A borrower’s various objections to an arbitration agreement, including that the neutrals were biased that arbitration would be cost-prohibitive, were rejected by a Pennsylvania federal court, which ultimately enforced the agreement.

In Cronin v. Citifinancial Services, Inc., No. 08-1523, 2008 WL 2944869 (E.D. Pa. July 25, 2008), Cronin took out a loan from Citifinancial. The loan documents included an agreement to arbitrate. When Citifinancial reported the loan to credit reporting agencies, it reported the full amount of the loan including five years worth of interest. Cronin contested the account balance with the credit reporting agencies.

Meanwhile, Cronin was denied credit for other purposes and was subjected to an increase in interest rates. Cronin sued Citifinancial. He claimed that he suffered financial harm based on Citifinancial’s alleged violations of the Fair Credit Reporting Act (FCRA). Citifinancial moved to compel arbitration.

In opposing the motion, Cronin claimed the arbitration agreement was unconscionable, that arbitration was cost-prohibitive, that the arbitrators were not neutral, and that arbitration was not the appropriate forum for resolving FCRA claims.

The Court rejected Cronin’s argument that the arbitration agreement was unconscionable as a classic contract of adhesion. As the Court noted, Cronin failed to present any evidence that the terms of the arbitration agreement were unreasonably favorable to Citifinancial. Also, Cronin did not present any information that he lacked a meaningful choice in choosing Citifinancial as his lender.

The Court determined that because Cronin’s claim of unconscionability was generalized and unsupported, Cronin did not demonstrate unconscionability in the arbitration agreement. The Court similarly rejected Cronin’s speculative claim that arbitration would be cost-prohibitive because Cronin did not submit any evidence to substantiate that claim.

Lastly, the Court also took issue with Cronin’s claim that the arbitrators were not neutral. The agreement allowed for a choice between the National Arbitration Forum or the American Arbitration Association. Cronin claimed that as a repeat player, Citifinancial would receive favorable treatment from biased arbitrators. Again, the Court noted that Cronin’s claim lacked evidentiary support and that courts have held that the mere fact that an organization is a repeat player is not enough to invalidate an arbitration agreement. Accordingly, the Court upheld the arbitration agreement.