Congratulations to Wallace & Graham of North Carolina, and to John Hughes there who played the lead role in this case and argued it, and won a terrific decision that will benefit a lot of other consumers. The case involved Fair Credit Reporting Act and other claims against an internet payday lender that is trying to hide behind tribal sovereign immunity. (Public Justice is also involved in a number of cases involving phony claims of tribal sovereign immunity.) The lender had an arbitration clause banning class actions (of course), but it provided that the arbitration would be conducted “BY” the Cheyenne River Sioux Tribal Nation. The thing is – when the plaintiffs checked out the arbitration, there was no process to which it could go. The tribe wrote back that it doesn’t do arbitrations.
Undeterred, the lender argued that the court should re-write the arbitration clause and give it an arbitration company that exists and does arbitrations. The Eleventh Circuit rejected this argument. It found that the selection of the arbitrator was an “integral term” to the arbitration clause, not a mere ancillary fact, and that where this is true, the court can not re-write the arbitration clause. (At Public Justice, we won cases on this issue going back to 2008 in a Seattle federal district court handled by Leslie Bailey, and in the New Mexico Supreme Court in a case argued by former fellow Melanie Hirsch.) The court looked at the contract language and held that it clearly made the selection of the arbitrator an integral term, saying that it must be exclusively handled by the tribe.
This is a terrific decision. It should prove helpful to us in a case where we have an upcoming argument in the Fourth Circuit, to be argued by Matt Wessler, Moses v. Cashcall, which has some related issues.
Credit to: Paul Bland, Executive Director, Public Justice
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