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Oakland Restaurant Loses U.S. Supreme Court Ruling

Publication Date: 
June 26, 2013
San Francisco Chronicle - Biz & Tech
Carolyn Said

Professor Mark Lemley spoke with the San Francisco Chronicle's Carolyn Said about the Supreme Court's decision in Amex v. Italian Colors Restaurant and why he sees it as "practically getting rid of antitrust enforcement." 

Italian Colors Restaurant in Oakland's Montclair district is the kind of charming neighborhood bistro that draws loyal regulars for dishes like Margarita-marinated chicken or squash blossoms stuffed with buffalo mozzarella.

But now it's achieved a different kind of distinction: It is the named defendant in a U.S. Supreme Court case likely to have a chilling effect on class-action lawsuits.


Mark Lemley, director of Stanford's Program in Law, Science and Technology, who teaches courses in antitrust and intellectual property law and was not involved in the case, said the Supreme Court ruling "practically is getting rid of antitrust enforcement."

'Not worth it'"No lawyer is going to take a case on contingency if they have to separately represent each individual merchant who was overcharged by $25 or $50 or $100 - that's not worth it," he said. "There is basically no prospect for relief in a case like this now that it can't be brought as a class action. What's notable here is that the court said, 'We recognize that no one will sue over $24, but too bad.' "

The court "has given one party the unilateral ability to decide that its conduct won't be subject to scrutiny under antitrust laws," he said.

Moreover, Lemley said, the merchants had no choice but to sign the original agreement that disputes would be handled by arbitration.

"It would be one thing if this were enforcing (an agreement) by two sophisticatedparties represented by lawyers that they want to resolve disputes by arbitration,"he said. "This is not that kind of case. These were standard-form agreements with an arbitration clause wedged in there. There was no opportunity to negotiate it."