CED

September 2013

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Money Little Did You Know: Supreme Court Has Been Minding Your Business Decisions impacting companies have broader implications for all employers, including equipment distributors. By Laura Vlieg Unless you're a lawyer or have an obsession with old people in black robes (if it's the latter, I recommend you seek help), you have probably only heard about Supreme Court of the United States' (SCOTUS or "the Court") decisions on same-sex marriage and affirmative action. However, the recent Court term is noted by legal commentators and scholars for its landmark rulings on legal issues that impact business. In particular, in areas of class actions and employment law, Chief Justice John Roberts' Court had a significant impact. Though they're hardly as glamorous as civil rights or social issues, these judgments are certainly worth taking a moment to consider when making business decisions. Group Suits The Court's decisions related to class actions could leave a long-standing imprint on the legal system. Besides being a classic legal thriller starring Gene Hackman, a class action is a type of lawsuit in which a group of people with identical claims file suit together. Class actions benefit plaintiffs, particularly those with relatively small claims, by allowing them to band together to sue. The proliferation of class actions has long been a concern of businesses of all sizes. Both American Express v. Italian Colors Restaurant (American Express) and Comcast v. Behrend were considered pro-big business decisions and dealt with class action antitrust claims. In American Express, a group of small businesses sought to file a classaction antitrust lawsuit, claiming that American Express exercised monopolistic practices by imposing excessive fees (30 percent higher than its competitors) on companies accepting its credit cards. The Court sided with American Express, telling the small businesses that they were bound by an arbitration clause in their agreements with American Express requiring the companies to file suit individually, even if it would be prohibitively expensive. The outcome in American Express amplifies the ability of bigger companies to avoid class actions through an arbitration clause, essentially immunizing liability whenever the litigation costs exceed the potential recovery for an individual plaintiff (which is often). In this case, the decision could be beneficial to equipment distributors. Any contract including a clause saying that parties will arbitrate disputes rather than file suit in court can be written to ensure litigation is conducted individually rather than as a class. While a properly constructed arbitration clause can protect an equipment dealer from class actions brought by its customers, bear in mind that it can also defend manufacturers from class actions by those selling their products. The Court has made it clear that parties will be held to arbitration agreements, highlighting 42 | www.cedmag.com | Construction Equipment Distribution | September 2013 42_Supreme_Court_Feature_KP.indd 42 8/28/13 12:30 PM

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