Supreme Court grants petition for a writ of certiorari to decide whether CROA guarantees a right to sue | Practical Law

Supreme Court grants petition for a writ of certiorari to decide whether CROA guarantees a right to sue | Practical Law

Abby Cohen Smutny (Partner) and Lee A. Steven (Counsel), Leah Witters (Associate), White & Case LLP

Supreme Court grants petition for a writ of certiorari to decide whether CROA guarantees a right to sue

Published on 02 Jun 2011 • International, USA (National/Federal)
Abby Cohen Smutny (Partner) and Lee A. Steven (Counsel), Leah Witters (Associate), White & Case LLP
The US Supreme Court will decide whether a statute that grants a right to sue in its disclosure provision, enforceable through its civil liability provision, provides a right to sue or only a right to go to arbitration.
The Supreme Court granted the petition for a writ of certiorari in CompuCredit Corp. v Greenwood, No. 10-948 (May 2, 2011) to decide 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.
The Credit Repair Organizations Act (CROA) prohibits unfair and deceptive practices by Credit Repair Organisations. Credit Repair Organisations are defined as organisations providing services to "improv[e] any consumer's credit record, credit history, or credit rating." In relevant part, the disclosure provision of the CROA requires that written statements to consumers state "you have a right to sue a credit repair organisation that violates the Credit Repair Organization Act." This right is established through the civil liability provision. The CROA also states that consumer protections included in the act cannot be waived.
In the case that the Supreme Court will hear, Greenwood applied for and received a credit card with an agreement providing that all disputes would be arbitrated. After a dispute arose over annual fees associated with the card, Greenwood filed a complaint in court. CompuCredit moved to compel arbitration based on the arbitration agreement in the parties' contract. The district court denied the motion because the CROA provides a "non-waivable right to sue" making the arbitration agreement unenforceable.
On appeal, the Court of Appeals for the Ninth Circuit affirmed, explaining that arbitration agreements must be enforced "unless Congress itself has evinced an intention to preclude a waiver of judicial remedies for the statutory rights at issue." The court then found that the plain meaning of "right to sue" in the CROA disclosure provision required a court to hear claims, not an arbitrator. Thus, Congress made its intention clear, and the arbitration agreement could not be enforced.
In its opinion, the Ninth Circuit noted that it was in conflict with the Third and Eleventh Circuits. Now, the Supreme Court will decide which Circuit correctly interpreted the law. Its decision will help clarify the extent of the federal policy favouring arbitration when congressional enactments on point disfavour arbitration.