1 At a stated term of the United States Court of Appeals 2 for the Second Circuit, held at the Daniel Patrick Moynihan 3 United States Courthouse, 500 Pearl Street, in the City of 4 New York, on the 29th day of May, two thousand twelve.
Following disposition of this appeal on February 1,
2012, an active judge of the Court requested a poll
3 whether to rehear the case in banc. A poll having
4 conducted and there being no majority favoring in
5 review, rehearing in banc is hereby DENIED.
7 Rosemary S. Pooler, Circuit Judge, concurs by opinion 8 in the denial of rehearing in banc.
10 Dennis Jacobs, Chief Judge, joined by Jose A. Cabranes 11 and Debra Ann Livingston, Circuit Judges, dissents by 12 opinion from the denial of rehearing in banc.
14 Jose A. Cabranes, Circuit Judge, dissents by opinion 15 from the denial of rehearing in banc.
17 Reena Raggi, Circuit Judge, joined by Richard C. 18 Wesley, Circuit Judge, dissents by opinion from the denial 19 of rehearing in banc.
24 CATHERINE O'HAGAN WOLFE, CLERK
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.
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, 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 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, 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.
1 DENNIS JACOBS, Chief Judge, with whom Judge CABRANES and 2 Judge LIVINGSTON join, dissenting from the denial of 3 rehearing in banc:
5 I respectfully dissent from the denial of rehearing in 6 banc.
7 In 1968, it became law in this Court that, for public 8 policy reasons, federal antitrust claims could not be 9 arbitrated. See Am. Safety Equip. Corp. v. J.P. Maguire & 10 Co., 391 F.2d 821, 827-28 (2d Cir. 1968). The Supreme Court 11 rejected that public policy approach in Mitsubishi Motors 12 Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 636 13 (1985). And in 1991, it reiterated that federal statutory 14 claims can be ...