WASHINGTON — The Supreme Court considered on Wednesday whether to expand on its recent rulings allowing companies to avoid class-action lawsuits by insisting that customers resolve complaints through arbitration.
Arbitration requirements have become a standard feature of American life, printed on the back of baseball tickets, in the fine print of cellphone plans and in a wide range of other contracts.
Businesses say arbitration reduces legal costs while allowing more claims to be resolved. But consumer advocates say that arbitration increasingly lets companies escape accountability.
In the case before the court, a group of merchants argued that the arbitration terms imposed by American Express, as part of a credit card contract, were preventing them from seeking damages.
The court’s recent history, and the questions from the justices on Wednesday, suggested that arbitration requirements will be further entrenched.
The court ruled in a similar case in 2011 that customers could not choose litigation over arbitration even if arbitration was not practical. The justices divided 5-to-4 along ideological lines with conservatives in the majority.
Justice Antonin Scalia, who wrote the majority opinion in the 2011 case, said on Wednesday that he saw no reason to rule in favor of the merchants. “I don’t see how a federal statute is frustrated or is unable to be vindicated if it’s too expensive to bring a federal suit,” he said.
The case, American Express Company v. Italian Colors Restaurant, began when the merchants sued American Express claiming it had violated antitrust laws. American Express is the dominant provider of the charge cards favored by many corporations and affluent individuals, but businesses wishing to accept those cards must also agree to accept American Express credit cards. (Charge cards require payment in full each month, while credit cards allow customers to carry a balance.)
Merchants pay a fee each time a customer uses plastic, and American Express charges higher fees on credit card transactions than Visa or MasterCard.
The lawsuit asserts that it is illegal for American Express to require merchants to accept its credit cards as a condition of accepting its charge cards.
At issue before the Supreme Court is the validity of the contract each merchant signed requiring each to submit such claims to binding arbitration, rather than litigation, and requiring the claims to be arbitrated individually.
Paul D. Clement, a solicitor general for President George W. Bush, argued on behalf of the merchants that the contracts should not be binding because the cost of documenting an antitrust violation is much greater than the potential award in any individual case. The cost of arbitration might reach $1 million, the plaintiffs estimated, while the typical merchant might be able to win just $5,000.
The United States Court of Appeals for the Second Circuit ruled in favor of the merchants in 2009, and it has since upheld that ruling twice, even after considering recent Supreme Court rulings in favor of arbitration agreements.
The Obama administration, which joined the case on the side of the merchants, said a ruling in favor of American Express would limit the ability of individuals to pursue antitrust and other claims, which supplement federal enforcement efforts.
Malcolm L. Stewart, a deputy solicitor general, told the court that it should establish a simple standard: “Could any reasonable plaintiff proceed under the terms and conditions that are set up? And if the answer to that is no, then the arbitration agreement is unenforceable.”
But the justices expressed skepticism on Wednesday about the argument on two levels, challenging both the premise that class arbitration was necessary to pursue the merchants’ claims, and the assertion that they were entitled to do so.
Chief Justice John G. Roberts Jr. said that plaintiffs could share costs and research even without creating a formal class.
“That doesn’t seem too difficult,” he said. “You either have your trade association or you have a big meeting of all them and say we need to pay for this expert report and once we’ve got it, you know, I’m going to represent each of you individually in individual arbitrations and I’m going to win the first one, and then the others are going to fall into place, and they’ll get a settlement.”
Justice Stephen G. Breyer, who earlier favored limiting arbitration, seemed to be leaning the other way this time. He said that unavoidable costs might be considered problematic, but in the present case, he said, the plaintiffs had chosen an expensive legal theory.
“It is an odd doctrine that just says, plaintiff by plaintiff, you can ignore an arbitration clause if you can get a case that’s expensive enough,” he said.
Justice Elena Kagan countered, suggesting that the court should focus instead on the minimum amount required to mount a viable case.
But Justice Breyer would not cede the point, describing from the bench the way that he himself would arbitrate the case quickly and cheaply.