Situated v. Compucredit Corp..

• Decision Date: 17 August 2010
• Docket Number: No. 09-15906.,09-15906.
• Citation: 615 F.3d 1204
• Parties: Wanda GREENWOOD; Ladelle Hatfield; Deborah McCleese, on behalf of themselves and other similarly situated, Plaintiffs-Appellees, v. COMPUCREDIT CORPORATION and Columbus Bank and Trust, jointly and individually, Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

615 F.3d 1204

Wanda GREENWOOD; Ladelle Hatfield; Deborah McCleese, on behalf of themselves and other similarly situated, Plaintiffs-Appellees,

v.COMPUCREDIT CORPORATION and Columbus Bank and Trust, jointly and individually, Defendants-Appellants.

No. 09-15906.

United States Court of Appeals,Ninth Circuit.

Argued and Submitted April 12, 2010.

Filed Aug. 17, 2010.

Susan L. Germaise, McGuire Woods LLP, Los Angeles, CA, David L. Hartsell, McGuire Woods LLP, Chicago, IL, James R. McGuire, Morrison & Foerster LLP, San Francisco, CA, Tim A. O'Brien, Morrison & Foerster LLP, Washington, D.C., for the defendants-appellants.

Adrian Barnes, Gilbert & Sackman, Los Angeles, CA, W. Lloyd Copeland, Taylor-Martino-Zarzaur, PC, Mobile, AL, for plaintiffs-appellees.

Appeal from the United States District Court for the Northern District of California, Claudia Wilken, District Judge, Presiding. D.C. No. 4:08-cv-04878-CW.

Before ANDREW J. KLEINFELD, A. WALLACE TASHIMA, and SIDNEY R. THOMAS, Circuit Judges.

OPINION

THOMAS, Circuit Judge.

This appeal presents the question, inter alia, as to whether the word “sue,” as used in the Credit Repair Organization Act (“CROA”), means “arbitrate.” Or, perhaps the question is, as Alice put it: “whether you can make words mean so many different things?” ¹ We conclude that Congress meant what it said in using the term “sue,” and that it did not mean “arbitrate.” We affirm the order of the district court denying the Credit Providers' motion to compel arbitration.

I

CompuCredit marketed a subprime credit card under the brand name Aspire Visa to consumers with low or weak credit scores through massive direct-mail solicitations and the internet. ² CompuCredit marketed the card and the cards were issued by Columbus Bank and Trust (collectively “Credit Providers”).

Greenwood and her fellow plaintiffs (“Consumers”) allege CompuCredit marketed the card by representing to consumers it could be used to “rebuild your credit,” “rebuild poor credit,” and “improve your credit rating.” Consumers allege the promotional materials noted there “was no deposit required,” and that consumers would immediately receive $300 in available credit when they received the card. In fact, they allege, Credit Providers charged a $29 finance charge, a monthly $6.50 account maintenance fee, and a $150 annual fee, assessed immediately against the $300 limit before the consumer received the card. In aggregate, the card had $257 in fees the first year. Although the promotional material mentioned the fees, it did so in small print amidst other information in the advertisement, and not in proximity to its representations that no deposit was required. Consumers each applied for and received an Aspire card, and were charged these fees. Consumers allege the Credit Providers' actions constitute several violations of the CROA and of California's Unfair Competition Law.

Before receiving the Aspire Visa credit card, each Consumer received a mailing entitled “Pre-Approved Acceptance Certificate.” The Acceptance Certificate includes the following paragraph:

By signing, I request an Aspire Visa card and ask that an account be opened for me. I certify that everything I have stated in the Acceptance Certificate is true and accurate to the best of my knowledge. I have read and agree to the be bound by the “Summary of Credit Terms” and “Terms of Offer” printed

on the enclosed insert, which insert includes a discussion of arbitration applicable to my account, and is incorporated here by reference.

One Consumer mailed in her acceptance, one applied over the internet, and the other applied over the phone.

The “Terms of Offer” states:

Important-The agreement you receive contains a binding arbitration provision. If a dispute is resolved by binding arbitration, you will not have the right to go to court or have the dispute heard by a jury, to engage in pre-arbitration discovery except as permitted under the code of procedure of the National Arbitration Forum (“NAF”), or to participate as part of a class of claimants relating to such dispute. Other rights available to you in court may be unavailable in arbitration.

The “Summary of Credit Terms” contains the following:

ARBITRATION PROVISION (AGREEMENT TO ARBITRATE CLAIMS)

Any claim, dispute or controversy (whether in contract, tort, or otherwise) at any time arising from or relating to your Account, any transferred balances or this Agreement (collectively, “Claims”), upon the election of you or us, will be resolved by binding arbitration pursuant to this Arbitration Provision and the Code of Procedure (“NAF Rules”) of the National Arbitration Forum (“NAF”) in effect when the Claim is filed. If for any reason the NAF cannot, will not or ceases to serve as arbitration administrator, we will substitute another nationally recognized arbitration organization utilizing a similar code of procedure.

Upon such an election, neither you nor we will have the right to litigate in court the claim being arbitrated, including a jury trial, or to engage in prearbitration discovery except as provided under NAF Rules. In addition, you will not have the right to participate as representative or member of any class of claimants relating to any claim subject to arbitration. Except as set forth below, the arbitrator's decision will be final and binding. Other rights available to you in court might not be available in arbitration.

The agreement also provides, “This Agreement, and your Account, and any claim, dispute or controversy (whether in contract, tort or otherwise) ... are governed by and construed in accordance with applicable federal law and the laws of Georgia.”

Consumers brought this action in federal district court, and the Credit Providers moved to compel arbitration of Consumers' CROA claims. The district court held the arbitration clause in the Credit Providers' Aspire Visa credit card agreements was invalid and void under the CROA's prohibition of the waiver of a consumer's right to sue in court, and denied the motion to compel arbitration. The district court also denied the Credit Providers' Motion for Leave to File Motion for Reconsideration. The Credit Providers filed a timely interlocutory appeal challenging the denial of the motion to compel arbitration.

We review the denial of a motion to compel arbitration de novo. Balen v. Holland Am. Line Inc., 583 F.3d 647, 652 (9th Cir.2009); Lozano v. AT & T Wireless Servs., Inc., 504 F.3d 718, 725 (9th Cir.2007) (“Whether [a federal statute] permits adjudication by binding arbitration is a question of law that we review de novo.”).

II

The district court correctly concluded that the arbitration agreement was void because the CROA specifically prohibits provisions disallowing any waiver of a consumer's right to sue in court for CROA violations.

A

We employ our usual methodology in statutory construction. As always, our starting point is the plain language of the statute. Children's Hosp. & Health Ctr. v. Belshe, 188 F.3d 1090, 1096 (9th Cir.1999). “[W]e examine not only the specific provision at issue, but also the structure of the statute as a whole, including its object and policy.” Id. If the plain meaning of the statute is unambiguous, that meaning is controlling and we need not examine legislative history as an aid to interpretation unless “the legislative history clearly indicates that Congress meant something other than what it said.” Carson Harbor Village, Ltd. v. Unocal Corp., 270 F.3d 863, 877 (9th Cir.2001) (en banc). If the statutory language is ambiguous, we consult legislative history. United States v. Daas, 198 F.3d 1167, 1174 (9th Cir.1999).

In this context, we also note that Congress has manifested a “liberal federal policy favoring arbitration agreements.” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 25, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991) (internal quotation marks omitted). Specifically, the Federal Arbitration Act declares that “[a] written provision in ... a contract evincing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2.

The Supreme Court has held that “[h]aving made the bargain to arbitrate, the party should be held to it unless Congress itself has evinced an intention to preclude a waiver of judicial remedies for the statutory rights at issue.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985). “[I]f Congress intended the substantive protection afforded by a given statute to include protection against waiver of the right to a judicial forum, that intention would be deducible from text or legislative history.” Id. More recently, the Supreme Court has reiterated that the Congressional intent to preclude waiver “will be discoverable in the text of the [statute], its legislative history, or an ‘inherent conflict’ between arbitration and the [statute's] underlying purposes.” Gilmer, 500 U.S. at 26, 111 S.Ct. 1647. The burden is on the party opposing arbitration to show that Congress intended to preclude a waiver of judicial remedies for the statutory rights at issue. Id.

B

With these principles in mind, we turn to the Credit Reporting Organization Act. The CROA expressly identifies four rights, which appear in the disclosures section of the statute, 15 U.S.C. § 1679c. The first two rights concern rights that consumers have in relation to credit bureaus, which are not implicated by this suit. The third and fourth rights specifically concern rights that consumers have in relation to credit repair organizations. ³ The third right directly addresses the Consumers' argument: “You have a right to sue a credit repair organization that violates the Credit Repair Organization Act.” 15 U.S.C. § 1679c(a). In addition, each credit repair...