Monday, January 16, 2012

The Supreme Court and Arbitration

The right to jury trial in civil cases is fundamental. It is guaranteed in the Constitution. That right is becoming increasingly illusory, however. It is easily waived, and most litigants find themselves looking for alternatives to pursuing their rights to the end. Or they find they gave away those rights from the beginning. Just what does it mean to remind people that they retain the right to sue those whom they believe have violated their interests? That is what the Supreme Court considered last week in Compucredit Corp. v. Greenwood. In that case, the Court had to interpret the meaning of a statutory mandate enacted by Congress that credit repair companies disclose that consumers maintain the right to sue the companies. The Court held, 8-1, that this requirement did not preclude the credit repair companies from mandating instead that consumers arbitrate any disputes. So consumers are being told by these companies, yes you have the right to sue us, but sorry, you have to give up that right if you want to do business with us in the first place.

As a matter of statutory interpretation, the result is understandable. That it was decided by an 8-1 vote shows that it was not difficult for most of these Justices to wrap their heads around the concept that consumers are entitled to waive even fundamental rights. That is the whole point of the Federal Arbitration Act of 1925. We have the right to sue in many other circumstances, but we waive that right all the time. And if Congress had wanted to bar credit repair companies from requiring consumers to sign arbitration agreements, there were much more direct ways of accomplishing that than simply mandating disclosure of the right to sue. One could also interpret the "right to sue" as including the right to pursue claims in arbitration, although that may be a stretch.

On the other hand, you have to sympathize with the consumer's situation in being handed a contract with a credit repair company that on the one hand clearly guarantees the right to sue the company if the consumer is dissatisfied, and on the other hand, clearly requires that he or she waive that right. I believe the legal term for such a clause is "Catch-22."  Yet another example of how queasy we should feel in enforcing pre-dispute mandatory arbitration clauses that are contained in take it or leave it contracts that people are required to sign to engage in an increasing number of ordinary business transactions.  

Read more...

  © Blogger templates The Professional Template by Ourblogtemplates.com 2008

Back to TOP