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Supreme Court Grants Certiorari in CompuCredit Corp. v. Greenwood--DRI Files Amicus Brief

DRI Today
May 26, 2011

On May 2, the Supreme Court granted certiorari in CompuCredit Corp v. Greenwood, to address whether claims arising under the Credit Repair Organizations Act, 15 U.S.C. § 1679 et seq., (CROA) are subject to arbitration pursuant to an otherwise valid arbitration agreement.  The petitioners marketed, serviced and issued a credit card to the respondents.  The respondents agreed that any dispute arising from or related to the credit card would be arbitrated.  In 2008, the respondents filed suit against CompuCredit and Synovus Bank, alleging in part that the imposition of certain fees related to the credit cards violated the statutory requirements of CROA.  CROA contains a "right to sue" provision as well as an anti-waiver provision stating that "[a]ny waiver by any consumer of any protection provided by or any right of the consumer under" CROA "shall be treated as void . . . and may not be enforced by any Federal or State court or any other person."

The petitioners moved the district court to compel arbitration pursuant to the terms of the arbitration agreement between the parties.  The district court denied the motion, holding that claims brought under CROA were not subject to arbitration.  According to the district court, CROA provides consumers with a "non-waivable right to sue" in court, rendering the arbitration agreements void and unenforceable.

A divided panel of the Ninth Circuit affirmed, holding that the plain language of CROA compels a conclusion that Congress precluded arbitration of CROA claims.  According to the majority, CROA provides consumers with a "right to sue," and the plain meaning of "right to sue" involves bringing an action in a court of law.  The majority also concluded that the anti-waiver provision in CROA invalidates any waiver of the right to sue, thus rendering the arbitration agreements unenforceable. In so holding, the majority concluded that the decision conflicts with determinations on the same question made by the Third and Eleventh Circuits.  See Gay v. CreditInform, 511 F.3d 369 (3d Cir. 2007); Picard v. Credit Solutions, Inc., 564 F.3d 1249 (11th Cir. 2009).  The Ninth Circuit, over a dissent from Judge Tashima, denied panel rehearing and rehearing en banc.

Petitioners sought certiorari to resolve the conflict between the Third, Ninth and Eleventh Circuits and determine whether claims brought under CROA are subject to arbitration.  DRI submitted an amicus brief in support of the petition, arguing in favor of reversal based on the strong federal policy in favor of arbitration and the settled expectations of both businesses and consumers based on the terms of validly executed arbitration agreements.  Moreover, DRI's brief highlighted the inconsistencies in the Ninth Circuit's interpretation of the statutory language in CROA as compared to the judicial interpretation of other similar statutory provisions.

No briefing schedule has been issued yet.  The ADR Committee will provide further updates as more information becomes available.