Bernstein Shur Business and Commercial Litigation Newsletter #22

By Paul McDonald and Dan Murphy

November 2012 | Issue 22

We are pleased to present the 22nd edition of the Bernstein Shur Business and Commercial Litigation Newsletter. This month, we examine several cases that the U.S. Supreme Court will hear in its next term and an anti-competition case involving eBay, Inc. We hope you enjoy the newsletter.

In the News:

The U.S. Supreme Court agreed to hear an appeal by American Express Co. that could reverse a decision by the Second Circuit Court of Appeals that invalidated a mandatory arbitration clause requiring waiver of class-action rights.  In the case, American Express Co. v. Italian Colors Restaurant, merchant customers of American Express Co. brought a class-action suit against the company concerning its fee practices, asserting antitrust claims based on the Sherman Act. In response, Amex moved to compel arbitration based on a mandatory arbitration clause contained in its customer agreement that included a waiver of class-action rights. Analyzing the dispute, the Second Circuit noted that class actions were the only economically rational alternative for large groups where damages are too small to justify an individual action. Based on this determination, the Second Circuit concluded that the mandatory arbitration class-action waiver clause was unenforceable because it would effectively prevent plaintiffs from vindicating their federal statutory rights under the Sherman Act. The High Court will have a chance to revisit its recent rulings where it has enforced arbitration provisions in a variety of contexts. Read more about the case and access the Second Circuit’s decision.

The High Court agreed to entertain a challenge by California raisin growers to a federal law that compels them to set aside a portion of their harvest as a means of stabilizing supply and supporting prices. In the case, Horne v. U.S. Dep’t of Agriculture, the plaintiffs challenged the federal program as an impermissible “taking” without just compensation in violation of the Fifth Amendment of the U.S. Constitution. Under the federal scheme, raisin handlers have been required to turnover a large portion of their harvest – exceeding 30 percent in some years – but have received little or no compensation in return. Plaintiffs challenged the scheme after being assessed $483,843 in civil fines for failing to participate in the program. Analysts believe that the case could provide the High Court with an opportunity to address the extent of the constitutional prohibition on the taking of property by the government without just compensation. Read more about the case here.

eBay, Inc. has been sued by the U.S. Department of Justice based on allegations that it engaged in anti-competitive behavior by entering into a secret agreement with Intuit not to recruit its employees. The government has alleged that the companies entered into an illegal agreement pursuant to which eBay’s recruiting staff was instructed to throw away resumes from candidates employed by Intuit, effectively limiting career options for such individuals. During the period at issue in the case, the founder of Intuit served on the board of directors for eBay. The Justice Department has taken the position that the non-recruitment agreement was per se illegal under antitrust law. eBay has responded by stating that its actions did not violate antitrust laws because its conduct did not have an effect on the market. Intuit faced similar antitrust charges in 2010 and settled with the Justice Department. Click here to read more about the case.