Compucredit Corp. v. Greenwood
181 L. Ed. 2d 586, 2012 U.S. LEXIS 575, 565 U.S. 95 (2012)
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Rule of Law:
The Credit Repair Organizations Act (CROA) does not override the Federal Arbitration Act's mandate to enforce arbitration agreements. A statute's provision of a "right to sue" and its references to court proceedings do not, by themselves, constitute a "contrary congressional command" sufficient to preclude arbitration.
Facts:
- CompuCredit Corporation marketed an Aspire Visa credit card, issued by Columbus Bank and Trust, representing that the card could help consumers rebuild poor credit.
- Individuals (respondents) applied for and received the Aspire Visa credit card.
- The credit card applications contained a provision stating that any claim or dispute arising from the account would be resolved by binding arbitration upon either party's election.
- Upon opening their accounts, CompuCredit assessed multiple fees against the cardholders, which significantly reduced the advertised credit limit.
- The cardholders alleged that CompuCredit's representations about rebuilding credit were misleading and that the fee structure was not clearly disclosed.
Procedural Posture:
- Consumers filed a class-action complaint against CompuCredit and Columbus Bank in the U.S. District Court for the Northern District of California, alleging violations of the CROA.
- CompuCredit filed a motion to compel arbitration.
- The District Court (trial court) denied the motion, concluding that Congress intended CROA claims to be non-arbitrable.
- CompuCredit, as appellant, appealed the decision to the U.S. Court of Appeals for the Ninth Circuit.
- A panel of the Ninth Circuit (intermediate appellate court) affirmed the District Court's ruling.
- The U.S. Supreme Court granted certiorari to review the judgment of the Ninth Circuit.
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Issue:
Does the Credit Repair Organizations Act (CROA) preclude the enforcement of a valid, pre-dispute arbitration agreement for claims brought under the Act?
Opinions:
Majority - Justice Scalia
No, the Credit Repair Organizations Act (CROA) does not preclude the enforcement of an arbitration agreement. The Federal Arbitration Act (FAA) establishes a liberal federal policy favoring arbitration that can only be overridden by a contrary congressional command, which is absent in the CROA. The CROA's disclosure provision mentioning a 'right to sue' is a colloquial description of the consumer's ability to enforce liability created elsewhere in the statute (§ 1679g); it does not create a substantive, non-waivable right to a judicial forum. The mere use of terms like 'action' and 'court' in the civil liability section is insufficient to override the FAA, as the Court has previously enforced arbitration for statutes with similar language. Had Congress intended to prohibit arbitration for CROA claims, it would have done so with greater clarity, as it has in other consumer protection statutes.
Dissenting - Justice Ginsburg
Yes, the Credit Repair Organizations Act (CROA) does preclude the enforcement of an arbitration agreement. The Act should be read as a whole, considering its purpose to protect vulnerable consumers. The combination of the mandatory disclosure of a 'right to sue' (§ 1679c), the civil liability provision creating individual and class actions in court (§ 1679g), and the non-waiver provision for 'any right' under the Act (§ 1679f) demonstrates Congress's intent to guarantee a judicial forum. An ordinary consumer would understand 'right to sue' to mean the right to go to court, and allowing companies to negate this right through a fine-print arbitration clause permits the very deception the CROA was enacted to prevent.
Concurring - Justice Sotomayor
No, the Credit Repair Organizations Act (CROA) does not preclude the enforcement of an arbitration agreement, although the case is a close one. It is plausible that consumers, for whom the Act was written, would interpret the 'right to sue' as a guarantee of a judicial forum. However, the contrary interpretation is no less compelling, as the Act's liability provision is materially indistinguishable from other statutes the Court has held do not preclude arbitration. Because the arguments are in equipoise, the default precedents apply: the party opposing arbitration bears the burden of proof, and any doubts are resolved in favor of arbitration. Therefore, the arbitration agreement must be enforced.
Analysis:
This decision significantly strengthens the presumption in favor of arbitration under the Federal Arbitration Act (FAA). It establishes a high bar for finding that a federal statute implicitly overrides the FAA, requiring a clear and explicit 'contrary congressional command.' The ruling clarifies that statutory language granting a 'right to sue' or referencing court proceedings is generally insufficient to preclude arbitration. Consequently, this case makes it more difficult for consumers and employees to avoid arbitration clauses in contracts, even under statutes designed for their protection, unless Congress has included unambiguous anti-arbitration language in the law itself.
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