Is the Supreme Court’s January 10th opinion in CompuCredit Corp v. Greenwood.pdf a potential antidote for the National Labor Relations Board’s (“NLRB”) decision in D.R. Horton? Perhaps. CompuCredit Corp. considered whether the Credit Repair Organizations Act (“CROA”), 15 U.S.C. § 1679 et seq., foreclosed enforcement of an arbitration agreement in a class action filed in the Northern District of California alleging CROA violations stemming from alleged misrepresentations made by CompuCredit in marketing its Aspire Visa credit card.
The District Court denied CompuCredit’s motion to compel arbitration, finding that claims under CROA were non-arbitrable based on its language. The Ninth Circuit affirmed and the Supreme Court reversed.
I. The Arbitration Provision
The arbitration provision in CompuCredit Corp. required individual arbitration of all claims. It provided:
Any claim, dispute or controversy (whether in contract, tort or otherwise) at any time arising from or relating to your Account . . . will be resolved by binding arbitration . . . .
* * *
In addition, you will not have the right to participate as a representative or member of any class of claimants relating to the claim subject to arbitration.
II. The CROA’s Provisions
The CROA regulates the practices of credit repair organizations and provides a private cause of action for violations as well as federal and state administrative enforcement. The CROA also has disclosure and nonwaiver provisions, which were focused upon by the District Court and the Ninth Circuit. The required disclosure statement, stated in pertinent part: “You have a right to sue a credit repair organization that violates the Credit Repair Organization Act.” (Emphasis added). The non-waiver provision declares:
“Any waiver by any consumer of any protection provided by or any right of the consumer under their subchapter – (1) shall be treated as void; and (2) may not be enforced by any Federal or State court or any other person.” (Emphasis added).
III. The FAA and Federal Statutory Claims
As a threshold matter, Justice Antonin Scalia, writing for the Court, examined the Federal Arbitration Act (“FAA”) as background for resolution of the case. He found that the FAA’s “liberal policy favoring arbitration agreements” applied to federal statutory claims “unless the FAA’s mandate has been ‘overridden by a contrary Congressional Command.’” With that understanding, Justice Scalia reviewed CROA’s provisions to determine if the Act contained such a Congressional command.
IV. CROA’s Provisions and The Duty to Arbitrate
The opinion found that the disclosure provision did not give consumers a right to bring an action in court. Instead, Justice Scalia concluded “[t]he only consumer right it creates is the right to receive the statement, which is meant to describe the consumer protections that the law elsewhere provides.”
The opinion went on to note that it was common for statutes creating civil causes of action to detail the claims, and relief available in a judicial context. Yet, the mere reference to a cause of action is insufficient to establish a “’contrary congressional command’ overriding the FAA.”
The opinion commented that in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 28 (1991), an arbitration agreement was enforced as to an Age Discrimination in Employment Act of 1967 (“ADEA”) claim despite language that declared: “Any person aggrieved may bring a civil action in any court of competent jurisdiction for such legal or equitable relief as will effectuate the purpose of this chapter.” Justice Scalia emphasized that the court had “repeatedly recognized that contractually required arbitration of claims satisfies the statutory prescription of civil liability in court.”
The opinion reasoned that at the time of CROA’s enactment in 1996, arbitration provisions in agreements were not unusual. So, if Congress intended to prohibit arbitration of CROA claims it would have done so with greater clarity. This reasoning led Justice Scalia to conclude “[b]ecause the CROA is silent on whether claims under the Act can proceed in an arbitral form, the FAA requires the arbitration agreement to be enforced according to its terms.” (Emphasis added). In her concurring opinion, Justice Sotomayor attempted to place the majority opinion in the context of existing precedent. She wrote: “I do not understand the majority opinion to hold that Congress must speak so explicitly in order to convey its intent to preclude arbitration of statutory claims.”
V. The Antidote or Just Another Pro-Arbitation Opinion?
Does CompuCredit Corp. signal an even more aggressive enforcement of arbitration procedures with class action waivers? Does the silence of the 1930’s vintage National Labor Relations Act on the key “congressional command” needed to foreclose arbitration mean that D.R. Horton is destined to be overturned? Or, as Justice Sotomayor states, can the Congressional will be “discovered in the history or purpose of the statute in question?” Too soon to tell. Yet, the CompuCredit Corp. opinion plainly raises additional doubts about the future viability of D.R. Horton.
The Bottom Line: Only time will tell what role the CompuCredit Corp. opinion will play in the future development of the law on mandatory arbitration. But, the opinion certainly provides at least one basis to challenge the NLRB’s decision in D.R. Horton.