In re: American Express Merchants’ Litig.

06-1871-cv
In re: American Express Merchants’ Litig.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
ORDER
At a stated term of the United States Court of Appeals 1
for the Second Circuit, held at the Daniel Patrick Moynihan 2
United States Courthouse, 500 Pearl Street, in the City of 3
New York, on the 29 th day of May, two thousand twelve. 4
5
- - - - - - - - - - - - - - - - - - - -X 6
IN RE: AMERICAN EXPRESS MERCHANTS’ 7
LITIGATION, 8
9
Italian Colors Restaurant, on behalf 10
of itself and all similarly situated 11
persons, National Supermarkets 12
Association, 492 Supermarket Corp., 13
Bunda Starr Corp., Phoung Corp., 14
15
Plaintiffs-Appellants, 16
17
-v.- 06-1871-cv 18
19
American Express Travel Related 20
Services Company, American Express 21
Company, 22
23
Defendants-Appellees. 24
- - - - - - - - - - - - - - - - - - - -X 25
26
Gary B. Friedman, Tracey Kitzman, Aaron Patton, 27
Warren Parrino, Friedman Law Group LLP, New York, 28
NY, for Plaintiffs-Appellants. 29
30
Bruce H. Schneider, Stroock & Stroock & Lavan, 31
LLP, New York, NY, Julia B. Strickland, Stephen J. 32
Newman, Stroock & Stroock & Lavan LLP, Los 33
Angeles, CA, Michael K. Kellogg, Derek T. Ho, 34
Kellogg, Huber, Hansen, Todd, Evans & Figel, PLLC, 35
Washington, DC, for Defendants-Appellees. 36

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2
Following disposition of this appeal on February 1, 1
2012, an active judge of the Court requested a poll on 2
whether to rehear the case in banc. A poll having been 3
conducted and there being no majority favoring in banc 4
review, rehearing in banc is hereby DENIED. 5
6
Rosemary S. Pooler, Circuit Judge, concurs by opinion 7
in the denial of rehearing in banc. 8
9
Dennis Jacobs, Chief Judge, joined by José A. Cabranes 10
and Debra Ann Livingston, Circuit Judges, dissents by 11
opinion from the denial of rehearing in banc. 12
13
José A. Cabranes, Circuit Judge, dissents by opinion 14
from the denial of rehearing in banc. 15
16
Reena Raggi, Circuit Judge, joined by Richard C. 17
Wesley, Circuit Judge, dissents by opinion from the denial 18
of rehearing in banc. 19
20
21
22
FOR THE COURT: 23
CATHERINE O’HAGAN WOLFE, CLERK 24
25
26

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ROSEMARY S. POOLER , Circuit Judge, concurring in the denial of rehearing en banc:
I respectfully concur in the denial of the rehearing en banc. I write briefly to emphasize
that the limited holding in this case is not governed by the Supreme Court’s reasoning in AT&T
Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011). Concepcion holds that the Federal
Arbitration Act (“FAA”) preempts state laws hostile to arbitration, and focuses its analysis on
preemption issues. In contrast, analysis in Amex III rests squarely on a vindication of statutory
rights analysis -- an issue untouched in Concepcion.
Amex III strives to give full effect to the Supreme Court’s teachings that where a
contractual agreement functions “as a prospective waiver of a party's right to pursue statutory
remedies,” then the contractual agreement may not be enforced. Mitsubishi Motors Corp. v.
Soler Chrysler–Plymouth, Inc., 473 U.S. 614, 637, n. 19 (1985); see also Green Tree Fin. Corp.
Alabama v. Randolph, 531 U.S. 79, 90 (2000). Amex III is carefully cabined to hold that this
waiver, on this record, is unenforceable. It creates no broad new rights.
While Concepcion addresses state contract rights, Amex III deals with federal statutory
rights -- a significant distinction. In analyzing Concepcion, the Court reasoned that although the
FAA’s saving clause, 9 U.S.C. § 2, preserves a generally applicable contract defense, “nothing
in it suggests an intent to preserve state-law rules that stand as an obstacle to the accomplishment
of the FAA’s objectives.” 131 S.Ct. at 1748. The Court reasoned that invalidating a class waiver
would allow a party to an arbitration agreement to demand a class-wide arbitration that is not
consensual, thereby making arbitration slower, more formal and more costly, and greatly
increasing risks to defendants. Id. at 750-52. Because its analysis focused wholly on the issue of
preemption of state law by federal law, Concepcion is silent on the holdings of the Court’s
earlier cases which enforce arbitration clauses only when those clauses permit parties to
effectively vindicate their federal statutory rights.

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2
In stark contrast, Amex III raises a different issue: whether the FAA always trumps rights
created by a competing federal statute, as opposed to rights existing under a common law of
unconscionability. At issue here is not the right to proceed as a class, but the ability to
effectively vindicate a federal statutory right that predates the FAA. Vindication of statutory
rights analysis is the method of analysis proposed by the Supreme Court in Mitsubishi for
addressing whether an arbitration clause will be enforced where the dispute implicates a federal
statute. 473 U.S. at 637; Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 28 (1991). This
analysis is not foreign to our Court. See, e.g., Brooks v. Travelers Ins. Co., 297 F.3d 167, 168
(2d Cir. 2002) (analysis of arbitration agreement required finding that agreement “provide[d]
adequately for vindication of federal statutory rights”). There is no indication in Concepcion that
the Supreme Court intended to overrule its previous holdings.
Mitsubishi holds that parties may agree to prosecute statutory rights via arbitration
instead of litigation only where “the prospective litigant effectively may vindicate [his or her]
statutory cause of action in the arbitral forum.” 473 U.S. at 637. Gilmer reaffirmed that principle.
500 U.S. at 28. Nearly ten years later, the Supreme Court cited the proposition again, in Green
Tree Fin. Corp., 531 U.S. at 90; see also 14 Penn Plaza LLC v. Pyett, 129 S. Ct. 1456, 1474
(2009) (recognizing principle and stating that “a substantive waiver of federally protected civil
rights will not be upheld”). Our sister Circuits also engage in a vindication of rights analysis.
See, e.g., Kristian v. Comcast Corp., 446 F.3d 25, 47-48 (1st Cir. 2006) (severing as
unenforceable provision of arbitration agreement limiting availability of treble damages under
antitrust statute); Hadnot v. Bay, Ltd., 344 F.3d 474, 478 n. 14 (5th Cir. 2003) (severing
restriction on available remedies from arbitration agreement after finding that “ban on punitive
and exemplary damages is unenforceable in a Title VII case”); Morrison v. Circuit City Stores,

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3
Inc., 317 F.3d 646, 657-60 (6th Cir. 2003) (en banc) (deciding when cost-sharing deprives
employees of substantive statutory rights); Shankle v. B-G Maint. Mgmt. of Colo., Inc., 163 F.3d
1230, 1234 (10th Cir. 1999) (“an arbitration agreement that prohibits use of the judicial forum as
a means of resolving statutory claims must also provide for an effective and accessible
alternative forum”); Paladino v. Avnet Computer Techs., Inc., 134 F.3d 1054, 1060 (11th Cir.
1998) (holding that arbitration agreement which proscribed award of Title VII damages was
unenforceable because it was fundamentally at odds with the purposes of Title VII); Cole v.
Burns Int’l Sec. Servs., 105 F.3d 1465, 1468 (D.C. Cir. 1997) (“We do not read Gilmer as
mandating enforcement of all mandatory agreements to arbitrate statutory claims; rather we read
Gilmer as requiring the enforcement of arbitration agreements that do not undermine the relevant
statutory scheme.”).
Equally unavailing is any reliance on Coneff v. AT&T, Corp.-- F.3d ---, 2012 WL
887598 (9th Cir. 2012). Coneff -- like Concepcion -- examines when the FAA preempts state
contract law. Unlike Amex III, the Coneff court was not focused on individual plaintiffs lacking
an effective means of enforcing their rights. Rather, the question addressed in Coneff was, given
the small damages awards in any individual arbitration, whether the plaintiffs would have an
adequate incentive to vindicate their rights. The Ninth Circuit expressly recognized the
difference between incentive and ability. Coneff, 2012 WL 887598, at *3 n. 3 (distinguishing
Amex III, 667 F.3d 206, 218 (2d Cir. 2012) on the ground that in Amex III “the only
economically feasible means for plaintiffs enforcing their statutory rights is via a class
action.”)(emphasis in original).
Further, in both Coneff and Concepcion the individual damages awards available to any
single plaintiff were small, but fee-shifting provisions ensured that a damaged plaintiff could be

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4
made whole. The reason that a plaintiff may not bring suit was not because he would not be
likely to recoup his costs, but rather because the small amount of damages was not worth his
trouble. In Amex III, however, plaintiffs were faced with substantial upfront expenditures to
prosecute their antitrust rights -- costs that were only economically feasible if the plaintiffs
prosecuted their claims as a class. Amex I explained why the Clayton Act's treble-damages and
fee-shifting provisions would not make an individual plaintiff whole:
[Not only is] the trebling of a small individual damages award []
not going to pay for the expert fees Dr. French has estimated will
be necessary to make an individual plaintiff's case here, there is an
even more important legal consideration that the district court did
not consider. In Crawford Fitting Co. v. J.T. Gibbons, Inc., the
Supreme Court addressed fee-shifting for expert witnesses under
Rule 54(d) of the Federal Rules of Civil Procedure in an antitrust
case, holding that “when a prevailing party seeks reimbursement
for fees paid to its own expert witnesses, a federal court is bound
by the limit of [28 U.S.C.] § 1821(b). . . .” 482 U.S. 437, 439
(1987). We note that figure is now set at a $40 per diem. Further,
as the plaintiffs assert, there are no provisions “in the rules of any
of the arbitral bodies designated [in the Card Acceptance
Agreement] that would allow such costs to be awarded where they
are not authorized by the applicable fee shifting statute.” Even
with respect to reasonable attorney's fees, which are shifted under
Section 4 of the Clayton Act, the plaintiffs must include the risk of
losing, and thereby not recovering any fees, in their evaluation of
their suit's potential costs.
554 F.3d 300, 317-18 (2d Cir. 2009) (footnotes omitted); see also 15 U.S.C. § 15.
We need not tarry long in addressing a final concern: that Amex III permits plaintiffs to
evade enforcement of class action arbitration waivers simply by manufacturing an affidavit or
choosing pricey attorneys. The business plaintiffs here are prosecuting antitrust claims that will
likely require complex discovery and expert testimony. Other statutory claims may not require
such extensive proof. The courts are perfectly capable of doing the analysis necessary to
determine if the plaintiffs have made the necessary showing. See, e.g., Adkins v. Labor Ready,

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5
Inc., 303 F.3d 496, 502 (4th Cir. 2002) (refusing to strike class arbitration waiver where plaintiff
failed to make required showing that he would incur prohibitively high expenses in prosecuting
claim individually); Ornelas v. Sonic-Denver T, Inc., 2007 WL 274738, at *6 (D. Colo. Jan. 29,
2007) (refusing to strike class arbitration waiver because the evidence did not demonstrate the
costs of pursuing arbitration would effectively “preclude the plaintiff from pursuing his claims”);
see also Bonanno v. Quizno’s Franchise Co., LLC, 2009 WL 1068744, at *16 (D. Colo. April
20, 2009) (enforcing contract clause barring class actions where plaintiffs failed to demonstrate
they would incur excessively high costs in proceeding individually). Amex III specifically
admonishes that each case will need to stand on its own merits.
Amex III gives full effect to a long line of Supreme Court precedent preserving plaintiffs’
ability to vindicate federal statutory rights, rather than eviscerating more than 120 years of
antitrust law by closing the courthouse door to all but the most well-funded plaintiffs. For these
reasons, I concur in the denial of rehearing en banc.

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1
DENNIS JACOBS, Chief Judge, with whom Judge CABRANES and 1
Judge LIVINGSTON join, dissenting from the denial of 2
rehearing in banc: 3
4
I respectfully dissent from the denial of rehearing in 5
banc. 6
In 1968, it became law in this Court that, for public 7
policy reasons, federal antitrust claims could not be 8
arbitrated. See Am. Safety Equip. Corp. v. J.P. Maguire & 9
Co., 391 F.2d 821, 827-28 (2d Cir. 1968). The Supreme Court 10
rejected that public policy approach in Mitsubishi Motors 11
Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 636 12
(1985). And in 1991, it reiterated that federal statutory 13
claims can be subject to valid arbitration agreements. See 14
Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 25 15
(1991). 16
Now the panel opinion in this case uses public policy 17
to hold that arbitration agreements containing class-action 18
waivers are unenforceable when applied to federal statutory 19
claims if (as is always so easy to assert) a claim would not 20
be “economically rational” to pursue individually. In re 21
Am. Express Merchs.’ Litig., 667 F.3d 204, 214 (2d Cir. 22

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2
2012) (Amex III). The panel opinion thus impairs the 1
Federal Arbitration Act’s strong federal policy favoring the 2
enforcement of arbitration agreements, and frustrates the 3
goals of arbitration by multiplying claims, lawsuits, and 4
attorneys’ fees. “[T]he longstanding judicial hostility to 5
arbitration agreements,” Gilmer, 500 U.S. at 24, is 6
undiminished. 7
* * * 8
At issue is a provision, of a kind commonly used in 9
arbitration agreements, that bars class actions. The 10
underlying arbitration involves an antitrust claim. In In 11
re American Express Merchants’ Litigation, 554 F.3d 300 (2d 12
Cir. 2009) (Amex I), the panel held that such a bar ran 13
afoul of the federal substantive law of arbitration because 14
the litigation expense of the antitrust suit--expert 15
testimony, in particular--would render separate arbitrations 16
too expensive. So the panel ruled that a class action may 17
proceed in court notwithstanding the agreement to arbitrate. 18
Id. at 320. The Supreme Court granted certiorari and 19
vacated Amex I in light of Stolt-Nielsen S.A. v. AnimalFeeds 20
Int’l Corp., 130 S. Ct. 1758 (2010). Am. Express Co. v. 21
Italian Colors Rest., 130 S. Ct. 2401 (2010). 22

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3
Stolt-Nielsen holds that a party to an arbitration 1
agreement cannot be compelled to submit to class arbitration 2
absent a “contractual basis for concluding that the party 3
agreed to do so . . . because class-action arbitration 4
changes the nature of arbitration to such a degree that it 5
cannot be presumed the parties consented to it by simply 6
agreeing to submit their disputes to an arbitrator.” 130 S. 7
Ct. at 1775. On remand the (by then) two-judge panel 8
reached the same conclusion as in Amex I. See In re Am. 9
Express Merchs.’ Litig., 634 F.3d 187, 199 (2d Cir. 2011) 10
(Amex II). 11
Shortly after Amex II was published but before the 12
mandate issued, the Supreme Court decided AT&T Mobility LLC 13
v. Concepcion, 131 S. Ct. 1740 (2011), which holds that 14
state law may not be used to invalidate a class-action 15
waiver in an arbitration agreement on the ground that the 16
only economical way to litigate the claim is through a class 17
action. Id. at 1748. After soliciting briefing on the 18
impact of Concepcion, the panel issued its third opinion. 19
In Amex III, the panel yet again concludes that the class- 20
action waiver is unenforceable on the ground that the only 21
effective way to litigate the antitrust claims was by a 22
class action in court. Amex III, 667 F.3d at 218-19. 23

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4
As I undertake to show, the public policy rationale 1
which Amex III relies upon is wrong because: [1] it runs 2
counter to the public policy that the Supreme Court has made 3
paramount in the context of the Federal Arbitration Act 4
(“FAA”); [2] it employs a dubious ground of distinction to 5
overcome Concepcion, which teaches that the FAA does not 6
allow courts to invalidate class-action waivers even if 7
“class proceedings are necessary to prosecute small-dollar 8
claims that might otherwise slip through the legal system,” 9
Concepcion, 131 S. Ct. at 1753; and [3] the dicta on which 10
the panel precariously relies--that large “arbitration 11
costs” cannot be allowed to prevent a plaintiff from 12
“effectively vindicating” a statutory right--is pulled out 13
of context and distorted. 14
15
I 16
Amex III cannot be squared with the FAA, as it has been 17
applied and explained by the Supreme Court. In banc review 18
is needed because [A] the panel opinion is unbounded and can 19
be employed to defeat class-action waivers altogether; [B] 20
it makes the district court the initial theater of arbitral 21
conflict on the merits (how else does a district court 22
estimate the cost of a litigation?); and [C] it is already 23
working mischief in the district courts. 24

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5
1
A 2
Amex III is a broad ruling that, in the hands of class 3
action lawyers, can be used to challenge virtually every 4
consumer arbitration agreement that contains a class-action 5
waiver--and other arbitration agreements with such a clause. 6
While it purports to require a case-by-case approach, its 7
wording is categorical: “Supreme Court precedent recognizes 8
that the class action device is the only economically 9
rational alternative when a large group of individuals or 10
entities has suffered an alleged wrong, but the damages due 11
to any single individual or entity are too small to justify 12
bringing an individual action.” Amex III, 667 F.3d at 214. 13
Thus every class counsel and every class representative who 14
suffers small damages can avoid arbitration by hiring a 15
consultant (of which there is no shortage) to opine that 16
expert costs would outweigh a plaintiff’s individual loss. 17
The breadth of the holding is illustrated in the 18
opinion. Amex III uncritically adopts the affidavit of a 19
paid consultant to find that expert costs would be so high 20
relative to potential damages, that “the only economically 21
feasible means for plaintiffs enforcing their statutory 22
rights is via a class action [in court].” 667 F.3d at 218. 23

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6
However, Section 4 of the Clayton Act provides for the 1
recovery of costs, including expert costs, and attorneys’ 2
fees. See 15 U.S.C. § 15(a) (“[A]ny person who shall be 3
injured in his business or property by reason of anything 4
forbidden in the anti-trust laws . . . shall recover 5
threefold the damages by him sustained, and the cost of 6
suit, including a reasonable attorney's fee.”). The Amex 7
panel is evidently of the view that the incentivizing fees 8
and cost afforded by the statute would not fully compensate 9
plaintiffs for the costs of pursuing their claims. See Amex 10
III, 667 F.3d at 218. But Congress deems these incentives 11
sufficient to encourage private suits. The judgment of 12
Congress in such a matter is entitled to deference, not the 13
panel opinion’s dismissive treatment. 14
Amex III does not vouchsafe what is meant for a suit to 15
be “economically feasible,” or when a hypothetical 16
“economically rational” plaintiff might be willing to pursue 17
a claim. Id. at 218. It cannot mean that a potential 18
plaintiff must have the opportunity to be made whole and 19
happy by recovery of damages, costs, attorneys’ fees, expert 20
charges, etc., because such a result is rarely achieved by 21
even the most successful litigants. Moreover, Amex III 22
demands more than such complete victory; it demands a 23

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7
“risk-of-losing” premium. Id. at 218 (“Even with respect to 1
reasonable attorney’s fees[,] . . . the plaintiffs must 2
include the risk of losing, and thereby not recovering any 3
fees, in their evaluation of their suit's potential 4
costs.”). This formulation betrays a dominant 5
consideration--that, without the class-action vehicle, no 6
lawyer will be incentivized to pursue these claims. That 7
may be; but Concepcion rejected this very policy rationale. 8
See Concepcion, 131 S. Ct. at 1753 (rejecting argument that 9
“class proceedings are necessary to prosecute small-dollar 10
claims that might otherwise slip through the legal system,” 11
because rules inconsistent with the FAA cannot be imposed 12
“even if desirable for unrelated reasons”); see also Coneff 13
v. AT&T Corp., 673 F.3d 1155, 1159 (9th Cir. 2012 ) (rejecting 14
argument that plaintiffs had insufficient incentive to 15
pursue individual claims as “primarily a policy rationale” 16
that “cannot undermine the FAA”). 17
18
19
B 20
Under the panel opinion, arbitration must now begin in 21
federal court--and be litigated there on the merits in many 22
critical respects. The courtroom inquiry that the panel 23

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8
requires to be undertaken before any class arbitration can 1
in fact take place is searching. Whether a dispute may 2
require expert testimony is a question inseparable from the 3
merits (and raises Daubert and other vexed questions). 4
Without a close inquiry into the merits, no court can decide 5
what expert testimony would be required, or how much 6
discovery is needed. And it cannot be decided whether any 7
discovery or testimony is needed at all without deciding if 8
the claim is dismissible--or such prior questions as the 9
statute of limitations and laches, controlling law, res 10
judicata, etc., etc., not to mention little things like 11
whether the putative class is duly constituted and properly 12
represented, without which there is no class claim. 13
Under the FAA, however, all those questions are for the 14
arbitrator to decide. See, e.g., Prima Paint Corp v. Flood 15
& Conklin Mfg. Co., 388 U.S. 395, 403-404 (1967). By 16
requiring the district court to consider this at the 17
threshold, Amex III effectively displaces arbitration with a 18
trial court proceeding whenever lawyers assert a class 19
claim. (And they will, often.) Even if arbitration is 20
given a green light at the end of the judicial proceeding, 21
the party seeking to arbitrate may have already spent many 22
times the cost of an arbitral proceeding just enforcing the 23

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9
arbitration clause. And the partial list of issues above 1
will create fertile ground for appeal, adding yet more 2
delay, expense, and uncertainty. The predictable upshot is 3
that Amex III will render arbitration too expensive and too 4
slow to serve any of its purposes. 5
Amex III is incompatible with the FAA. The FAA 6
“establishes that, as a matter of federal law, any doubts 7
concerning the scope of arbitrable issues should be resolved 8
in favor of arbitration.” Moses H. Cone Mem'l Hosp. v. 9
Mercury Constr. Corp., 460 U.S. 1, 24-25 & n.32 (1983). The 10
federal substantive law of arbitration “is a congressional 11
declaration of a liberal federal policy favoring arbitration 12
agreements.” Id. at 24. This is particularly true in light 13
of Concepcion’s reaffirmance of the “overarching purpose” of 14
the FAA: 15
The overarching purpose of the FAA, evident in the 16
text of §§ 2, 3, and 4, is to ensure the 17
enforcement of arbitration agreements according to 18
their terms so as to facilitate streamlined 19
proceedings. Requiring the availability of 20
classwide arbitration interferes with fundamental 21
attributes of arbitration and thus creates a 22
scheme inconsistent with the FAA. 23
24
Concepcion, 131 S. Ct. 1740. 25
26
C 27

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1 These three cases also happen to be the only
citations in Amex III that support its “vindication of
rights” analysis. See Amex III, 667 F.3d at 219. This is
of course self-referential: the citation of Second Circuit
opinions by the district courts of this Circuit is not a
form of endorsement.
10
In the six years Amex has been pending in this Court, 1
its several iterations have been relied upon no fewer than 2
three times in the Southern District of New York alone. See 3
Raniere v. Citigroup, Inc., No. 11 Civ. 2248, 2011 WL 4
5881926, at *13 (S.D.N.Y. Nov. 22, 2011); Chen-Oster v. 5
Goldman, Sachs & Co., No. 10 Civ. 6950, 2011 WL 2671813, at 6
*2-5 (S.D.N.Y. July 7, 2011); Sutherland v. Ernst & Young, 7
LLP, 768 F. Supp. 2d 547, 550-55 (S.D.N.Y. 2011). 1 Given 8
the recurrent influence of Amex, this Court should subject 9
it to in banc review. 10
That responsibility is even more compelling because the 11
panel opinion now splits with a recent holding of the Ninth 12
Circuit Court of Appeals. See Coneff v. AT&T Corp., 673 F.3d 13
1155, 1158 n.2, 1159 n.3 (9th Cir. 2012). In Coneff, a 14
putative class of AT&T wireless customers sued AT&T on a 15
variety of claims, including a violation of the Federal 16
Communications Act. Id. at 1157. The Ninth Circuit held 17
that Green Tree Financial Corp. v. Randolph, 531 U.S. 79 18
(2000), was no obstacle to the enforcement of the 19

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11
arbitration agreement containing a class-action waiver 1
because under the FAA it is irrelevant whether customers 2
“have insufficient incentive” “to vindicate their rights.” 3
Id. at 1159. (citing Concepcion, 131 S. Ct. at 1753). 4
5
II 6
Amex III is thus incompatible with the longstanding 7
principle of federal law, embodied in the FAA and numerous 8
Supreme Court precedents, favoring the validity and 9
enforceability of arbitration agreements. It should come as 10
no surprise, then, that the panel opinion finds no support 11
in the Supreme Court’s case law. Instead, Amex III proceeds 12
by selective quotation from Supreme Court dicta, and by 13
aggressive measures to distinguish away the Supreme Court’s 14
recent holding in Concepcion. 15
16
17
A 18
Concepcion, decided after the second iteration of Amex, 19
vindicated the FAA against an unconscionability challenge 20
that was materially indistinguishable from the challenge 21
upheld in Amex. In Concepcion, the Supreme Court rejected a 22
common-law rule, developed by the California Supreme Court, 23

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12
that was applied to void class-action waivers in contracts 1
of all types. This is what the discredited California 2
opinion had said: 3
[B]ecause . . . damages in consumer cases are often 4
small and because a company which wrongfully exacts a 5
dollar from each of millions of customers will reap a 6
handsome profit, the class action is often the only 7
effective way to halt and redress such 8
exploitation. . . . Such one-sided, exculpatory 9
contracts in a contract of adhesion, at least to the 10
extent they operate to insulate a party from liability 11
that otherwise would be imposed under California law, 12
are generally unconscionable. 13
14
Discover Bank v. Superior Court, 36 Cal. 4th 148, 161 (2005) 15
(internal quotation marks, citations, and alterations 16
omitted). 17
The Supreme Court ruled that this attempt by California 18
to police arbitration agreements was inconsistent with the 19
FAA. Concepcion, 131 S. Ct. at 1748. Refuting the 20
dissent's argument that “class proceedings are necessary to 21
prosecute small-dollar claims that might otherwise slip 22
through the legal system,” the majority affirmed that rules 23
inconsistent with the FAA cannot be imposed “even if 24
desirable for unrelated reasons.” Id. at 1753. 25
After the Amex panel solicited briefing from the 26
parties on the effect of Concepcion, the panel reissued Amex 27
(in the form of Amex III), evading the broad language and 28

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13
clear import of Concepcion. Again in Amex III, the panel 1
found that a class-waiver provision in an arbitration 2
agreement is unenforceable if “the only economically 3
feasible means for plaintiffs enforcing their statutory 4
rights is via a class action.” Amex III, 667 F.3d at 218. 5
Amex III tries to narrow Concepcion to (in the words of 6
Amex III) a “path for analyzing whether a state contract law 7
is preempted by the FAA.” Amex III, 667 F.3d at 213. In so 8
doing, Amex III conceives the following distinction: 9
Concepcion decided only whether California's doctrine of 10
unconscionability was preserved by the FAA's savings clause 11
for “grounds as exist at law or in equity for the revocation 12
of any contract,” 9 U.S.C. § 2, whereas Amex III invalidates 13
the arbitration agreement (for the same reason of 14
unconscionability) on the ground that the underlying 15
antitrust claim was federal, a circumstance that the panel 16
dresses up rhetorically as a “federal substantive law of 17
arbitrability,” Amex III, 667 F.3d at 213 (quotation marks 18
omitted). This labored analysis does not rise to a 19
distinction, and treats the reasoning of Concepcion as an 20
obstacle to be surmounted or evaded. Since, as the Supreme 21
Court has held, the FAA preempts even state law that permits 22
evasion of a class action waiver clause, it is hard for me 23

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14
to see any justification for a rule permitting precisely the 1
same sort of evasion as part of the “federal substantive law 2
of arbitrability.” 3
4
B 5
The panel opinion leans on the distortion of dicta from 6
Green Tree Financial Corp. v. Randolph, 531 U.S. 79 (2000). 7
In Green Tree, a lender sought to compel a borrower to 8
arbitrate claims she had raised under certain federal 9
statutes. Id. at 83. The question was “whether [her] 10
agreement to arbitrate is unenforceable because it says 11
nothing about the costs of arbitration, and thus fails to 12
provide her protection from potentially substantial costs of 13
pursuing her federal statutory claims in the arbitral 14
forum.” Id. at 89. The Court reconfirmed “that federal 15
statutory claims can be appropriately resolved through 16
arbitration,” id. at 89, and “rejected generalized attacks 17
on arbitration that rest on a ‘suspicion of arbitration as a 18
method of weakening the protections afforded in the 19
substantive law to would be complainants,’” id. at 89-90 20
(quoting Rodriguez de Quijas v. Shearson/American Express, 21
Inc., 490 U.S. 477, 481 (1989)). And the challenge failed 22

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15
for want of evidence of the “cost” of the arbitration. Id. 1
at 90. 2
A passage in dicta (relied upon in Amex III) added that 3
“the existence of large arbitration costs could preclude a 4
litigant . . . from effectively vindicating her federal 5
statutory rights.” Id. at 90. However, “large arbitration 6
costs” is not a reference to expense generally. Green Tree 7
uses the phrase to reference the cost of access to an 8
arbitral forum and is about the price of admission: “payment 9
of filing fees, arbitrators’ costs, and other arbitration 10
expenses.” Green Tree, 531 U.S. at 84. Only Amex III has 11
suggested that a claim that may be expensive to litigate-- 12
whether in court or in arbitration--can for that reason be 13
deemed to entail preclusive “arbitration costs.” In any 14
event, even if the Green Tree dicta were to have the meaning 15
the panel ascribes to it, it is nonetheless still dicta. 16
And it loses any persuasive power it might once have had in 17
light of the Supreme Court’s holding in Concepcion, which is 18
more clear and more recent--and authoritative. 19
Similarly misleading is the panel’s quotation of 20
Mitsubishi, for the proposition that “should clauses in a 21
contract operate ‘as a prospective waiver of a party’s right 22
to pursue statutory remedies for antitrust violations, we 23

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16
would have little hesitation in condemning the agreement as 1
against public policy.’” Amex III, 667 F.3d at 214 (quoting 2
Mitsubishi, 473 U.S. at 637 n.19). The Court was there 3
concerned with a hypothetical arbitral panel that might, 4
relying on provisions concerning choice of forum or choice 5
of law, refuse to apply American law to a federal statutory 6
claim. Mitsubishi, 473 U.S. at 637 n.19. 7
Other circuit cases have excised provisions from 8
arbitration agreements for the precise reasons anticipated 9
by Green Tree and Mitsubishi. See Kristian v. Comcast 10
Corp., 446 F.3d 25, 47-48 (1st Cir. 2006) (severing waiver 11
of treble damages); Hadnot v. Bay, Ltd., 344 F.3d 474, 478 12
n.14 (5th Cir. 2003) (noting that waiver of exemplary and 13
punitive damages is unenforcable); Paladino v. Avnet 14
Computer Techs., Inc., 134 F.3d 1054, 1060 (11th Cir. 1998) 15
(holding that arbitration agreement cannot force a party to 16
arbitrate a statutory right and at the same time bar it from 17
being awarded damages in the arbitral forum). All of these 18
three cases involved an arbitration agreement that entirely 19
foreclosed a remedy to which one of the parties was 20
otherwise entitled to seek at law. None of them invalidated 21

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2 Amex III asserts that “[o]ther Circuits permit
plaintiffs to challenge class-action waivers on the grounds
that prosecuting such claims on an individual basis would be
a cost prohibitive method of enforcing a statutory right,”
Amex III, 667 F.3d at 216-17 (citing In re Cotton Yarn
Antitrust Litig., 505 F.3d 274, 285 (4th Cir. 2007);
Livingston v. Assocs. Fin., Inc., 339 F.3d 553, 555, 557
(7th Cir. 2003); Adkins v. Labor Ready, Inc., 303 F.3d 496,
502-03 (4th Cir. 2002). Each of those opinions quotes the
“prohibitive costs” passage of Green Tree, but none uses the
phrase as Amex III uses it--and all find in favor of the
party seeking to enforce the arbitration clause. For one
thing, the plaintiffs in each case failed to provide
non-conclusory cost evidence. Notably, in Livingston and
Adkins (upon which Cotton Yarn relies) the plaintiffs had
raised the specter of prohibitive arbitration fees--not
expenses incident to litigation. See Livingston, 339 F.3d
at 557 (“Tellingly, [plaintiffs’] only ‘evidence’ of
prohibitive arbitration costs is an unsubstantiated and
vague assertion that discovery in an unrelated arbitration
matter disclosed fees of nearly $2,000 per day.”); Adkins,
303 F.3d at 503 (“[Plaintiff] does not even provide any
evidence about the most basic element of this challenge: the
size of the allegedly ‘prohibitive’ arbitration fee
itself.”). These cases were thus concerned about the price
of admission.
17
an arbitration agreement on the ground that the claims were 1
costly to litigate individually. 2
2
In Amex, there is zero evidence that any “arbitration 3
costs”--within the meaning of Green Tree--would hamper the 4
plaintiffs’ ability to vindicate their statutory rights. 5
None of the three panel opinions references the size of the 6
filing fees, or any arbitrators’ fees that would befall the 7
plaintiffs. In finding that claim-by-claim litigation would 8
not be “economically feasible,” Amex III, 667 F.3d at 204, 9

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3 It evidently did not occur to French or the panel
that the rules of evidence do not govern arbitration, and
that an arbitrator can consult treatises and articles for
relevant antitrust and economic principles, and should do so
in some cases.
18
the panel relies solely on the affidavit of a paid 1
consultant, Gary French, who opined that preparing an 2
antitrust study would cost “at least several hundred 3
thousand dollars, while a larger study can easily exceed $1 4
million.” Id. at 212. 3 His preliminary review of the 5
particular claim yielded a guess of nearly one million 6
dollars. Id. However, that is beside the point: The 7
ability to spread costs among a class is only a procedural 8
right, the absence of which cannot render arbitration costs 9
prohibitive. Gilmer v. Interstate/Johnson Lane Corp., 500 10
U.S. 20, 25 (1991), is instructive: an employee sought to 11
avoid arbitrating his ADEA claims on the ground that 12
“arbitration is inconsistent with the ADEA.” Id. at 30. 13
The Supreme Court characterized that argument as “rest[ing] 14
on suspicion of arbitration as a method of weakening the 15
protections afforded in substantive law to would-be 16
complainants, and as such, . . . far out of step with our 17
current strong endorsement of the federal statutes favoring 18
this method of resolving disputes.” Id. (internal quotation 19
marks omitted). 20

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19
Gilmer's argument about the unavailability of class 1
actions was expressly rejected: 2
It is also argued that arbitration procedures 3
cannot adequately further the purposes of the ADEA 4
because they do not provide for broad equitable 5
relief and class actions. . . . But even if the 6
arbitration could not go forward as a class action 7
or class relief could not be granted by the 8
arbitrator, the fact that the [ADEA] provides for 9
the possibility of bringing a collective action 10
does not mean that individual attempts at 11
conciliation were intended to be barred. 12
Id. at 32 (internal quotation marks omitted). As the 13
passage from Gilmer reflects, the ADEA expressly provides 14
for a collective action; a fortiori, the same result obtains 15
under the antitrust laws, which do not. The only right to 16
an antitrust class action is “merely a procedural one, 17
arising under Fed. R. Civ. P. 23, that may be waived by 18
agreeing to an arbitration clause.” Johnson v. W. Suburban 19
Bank, 225 F.3d 366, 369 (3d Cir. 2000) (enforcing, due to 20
absence of congressional intent to the contrary, a bilateral 21
arbitration clause “even though [such clauses] may render 22
class actions to pursue statutory claims . . . 23
unavailable”). 24

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J OSÉ A. CABRANES , Circuit Judge, dissenting from the denial of rehearing in banc:
I concur fully in the thorough opinion of Chief Judge Jacobs dissenting from the denial
of in banc review. I write separately simply to underscore that the issue at hand is indisputably
important, creates a circuit split, and surely deserves further appellate review. This is one of
those unusual cases where one can infer that the denial of in banc review can only be explained
as a signal that the matter can and should be resolved by the Supreme Court.

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REENA RAGGI , Circuit Judge, with whom Judge W ESLEY joins, dissenting from the denial
of rehearing en banc:
I respectfully dissent from the denial of en banc review in this case. The panel
decision to hold a class action waiver unenforceable is at odds with Coneff v. AT&T
Corp., 673 F.3d 1155 (9th Cir. 2012). This circuit split appears unwarranted in light of
controlling Supreme Court precedent for the reasons forcefully advanced by Chief Judge
Jacobs in his opinion dissenting from the denial of rehearing en banc. While I identify
much merit in the Chief Judge’s analysis, I do not join in his opinion because I think it
would be useful to have the issues explored further by the full court in the adversarial
context of an en banc argument. To the extent a majority of the court maintains this
circuit split without further consideration, I must dissent.

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