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SUPREME COURT DOCKET REPORT

Mayer Brown's Supreme Court and Appellate Practice Group distributes a Docket Report whenever the Supreme Court grants certiorari in a case of interest to the business community. We also email the Docket Report to our subscribed members and if you don't already subscribe to the Docket Report and would like to, please click here.

October Term 2010 - May 2, 2011

May 2, 2011

Today the Supreme Court granted certiorari in one case of interest to the business community:


Federal Arbitration Act—Arbitrability of Disputes Under the Credit Repair Organizations Act

Under the Federal Arbitration Act (“FAA”), agreements to arbitrate federal statutory claims are presumed to be enforceable “unless Congress itself has evinced an intention to preclude a waiver of judicial remedies for the statutory rights at issue.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 624, 628 (1985). Today, the Supreme Court granted certiorari in CompuCredit Corp. v. Greenwood, No. 10-948, to resolve a circuit split on whether parties may agree to arbitrate claims under the Credit Repair Organization Act (“CROA”), 15 U.S.C. §§ 1679 et seq.

The CROA requires credit repair organizations to provide its customers with a disclosure document informing them that they “have the right to sue a credit repair organization that violates” the Act. 15 U.S.C. § 1679c(a). The CROA further provides that “[a]ny waiver by any consumer of any protection provided by or any right of the consumer under this subchapter” is void and unenforceable. 15 U.S.C. § 1679f(a). In CompuCredit, the plaintiffs applied for and received credit cards from the company. They subsequently sued CompuCredit, alleging that the company’s marketing practices violated the CROA, and CompuCredit moved to compel arbitration in accordance with the parties’ arbitration agreements. The district court denied the motion to compel, holding that the CROA precluded resolution of the plaintiffs’ claims through arbitration. 

A divided panel of the Ninth Circuit affirmed. See Greenwood v. CompuCredit Corp., 615 F.3d 1204 (9th Cir. 2010). The majority held that “the plain language of the CROA provides consumers with the ‘right to sue,’” not “a right to ‘some form of dispute resolution.’” Id. at 1208. In the absence of any statutory definition, the Ninth Circuit concluded, the ordinary meaning of a “right to sue” “involves the right to bring an action in a court of law.” Id

As Judge Tashima pointed out in his dissent, however, the Ninth Circuit’s conclusion is at odds with decisions of the Third and Eleventh Circuits, both of which have held that claims brought under the CROA are arbitrable. Cf. Gay v. CreditInform, 511 F.3d 369 (3d Cir. 2007); Picard v. Credit Solutions, Inc., 564 F.3d 1249 (11th Cir. 2009). Like the Third and Eleventh Circuits, Judge Tashima explained that the disclosure requirements of the CROA do not “create any substantive rights, including the right to sue,” and that the “right to sue” mentioned in the mandated disclosure was intended to point to the civil liability provisions of the Act, which do not themselves specify a non-waivable judicial forum. 615 F.3d at 1215 (Tashima, J., dissenting). Judge Tashima further noted that, because the CROA specifies that a waiver of statutory rights “‘may not be enforced by any Federal or State court or any other person,’” it expressly contemplates a “role for arbitrators in enforcing CROA claims.” Id. (quoting 15 U.S.C. § 1679f(a) (emphasis by Judge Tashima)). Finally, Judge Tashima rejected the majority’s contention that a “right to sue” necessarily entails the “right to sue in court.” Id. at 1216. As Judge Tashima noted, “[n]othing cited by Plaintiffs suggests that Congress actually considered the issue of arbitrability of CROA claims, and the legislative history does not establish that Congress intended CROA claims to be non-arbitrable.” Id.

This case is of great interest not only to credit repair organizations but to any other business that is a party to arbitration agreements requiring arbitration of federal statutory claims. Since the 1980s, the Supreme Court has repeatedly held that federal statutory claims—including claims under the antitrust, securities, and civil rights laws—may be arbitrated. A number of lower courts nonetheless remain divided over whether parties can agree to arbitrate claims under not only the CROA but also the federal Magnuson-Moss Warranty Act. (For more information about the conflict over whether Magnuson-Moss claims may be arbitrated, please see this article.)

Absent extensions, amicus briefs in support of the petitioner will be due on June 23, 2011, and amicus briefs in support of the respondent will be due on July 25, 2011. Any questions about this case should be directed to Evan Tager (+1 202 263 3240) or Archis Parasharami (+1 202 263 3328) in our Washington, DC office.


Mayer Brown's Supreme Court & Appellate practice distributes a Docket Report whenever the Supreme Court grants certiorari in a case of interest to the business community and distributes a Docket Report-Decision Alert whenever the Court decides such a case. We hope you find the Docket Reports and Decision Alerts useful, and welcome feedback on them (which should be addressed to Andrew Tauber, their general editor, at atauber@mayerbrown.com or +1 202 263 3324).

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Mayer Brown's Supreme Court & Appellate practice distributes a Docket Report whenever the Supreme Court grants certiorari in a case of interest to the business community and distributes a Docket Report-Decision Alert whenever the Court decides such a case. We hope you find the Docket Reports and Decision Alerts useful, and welcome feedback on them (which should be addressed to Andrew Tauber, their general editor, at atauber@mayerbrown.com or +1 202 263 3324).

Mayer Brown Supreme Court Docket Reports provide information and comments on legal issues and developments of interest to our clients and friends. They are not a comprehensive treatment of the subject matter covered and are not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed. 



 
 
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