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Mere speculation as to prohibitive costs in arbitration does not render an arbitration agreement unenforceable, and federal statutory claims are arbitrable unless Congress has clearly expressed an intention to preclude arbitration as to those claims, according to a federal district court in Nebraska.
In Schreiner v. Credit Advisors, Inc., No. 8:07CV78, 2007 WL 2904098 (D. Neb. Oct. 2, 2007), Schreiner contracted with Credit Advisors to act as his agent in making monthly payments to his creditors. In addition, the contract specified that any controversy or claim arising out of or relating to the contract would be sent to mediation, and, if necessary, then to arbitration.
Schreiner later filed a class action complaint against Credit Advisors, alleging violations of several state and federal statutes, including misrepresentations in violation of the Credit Repair Organization Act (CROA). Credit Advisors moved to compel arbitration. Schreiner opposed the motion, maintaining, in part, that the costs of arbitration were prohibitive to consumers, and that Congress did not intend to make CROA claims arbitrable.
The Court rejected Schreiner’s claim that the costs of arbitration were prohibitive, characterizing this claim as speculative. The Court observed that Schreiner had “not presented any non-speculative evidence of the costs that may be imposed,” had not proven that he would in fact be burdened with paying any of the arbitration fees, and had grossly underestimated the cost of a federal class action lawsuit as a point of comparison with the arbitration fees.
The Court also rejected Schreiner’s claim that Congress had intended to preclude arbitration of CROA claims. While the Court acknowledged that some statutory claims may be non-arbitrable when Congress demonstrates an intention to do so in the statutory text, purpose, or legislative history, the Court did not find such intent as to CROA claims.
The Court was persuaded by a federal district court from Michigan that held CROA claims arbitrable. The court in Rex v. CSA-Credit Solutions of Am., Inc., No. 1:06-CV-633, 2007 WL 1875858 (W.D. Mich. June 27, 2007), noted that no language within the section addressing the right to bring a claim specified any particular forum for the claims, but instead only specified the basis for liability and available remedies. Without evidence of contrary intent, the Court found the federal policy favoring arbitration warranted arbitration of the CROA claim.
Since Schreiner had failed to meet the burden of showing that CROA claims were not arbitrable, the Court stayed that claim and compelled its arbitration.
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