a factor when considering whether a suit may proceed on a class basis, either in arbitration or in a judicial proceeding?