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.
Given this court’s past history of championing big business, this is probably not a good sign for consumers.
