The U.S. Supreme Court is poised to give companies another powerful tool for reducing class action litigation against them.

During recent oral arguments in American Express v. Italian Colors, the justices appeared to be leaning toward ruling in favor of American Express, which required merchants to sign an agreement forcing them to settle all disputes through arbitration. That could open the door to more widespread use of arbitration clauses that ban class actions, possibly even including changes in corporate bylaws to preclude securities class actions.

“Since the federal securities laws don’t preclude arbitration, I don’t think that the SEC would have any basis for continuing to object to the use of arbitration in a company’s articles of incorporation or by laws,” said Alan Kaplinsky, a partner with Ballard Spahr in Philadelphia who represents banks and financial-services companies and was a pioneer in the development of arbitration clauses.

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