Supreme Court Refuses to Overturn Arbitration Requirement

The Supreme Court has turned aside arguments from consumers that they should be allowed to sue a bank and credit repair company that allegedly misled them into thinking that using the bank's credit card would somehow improve their credit rating.

CompuCredit and Columbus Bank and Trust, now owned by Synovus Bank, included an arbitration clause in the agreements they presented to consumers and the nation's high court yesterday overturned lower court rulings to side with the companies and against the consumers.

Writing for the majority, Justice Antonin Scalia turned aside arguments that the Credit Repair Organizations Act (CROA) precludes arbitration agreements.

Attorneys for the consumers had argued that a disclosure provision in CROA gives consumers the right to sue, and the nonwaiver provision prohibits the waiver of "any right of the consumer under this subchapter." Since the arbitration agreement waived the right to bring an action in a court of law, they claimed it could not be enforced.

"The flaw in this argument is its premise: that the disclo­sure provision provides consumers with a right to bring an action in a court of law," Scalia wrote. "It does not. Rather, it imposes an obligation on credit repair organizations to supply con­sumers with a specific statement" describing the consumer protections the law provides.

Congressional intent

"Had Congress meant to prohibit these very common provisions in the CROA, it would have done so in a man­ner less obtuse than what respondents suggest," Scalia added. "That Congress would have sought to achieve the same result in the CROA through combination of the nonwaiver provision with the "right to sue" phrase in the disclosure provision, and the references to 'action' and 'court' in the description of damages recoverable, is unlikely."

In a sharp dissent, Justice Ruth Bader Ginsburg rebuked her colleagues for trampling the common man, Courthouse News Service reported.

"The court today holds that credit repair organizations can escape suit by providing in their take-it-or-leave-it contracts that arbitration will serve as the parties' sole dispute-resolution mechanism," Ginsburg wrote. "The 'right to sue,' the court explains, merely connotes the vindication of legal rights, whether in court or before an arbitrator."

Justices Sonia Sotomayor and Elena Kagan agreed congressional intent was lacking, but they said it was "a much closer case than the majority opin­ion suggests."