Homa v. American Express

Homa v. American Express

This case presented the question of whether, in a case in which the uncontroverted evidence establishes that a company’s class action ban would effectively preclude a party from vindicating his substantive statutory rights, a court could refuse to enforce the arbitration clause notwithstanding the U.S. Supreme Court’s decision in Concepcion.

The named plaintiff in the case was an American Express cardholder in New Jersey who claimed that American Express engaged in a bait-and-switch scheme to cheat them out of the cash rebates they had earned, in violation of the state’s consumer protection laws. At the trial court, he submitted uncontroverted evidence that the presence of a class action ban in American Express’s arbitration agreement would unequivocally prevent him from being able to effectively vindicate his substantive statutory rights.

On a final appeal to the Third Circuit, the Court of Appeals accepted the factual record showing that American Express’s ban on class actions would gut Mr. Homa’s case: “We accept this characterization, for the record demonstrates that the significant cost of arbitrating Homa’s claim and the likelihood that there would be a limited recovery even if his arbitration was successful makes it unlikely that an attorney would take his case. Furthermore, in view of the complexity of the issues pertaining to the merits of Homa’s claim, it would be very difficult for him to prosecute the case without the aid of an attorney whether in a judicial proceeding or in arbitration.”

Notwithstanding these facts, in light of the Concepcion case, the Third Circuit said that American Express’s arbitration clause should be enforced even though the arbitration offered only an “illusory remedy”: “Even if Homa cannot effectively prosecute his claim in an individual arbitration that procedure is his only remedy, illusory or
not. Though some persons might regard our result as unfair, [the Federal Arbitration Act] requires that we reach it.”

Plaintiffs’ counsel includes Public Justice attorneys Paul Bland and Matt Wessler; Gary Graifman of Kantrowitz, Goldhamer & Graifman in Montvale, N.J.; and Howard Longman of Stull, Stull & Brody in New York.

Skip to content