Breaking NewsLaw.com and associated brands will be offline for scheduled maintenance Friday Feb. 26 9 PM US EST to Saturday Feb. 27 6 AM EST. We apologize for the inconvenience.

 

Divided Supreme Court Upholds Arbitration in Consumer Claim

A divided Supreme Court ruled that the hidden cost of seeing a complaint through the process of arbitration is not enough to void an arbitration agreement and allow a disgruntled consumer to take the issue to court. By a 5-4 vote in Green Tree Financial Corp. v. Randolph , the justices decided against Larketta Randolph, an Alabama woman whose complaint began when she disputed a $15 charge in her mobile-home financing agreement.

X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
A divided Supreme Court ruled Monday that the hidden cost of seeing a complaint through the process of arbitration is not enough to void an arbitration agreement and allow a disgruntled consumer to take the issue to court. By a 5-4 vote, the justices decided against Larketta Randolph, an Alabama woman whose complaint began when she disputed a $15 charge in her mobile-home financing agreement. A federal judge dismissed Randolph’s 1996 suit against Green Tree Financial Corp. of Opelika, Ala., because in signing the original contract, Randolph agreed an arbitrator would resolve any disputes. The 11th U.S. Circuit Court of Appeals in Atlanta gave the case new life last year, saying Green Tree didn’t disclose the potential costs of arbitration when it signed the agreement with Randolph. In the Supreme Court, the conservative and center-right blocs voted to reject Randolph’s claim. “The ‘risk’ that Randolph will be saddled with prohibitive costs is too speculative to justify the invalidation of an arbitration agreement,” Chief Justice William Rehnquist wrote for the majority, which also included Justices Antonin Scalia, Clarence Thomas, Sandra Day O’Connor and Anthony Kennedy. Writing for the moderate-to-liberal faction, Justice Ruth Bader Ginsburg said she would have vacated the appeals court decision and sent it back for further consideration. Ginsburg questioned whether Randolph should have to prove that the court system was her only option, “or that she should be required to submit to arbitration without knowing how much it will cost her.” “As I see it, the court has reached out prematurely to resolve the matter in the lender’s favor,” Ginsburg wrote. The court also found that the appeals court had jurisdiction in the matter, an authority the lender had questioned. The American Arbitration Association, the nation’s largest dispute resolution provider, filed a brief with the court that argued against ending arbitration in consumer business contracts. The association said it limits consumer fees to $125 in arbitration cases valued under $10,000, and allows consumers to opt out of arbitration and file a lawsuit instead. The case is Green Tree Financial Corp.-Alabama v. Randolph, 99-1235. Copyright 2000 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 1 article* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?

Trending Stories

 

Featured Product

Global Briefing

A weekly, curated selection of our international content from around the globe, across the business of law, in-house, regulatory, technology and more, with expert insights from our senior editors.

Learn More

More from ALM

 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Privacy Policy

About Us / Contact Us / Site Map / Advertise With Us/ Customer Service / Terms of Service/ FAQ / Privacy Policy

Publications

Law Topics

Rankings

More

Law.com

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.