A case pending at the Supreme Court regarding the right to arbitrate could potentially address whether a statutory notice requirement conveys rights. NSCLC joined with AARP to file the attached Supreme Court brief addressing the important issue of the rights-creating aspect of statutory notice requirements. Scott Nelson of the Public Citizen Litigation Group represents the Petitioners.
The Credit Repair Organizations Act (CROA) mandates a notice to consumers that they have a “right to sue.” The Ninth Circuit held that the word “sue” did not mean arbitrate, and therefore, the consumer could not be forced into arbitration, despite signing an arbitration agreement. Greenwood v. CompuCredit Corporation, 615 F.3d 1204 (9th Cir. 2010). The dissenting Ninth Circuit judge argued that because the right to sue was contained within a disclosure requirement, the consumer only had a right to the disclosure notice listing the right to sue. The dissent suggested that the consumer did not have an actual right to sue. Id. at 1215 (Tashima, J., dissenting). A district court decision similarly advocated that the disclosure requirement did not indicate an actual right to sue. Rex v. CSA-Credit Solutions of America, Inc., 507 F.Supp.2d 788, 799 (W.D. Mich. 2007).
The brief begins by documenting the harmful impact of financial fraud and abuse on older persons. The brief explains that the CROA was passed in response to credit repair organizations falsely promising that they could remove negative credit reports, regardless of the accuracy of the reports. Below is the summary of the argument regarding notice:
The Petitioners in this case, as well as the dissent below, argue that consumers do not have a “right to sue,” even though the CROA unquestionably mandates that credit repair organizations give consumers a notice informing them that they have a “right to sue” those who violate the law. 15 U.S.C. § 1679c(a). The argument that Congress required credit repair organizations to provide an inaccurate notice to consumers is baseless and contrary to well established canons of statutory construction. The statutory purpose of protecting consumers from inaccurate information is served only if the CROA is interpreted as granting a right to sue.
This Court has long recognized that notice and hearing rights are interconnected such that the right to sue has little value and cannot be enjoyed without notice of this right. Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950); Baldwin v. Hale, 68 U.S. 223, 233 (1863). The Court also has emphasized the importance of the accuracy of notice, requiring the “best possible” notice to “describe the plaintiffs’ rights.” Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 812 (1985). A mandated notice of consumers’ rights thus denotes that such rights exist.
Basic principles of statutory construction require rejecting an interpretation of the statute that produces the absurd result of mandating a “disclosure” notice that lies. Such an interpretation would effectively emasculate the requirement to accurately inform consumers of their rights, including their right to sue. Congress clearly did not intend such an “unreasonable result.” Brown v. Plata, 131 S. Ct. 1910, 1931 (2011).
Moreover, the legislative history shows that the inclusion of the “right to sue” in the disclosure section was intended to “strengthen” the protection of consumers under the act. Credit Repair Organizations Act: Hearing on H.R. 458 Before the Subcomm. on Consumer Affairs and Coinage of the Comm. on Banking, Finance and Urban Affairs, 100th Cong. 2nd Sess., at 171, 173 (1988). The legislative history further indicates that Congress believed that the disclosures to consumers listed actual rights. S. Rep. No 103-209, at 7 (1993). Finally, the larger context of the Consumer Credit Protection Act, of which the CROA is a part, demonstrates the importance to Congress of accurate disclosures to consumers. In this context, it is clear that Congress intended to impart to consumers a right to sue.