The US Supreme Court [official website] ruled 8-1 [opinion, PDF] Tuesday in CompuCredit Corp. v. Greenwood [SCOTUSblog backgrounder] that, because the Credit Repair Organizations Act (CROA) is silent on whether claims can proceed in an arbitrable forum, the Federal Arbitration Act (FAA) [text] requires the arbitration agreement to be enforced according to its terms. The case arose from a dispute between consumers and companies that issue low-rate credit cards to people with bad credit. The consumers filed a lawsuit over credit card fees, and the US Court of Appeals for the Ninth Circuit ruled that they had a right to sue in federal court [opinion, PDF] rather than face arbitration. In an opinion by Justice Antonin Scalia, the Supreme Court reversed the Ninth Circuit:
The flaw in [respondents'] argument is its premise: that the disclosure provision provides consumers with a right to bring an action in a court of law. It does not. Rather, it imposes an obligation on credit repair organizations to supply consumers with a specific statement set forth (in quotation marks) in the statute. The 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.Justice Sonia Sotomayor filed an opinion concurring in the judgment, which Justice Elena Kagan joined. Justice Ruth Bader Ginsburg filed a dissenting opinion.
The court heard oral arguments [JURIST report] in the case in October. The attorney for CompuCredit argued that strong federal policy in favor of arbitration overrides any differing laws that discourage waivers of rights to sue. Respondents argued that the CROA explicitly bans any suggestion of waiving the right to sue and that credit card companies should be fined for even asking applicants to sign an arbitration waiver.