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Posts Tagged ‘croa’

It has only been a few months since the Supreme Court issued its decision in AT&T Mobility v. Concepcion, holding that state laws holding class arbitration waivers unenforceable as against public policy are preempted by the Federal Arbitration Act (FAA), and the Court is already considering a new case involving the enforceability of arbitration agreements in consumer contracts.  

Today, the Supreme Court heard oral argument in Compucredit Corp. v. Greenwood, No. 10-948, in which the issue is whether a federal law’s grant to consumers of a right to sue can be waived through an arbitration agreement.  A copy of the oral argument transcript is now available at the Court’s website.  Most of the questions were directed at issues of statutory construction under the Credit Repair Organizations Act, 15 U.S.C. § 1679 et seq., and in particular whether Congress intended that the right to sue in court be non-waivable.  The Ninth Circuit’s decision below, the limited scope of the question presented for review, and the questions posed at oral argument would all suggest that the Court is unlikely in its ultimate opinion to address some of deeper questions remaining after Conception, such as whether and under what circumstances a consumer arbitration agreement can be held unconscionable under federal law.  Then again, as aptly illustrated in Justice Scalia’s opinion in Concepcion decision, the possibility that the decision will go beyond the limited statutory questions presented and address deeper public policy issues can never be ruled out.

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Last week, following the Supreme Court’s decision in AT&T Mobility v. Concepcion, I commented that the decision does not answer the question whether a federal court has the power to declare a class arbitration waiver unconscionable.  Although not on this precise issue, the Court has granted cert on a related issue relating to the enforceability of arbitration agreements that preclude class actions.

The issue presented in CompuCredit Corp. v. Greenwood, No. 10-948 is “Whether claims arising under the Credit Repair Organizations Act, 15 U.S.C. § 1679 et seq., are subject to arbitration pursuant to a valid arbitration agreement.”  This would-be class action involves a potential conflict between two competing federal laws, the Federal Arbitration Act and the Credit Repair Organizations Act (CROA).  The Ninth Circuit Court of Appeals held that a class arbitration waiver was void “because the CROA specifically prohibits provisions disallowing any waiver of a consumer’s right to sue in court for CROA violations.”  In reaching that conclusion, it held that the statute’s reference to a “right to sue” was an express statement of Congressional intention to preclude waivers of consumer’s rights to bring a lawsuit in court, thus falling within an exception to the otherwise liberal policy favoring arbitration.

The case has been added to the Court’s docket for the October 2011 term.

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