Supreme Court vs. Consumers: Justice Ginsburg Left Fighting Alone For 'Ordinary People'

WASHINGTON -- After spending several years clearing a path for corporations to contract away their customers' access to courts generally and class actions in particular, the Supreme Court on Tuesday morning returned to the business docket to pull out a pesky pro-consumer weed.

The issue in CompuCredit v. Greenwood is whether a company may bar the courtroom doors to consumers seeking relief under a 1996 federal consumer protection law.

Wanda Greenwood, Ladelle Hatfield and Deborah McCleese brought suit in federal court against CompuCredit, a credit repair organization, for attaching hidden fees to its low-limit Visa card that had the effect of further destroying, rather than rebuilding, their credit ratings. Under the Credit Repair Organizations Act, consumers have the unwaivable right to sue a credit repair organization that engages in deceptive practices.

But CompuCredit tried to get the case kicked out of court, noting that the plaintiffs' contract requires that all claims go to private arbitration. The option of private arbitration, the company argued, fulfills their right to sue.

The district court would have none of CompuCredit's argument, and a divided 9th Circuit panel agreed, reading the phrase "right to sue" to plainly mean a suit in a court of law, not "an opportunity to submit a dispute to arbitration."

That, however, was the U.S. Court of Appeals for the 9th Circuit. This is the Roberts Supreme Court, which over the past few years has demonstrated its considerable enthusiasm for propping up arbitration provisions and weeding out the West Coast appeals court's left-leaning decisions.

Yet on Tuesday morning, most of the justices were relatively muted -- or in Justice Stephen Breyer's case, entirely mute -- as the lawyers before them dutifully made their arguments despite the apparently foregone conclusion that CompuCredit will win.

That's not to say the bench was completely cold. Justice Ruth Bader Ginsburg chimed in early and often to challenge CompuCredit's lawyer, former federal judge Michael McConnell, over the meaning of the phrase "right to sue."

"The statute is meant to apply to ordinary people," said Ginsburg, "and if an ordinary person not schooled in law read, 'You have a right to sue,' wouldn't they understand that to mean, 'I have a right to sue in court'?"

Pressing McConnell further, Justice Elena Kagan noted that he was asking the Court to believe that the right to sue meant, "You have a right to bring a claim in court, but it's probably going to end up in arbitration because of the nature of your form contract."

And even Chief Justice John Roberts, who has consistently joined his Court's anti-consumer majorities, seemed to have trouble with McConnell's interpretation. "If you're subject to an arbitration, would you say, 'I'm in a lawsuit,'" Roberts asked. When McConnell answered no, Roberts returned to Ginsburg's original point: "Why doesn't a right to sue refer to a lawsuit?"

McConnell answered each question with a litany of statutes and case law to indicate that the Court has long followed the "strong federal policy in favor of arbitrability" that Congress set in passing the Federal Arbitration Act of 1925. He made the 9th Circuit's decision seem like some ugly growth requiring removal.

Kagan, who initially appeared to regard the 9th Circuit's decision as something worth saving, ultimately could not overcome McConnell's argument. When Scott Nelson took to the lectern on behalf of the consumers, she reminded him that "Congress knew it had to make especially clear that it wanted to void arbitration agreements." So why didn't it just say so in the 1996 law as it had done many times before, she wanted to know.

And she wasn't finished. "Do you know," Kagan asked Nelson, "of any other statute that arguably voids arbitration agreements without saying that it's voiding an arbitration agreement?"

Nelson's "no" came in stark contrast to the many citations McConnell pulled out in support of his side.

By the time the oral argument ended -- with five minutes left unused -- it seemed that the chief justice's tough questions to McConnell were more a way to fill up time and make the case look like a fair fight than any actual indication that CompuCredit was in trouble. And with Kagan apparently torn between the Court's pro-corporate precedents and her own pro-consumer leanings, only Ginsburg was left to defend the appeals court's decision.

"These are take-it-or-leave-it contracts," she said to McConnell earlier in the hour. "So the consumer doesn't really elect arbitration."

But Ginsburg's nod to market realities served only as a futile protest.

"That is an argument against arbitration that this Court has rejected several times," McConnell replied, saying nothing that Ginsburg did not already know.