US Supreme Court Briefs


IN THE




No. 99-1235







GR [TN TREE FINANCIAL CORP.ALABAMA.
AND GREEN TREE FINANCIAL CORPORATION

Petitioners
V.

LARKETTA RANDOLPH
Respondent.



On Writ of Certiorari to the
United States Court of Appeals
for the Eleventh Circuit



BRIEF OF PETITIONERS



ROBERT A HUFFAKER

WILL IAM H. WEBSTER
R RUSHTON )N, STA KELY, JOH INSTON & GARRETT, P.A.

184 Commerce Street
Monigomery. AL 36101-0270
(334) 206-3100
CARTER GT PHIIJJPS *
PAUL JT ZIDLIDKY
MICHAEL POST
LAURELE. SHANKS
SIDLEY & AUSTIiN

1722 Eye Street NW
Washington, DC. 20006
(202) 736-8000
Counsel for Petitioners
June 8, 2000
* Counsel of Record
WIISON-EPFS PRINTING Co.. INC. (202) 789-0096 WASHINGTON, D. C. 20001

QUESTIONS PRFSENTED

1. Whether the court of appeals erred in concluding that an order compelling arbitration and dismissing a lawsuit's underlying claims is a "final decision with respect to an arbitration" appealable under 9 U.S.C. 16(a)(3).

2. Whether the court of appeals erred in concluding that an arbitration provision that was "silent" on the issue of costs and fees was unenforceable under the Federal Arbitration Act because the risk that plaintiff "might" be required to bear unknown costs and fees potentially undermined her ability to vindicate statutory rights.

























(i)

Page



ii

V


I

2

2

2

3

9

14

16

19





19




19
ii

STATEMENT REQUIRED BY RULE 29.6

Pursuant to Rule 29.6 of the Rules of this Court, petitioners state that Green Tree Financial Corp. is now known as Conseco Finance Corp. Petitioners remain wholly owned subsidiaries of Conseco, Inc., an Indiana corporation whose stock is publicly traded. Petitioners further state that no publicly owned company owns ten percent or more of the stock of Conseco, Inc.
TABLE OF CONTENTS


QUESTIONS PRESENTED

STATEMENT REQUIRED BY RULE 29.6

TABLE OF AUTHORITIES

OPINIONS BELOW

JURISDICTION

RELEVANT STATUTORY PROVISIONS

STATEMENT OF THE CASE

Statutory Background

Factual Background

Decision Of The Court Of Appeals SUMMARY OF ARGUMENT ARGUMENT

I. AN ORDER COMPELLING ARBITRATION
AND DISMISSING AN "EMBEDDED"
PROCEEDING IS NOT A "FINAL DE-CISION" UNDER 9 U.S.C. SECTION
16(a)(3)

A. Settled Statutory Construction Principles Govern The Scope Of Appellate Juris-diction Under Section 1 6(a)(3) And They Preclude An Appeal In This Case
(iii)

iv
TABLE OF CONTENTSContinued

Page
B. The Purpose Of The Federal Arbitration
Act, The Structure Of Section 16, And The
Legal Framework Against Which Section
I 6(a)(3) Was Enacted Confirm That An
Order Compelling Arbitration In An
"Embedded" Proceeding Is Not A "Final
Decision" Under Section 16(a)(3)

II. THE ARBITRATION AGREEMENT IS ENFORCEAB~ UNDER THE FEDERAL ARBITRATION ACT

A. The Federal Arbitration Act Reflects A Strong Presumption In Favor Of Arbitration Of Federal Statutory Claims

B. Under The Federal Arbitration Act, The
Arbitration Agreement Is Enforceable To
Resolve Respondent's Claims Under The
Truth In Lending Act And Equal Credit
Opportunity Act

C. Respondent's Alternative Argument That
Congress Intended To Preclude Individual
Agreements To Arbitrate Truth In Lending
Act Claims Should Be Rejected

CONCLUSION
21



30



31
V

TABLE OF AUTHORITIES
Page
CASES

AT&T Techs., Inc. v. Communications Workers
of Am., 475 U.S. 643 (1986) 33
Allied-Bruce Tenninix sos. v. Dobson, 513 U.S.
265 (1995) 4,42
Altman Nursing, Inc. v. Clay Capital Corp., 84
F.3d 769 (5th Cir. 1996) 14
American Etpress ~o. v. Koerner, 452 U.S. 233
(1981) 47
Anderson Bros. Ford v. Valencia, 452 U.S. 205
(1981) 47
Bailevv. United States, 516 U.S. 137 (1995) 20
Baltimore Contractors, Inc. v. Bodinger. 348
U.S. 176 (1955), overruled on other grounds,
Gulfstream Areospace Corp. v. Mayacamas
C'orp.,485 U.S. 271 (1988) 24
Bennett v. Spear, 520 U.S. 154 (1997) 20,30
Brownv.Gardner,513U.S. 115 (1994) 20,21
Catlin v. United States, 324 U.S. 229 (1945) ....23, 25,26
Cortez Byrd Chips, Inc. v. Bill Ilarbert C'onstr.
Co., 120 5. Ct. 1331(2000) 22, 26, 27
Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213
(1985) 22
Deposit Guar. Nat'l Bank v. Roper, 445 U.S. 326
(1980) 45,47
Digital Equip. Corp. v. Desktop Direct, inc., 511
U.S.863(1994) 23
Dole v. United Steelworkers of Am., 494 U.S. 26
(1990) 20,21
Evans v. United States, 504 U.S. 255 (1992) 20, 23, 26
Farr & Co. v. CIA. intercontinental De
Navegacion de Cuba, S.A., 243 F.2d 342 (2d
Cir. 1957) 24, 25, 26
33
42

49


Page
vi

TABLE OF AUTHORiTIESContinued
Page
Filanto, S.p.A. v. Chilewich Int'l Corp., 984 F.2d
58 (2d Cir. 1993) 14, 24
First Options, Inc. v. Kaplan, 514 U.S. 938
(1995) 5
Ford Motor Credit Co. v. Cenance, 452 U.S. 155
(1981) 47
Ford Motor Credit Co. v. Milbollin. 444 U.S.
555(1980) 47
Gammaro v. Thorp Consumer Discount Co., 15
F.3d 93 (8th Cir. 1994) 14
Gilmer v. Interstate/Johnson Lane Corp., 500
U.S. 20(1991) passim
Griggs v. Provident Consumer Discount Co., 459
U.S. 56 (1982) 47
Hartford Fin. Sys., Inc. v. Florida Software
Servs., Inc., 712 F.2d 724 (1st Cir. 1983) 25, 26, 28
Hartford Underwriters Ins. Co. v. Union
Planters Bank, N.A., 68 U.S.L.W. 4441
(2000) 21
James v. Home Constr. Co., 689 F.2d 1357 (11th
Cir. 1982) 47
John Hancock Mut. Life Ins. Co. v. Olick, 151
F.3d 132 (3d Cir. 1998) 14
Kelly v. Robinson, 479 U.S. 36 (1986) 20, 28
Kirchberg v. Feenstra, 450 U.S. 455 (1981) 47
Landreth Timber Co. v. Landreth, 471 U.S. 681
(1985) 19
Liberty Mut. Ins. Co. v. Wetzel, 424 U.S. 737
(1976) 24,29
Luminus Co. v. Commonwealth Oil Refining Co.,
297 F.2d 80 (2d Cir. 1961) 26
Marx v. Broom, 632 So. 2d 1315 (Miss. 1994) 46
Vii

TABLE OF AUTHORITIES~COnIinUCd


Mastrobuono v. Shea rson Lehman Hutton, Inc.,
514U.S.52(1995) 32,37,39
McCartlry v. Providential Corp., 122 F.3d 1242 (9th Cir. 1997), cert denied, 525 U.S. 921 (1998) 14
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985) passim
Morrissette v. United States, 342 U.S. 246 (1952) 20,23
Moses H. Cone Mein '1 Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) passim
Mourning v. Family Publications Serv., Inc., 411 U.S.356(1973)
Napleton v. General Motors Corp., 138 F.3d 1209 (7th Cir.), cert. denied, 525 U.S. 931
(1998) 14
National Collegiate Athletic Ass'n v. Snuith, 525
U.S.459(1999)
Perera v. Siegel Trading Co., 951 F.2d 780 (7th
Cir. 1992) 24, 25
Perry v. Thomas. 482 U.S. 483 (1987) 43
In re Pisgah Contractors, Inc., 117 F.3d 133 (4th
Cir. 1997) 14 Red Cross Line v. Atlantic Fruit Co., 264 U.S.
4
109 (1924)
Roberts v. Galen, Inc., 525 U.S. 249 (1999) 43
Rodriguez de Quijas v. Shearson/Am. Express,
Inc., 490 U.S. 477 (1989) pavsim St. Louis, Iron Mountain & S. R.R. v. Soutirern
Express Co.. 108 U.S. 24(1883) 23
Schoenamsgruber v. hamburg Am. Line, 294
U.S. 454(1935) 23

viii

TABLE OF AUTHORITIESContinued
Page

Seacoast Motors, Inc. v. ~Jhrysler Corp., 143 F.3d 626 (1st Cir.), cert. denied, 525 U.S. 965
(1998) 14,24
Shanferoke Coal & Supply Corp. v. Westchester
Serv. Corp., 293 U.S. 449 (1935) 24
Shearson/Am. Express, lnc. v. McMahon, 482
U.S. 220 (1987) passim
Southland C'orp. v. Keating, 465 U.S. 1
(1984) 21,22, 27, 30, 39
Stedor Enters., Ltd. v. Armtex, lnc., 947 F.2d 727
(4thCir. 1991) 24
Sullivan v. Finkeistein, 496 U.S. 617 (1990) 24,29
United Say. Ass 'n v. Timbers of Inwood Forest Assocs., 484 U.S. 365 (1988) passim
United States v. Wallace & Tiernan Co., 336 U.S.793(1949) 29
Vimar Seguros y Reaseguros, S.A. v. MA' Sky Reefer, 515 U.S. 528 (1995) 33, 40,42
Volt Info. Sciences, lnc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468
(1989) 39

FEDERAL STATUTES
9U.S.C.I-16 2
2 4,31
3 4,13
4 4
9 5,25
10 5, 26, 41
11 5,41
16 passam
ix
TABLE OF AUTHORITIESContinued
Page
15 U.STC. 1601 etseq 2
1601(a) 6
1605 6
1607 7,48
1611 7,48
1640 passm
1691 8, 13
1691-1691f 2
1691c 8
1691e passim
6601(b)(3) 4,42
28 U.S.C. 1292(b) 6,23
29U.S.C.216(b) 43

FEDERAL REGULATIONS
12 C.F.R. 226.4(d)(2)
226.18n.41 (1996)
226.18

FEDERAL RULE
Fed. R. Civ. P.23

LEGISLATIVE HISTORY
141 Cong. Rec. H4120-21 (daily ed. Apr. 4,
1995) (statement of Rep. Roukema)
141 Cong. Rec. S5614 (daily ed. Apr. 24, 1995)
(statement of sponsor Sen. Mack) HTR. Rep. No. 68-96 (1924) H.R. Rep. No. 97-542 (1982), reprinted in 1982
U.SC.C.A.N. 765 S. Rep. No. 68-536 (1924) ST Rep. No.93-278(1973)
6, 11
7
6, 7
45



48

48
3,4

42
4
48

x
TABLE OF AUTHORITIESContinued IN THE
OTHER AUTHORITY Page ~'upreme Qlourt of tbe ?A~niteb ~tate~
Regulation 7 Commentary, 3 Fed. Reserve Reg.
Serv. 6-1165.2(10) (Nov. 1998) 11
GREEN TREE FINANCIAL CORP.ALABAMA,
AND GREEN TREE FThJANCIAL CORPORATION,
Petitioners,
v.
LARKETTA RANDOLPH
Respondent.



On Writ of Certiorari to the
United States Court of Appeals
for the Eleventh Circuit



BRIEF OF PETITIONERS


OPINIONS BELOW

The court of appeals' opinion (Pet. App. la-19a) is published at 178 F.3d 1149(11th Cir. 1999). The court of appeals' order denying the petition for rehearing (Pet. App. SSa-56a) is unpub-lished. The district court's memorandum opinion and order (Pet. App. 20a-SOa) is published at 991 F. Supp. 1410 (M.D. Ala. 1997). The district court's ordcr denying respondent's mo-Don for reconsideration (Pet. App. Sla-54a) is published at 991 F. Supp. 1410, 1425-26 (M.D. Ala. 1997).
2

JURISDICTION

The court of appeals entered judgment on June 22, 1999, and denied a petition for rehearing on October 28, 1999. The peti-tion for a writ of certiorari was filed on January 21, 2000, and was granted on April 3, 2000. The Court has jurisdiction under 28 U.S.C. 1254(1).


RELEVANT STATUTORY PROVISIONS

The statutes relevant to this case are the Federal Arbitration Act ("FAA"), 9 U.S.C. 1-16, the Truth in Lending Act ("TWA"), 15 U.S.C. 1601 et seq., and the Equal Credit Op-portunity Act ("ECOA"), 15 U.S.C. 1691-1691f. The rele-vant provisions of these statutes are reproduced in the statutory addendum attached to this brief.


STATEMENT OF THE CASE

The question of appellate jurisdiction presented is whether an order compelling arbitration and dismissing a lawsuit's underly-ing claims is a "final decision with respect to an arbitration" and is therefore immediately appealable under 9 U.S.C. l6(a)(3). As demonstrated below, the answer is no. The underlying pur-pose of the FAA, the structure of Section 16, and the existing legal framework against which Section 16(a)(3) was enacted each confirms that an order compelling arbitration in an em-bedded" proceeding is not a "final decision" that is appealable under Section 1 6(a)(3). The court of appeals' contrary conclusion was based on snippets from the legislative history that can-not substitute for or overcome the contrary congressional intent reflected in the text, structure and purpose of Section 16 and the FAA. Nor can the district court's decision to label the order compelling the parties to arbitrate a "dismissal" "with preju-dice" rather than a "stay" a label that has no bearing on the substance of the district court's action make an otherwise in-terlocutory order a "final decision" under Section I 6(a)(3).
3

Further, assuming this matter is appealable, this case presents the question of whether the court of appeals erred in concluding that the arbitration agreement was unenforceable because its "si-lence" on the issue of costs and fees created the risk that re-spondent "might" be required to bear unknown costs and fees associated with arbitration that could undermine her ability to vindicate her statutory rights under TWA and ECOA. As dem-onstrated below, the court of appeals clearly erred because the arbitration agreement was not "silent" on the issue of costs and fees. It provided the arbitrator with "all powers provided by the law," and the "law" relevant to respondent's statutory claims under TILA and ECOA is clear that "the costs of the action" are a component of damages to which respondent would be entitled if she prevailed in arbitration. Indeed, even if the agreement were ambiguous, that ambiguity must be resolved in favor of arbitration. The court of appeals' contrary conclusion was based on an outdated and improper mistrust of the arbitral process that this Court repeatedly has rejected.
Moreover, respondent also argues that the arbitration agree-ment is unenforceable as to her TWA claim because it does not provide class action procedures. Even if respondent's challenge were properly presented, this Court previously has addressed and rejected the same argument. Further, Congress has not ex-pressed an intent to preclude waiver ofjudicial remedies under TWA. Indeed, TILA authorizes parties to waive federal proce-dures through its grant of concurrent jurisdiction in state court. Finally, TILA provides a host of incentives to ensure that plain-tiffs, such as respondent, can bring such actions individually, and they routinely do bring such lawsuits.

Statutory Background

I. The Federal Arbitration Act. In 1925, Congress enacted the FAA to reverse centuries of judicial hostility to arbitration agreements and to allow parties to avoid "the costliness and de-lays of litigation" through arbitration. H.R. Rep. No. 68-96, at

4
1-2 (1924); see also Y2K Act, 15 U.S.C. 6601(b)(3) (arbitra-tion provides alternative to "costly and time-consuming litiga-tion"). Prior to enactment of the FAA, "Itihe federal courts like those of the States and of England bald) . . . denied, in large measure, the aid of their processes to those seeking to en-force executory agreements to arbitrate disputes" and had re-fused "to compel specific performance, or to stay proceedings on the original cause of action." Red Cross Line v. Atlantic Fruit Co., 264 U.S. 109, 120-21 (1924) (citations omitted). By enacting the FAA, Congress endeavored to reverse that judicial hostility through a procedure for the enforcement of arbitration agreements that was "very simple" and that would "reduc[e] technicality, delay, and expense to a minimum and at the same time safeguardil the rights of the parties." H.R. Rep. No.68-96, at 2. As this Court recently explained, "Congress, when enacting f the FAA], had the needs of consumers, as well as others, in mind." Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 280 (1995); see also S. Rep. No. 68-536, at 3 (1924) (the FAA, by avoiding "the delay and expense of litigation" will appeal "to big business and little businesses corporate interests [and)
individuals").

Specifically, Section 2 of the FAA provides that a written ar-bitration agreement "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revo-cation of any contract." 9 U.S.C. 2. In tum, sections 3 and 4 of the FAA provide a mechanism for enforcing that command by authorizing a court to "stay the trial of the action until such arbitration has been had in accordance with the tenns of the agreement," id. 3, or to enter an "order directing that [the] ar-bitration proceed in the manner provided for in such agree-ment," id. 4.

Once arbitration has been ordered, the FAA contemplates fur-ther court involvement in connection with the ultimate arbitra-tion award. Under Section 9, a party may file an application "for an order confirming the award" which the court "must grant
5

... unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of [the FAA]," id. 9. In turn, Section 10 authorizes a court to "vacat[e]" an arbitral award if (i) "the award was procured by corruption, fraud, or undue means," (ii) "there was evident partiality or corruption in the arbitrators," (iii) "the arbitrators were guilty of misconduct" or (iv) "the arbitrators exceeded their powers." Id. 10(a)(l)-(4); see also First Options. Inc. v. Kaplan, 514 U.S. 938,942(1995) (court may vacate award for "'manifest disregard"' of law). Similarly, under Section 11, a court "may make an order modi-fying or correcting the awardT" 9 U.S.C. I l(a)-(c) (setting forth reasons for modifying arbitral award). This Court has ruled that this post-award review "'is sufficient to ensure that arbitrators comply with the requirements of the statute' at is-sue." Gilmer v. Interstate/Johnson Lone Corp., 500 U.S. 20,32 n.4 (1991) (quoting Shearson/Am. Express Inc. v. McMahon, 482 U.S. 220,232 (1987)).

With respect to appellate review of arbitration orders, in 1988, Congress enacted section 16, which governs appeals of district court orders and reflects the same pro-arbitration policy evident in the substantive provisions of the FAA. Under Sec-tion 16, orders hostile to arbitration, whether interlocutory or final, are appealable immediately as of right. 9 U.S.C. I 6(a)( 1), (2). Thus, a party may appeal immediately an order (i) "refusing to stay an action under section 3," (ii) "denying a petition under section 4 . . . to order arbitration to proceed," or (iii) "granting, continuing, or modifying an injunction against an arbitration." Id. In contrast, a party generally cannot appeal immediately an interlocutory order that favors arbitration, in-cluding an order (i) "granting a stay of any action under section 3," (ii) "directing arbitration to proceed under section 4" or (iii) "refusing to enjoin an arbitration." Id. 16(b). Rather, imme-diate appeal of such an order is available only in extraordinary circumstances where the district court certifies the order for ap-peal and the court of appeals permits the appeal to be taken. Id.;

6

see 28 U.S.C. 1292(b). Finally, under section 16(a)(3),anap-peal may be taken from "a final decision with respect to an arbi-tration that is subject to this title." 9 U.S.C. 16(a)(3). Section 16 does not define the phrase "a final deci-sion with respect to an arbitration."

2. The Truth in Lending Act. The Truth in Lending Act ("TWA") was enacted "to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit. .. ." 15 U.S.C. 1601(a). TWA re-quires disclosure of the "finance charge" imposed "by the credi-tor as an incident to the extension of credit." Id. 1605(a); see also 12 C.F.R. 226.18 (setting forth "[clontent of disclosures" under TWA). As relevant here, TWA provides that "[c]harges or premiums for insurance, written in connection with any con-sumer credit transaction, against loss of or damage to property or against liability arising out of the ownership or use of prop-erty, shall be included in the finance charge." 15 U.S.C. 1605(c). Such premiums, however, may be excluded from the finance charge if "a clear and specific statement in writing is furnished by the creditor to the person to whom the credit is ex-tended, setting forth the cost of the insurance if obtained from or through the creditor, and stating that the person to whom the credit is extended may choose the person through which the insurance is to be obtained." ld.; see also 12 C.F.R. 226.4(d)(2) & n.5 (setting forth requirements under which "[piremiums" for "single interest insurance~~ "may be excluded from the finance charge"). The regulations in effect when re-spondent first filed suit provided that the "finance charge," in transactions such as respondent's, would "be considered accu-
7

rate if it [was] ... not more than $10 above or below the exact finance charge." 12 C.F.R. 226.18 n.41 (1996).'

Congress provided several avenues to vindicate the rights embodied in TWA. First, TWA provides for administrative en-forcement by a host of interested federal agencies. 15 U.S.C. 1607(a), (c). Among other things, these federal agencies may "require the creditor to make an adjustment to the account of the person to whom credit was extended, to assure that such person will not be required to pay a finance charge in excess of the fi-nance charge actually disclosed." Id. 1607(e)(l). Moreover, these agencies "shall require such an adjustment" when the error resulted from "(A) a clear and consistent pattern or practice of violations, (B) gross negligence, or (C) a willful violation." Id. I 607(e)(2). Further, violators who "willfully and knowingly" fail to provide disclosures required by TILA or its regulations face criminal penalties, including a fine of $5,000, imprisonmeEt of "not more than one year, or both." id. 1611.

In addition to these administrative and criminal remedies, TWA authorizes individuals to bring civil actions when aggrieved by a "creditor who fails to comply with any requirement imposed under this part." Id. 1640(a). Individuals are offered the choice of bringing such actions "in any United States district court, or any other court of competent jurisdiction." Id. 1640(e). In such a suit, a creditor who "fails to comply with any requirement imposed Iby TILA)... with respect to any per-son is liable to such person [for] . . . any actual damage su-stained by such person as a result of the failure." id.
I 640(a)( I). In addition to actual damages, a plaintiff, such as
respondent, if she prevailed, would be entitled to statutory dam-ages of "not less than $200 or greater than $2,000," id.



'The current TILA regulations provide that "the disclosed finance charge shall be treated as accurate if lit) (i) is understated by no more than
$100." 12 DEW 226.1X(d)(I).
8
l64O(a)(2)(A)(iii) and "the costs of the action, together with a reasonable attorney's fee," id. 1640(a)(3).

TWA also imposes restrictions on the relief available to indi-viduals who choose to represent a class of plaintiffs under Fed-eral Rule of Civil Procedure 23. Id. 1640(a). Unlike individ-ual actions, members of a class are not guaranteed a "minimum recovery" of statutory damages, and, "in any class action or se-ries of class actions arising out of the same failure," the maxi-mum recovery is capped at "the lesser of $500,000 or I per cen-tum of the net worth of the creditor." Id. 1640(a)(2)(B). TILA provides a series of statutory factors that must be assessed in determining the proper "award in any class action." Id. l640(a). With respect to certain TWA violations, in 1995, Congress enacted a moratorium during which time "no court [could] enter any order certifying any class in any action under
[TILA)." Id. 1640(i).

3. Equal Credit Opportunity Act. The Equal Credit Opportu-nity Act ("ECOA") makes it unlawful for any "creditor to dis-criminate against any applicant. . . because the applicant has in good faith exercised any right under [the Consumer Credit Pro-tection Act]." 15 U.S.C. 1691. As in TILA, the statutory re-quirements of ECOA are enforced by responsible federal agen-cies. Id. l691c(a), (c). If the federal agencies are unable to secure compliance, they "are authorized to refer the matter to the Attorney General with a recommendation that an appropriate civil action be instituted." Id. l691e(g). The Attorney Gen-eral, in tum, may bring a civil action "for such relief as may be appropriate, including actual and punitive damages and injunc-tive relief." Id. 1691e(h).

As in TWA, under ECOA, an individual may recover civil damages by filing suit in "United States district court.., or in any other court of competent jurisdiction." Id. 169 le(f). Under ECOA, an aggrieved party is entitled to re-cover "any actual damages sustained," id. 169 le(a); "punitive
9

damages in an amount not greater than $10,000," id. 169 le(b); and "the costs of the action, together with a reasonable attor-ney's fee," id. 1691e(d). If an individual chooses instead to bring a class action, regardless of the size of the class, punitive damages are capped at "the lesser of $500,000 or I per centum of the net worth of the creditor." Id. 169 le(b).


Factual Background

On January 25, 1994, respondent Larketta Randolph ("respondent") purchased a "manufactured" or mobile home from Better Cents Home Builders Inc. ("Better Cents"). Pet. App. 2a. Respondent financed the $38,958.00 purchase price through Petitioner Green Tree Financial Corp. Alabama, a wholly owned subsidiary of Green Tree Financial Corporation (collectively, "petitioners"). Joint Lodging ("J.L.") 35. Respondent's retail installment contract ("Contract") with Better Cents identifies petitioner Green Tree Financial Corp. as the assignee and contains the arbitration provision that is at the center of this dispute. Pet. App. at 2a-3a. The Contract is reproduced in the Joint Lodging. J.L. 35, 37.

On the front of the Contract, directly below the names of the parties, is a box entitled "Federal Truth-in-Lending Act Disclosures," which includes the annual percentage rate for the credit, the finance charge, the amount financed, the total of the payments over the life of the loan and the total sales price. J.L.
35. Directly below that box, is a box entitled "Physical Damage Insurance," which informed respondent that "Physical Damage Insurance is required but [respondent] may obtain it from anyone [respondent] want[s] that is acceptable to [the seller]. If [respondent] get[s] the insurance checked below from [the seller) or through [the seller], [respondent] will pay [the seller] $545.00 for a term of 01 years." ld. The Contract reflects that the $545.00 premium would purchase "Comprehensive,"

10
"Flood," "Liability," and "Vendor's Single Interest" insurance. Id.

Directly above the signature line, the Contract provides:

CAUTION - IT IS IMPORTANT THAT YOU
THOROUGHLY READ THE CONTRACT BEFORE
YOU SIGN IT.

J.L. 35 (bold omitted). Above this statement, the Contract provides in prominent typeface:

NOTICE: SEE OTHER SIDE FOR AI)DITIONAL TERMS AND CONDITIONS OF THIS CONTRACT.
Id. (bold omitted). Respondent signed directly below these provisions. Joint Appendix ("J.A.") 35.

The arbitration agreement appears on the other side of the Contract. J.L. 37. First, it provides that "[aill disputes, claims, or controversies arising from or relating to Ihis Contract or the relationships that result from this Contract, or the validity of this arbitration clause or the entire Contract, shall be resolved by binding arbitration by one arbitrator selected by Assignee with consent of Buyer(s)." Pet. App. 57a. Further, it explains that, by entering into the Contract, the parties acknowledged that "[t]his arbitration Contract is made pursuant to a transaction in interstate commerce" that is "governed by the Federal Arbitration Act," id., and that "[tihe parties agree and understand that they choose arbitration instead of litigation to resolve disputes." Id. Finally, the arbitration agreement states:
The parties agree and understand that all disputes arising under case law, statutory law, and all other laws including, but not limited to, all contract, tort, and property disputes, will be subject to binding arbitration in accord with this Contract. The parties agree and understand that the arbi-trator shall have all powers provided by the law and the Contract. These powers shall include all legal and equita-ble remedies, including, but not limited to, money dam-ages, declaratory relief, and injunctive relief.
II

Id. (emphasis added). The text of the arbitration agreement is reproduced at Pet. App. 57a-58a.

In January 1996, respondent filed suit in the United States District Court for the Middle District of Alabama, alleging that petitioners violated TILA by failing to disclose as a finance charge the portion of the insurance premium paid by respondent attributable to Vendor's Single Interest ("VSI") insurance. J.A. 26 (Second Amended Compl. 24). Specifically, respondent contends that the portion of the $15.00 VSI premium attributable to insuring "Green Tree's possible repossession expenses," id., should have been disclosed as a finance charge rather than as an insurance premium, Opp. 2; see also J.L. 35. Thus, respondent contends that the Contract violated TWA because the $55,278.00 finance charge disclosed by petitioners in the Contract, in her view, also should have reflected a $15.00
2
VSI insurance premium. Opp. 2. In addition to actual damages, respondent seeks "statutory damages," "costs of suit" and "attomey's fees and litigation expenses pursuant to 15 U.S.C. 1640." J.A. 26 (Second Amended Compl. 24).

Respondent also alleges that petitioners violated ECOA because the Contract includes an "arbitration clause which seeks to compel the resolution of all statutory causes of action in arbitration." J.A. 26 (Second Amended Compi. 27).


2 Even accepting respondent's theory of liability, her own submissions

demonstrate that her $15.00 estimate is overstated. According to respondent. the portion of the insurance premium she paid that was attributable to VSI insurance was $15.00. Opp. 2~ iL. 3. 'The exhibits to her Complaint make clear that this $15.00 VSI premium purchased coverage that protected the lienholder against "Iclollision (including Upset) of the mobile home" and "Ic lonversion, embezzlement and secretion of the mobile home by [respon-denil." ~d. at 27. The governing regulations provide that any portion of that $15.00 VSI premium allocable to insurance for "normal property damage, concealment, confiscation, conversion, embezzlement, and skip" need not be included in the finance charge See 12 C.F.R. 226.4(d)(2) & n.5: Regula-lion 7 Commentary. 3 Fed. Reserve Reg. Serv. 6-1165.2(10) (Nov. 1998).

12
According to respondent, by including this arbitration agreement in the Contract, Green Tree "violate[d] 15 U.S.C. 1691(a)(3) which prohibits a creditor from requiring a waiver of rights." J.A. 26-27 (Second Amended Compl. 28). In connection with this claim, respondent seeks "punitive damages," "actual damages," "attorney's fees and litigation expenses" and "costs of suit." Id.

Finally, respondent requested certification of a class action of all individuals who had entered into similar agreements with petitioners. She also sought monetary damages, including attorneys' fees and recovery of litigation expenses. Pet. App.
22a, 27a.

Petitioners filed a Motion to Stay Action and Compel Arbitration. J.A. 29-30. in resolving that Motion, the district court did not address the merits of respondent's claims, but instead, focused on whether respondent could be compelled to arbitrate her claims. Pet. App. 26a n.5. After concluding that the FAA applied because the Contract satisfied the necessary interstate commerce nexus, id. at 23a n.4 (citing Allied-Bruce, 513 U.S. 265), the court explained that by enacting the FAA, Congress "manifested a 'liberal federal policy favoring arbitration agreements,"' id. at 24a (quoting Gilmer, 500 U.S. at 24-25). As a result, "'questions of arbitrability must be addressed with a healthy regard for the federal policy favoring arbitration."' Id. (emphasis added) (quoting Moses H. Cone Mem 'I Hosp. v. Mercury C'onstr. Corp., 460 U.S. 1,24(1983)). To resolve whether respondent should be compelled to arbitrate her statutory claims, the court applied a two-part test asking "[I] whether the Parties' agreement to arbitrate reaches the statutory issues, and . . . [2] whether legal constraints external to the Parties' agreement foreclosed the arbitration of those claims." Pet. App. 27a.

First, the court explained that the arbitration agreement, by its terms, applied to claims arising under "'statutory law,"' and
13

therefore was "sufficiently broad to encompass [respondent'sl TILA, ECOA, and other claims." Id. at 28a. Second, the court explained that by agreeing to arbitrate statutory claims "'a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial, forum."' Pet App. 29a (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth. Inc., 473 U.S. 614, 628 (1985)). As a result, respondent bore the burden of showing that Congress intended to preclude a waiver of judicial remedies. Because respondent did "not cite any provision of the text or legislative history of either the TILA or the ECQA that expressly preclude[dl waiver of judicial remedies," the court focused on whether there was evidence of a "conflict between arbitration and the statutes' underlying purpose." Pet. App. 30a. The court ruled that "'the fact that [TILA] provides for the possibility of bringing a collective action does not mean that individual attempts at conciliation were intended to be barred."' Id. at 33a (quoting Gilmer, 500 U.S. at 32). Similarly, the court rejected as "unpersuasive" respondent's argument that 15 U.S.C. 1691 (a)(3), which bars a creditor from extending credit conditioned on the release of potential claims for TWA violations that arose in the past, rendered the arbitration provision unenforceable. Id. at 34a-35a.

Accordingly, the court granted petitioners' motion to compel respondent to submit her claims "to binding arbitration pursuant to the arbitration provision in her contract." Pet. App. 49a. Acknowledging that it was authorized to stay the proceedings, see 9 U.S.C. 3, the court instead dismissed the case "with prejudice" because all of respondent's claims were to be submitted to arbitration. Pet. App. 48a. On reconsideration, the court adhered to its prior ruling, explaining that it would "gladly modify andlor vacate its [prior] Order," if warranted by a change in circumstances. Id. at 54a.

14

Decision Of The Court Of Appeals

The Eleventh Circuit reversed. Pet. App. 2a. First, the court of appeals addressed whether the district court's order was a "'final decision with respect to an arbitration that is subject to [the FAA]."' Id. at 6a (quoting 9 U.S.C. 16(a)(3)). On that issue, the court of appeals acknowledged that the majority of circuits had drawn a distinction between "'embedded"' proceedings in "which the arbitration issue arises as part of a broader action dealing with other issues," and "'in dependent"' proceedings, in which "the motion to compel arbitration is the only issue before the court." Id. at 7a, 8a (emphasis in original omitted).3 The Eleventh Circuit recognized that these "circuits have held that orders compelling arbitration which arise in embedded proceedings must be treated as interlocutory and non-appealable, not as 'final decisions' under 16(a)(3)." Id. at 7a. Moreover, it explained that at least five courts of appeals that had adopted the embedded/independent framework for analyzing finality under Section 16(a)(3) had held that "a district court's order compelling arbitration in an embedded proceeding is interlocutory and non-appealable, even if the district court dismisses the remaining claims." Id. at 8a-9a (emphasis in original omitted).



~' The court of appeals identified eight circuits in which orders compelling arbitration in "embedded" proceedings would be considered non-final for purposes of Section 16(a)(3). Pet. App. 7a-8a (citing John Hancock Mut. Life Ins. Co. v. Olick, 151 F.3d 132, 135-36 (3d Cir. 1998); Seacoast Motors, Inc. v. Chrysler ('orp., 143 F.3d 626,628(1st Cir.), cert. denied. 525 U.S. 965 (1998); Napleton v. General Motors corp.. 138 F.3d 1209, 1212 (7th Cir.), cert. denied, 525 U.S. 931 (1998); McDarthy v. Providential Corp., 122 R3d 1242, 1244 (9th Cir. 1997), cert denied, 525 U.S. 921(1998); In re Pisgah Contractors, Inc., 117 F.3d 133, 136 (4th Dir. 1997); Altman Nurs-ing, Inc. v. Clay Capital ~'orp., 84 F.3d 769,771(5th Dir. 1996); Gainmaro v. Thorp fI'on su,ner Discount Co., 15 F.3d 93, 95 (8th Cir. 1994); Filanto, SpA. v. Chilewich Int'l Corp., 984 F.2d 58, 60-61 (2d Dir. 1993)).
15

The Eleventh Circuit "decline[d]" to adopt the majority rule, stating that the intent of Section 16 was to "clear away the deadwood" and to "furnish a clear rule for appealability of orders relating to arbitration proceedings." Pet. App. I Ia. I 2a. (internal quotation marks omitted). Ignoring that the "embedded/independent" framework provided just such a clear rule, the court of appeals looked instead to statements in the legislative history of Section 16 to conclude that an "'jjajppeal can be taken from.., a final judgment dismissing an action in deference to arbitration."' Id. at 13a (omission in original) (quoting Arnold v. Arnold Corp., 920 F.2d 1269, 1274-75 (6th Cir. 1990)). Ultimately, the court of appeals held that the district court's "order compelling arbitration was an appealable 'final decision' under 9 U.S.C. 16(a)(3)," id. at ISa.

Second, the Eleventh Circuit considered whether the arbitration provision was unenforceable. The court paid lip service to the "strong federal policy favoring arbitration" and recognized that the "procedural apparatus of an arbitration should not make an arbitration clause unenforceable." Pet. App. ISa (internal quotation marks omitted). Nonetheless, the court of appeals ignored these principles in ruling that the arbitration provision was unenforceable because it "fail [ed) to provide the minimum guarantees required to ensure that [respondent'sl ability to vindicate her statutory rights will not be undone by steep filing fees, steep arbitrators' fees, or other high costs of arbitration." ld. at I 8a.

In doing so, the court of appeals did not identify any provision of TILA that would be frustrated by arbitration of respondent's claims. Nor did the court of appeals identify any record evidence that arbitration of respondent's statutory claims would result in the imposition of substantial arbitration costs that respondent would he required to bear. Indeed, the Eleventh Circuit ignored that the arbitration agreement provided that the arbitrator was authorized to award such costs to the prevailing party based on a provision in the arbitration agreement granting

16 17
the arbitrator "all powers provided by the law." Pet. App. 57a. Instead, it relied upon the absence of any record evidence on these issues to rule that the arbitration provision "raises serious concerns with respect to filing fees, arbitrators' costs and other arbitration expenses that may curtail orbara plaintiffs access to the arbitral forum." Id. at 17a.

In the end, the court of appeals acknowledged that the
arbitration agreement did not, by its terms, impose the costs of the proceeding on respondent and that there was no record evidence regarding the amount or the apportionment of those costs. Pet. App. I 7a, I 8a. Nevertheless, it resolved that failure of proof against arbitration by speculating that respondent "might be required to bear substantial costs of the arbitration even if she were to prevail." Id. at 19a (emphasis added). On this basis alone, the court of appeals declared the arbitration agreement unenforceable.


SUMMARY OF ARGUMENT

The common thread between the two holdings of the court of appeals is the manifest hostility of the panel to arbitration. In stark contrast to both the language and plain intent of Congress embodied in the FAA and a consistent line of decisions by this Court interpreting that statute, the court of appeals' basic ap-proach is far out of step with the applicable statutory and judi-cial norms strongly favoring methods of alternative dispute reso-lution, primarily including arbitration. Had the court of appeals faithfully attempted to promote arbitration over litigation, it is clear that the court of appeals would have concluded that it lacked jurisdiction to review the district court's order requiring the parties' dispute to be arbitrated immediately and would have resolved its "concerns" about the costs of arbitration in favor of enforcement of the parties' contract. Because the court of ap-peals instead allowed distrust of arbitration to animate its deci-sion, it erred in both of its rulings. Accordingly, its judgment
should be reversed and the matter allowed to proceed in accor-dance with the parties' agreement to resolve this dispute through arbitration.

1. The purpose of the FAA, the structure of Section 16, and the legal framework against which the text of Section 16(a)(3) was enacted each confirms that the district court's order compel-I ing respondent to arbitrate the merits of her claims against peti-tioners is not a "final decision" under Section 16(a)(3). In enacting Section 16, Congress sought to promote the FAA's strong policy in favor of arbitration by limiting the ability of parties to avoid or delay compliance with their obligations under arbitration agreements by providing for immediate appeal of or-ders that disfavor arbitration and generally prohibiting immedi-ate appeal of interlocutory orders that favor arbitration. Although Congress specifically modified aspects of the appellate process that had disfavored arbitration, in Section I 6(a)(3), Congress codified the existing legal framework which distinguished between "embedded" and "independent" proceedings for purposes of determining whether an order denying or compelling arbitration constituted a "final decision." Under that framework, the district court's order compelling arbitration and dismissing the lawsuit, which occurred in an embedded proceeding, is not a final decision and therefore is not appealable under Section 1 6(a)( 3).

The district court's decision to label its order compelling arbi-tration a "dismissal" "with prejudice" rather than a "stay," has no bearing on the substantive effect of the ruling and should have no bearing on whether that order is appealable under Sec-tion 1 6(a)(3). Regardless of the label, respondent will be enti-tled to present the merits of her claims in arbitration, and, if she is dissatisfied with the outcome, she would be entitled to chal-lenge the arbitral award in the same district court that compelled her to arbitrate. Indeed, this Court has held that distinctions that have no bearing on the substance of an order should have no effect on whether it is appealable. Moreover, allowing a district

18

court's choice of label to control whether an otherwise interlocutory order may be appealed immediately would under-mine Section 16(b), which requires that such orders can be appealed only with prior authorization by both the district court and the court of appeals.

2. Through the FAA, Congress has expressed an emphatic federal policy in favor of enforcing agreements by private par-ties to arbitrate their disputes. Accordingly, a party seeking to avoid an agreed-upon obligation to arbitrate a dispute bears the heavy burden of proving (1) that the arbitration agreement, by its terms, does not apply to the dispute, or (2) that arbitration of the underlying federal statutory right is contrary to the intent of Congress.

In this case, the court of appeals, reflecting an outdated and discredited distrust of arbitration, surmised that the arbitration agreement's putative "silence" on the issue of costs and fees created a "risk" that the underlying federal statutory rights would be compromised in arbitration. That conclusion is flatly mistaken on two counts. First, the arbitration agreement was not silent on this issue. It made clear that the arbitrator "shall have all powers provided by the law" and therefore was author-ized under TILA and ECOA to award respondent, if she pre-vailed, "the costs of the action, together with a reasonable attor-ney's fee." 15 U.S.C. 1640(a)(3) (TWA); accord id. 1691 e(d) (ECOA). Second, respondent presented no evidence to meet her burden of establishing that she would be unable in arbitration to vindicate effectively her federal statutory rights.

Finally, the Court need not address respondent's alternative claim that arbitration creates an "inherent conflict" with TWA because an individual can "effectively vindicate" her statutory rights only in class action litigation rather than individual arbi-tration. In any event, that argument is meritless. This Court previously has rejected precisely the same argument in the con-text of a challenge to arbitration under the ADEA. See Gilmer,
19

500 U.S. at 32. Moreover, as explained in Rodriguez de Quijas v. Shearson/A,n. Express, Inc., 490 U.S. 477 (1989), Congress's grant of concurrent jurisdiction in state courts under TWA con-stitutes "explicit authorization" for individuals to waive federal procedural rights such as federal class action procedures. See id. at 482. Indeed, the incentive structure reflected in TWA is designed to ensure that individuals can and will bring individual actions even if their actual damages may be relatively modest. Finally, Congress's decision to limit the damages that otherwise would be available in class actions under TILA reflects that Congress did not view class action litigation as the only proce-dural mechanism through which substantive rights under TWA could be vindicated.


ARGUMENT

I. AN ORDER COMPELLING ARBITRATION AND
DISMISSING AN "EMBEDDED" PROCEEDING
IS NOT A "FINAL I)ECISION" UNDER 9 U.S.C.
SECTION 16(a)(3).

Settled principles of statutory construction confirm that the district court's order compelling the parties to arbitrate their dis-pute and dismissing the case is not a "final decision" within the meaning of Section 1 6(a)(3) of the FAA. That conclusion is confirmed by the underlying purpose of the FAA, the structure of Section 16, and the existing legal framework against which Section 16(a)(3) was enacted.

A. Settled Statutory Construction Principles Govern The Scope Of Appellate Jurisdiction Under Sec-tion 16(a)(3) And They Preclude An Appeal In This Case.

"It is axiomatic that '[tihe starting point in every case involv-ing construction of a statute is the language itself."' Landreth Timber Co. v. Landreth, 471 U.S. 681, 685 (1985) (quoting

20
Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 756 (1975) (Powell, J., concurring)). "'fT]he meaning of statutory language, plain or not, depends on context."' Brown v. Gard-ner, 513 U.S. 115, 118 (1994) (quoting King v. St. Vincent's Hosp., 502 U.S. 215, 221 (1991)). As a result, the Court "con-sider[s] not only the bare meaning of the wordfs] but also [their) placement and purpose in the statutory scheme," Bailey v. United States, 516 U.S. 137, 145 (1995), as well as "the provi-sions of the whole law" including "its object and policy," Dole v. United Steelworkers of Am.,494 U.S. 26,35 (1990) (internal quotation marks omitted). Thus, "[a) provision that may seem ambiguous in isolation is often clarified by the remainder of the statutory scheme. . . because only one of the permissible mean-ings produces a substantive effect that is compatible with the rest of the law." United Say. Ass 'n v. Timbers of In wood Forest Assocs., 484 U.S. 365, 371 (1988) (citation omitted). Indeed, it is a "cardinal principle" of statutory construction "'to give ef-fect, if possible, to every clause and word of a statute. . . rather than to emasculate an entire section."' Bennett v. Spear, 520 U.S. 154, 173 (1997).

Moreover, "'if a word is obviously transplanted from another legal source, whether the common law or other legislation, it brings the old soil with it."' Evans v. United States, 504 U.S. 255, 260 n.3 (1992) (quoting Frankfurter, Some Reflections on the Reading of Statutes, 47 Colum. L. Rev. 527, 537 (1947)); see also Morrissette v. United States, 342 U.S. 246,263(1952). As a result, "'[t]he normal rule of statutory construction is that if Congress intends for legislation to change the interpretation of a judicially created concept, it makes that intent specific."' Kelly v. Robinson, 479 U.S. 36, 47 (1986) (quoting Midlantic Nat'l Bank v. New Jersey Dep 't of Envtl. Protection, 474 U.S. 494, 501 (1986)). Put another way, a change in the existing legal framework is not to be presumed "without specific provision in the text of the statute." United Say. Ass'n, 484 U.S. at 380 (em-phasis added) (rejecting reliance on "legislative history" to sup-
21

port a "change in the existing rules"); ef. Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A., 68 U.S.L.W. 4441,4444 2000) (rejecting presumption where "language" of statute "leaves no room for clarification by [pre-existingi practice").

Application of these principles confirms that the district court's order compelling the parties to arbitrate their dispute is not a "final decision~~ under Section 16(a)(3).


B. The Purpose Of' The Federal Arbitration Act,
The Structure Of Section 16, And The Legal
Framework Against Which Section 16(a)(3) Was
Enacted Confirm That An Order Compelling
Arbitration In An "Embedded" Proceeding Is
Not A "Final Decision" Under Section 16(a)(3).

Section 16(a) provides, in pertinent part, that: "An appeal may be taken from... (3) a final decision with respect to an ar-bitration that is subject to [the FAA]." 9 U.S.C. 16(a)(3). Be-cause Congress did not define "final decision," its meaning de-rives from its relevant context, see Brown, 513 U.S. at 118, which consists of (i) the FAA, whose goals Section 16 was de-signed to foster, (ii) the structure of Section 16 itself, and (iii) the pre-existing legal framework defining "final decision" in the context of arbitration orders.

First, interpretation of the term "final decision" in Section 16(a)(3) must take into account the "object and policy" of the FAA. Dole, 494 U.S. at 35; see also United Say. Ass'n, 484 U.S. at 371. The FAA indisputably reflects a "liberal federal policy favoring arbitration agreements" that "calls for a sum-mary and speedy disposition of motions.. . to enforce arbitra-tion clauses." Moses H. ('one Mern 'I Hosp. v. Mercury Constr. Corp., 460 U.S. I, 24.29(1983). Further, the FAA is designed to permit "'parties to an arbitrable dispute [to move] out of court and into arbitration as quickly and easily as possible."' South-land Corp. v. Keating, 465 U.S. 1, 7 (1984) (quoting Moses H.

22 23

Cone, 460 U.S. at 22). As a result, agreements to arbitrate are "not to be avoided by allowing one party to ignore the contract and resort to the courts" because "Isluch a course could lead to prolonged litigation, one of the very risks the parties, by con-tracting for arbitration, sought to eliminate." Id. Indeed, "[b)elated enforcement of [an) arbitration clause . . . signifi-cantly disappoints the expectations of the parties and frustrates the clear purpose of their agreement." Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 225 (1985) (White, J., concurring). Earlier this year, the Court reconfirmed these principles, ex-plaining that the FAA reflects a "'statutory policy of rapid and unobstructed enforcement of arbitration agreements."' Cortez Byrd Chips, Inc. v. Bill Harbert C'onstr. Co., 120 5. Ct. 1331, 1337 (2000) (quoting Moses H. Cone, 460 U.S. at 23).

Second, and more specifically, the term "final decision" in Section 1 6(a)(3) also draws meaning from the pro-arbitration structure of Section 16. See United Say. Ass'n, 484 U.S. at 371 (provision of statute "often" is clarified by "the remainder of the statutory scheme"). Under Section 16, an immediate appeal may be taken from orders, whether final or interlocutory, that are hostile to arbitration. 9 U.S.C. I 6(a)( 1). Thus, a party can appeal immediately if a district court enters an order (i) "refus-ing a stay of any action" until arbitration has occurred, id. I 6(a)( I )(A), (ii) "denying a petition. . . to order arbitration to proceed," id. 16(a)(l)(B), (iii) "denying confirmation of an award or partial award," id. 16(a)( 1 )(D), (iv) "modifying, cor-recting or vacating an award," id. 16(a)( 1 )(E), or (v) "granting, continuing, or modifying an injunction against an arbitration," id. 16(a)(2).

In contrast, Section 16(b) denies an immediate appeal as of right from orders that are favorable to arbitration, including in-terlocutory orders (i) "granting a stay of any action" so that arbi-tration may proceed, id. 16(b)(1), (ii) "directing arbitration to proceed under section 4," id. 1 6(b)(2), or (iii) "refusing to en-join an arbitration," id. 16(b)(4). As to these orders, a disap-
pointed litigant either can await a "final decision" after the arbi-tration has taken place, id. 16(a)(3), or may seek to convince the district court and the court of appeals that an appeal should be permitted immediately because the order satisfies the discre-tionary standards of section 1292(b) of title 28, id. 16(b).4 Thus, Section 16(b) precludes a district court from unilaterally deciding that an interlocutory order favoring arbitration may be appealed immediately. In sum, Section 16 reflects a pro-arbitration structure that provides for immediate appeals from orders hostile to arbitration and requires, absent grounds for mandamus or certification, that review of orders favoring arbi-tration await until after the arbitration has run its course.

Third, and most specifically, the term "final decision" in Sec-tion 16(a)(3) is a term of art with a well-developed legal mean-ing both generally and as applied to orders involving arbitration. See Evans, 504 U.S. at 259-60 & n.3; Morrissette, 342 U.S. at
263. The phrase "final decision" means an order "which ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Catlin v. United States, 324 U.S. 229, 233 (1945); accord Digital Equip. C'orp. v. Desktop Direct, Inc., 511 U.S. 863, 867 (1994); St. Louis, Iron Mountain & S. R.R. v. Southern Express Co., 108 U.S. 24, 28-29 (1883). Ap~-plying that understanding of a "final decision," this Court has held that orders granting or denying stays of judicial proceed-ings so that arbitration could go forward are not final decisions. See Schoenamsgruher v. Hamburg Am. Line, 294 U.S. 454,456 (1935) (order that required "the parties to proceed to arbitration"


~ Section 1292(h) provides for an appeal from an interlocutory order when "a district judge .. . shall be of thc opinion that such order involves a controlling question of law as to which there is substantial ground for differ-ence of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation" and "liThe Court of Ap-peals permitlsi an appeal to be taken from such order." 28 U.S.C. 1292(h).

24

and "stayed trial of the action pending filing of the award" "definitely" was "not final"); see also Shanferoke Coal & Supply Corp. v. Westchester Serv. Corp., 293 U.S. 449,450-51(1935) (order denying a motion to stay an "action, and all the proceed-ings therein . . . until an arbitration should be had in accordance with the terms of the contract sued on" "was not a final judg-ment"); Baltimore Contractors, Inc. v. Bodinger, 348 U.S. 176, 179 (1955) ("order denying stay could not be called a final deci-sion under 1291"). Further, the Court has rejected the "artifi-ciality of resting appealability on an otherwise substanceless dis-tinction between stays and dismissal." Moses H. Cone, 460 U.S. at 9 n.8f

Similarly, the courts of appeals, building on this meaning of "final decision," developed a bright-line framework that distinguishes between "independent" and "embedded" proceedings for purposes of determining whether an arbitration order consti-6
tutes a "final decision." For example, in Farr & Co. v. ('IA. Intercontinental De Nave gacion de Cuba, S.A., 243 F.2d 342



See also Sullivan v. Finke/stein, 496 U.S. 617,628 n.7 (1990) ('The la-bel used by the District Court of course cannot control the order's appealabil-ity in this case, any more than it could when a district court labeled a nonap-pealable interlocutory order as a 'final judgment"'); Liberty Mut. Ins. ('o. v. Weizel. 424 U .S. 737,741-42(1976) (district court's "recital" that order was "final judgment" did not make interlocutory order immediately appealable).
6 See, e.g., Seacoast, 143 F.3d at 628 (independent/embedded framework "based on finality principles that were firmly established at the time of sec-tion 16's enactment in 1988"); Filanto, 984 F.2d at 60 (in enacting Section 16. "Congress built upon the distinction the courts had previously recognized between so-called 'independent' proceedings and 'embedded' proceedings"); Perera v. Siegal Trading Co., 951 F.2d 780. 784 (7th Cir. 1992) (prior to enactment of Section 16, "1 mlany courts of appeals have concluded that arbi-tration orders in embedded proceedings constitute interlocutory and not final decisions"); Stedor Enters.. Ud. v. Armtex. Inc., 947 F.2d 727, 729 (4th Cir. 1991) ("Before the adoption of section 16, whether an order granting or de-nying a motion to compel arbitration was appealable depended on whether
the sole object of the suit was to determine arbitrability.").
25

(2d Cir. 1957), the Second Circuit held that an order compelling arbitration "in an independent proceeding" was a "final and ap-pealable" order, whereas such an order "made in a pending suit" would be "viewed as being interlocutory." Id. at 345. Similarly, in Hartford Fin. Svs., Inc. v. Florida Software Set-vs., Inc., 712 F.2d 724 (1st Cir. 1983) (Breyer, J.), the First Circuit relied upon the distinction between embedded and independent pro-cee(lings in assessing whether an arbitration order was "final." Id. at 728. While noting that some courts differed, the First Cir-cuit held that an order compelling arbitration in an "embedded" proceeding was not "final" because such orders merely "pre-clude further consideration of the merits of the case until arbitra-tion is concluded," when "the litigation in court will resume and the parties can appeal their legal questions after the court has issued a final decision." Id. at 729. In doing so, the Hartford court explained that a contrary holding "would have led to piecemeal appeals" and "would have run counter to the congres-sional policy of encouraging arbitration." ki. at 728.

In addition to providing a clear, easily-administered test, the embedded/independent framework developed by the courts of appeals prior to enactment of Section 16 was consistent with the general definition of "final decision" under this Court's prece-dents. Thus, in an "independent" proceeding which seeks only an order compelling arbitration an order compelling or deny-ing arbitration is a "final decision" because it does, in fact, "endlil the litigation on the merits and leaves nothing for the court to do but execute the judgment." ('at/in, 324 U.S. at 233. In contrast, in an "embedded" proceeding which seeks relief on the merits apart from whether the parties must arbitrate the dispute an order compelling or denying arbitration is not a "fi-nal decision" because such a decision does not end "the litiga-tion on the merits" or "leave[J nothing for the court to do but execute the judgment." Id. Rather, after the arbitration has concluded, further judicial involvement will be "necessary for this award to become enforceable." Perera, 95 1 F.2d at 784; 9

26

U.S.C. 9 (governing enforcement of arbitration awards); id. 10 (governing vacatur of arbitration awards). Such an order is not a "final decision" because "it remains undeniable that... arbitration cannot produce an enforceable result without further judicial action." Lummus Co. v. Commonwealth Oil Refining Co., 297 F.2d 80, 86 (2d Cir. 1961) (Friendly, J.). Indeed, this Court has acknowledged that fact, explaining that after a court has stayed an action so that arbitration may be had, further court involvement is necessary to "'to confirm the award or to set it aside for irregularity, fraud, ultra vires or other defect."' Cortez Byrd Chips, Inc., 120 5. Ct. at 1338 (quoting Marine Transit Corp. v. Dreyfus, 284 U.S. 263, 275-76 (1932)).

Applying these principles, the order compelling arbitration in the embedded proceeding in this case is not a "final decision" under Section 1 6(a)(3), and therefore cannot be appealed imme-diately as of right. First, because Congress did not define "final decision," it is presumed that Congress intended to adopt the firmly established meaning of that term. See Evans, 504 U.S. at 259-60 & n.3. Prior to enactment of Section 16, the law among the courts of appeals, though not unanimous, firmly established that an order requiring the parties to arbitrate their dispute that was entered in an "embedded" proceeding was not a "final decision. See, e.g., Farr & Co., 243 F.2d at 345; Hartford, 712 F.2d at 728-29. More generally, there can be no dispute that an order compelling arbitration in an embedded proceeding is not a "final decision" because it does not "end[] the litigation on the merits." Cat/in, 324 U.S. at 233; see Lummus, 297 F.2d at 86 ("[A]rbitration cannot produce an enforceable result without fur-ther judicial action."). As a consequence, a party aggrieved by an order to arbitrate can, after the arbitration, challenge the arbi-tration award, and the court that ordered the parties to arbitrate would have the "'authority to confirm the award or to set it aside."' Cortez Byrd C7iips, 120 S. Ct. at 1338 (quoting Marine Transit Corp., 284 U.S. at 276). A contrary conclusion would authorize multiple appeals and "piecemeal" appellate review,
27

rather than a single appeal after the arbitration proceeding has occurred and after the district court has addressed the enforce-ability of the award under the FAA.

Second, the conclusion that an order compelling arbitration in an embedded proceeding is not a "final decision" also is war-ranted because that interpretation "produces a substantive effect that is compatible with the rest of the [statute]." United Say. Ass'n, 484 U.S. at 371. Subsections (a)(1), (a)(2) and (b) of Section 16 reflect an unabashed pro-arbitration bias. Under subsections (a)( I) and (a)(2), orders hostile to arbitration, whether final or interlocutory, are immediately appealable as of right. 9 U.S.C. 16(a)(l), (2). Under subsection (b), interlocu-tory orders that favor arbitration may not be appealed immedi-ately as a matter of right but instead must await completion of the arbitration proceeding before they are reviewed. Id. 16(b). Given this pro-arbitration structure, Congress also would have intended to give Section 1 6(a)(3) a similar pro-arbitration mean-ing. In this regard, an overly broad definition of "final decision" under Section 16(a)(3) would unduly limit the scope of subsection (b) which prohibits immediate appeals of interlocutory or-ders that favor arbitration.

Finally, the conclusion that Congress intended that Section I 6(a)(3) be given a pro-arbitration construction is confirmed by the broader federal policy underlying the FAA: to promote the
rapid and unobstructed enforcement of arbitration agreements."' C'ortez Byrd C'hips, 120 S. Ct. at 1137 (quoting Moses H. Cone, 460 U.S. at 23). Interpreting section 16(a)(3) to au-thorize immediate appeals as of right from orders compelling arbitration in embedded proceedings could, as was done in this case, "lead to prolonged litigation, one of the very risks the par-ties, by contracting for arbitration sought, to eliminate." South-land, 465 U.S. at 7. Indeed, the FAA was designed to allow par-ties "'[to move] out of court and into arbitration as quickly as possible."' Id. (quoting Moses H. Cone, 460 U.S. at 22). In light of this "emphatic" policy in favor of arbitration, Mitsubishi

28

Motors C'orp. v. Soler Chrysler-Plymouth, inc., 473 U.S. 614, 631 (1985), the phrase "final decision" should be construed to exclude orders compelling arbitration in embedded proceedings and thereby prevent litigants, such as respondent, from improp-erly delaying enforcement of agreed-to arbitration provisions.

The court of appeals' contrary conclusion is based upon two erroneous premises. First, the court of appeals relied on snip-pets from the legislative history of Section 16 to conclude that Congress intended to do away with the embedded/independent framework. Pet. App. 12a. That reliance violates the rule of construction that "if Congress intends for legislation to change the interpretation of a judicially created concept, it makes that intent specific," Kelly, 479 U.S. at 47, with a "specific provision in the text of the statute," United Savings Association, 484 U.S. at 380. Section 16 illustrates that controlling principle in prac-tice. By enacting Section 16, Congress intended to do away with the judicially-created Enelow-Ettelson doctrine which govemed appeals from certain interlocutory orders under 28 U.S.C.
1292(b). Congress did so specifically in the text of Section 16 by dictating that an interlocutory order "granting a stay of any action" could not be appealed immediately as of right. 9 U.S.C. 16(b)(1)i' In contrast, with respect to the embedded/ independent framework that the lower courts had developed to implement the "final decision" requirement, Congress did not repudiate that judicially created concept, but instead expressly adopted the same "final decision" language upon which the em-bedded/independent framework was predicated. Because the statutory text of Section 16(a)(3) does not purport to alter this judicially created approach, snippets from the legislative history


See Hartford, 712 F.2d at 726 (Breyer, J.) (explaining that the Enelow-Ettelson doctrine provided an exception to the rule that an order under Sec-tion 3 of the FAA is not appealable as an "injunction" under 28 U.S.C. I 292(a)( I) "if the suit stayed pending arbitration is legal in nature rather than equitable").
29

cannot provide the "specific intent" necessary to establish that Congress sought to uproot the existing judicial scheme. See United Say. Ass'n, 484 U.S. at 380.

Similarly, the court of appeals improperly gave controlling weight to the district court's decision to label its order compel-ling arbitration a "dismissal" "with prejudice," rather than a "stay" of the proceedings. Pet. App. 14a. The district court's label, however, had no bearing on any substantive right of re-spondent. Indeed, the district court expressly declined to re-solve "the merits of the underlying claims themselves" and in-stead addressed solely the question whether respondent "may be compelled to arbitrate her claims." Pet. App. 26a n.5. As a re-sult, regardless of the label, respondent will be entitled to chal-lenge, if necessary, the outcome of the arbitration in the district court and then appeal, if necessary, the district court's decision to the court of appeals. Simply put, the label "dismissal" "with prejudice" should have no bearing on appealability under Sec-tion 16 because that label has no bearing on respondent's sub-stantive rights. See Liberty Mut. ins., 424 U.S. at 742 (district court's decision to label interlocutory order a ''final judgment cannot control appealability of order); see also Sullivan, 496 U.S. at 628 n.7 (district court's "label" cannot control "appeal-ability"); cf. United States v. Wallace & Tiernan Co., 336 U.S. 793, 794 n.l (1949) (label attached to dismissal order does not affect appealability).

In fact, this Court already has rejected, in a similar context, "the artificiality of resting appealability on an otherwise sub-stanceless distinction between stays and dismissals." Moses H. Cone, 460 U.S. at 9 n.8. Adoption of such an "artificial" and "substanceless" distinction is even more inappropriate here be-cause Congress could not have intended that a district court could unilaterally transform what is in substance an interlocu-tory order into a "final decision" merely by labeling that order a "dismissal" rather than a "stay." Indeed, such an interpretation must be rejected because it would allow a district court unilater-

30 31

ally to circumvent the requirement that interlocutory orders set forth in Section 16(b) may be appealed only if the district court and court of appeals agree that the requirements of 28 U.S.C. 1292(b)(2) have been satisfied. See Bennett, 520 U.S. at 173 (interpretation of statute must give effect "to every clause and word of a statute . . . rather than to emasculate an entire sec-tion").

Under the FAA, petitioners are entitled to enforce their right to arbitrate by moving this dispute out of the courts "'and into arbitration as quickly and easily as possible."' South/and, 465 U.S. at 7. Any appeal of the district court's order compelling arbitration in this embedded proceeding therefore must await the completion of the arbitration that the FAA and Section 16 were designed to foster.


II. THE ARBITRATION AGREEMENT IS ENFORCEABLE UNDER THE FEDERAL ARBITRATION ACT.

Contrary to the decision of the court of appeals, the agree-ment to arbitrate is enforceable under the FAA because it does not undermine respondent's ability to vindicate her federal statu-tory rights. With respect to the court of appeals' concern re-garding the costs associated with arbitration, the arbitration agreement is not "silent." It provides that the arbitrator shall have "all powers provided by the law," Pet. App. 57a, and the "law" goveming TWA and ECOA claims mandates that a pre-vailing plaintiff is entitled to recover such costs as part of her damages. But, even if the arbitration agi~ement were "silent" or ambiguous on this point, under the FAA, such ambiguity must be construed in favor of arbitration. As to the class action issue raised in respondent's Brief in Opposition, the Court need not address it because it is outside the questions presented and be-cause the court of appeals never addressed it. Nevertheless, as explained below, there is no inherent conflict between individ-
ual arbitration and respondent's vindication of her statutory rights.


A. The Federal Arbitration Act Reflects A Strong Presumption In Favor Of Arbitration Of Fed-eral Statutory Claims.

The legal standards governing the enforceability of arbitration agreements under the FAA are well established. Section 2 of the FAA provides that arbitration agreements "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. 2. The Court has held that this provision manifests a "'liberal federal policy favoring arbitration agreements."' Gi/mer, 500 U.S. at 25 (quoting Moses H. Cone, 460 U.S. at 24). As a result of that federal policy, judicial "suspicion of arbitration as a method of weakening the protections afforded in the substantive law to would-be complainants" plainly is "far out of step with [the Court's] current strong endorsement of the federal statutes favoring this method of resolving disputes." Rodriguez de Qui-jas, 500 U.S. at 481. Indeed, under the FAA, courts employ an "emphatic policy in favorofarbitral dispute resolution," Mitsu-his/ri, 473 U.S. at 631, in which "any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitra-tion, whether the problem at hand is the construction of the con-tract language itself or an allegation of waiver, delay, or a like defense to arbitrability." Moses H. Cone, 460 U.S. at 24-25.

This duty to '''rigorously enforce agreements to arbitrate,~~~ Shearson/Am. Express, Inc. v. McMahon, 482 U.S. 220, 226 (1987) (quoting Byrd, 470 U.S. at 221), "is not diminished when a party bound by an agreement raises a claim founded on statu-tory rights," id.; accord Mitsubishi, 473 U.S. at 626. With re-spect to disputes implicating federal statutory law, this Court has adopted a two-part test to determine whether private parties may agree to resolve such claims through arbitration. Id. at 628.

32 33
First, because the "central purpose of the Federal Arbitration Act" is "to ensure 'that private agreements to arbitrate are en-forced according to their terms,"' Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 53-54 (1995) (quoting Volt Information Sciences, Inc. v. Board of Trustees of Leland Stan-ford Junior University, 489 U.S. 468, 479 (1989)), the court must determine whether the arbitration agreement encompasses the federal statutory claims, Mitsubishi, 473 U.S. at 626. In con-ducting that inquiry, "'any doubts concerning the scope of arbi-trable issues should be resolved in favor of arbitration."' Id. at 626 (quoting Moses H. Cone, 460 U.S. at 24-25).

Second, the court must determine whether the party's federal statutory "claims are nonarbitrable even though it has agreed to arbitrate them." Id. at 628. Put another way, "fhlaving made the bargain to arbitrate, the party should be held to it unless Congress itself has evinced an intention to preclude a waiver of judicial remedies for the statutory rights at issue." Gil,ner, 500 U.S. at 26 (internal quotation marks omitted); see McMahon, 482 U.S. at 227. Congressional intent to preclude arbitration must be "discoverable in the text of the I federal statutel, its leg-islative history, or an 'inherent conflict' between arbitration and the [federal statute's] underlying purposes." Gilmer, 500 U.S. at
26. In particular, "'[Sb long as the prospective litigant effectively may vindicate [his or hen statutory cause of action in the arbitral forum, the statute will continue to serve both its reme-dial and deterrent function."' Id. (quoting Mitsubishi, 473 U.S. at 637). The party seeking to avoid arbitration bears the burden to show plainly that the agreement to arbitrate is contrary to con-gressional intent. Id.

Applying these standards, the Court has upheld agreements to arbitrate disputes arising under the Securities and Exchange Act of 1934, McMahon , 482 U.S. at 238; the Securities Act of 1933, Rodriguez de Qutias, 490 U.S. at 483; the Sherman Act, Mitsu-bishi, 473 U.S. at 629; the Racketeer Influenced and Corrupt Organizations Act ("RICO"), McMahon, 482 U.S. at 242; the
Age Discrimination in Employment Act ("ADEA"), Gilmer,
500 U.S. at 35; and the Carriage of Goods by Sea Act
("COOSA"), Vitnar Seguros y Reaseguros, S.A. v. MN Sky
Reefer, 515 U.S. 528, 541 (1995).


B. Under The Federal Arbitration Act, The Arbitra-tion Agreement Is Enforceable To Resolve Re-spondent's Claims Under The Truth In Lending Act And Equal Credit Opportunity AcL

Application of this two-part test confirms that Congress did not intend to preclude petitioners and respondent from agreeing to arbitrate their disputes under TWA and ECQA.

I. The broad language of the arbitration agreement plainly covers respondent's federal statutory claims. It provides:

All disputes, claims, or controversies arising from or relat-ing to this Contract or the relationships which result from this Contract hall be resolved by binding arbitration


Pet. App. 57a. The arbitration agreement further states: "The parties agree and understand that all disputes arising under case law, statutory law, and all other laws ... will be subject to binding arbitration." Id. (emphasis added). Plainly, respondent's claims under TILA and ECOA relate to the Contract and qualify as "disputes arising under . . . statutory law." Id.; ef. Mitsubishi, 473 U.S. at 625 (holding that parties agreed to arbi-trate disputes under the Sherman Act and other federal statutes even though "the arbitration clause. . .dljidj not mention these statutes or statutes in general"); AT&T Techs., inc. v. Communi-cations Workers of Ant., 475 U.S. 643, 648 (1986). lndeed. in her Complaint, respondent has conceded that the arbitration agreement "seeks to compel the resolution of all statutory causes of action in arbitration." JA. 26 (Second Amended Compl. 27) (emphasis added). But, even if there were some doubt about the parties' intent to arhitrate respondent's claims

34 35
and there is none under the FAA, the parties' intentions "are generously construed as to issues of arbitrability." Mitsubishi, 473 U.S. at 626. In short, the broad language of the arbitration agreement encompasses respondent's statutory claims.

2. Respondent thus bears the burden of establishing that Con-gress, through a separate statute, "intended to preclude a waiver of judicial remedies for the statutory rights at issue," McMahon, 482 U.S. at 227. Respondent cannot satisfy that burden. There is nothing in the text or legislative history of TILA or ECOA to support the conclusion that Congress intended to preclude pri-vate parties from agreeing to arbitrate such claims. See Mitsubi-shi, 473 U.S. at 628. Furthermore, there is no "inherent con-flict" between the arbitration agreement and respondent's vindi-cation of her statutory rights under TWA or ECQA.

a. Statutory Text. The text of TWA and ECOA reflects that Congress did not consider federal procedures essential to vindi-cating substantive rights under these statutory schemes and therefore authorized private parties to trade the procedures of federal court for the "simplicity, informality, and expedition of arbitration." Id.

Both TWA and ECOA provide that the substantive federal rights protected by these statutory schemes may be enforced by individuals either "in any United States district court, or in any other court of competent jurisdiction." 15 U.S.C. 1640(e) (TWA) (emphasis added); accord 15 U.S.C. 1691e(c), (0 (ECOA). In Rodriguez de Quijas, this Court explained that where Congress authorizes concurrent jurisdiction over federal claims in State courts whose procedures differ from those in federal courts Congress thereby expresses its view that federal procedures are not essential for vindication of the underlying statutory rights. 490 U.S. at 482. Specifically, the Court ruled that "the grant of concurrent jurisdiction constitutes explicit authorization for complainants to waive [federal procedural] pro-tections by filing suit in state court." ki. (emphasis added).
Similarly, in Giltner, the Court noted that "arbitration [was] consistent with Congress' grant of concurrent jurisdiction . . . to state and federal courts, because arbitration agreements, 'like the provision for concurrent jurisdiction, serve to advance the objec-tive of allowing [claimants] a broader right to select the forum for resolving disputes, whether it be judicial or otherwise."' 500 U.S. at 29 (quoting Rodriguez de Quijas, 490 U.S. at 483) (cita-tion omitted).

Here, as in Rodriguez de Quijas and Gi/mer, Congress' grant of concurrent jurisdiction in State and federal courts to address claims under TILA and ECOA "constitutes explicit authoriza-tion" to allow private parties to agree to arbitrate claims arising under these statutes. Rodriguez de Quijas, 490 U.S. at 482; see also Giltner, 500 U.S. at 29. As this Court explained in Mitsu-bishi, "fb]y agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial, forum. It trades the procedures and opportunity for review of the courtroom for the simplicity, informality, and expedition of arbitration." 473 U.S. at 628.

b. Legislative History. The legislative histories of TWA and ECOA do not specifically address whether individuals are precluded from agreeing to arbitrate these statutory claims. Indeed, the district court in this case explained that respondent did "not cite any provision of the text or legislative history of either the TILA or the ECOA that expressly precludes waiver of judicial remedies." Pet. App. 30a. Similarly, in the court of appeals, respondent acknowledged that "[t]here is no indication that arbi-tration was ever considered by Congress." Appellant's Br. 31; see Gil,ner, 500 U.S. at 26 (adopting party's concession that "nothing in the.. . legislative history explicitly precludes arbitration").

c. "Inherent Conflict." There is no "inherent conflict" between the arbitration agreement in this case and respondent's

36

vindication of her substantive federal statutory rights under TWA or ECQA. In reaching the contrary conclusion, the court of appeals expressed its view that the arbitration agreement was "silent" on the issue of costs and fees and that this "silence" was inconsistent with TWA because it "fail[edj to provide the mini-mum guarantees required to ensure that Irespondent's] ability to vindicate her statutory rights will not be undone by steep filing fees, steep arbitrators' fees, or other high costs of arbitration." Pet. App. I 8a. Specifically, the court of appeals stated that "(blecause the clause is silent on the subject of arbitration fees and costs, [respondent] might be required to bear substantial costs of the arbitration even if she were to prevail on her TWA claim." Pet. App. 19a. That conclusion does not withstand scrutiny.

First, the court of appeals was wrong in concluding that the arbitration agreement was "silent" as to whether respondent would "be required to bear substantial costs of the arbitration." Pet. App. I 9a. The arbitration agreement provides that the "ar-bitrator shall have all powers provided by the law" and that those "powers shall include all legal and equitable remedies, including, but not limited to, money damages, declaratory relief, and injunctive relief." Pet. App. 57a (emphasis added). As this Court explained in Mitsubishi, "[wihere the parties have agreed that the arbitral body is to decide a defined set of claims which includes... [a federal statutory claim]," the "inten[t] of the par-ties" also dictates that the arbitral body will be "bound to decide that dispute in accord with the. . . law giving rise to the claim." 473 U.S. at 636-37. Because the arbitration agreement plainly encompasses respondent's federal statutory claims under TWA and ECOA, as in Mitsubishi, the arbitrator would be "bound to decide th[e] dispute in accord with the.. . law giving rise to the claim." Id. at 636-37. Applied here, that legal principle refutes any concern that respondent's award might be "undone by steep filing fees, steep arbitrators' fees, or other high costs of arbitra-tion" because the "law giving rise to" respondent's claims under
37

lILA and ECOA mandates that respondent, if she prevails, will be awarded "the costs of the action, together with a reasonable attorney's fee." 15 U.S.C. 1640(a)(3) (TWA); see id. 1691 e(d) (ECOA) (same). In short, the arbitration agreement makes clear that respondent would be entitled to "the costs of the action, together with a reasonable attorney's fee" if she pre-vailed in arbitration on her TWA and ECOA claims.

Any possible doubt on this issue is resolved by this Court's decision in Mast robuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52 (1995). There, the Court considered whether the terms of an arbitration agreement authorized the award of punitive damages. Id. at 54. The arbitration agreement in Mastrobuono provided that controversies would '"be settled by arbitration in accordance with the rules. . . of the National Association of Se-curities Dealers INASD]."' ld. at 58 n.2. Recognizing that the NASD Rules referenced in the arbitration agreement did not provide "clear authorization of punitive damages," id. at 61, the Court nevertheless explained that "when a court interprets ... an agreement covered by the FAA, 'due regard must be given to the federal policy favoring arbitration, and ambiguities as to the scope of the arbitration clause itself resolved in favor of arbitration,"' id. at 62 (quoting Volt, 489 U.S. at 476). Applying that principle, the Court held that any "ambiguity" in the arbitration agreement must be resolved to allow recovery of punitive dam-ages. Id. at 64.

To the extent that there is any ambiguity in the arbitration agreement as to whether the arbitrator has authority to award respondent "the costs of the action," 15 U.S.C. 1640(a)(3), the Court's decision in Mast robuono confirms that any such ambi-guity must be resolved "'in favor of arbitration,"' 514 U.S. at 62 (quoting Volt, 489 U.S. at 476); accord Moses H. Cone, 460 U.S. at 24-25. Thus, the court of appeals simply was wrong that respondent "might be required to bear substantial costs of the arbitration even if she were to prevail on her TWA claim." Pet. App. 19a. The arbitration agreement expressly grants the arbi-

38

trator "all powers provided by the law" and the "law" upon which respondent's claims under TWA or ECOA are based makes clear that respondent, if she prevails, is entitled to an award including the "costs of the action, together with a reason-able attorney's fee." 15 U.S.C. 1640(a)(3); id. 169 le(d). In short, far from creating an "inherent conflict" with the statutory scheme, the arbitration agreement incorpo-rates and reinforces TWA and ECOA as they relate to the award of the "costs of the action."

Second, the court of appeals ignored these controlling stan-dards and instead expressed its distrust of arbitration by adopt-ing a presumption against arbitration. Thus, the court of ap-peals manufactured "serious concerns with respect to filing fees, arbitrators' costs," Pet. App. 17a, by positing a series of imag-ined circumstances that found no support in the record, and then concluding that the arbitration agreement was unenforceable because it failed expressly to address each of the court's worst-case hypotheses. For example, the court of appeals speculated that the arbitration agreement created unbearable risks because it did not expressly address (i) whether "filing fees [weire re-quired," (ii) which party bore "initial responsibility for filing fees" and (iii) whether there was a process for "waiver in cases of financial hardship." Pet. App. 17a, 18a. Such an approach would call into question thousands of arbitration agreements that do not spell out the precise procedures that an arbitrator will apply if faced with any of the innumerable issues or combina-tions of questions regarding the costs associated with arbitration. Moreover, the distrust of arbitration reflected in such an ap-proach would not be limited to costs but would extend to each and every aspect of arbitration. As a result, arbitration agree-ments would no doubt become unwieldy and more expensive as drafters sought to cover every possible contingency for fear that a reviewing court would strike down the agreement because it was "silent" or "ambiguous" on an issue of concern to that court. In addition to being bad policy, the court of appeals' ap-
39
proach to interpretation of arbitration agreements is solidly fore-closed by binding precedent requiring that "'questions of arbi-trability must be addressed with a healthy regard for the federal policyfavoring arbitration."' Mitsubishi, 473 U.S. at 626 (quot-ing Moses H. Cone, 460 U.S. at 24) (emphasis added).8

Similarly, the court of appeals also erred by expressing con-cern that vindication of federal rights likely would be contingent on "who conducts the arbitration." Pet. App. 18a. That "con-cern" reflects nothing more than an improper mistrust of the ar-bitral process. The settled rule is that "there is no reason to as-sume at the outset that arbitrators will not follow the law." McMahon, 482 U.S. at 232; see also Gilmer, 500 U.S. at 30; Mitsubishi, 473 U.S. at 636. Thus, this Court has confirmed that courts may not "indulge the presumption that the... arbi-tral body conducting a proceeding will be unable or unwilling to retain competent, conscientious, and impartial arbitrators." Mitsubishi, 473 U.S. at 634; see also Gilmer, 500 U.S. at 30 (same). Such mistrust "rest[s] on suspicion of arbitration as a method of weakening the protections afforded in the substantive law to would be complainants," a view that is "far out of step with our current strong endorsement of the federal statutes favoring this method of resolving disputes." Rodriguez de Quijas, 490 U.S. at 481; see McMahon, 482 U.S. at 231-32 (rejecting "general



8

See also Mastrobuono. 514 U.S. at 62 ("'due regard must he given to the federal policy favoring arbitration"'); Gilmer, 500 U.S. at 25 (FAA "mani-festlsi a 'liberal federal policy favoring arbitration agreements"'); Volt Info. Sciences, Inc. v. Board of Trustees of Leland StanfordJunior UnW, 489 U.S. 468, 476 (1989) ("due regard must be given to the federal policy favoring arbitration, and ambiguities as to the scope of the arbitration clause itself resolved in favor of arbitration"); McMahon, 482 U.S. at 226 (FAA "establishes a 'federal policy favoring arbitration"' and "requir[esl that 'we rigor-ously enforce agreements to arbitrate"'); Southland, 465 U.S. at l0(through the FAA, "Congress declared a national policy favoring arbitration").

40 41
suspicion of the desirability of arbitration and the competence of arbitral tribunals").9

In addition, even if the court of appeals' distrust of the arbi-tral process could create a "risk" that the arbitrator might refuse to follow the substantive provisions of the federal statutory scheme and it cannot that possibility alone could not justify holding the arbitration agreement unenforceable. Indeed, this Court rejected a similar argument in Vimar Sequros y Reasegu-ros, S.A. v. M/V Sky Reefer, 515 U.S. 528 (1995). There, the Court addressed a challenge to enforcement of a Japanese arbi-tration clause under the FAA based on speculation that "there [was] no guarantee foreign arbitrators w[ould] apply [the gov-erning federal statutory scheme]." Id. at 539. The Court ex-plained that such speculation was, at best, "premature" because "jja]t this interlocutory stage it is not established what law the arbitrators will apply to petitioner's claims or that petitioner will receive diminished protection as a result." Id. at 540. Similarly, in Mitsubishi, the Court declined to "speculate" whether the ar-bitral panel would apply the correct legal standards because that issue could be addressed when a court was asked "to enforce an award." 473 U.S. at 637 & n. 19. Here, as in Vimar and Mitsu-bishi, speculation regarding the manner in which the arbitrator will apply the governing legal standards on the issue of costs and fees cannot justify striking down the arbitration agreement before the arbitrator has been given the opportunity to address those issues in the first instance.


See also Gilrner. 500 U.S. at 30 (rejecting "generalized attacks on arbi-tration" which "'res[t] on suspicion of arbitration"'); MeMahon, 482 U.S. at 231-32 ("It is difficult to reconcile Wilko's mistrust of the arhitral process with this Court's subsequent decisions" because "most of the reasons given in Wilko have been rejected subsequently by the Court ); Mitsubishi, 473 U.S. at 626-27 (explaining that Court was "well past the time when judicial suspicion of the desirability of arbitration and of the competence of arbitral tribunals inhibited the development of arbitration as an alternative means of dispute resolution").
Moreover, even if the arbitrator ultimately were to rule in re-spondent's favor, but then deny her "the costs of the action," the arbitration agreement nevertheless should be enforced because, under the FAA, respondent still could effectively vindicate her federal statutory cause of action through post-arbitration review of the arbitral award. This Court repeatedly has ruled that judi-cial review of arbitration awards under the FAA is "sufficient to ensure that arbitrators comply with the requirements of the Stat-ute." McMahon, 482 U.S. at 232; see also Gilmer, 500 U.S. at 32 n.4; Mitsubishi, 473 U.S. at 636-37 & n. 19. Specifically, the FAA provides post-arbitration relief so that an aggrieved party may modify or vacate an arbitral award where the arbitrator dis-regards the applicable law. See 9 U.S.C. 10, 11. As the Court explained in both Gilmer and McMahon , "'although judi-cial scrutiny of arbitration awards necessarily is limited, such review is sufficient to ensure that arbitrators comply with the requirements of the statute."' 500 U.S. at 32 n.4 (quoting McMahon, 482 U.S. at 232). Thus, if there were some basis for concern that an arbitrator might manifestly disregard the appli-cable law and refuse to award a prevailing plaintiff "the costs of the action, together with a reasonable attorney's fee," 15 U.S.C. 1640(a)(3), post-arbitration review would remedy any such violation of the governing law.

Finally, to the extent that the court of appeals expressed "con-cerns" that the costs of arbitration would be "steep" or "high," that concern was unsupported and contrary to common sense. Pet App. I 7a. I 8a. The law is clear that the party seeking to avoid arbitration bears the burden of proof. Gilmer, 500 U.S. at
26. And, the record is clear that respondent failed to satisfy her burden on the issue of arbitration costs. Pet. App. 19a ("fW]e lack similar information about how claimants fare under Green Tree's arbitration clause."). Absent such record evidence, the court of appeals' assumption that such costs might be "steep" or "high" simply reflects a mistrust of the arbitral process that is impermissible under this Court's decisions. See, e.g., Gilmer,

42 43
500 U.S. at 30. Moreover, the assumption underlying that mis-trust i.e., that arbitration would be more costly than litigation is directly contradicted by the findings of Congress and the ex-perience of this Court. See, e.g., Y2K Act, 15 U.S.C. 6601(b)(3) (parties choose arbitration "to avoid costly and time-consuming litigation"); H.R. Rep. No.97-542, at 13(1982) reprinted in 1982 U.S.C.C.A.N. 765,777 (arbitration "is usually cheaper and faster than litigation"); Allied-Bruce, 513 U.S. at 280 (arbitration "often would seem helpful to individuals...
10
who need a less expensive alternative to litigation").


C. Respondent's Alternative Argument That Congress Intended To Preclude Individual Agree-merits To Arbitrate Truth In Lending Act Claims Should Be Rejected.

In her Brief in Opposition, respondent also argued that the court of appeals' conclusion that "Green Tree's arbitration clause was unenforceable" could be sustained on the alternative ground that the arbitration agreement precluded respondent from bringing her TWA claim as a class action. Opp. 19." The Court need not address this argument because it was not addressed by the court of appeals and is not within the questions



10 Even if respondent could demonstrate that the costs of an arbitration
proceeding would be greater than the costs of litigation in court, thatconclu-ston would not affect respondent's ahility to vindicate her statutory rights because, if she prevailed, she would be entitled to recover "the costs of the action." 15 U.S.C. 1640(a)(3): id. 169 le(d). Moreover, as in Vimar, "lilt would be unwieldy and unsupported by the terms or policy of the statute to require courts to proceed case by case to tally the costs and burdens to particular plaintiffs in light of their means, the size of their claims, and the relative burden on the [plaintiff]." 515 U.S. at 536.

Respondent did not make a similar argument with respect to her claim under ECOA in her Brief in Opposition. See Opp. 19-21.
presented.'2 In any event, respondent's argument regarding the availability of class action procedures in arbitration previously has been rejected by this Court and finds no support in TWA.
The arbitration agreement is enforceable because respondent may effectively vindicate through individual arbitration her statutory rights under TILA. See Gilmer, 500 U.S. at 28. The crux of respondent's argument is that because Congress "con-templated" that some individual might choose to bring a TWA claim in the context of a class action, Congress thereby intended to prohibit individuals from agreeing to arbitrate TWA claims individually. Opp. 19-21. As this Court explained in Gilmer, 50() U.S. at 32, the fact that a federal statute contemplates that individuals might bring class actions does not support the con-clusion that Congress intended to preclude individual arbitra-tion. Id.

In Gilmer, the petitioner entered into an arbitration agreement with his employer, id. at 23. but contended that it was unen-forceable as applied to his age discrimination claim because ar-bitration created an "inherent conflict" with the purposes of the ADEA, id. at 32. Specifically. Gilmer argued that an "inherent conflict" resulted because the ADEA expressly authorized class actions, whereas class action procedures were unavailable in arbitration. Id.; see 29 U.S.C. 216(b) (authorizing class ac-tions for ADEA claims). This Court rejected that argument, holding that "'even if the arbitration could not go forward as a


12 Under similar circumstances, the Court has declined to address issues outside the questions presented, and may do so here. See Roberts v. Galen. Inc., 525 U.S. 249, 253-54 (1999) (declining to address "two alternative grounds for affirmance" that were outside the questions presented and were "tinlsufficiently developed bclow ... to assess them"); National Collegiate Athletic Ass 'n v. Smith, 525 U.S. 459,470(1999) (declining to "decide in the first instance issues not decided below"); see also Perry v. Thomas, 482 U.S. 483, 492 n.9 (1987) (declining to address argument regarding unenforceabil-fly of arbitration agreement where issue was not addressed below).

44
class action or class relief could not be granted by the arbitrator, the fact that the [ADEA] provides for the possibility of bringing a collective action does not mean that individual attempts at conciliation were intended to be barred."' 500 U.S. at 32 (al-teration in original) (quoting Nicholson v. CPC Int'l Inc., 877 F.2d 221, 241 (3d Cir. 1989) (Becker, J., dissenting)).

That holding is equally applicable here. TWA, unlike ADEA, does not create any statutory right to bring a class action. Rather TWA anticipates that some individuals may seek to bring their TWA claitns as class actions and places a limitation on the total recovery that would otherwise be available "in any class action or series of class actions arising out of the same failure to com-ply by the same creditor." 15 U.S.C. 1640(a)(2)(B). Specifi-cally, Section 1640 caps such statutory damages at the "lesser of $500,000 or I per centum of the net worth of the creditor." Id.; see also Amicus Brief of the Chamber of Commerce of the United States of America at 7-8 (explaining that district court must consider host of factors when determining proper level of class relief). Thus, TWA merely recognizes that some plaintiffs may choose to proceed individually, while others may choose to proceed through a class action. Compare 15 U.S.C. I 640(a)(2)(A) (setting limits on statutory damages in "an indi-vidual action") with id. 1640(a)(2)(B) (setting limits on recov-ery "in any class action or series of class actions arising out of the same failure to comply"). As in Gilmer, the fact that Con-gress contemplated "the possibility" that individuals might choose to bring class actions under TWA does not mean that "'that individual attempts at conciliation were intended to be barred."' 500 U.S. at 32.

More generally, "[bly agreeing to arbitrate . . . a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial, forum." Mitsubishi, 473 U.S. at 628; see also Rodriguez de Quijas, 490 U.S. at 481. Applying that standard, this Court has held in a wide variety of circumstances that an agreement to
45

waive the procedural rules available in federal court does not prevent a party from "'effectively. . . vindicattingi [his or her] statutory cause of action in the arbitral forum."' Gilmer, 500 U.S. at 28 (second alteration in original) (quoting Mitsubishi, 473 U.S. at 637).

For example, in McMahon, the Court enforced an arbitration provision that waived the provision for "exclusive jurisdiction" in the district courts of the United States for a violation of the Exchange Act of 1934. 482 U.S. at 227-28. In doing so, the Court rejected the McMahons' argument that arbitration would "'weaken their ability to recover under the [Exchange] Act,"' id. at 231, holding instead that "the streamlined procedures of arbi-tration dlidl not entail any consequential restriction on substan-tive rights." Id. at 232. Similarly, in Rodriguez de Quijas, the Court held that the notion that arbitration procedures "weaken[ed] the protections afforded in the substantive law to would-be complainants" was "far out of step with [the Court's] current strong endorsement of the federal statutes favoring this method of resolving disputes." 490 U.S. at 481. Finally, in Giltner, the Court relied upon the same "'strong endorsement of the federal statutes favoring"' arbitration to reject a "host of challenges to the adequacy of arbitration procedures." 500 U.S. at 30.

These principles apply equally to respondent's claim under TILA. Here, there can be no dispute that the class action mechanism is procedural. See Fed. R. Civ. P. 23; see also Dc-posit Guar. Nat'l Rank v. Roper, 445 U.S. 326,332(1980) ("the right of a litigant to employ Rule 23 is a procedural right only, ancillary to the litigation of the substantive claims"); Gilmer, 500 U.S. at 33 (characterizing argument regarding absence of class action mechanism in arbitral forum a "claimed procedural inadequacilyl"). That fact is dispositive because Congress made clear that application of federal procedures was not essential to an individual's vindication of statutory rights under TWA. Spe-cifically, TWA provides that an individual may bring a civil ac-

46

tion in "any United States district court" or "any other court of competent jurisdiction." 15 U.S.C. 1640(e). As discussed previously, "the grant of concurrent jurisdiction constitutes ex-plicit authorization for complainants to waive [federal proce-dural] protections by filing suit in state court." Rodriguez de Quijas, 490 U.S. at 482; see also Gilmer, 500 U.S. at 29. Ac-cordingly, by granting concurrent jurisdiction in state and fed-eral courts, Congress provided "explicit authorization" for indi-viduals to waive federal procedural rights, including class action procedures, that are available in federal courts, but not in some state courts. See, e.g., Marx v. Broom, 632 So. 2d 1315, 1322 (Miss. 1994) ("In enacting the Rules of Civil Procedure this Court intentionally omitted Rule 23, which would have covered class actions.").

Moreover, respondent is wrong in suggesting that class action procedures are somehow essential for respondent to vindicate her statutory rights under TWA. Opp. 21. In particular, respon-dent has argued that individual arbitration of such claims would not be "'economically feasible,"' id. (quoting Roper, 445 U.S. at 339), in light of the "imposition of potentially prohibitive [arbi-tration] costs," and the "the limited financial recoveries likely to be obtained," id. That argument ignores that Congress carefully designed a structure of incentives to ensure that plaintiffs could and would bring individual suits under TWA.

Under TWA, a complainant such as respondent who brings an individual action is entitled to recover (i) "any actual damage sustained," 15 U.S.C. 1640(a)(l), plus, (ii) statutory damages of "twice the amount of any finance charge" or "not less than $200 or greater than $2,000," id. 1640(a)(2)(A),plus, (iii) "the costs of the action, together with a reasonable attomey's fee," id. 1640(a)(3). Given these incentives, it is no surprise that this Court has addressed numerous cases involving parties who brought individual lawsuits to vindicate their rights under
47

TILA.'~ Indeed, respondent relied upon an individual action brought under TWA to argue that "'the award of attorney's fees"' is the component of TWA necessary "'to effectuate this scheme."' Opp. 18 (quoting James v. Home Constr. Co., 689


Respondent was fully aware of the incentives provided by TILA for bringing an individual action and incorporated each of them into her request for "actual damages," "statutory dam-ages," "attorney's fees and litigation expenses pursuant to 15 U.S.C. 1640" and "costs of suit." i.A. 26 (Second Amended Compl. '1 24). Respondent's argument that, absent a class action mechanism, she could not effectively vindicate her statutory rights because individual arbitration would not be "economi-cally feasible,"' Opp. 21, is particularly weak under the facts of her case. In addition to her claim under TWA, respondent also sought "actual damages," "attorney's fees and litigation ex-penses," "costs of suit," and "punitive damages" of up to $10,000, in connection with her allegations under ECOA. J.A.
27 (Second Amended Compl. 28); see also 15 U.S.C.


II See, e.g., Griggs v. Proi'ident Gonsumer Discount C'o., 459 U.S. 56,57

(1982); America,, Express Co. v. Koerner, 452 U.S. 233. 238-39 (1981);
Anderson Bros. Ford v. Valencia, 452 U.S. 205, 208-09(1981); Ford Motor
Credit C'o. v. Cenance, 452 U.S. 155, 156 (1981); Kirchberg v. Feenstra,
450 U.S. 455,457-58 (1981); Ford Motor Credit Co. v. Milhollin, 444 U.S.
555,558(1980); Mourning v. Family Publications Serv., Inc., 4t I U.S. 356,
358-59 (1973).
For the reasons discussed in Part lIB, supra, the arbitrator also would be authorized to award as damages "a reasonable attorney's fee," 15 U.S.C. I 640(a)(3). As a result, respondent's reliance on Roper, 445 U.S. at 339, is misplaced because there, the Court characterized, in dictum, causes of action as "not economically feasible" when the total damages recovered would be less than the "costs of litigation, particularly attorney's fees." Id. at 338 n.9. In contrast. TILA makes clear that a prevailing party is entitled to actual damages, statutory damages and "the costs of the action, together with a rea-sonable attorney's fee." IS U.S.C I 640(a)( I )-(3).

49
48
169 le(a), (b), (d). Given the total relief potentially available to respondent if she were to prevail in arbitration, there can be no dispute that respondent's lawsuit is "economically feasible" or that she "'effectively may vindicate [her] statutory cause of action in the arbitral forum."' Gilmer, 500 U.S. at 28 (quoting Mitsubishi, 473 U.S. at 637)i~

Finally, TILA does not reflect any congressional intent to permit and promote class actions at all costs, but instead pro-vides limits on the recovery available under that statute that oth-erwise would not apply to general class actions brought under
16
other statutes. 15 U.S.C 1640(a)(2)(B). Indeed, in May
1995, Congress enacted a "[cilass action moratorium" which provided that, with respect to certain TWA claims, "no court may enter any order certifying any class action." See id. 1640(i). In so doing, members of Congress identified what they viewed to be the "abuse of the Truth in Lending Act through class-action suits." 141 Cong. Rec. S5614 (daily ed. Apr. 24, 1995) (statement of sponsor Sen. Mack); see also 141 Cong. Rec. H4120-21 (daily ed. Apr. 4, 1995) (statement of


'~ Apart from the incentives TILA provides to private parties to ensure compliance with its requirements, TILA also authorizes federal agencies and the Attorney General to seek administrative and criminal sanctions for viola-tions of TILA. 15 U.S.C. 1607, 1611; see also Amicus Brief of the Chamber of Commerce of the United States of America 18-29 (detailing ad-ministrati ye enforcement mechanisms of TILA).
16
The legislative history of the 1974 and 1976 amendments to 'ITILA simi-larly confirms that Congress intended that the substantive provisions of TILA could be vindicated through individual or class actions. Congress intended that its amendments would protect creditors from potentially "enormous pen-alties" that would be excessive to achieving voluntary compliance with TILA. S. Rep. No. 93-278, at 14-IS (1973). Moreover, the legislative history makes clear that the Congress envisioned that "consumers" would continue to choose to "bring individual or class actions against creditors" and that amendments were not meant to "preven[tl a series of individual civil ac-tions.' Id. at IS, 16.
Rep. Roukema). Congress' amendments to TWA cannot be reconciled with respondent's suggestion that class action litiga-tion is the only mechanism through which she may "effectively vindicate [her] statutory rights."


The Court's prior pronouncements on the issue of arbitrability are equally applicable here: "[T]he streamlined procedures of arbitration do not entail any consequential restriction on sub-stantive rights." McMahon, 482 U.S. at 232; see Gilmer, 500 U.S. at 26; Rodriguez de Quijas, 490 U.S. at 481; Mitsubishi, 473 U.S. at 628. "1-laying made the bargain to arbitrate," re-spondent "should be held to it." Id.

CONCLUSION

The judgment of the court of appeals should be reversed.

Respectfully submitted,
ROBERT A. HUEFAKER
WILLIAM H. WEBSTER
RUSHTON. STAKELY, JOHNSTON & GARRElT, P.A.
184 Commerce Street
Montgomery, AL 36101-0270
(334) 206-3100



June 8, 2000
CARTER G. PHILLiPS *
PAUL I. ZIDLIDKY
MIDHAEL L. POST
LAURELE. SHANKS
SIDLEY & AUSTIN
1722 Eye Street, N.W.
Washington, D.C. 20006 (202) 736-8000
Counsel for Pet itioners

* Counsel of Record

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