Tuesday, January 10, 2012

Just In: Another SCOTUS Pro-Arbitration Decision

Earlier today, the Supreme Court issued its opinion in CompuCredit Corp. v. Greenwood. This is actually a credit card case, but it has some value in employment law because it involves the Federal Arbitration Act (FAA).

The plaintiffs' credit card agreements included clauses that required their claims to be resolved by binding arbitration. They filed lawsuits under the Credit Repair Organizations Act (CROA). The district court and Ninth Circuit held that Congress intended CROA claims to be nonarbitrable - therefore allowing the lawsuits to proceed without compelling arbitration.

Even if you know nothing about the law, there are two guiding principles for predicting the outcome here:
  1. The Supreme Court loves arbitration clauses; and
  2. The only thing the Supreme Court loves more than arbitration clauses is reversing the Ninth Circuit (a little sarcasm there... but not a lot).
True to form, the Court held (8-1 with only Justice Ginsburg dissenting) that:
Because the CROA is silent on whether claims under the Act can proceed in an arbitrable forum, the Federal Arbitration Act (FAA) requires the arbitration agreement to be enforced according to its terms.
So, if you had aspirations of carving out nonarbitrable causes of action - the statute had better be pretty explicit. Justice Scalia cites the example of the Commodity Exchange Act which provides, "No predispute arbitration agreement shall be valid or enforceable, if the agreement requires arbitration of a dispute arising under this section." Yup, that's pretty explicit.

Posted by Philip Miles, an attorney with McQuaide Blasko in State College, Pennsylvania in the firm's civil litigation and labor and employment law practice groups.