US Supreme Court Briefs

Supreme CoUtt~ U.S.
No.99-1235 VIL1~D

~upreme (Lourt of tbe ~riteb ~j~(




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


184 Commerce Street
Montgomery. AL 36101-0270
(334) 206-3100
1722 Eye Street, N.W.
Washington. D.C. 20006
(202) 736-8000
Counsel for Petitioners
August 24, 2000
* Counsel of Record

WILSON-EPES PRINTING Co.. INC. (202) 789-0096 WASHINGTON, D. C. 20001



16(a)(3) 2

A. The Arbitration Agreement Is Enforceable
To Resolve Respondent's Claims Under
The Truth In Lending Act And Equal
Credit Opportunity Act 9
B. Congress Did Not Intend To Preclude
Individual Agreements To Arbitrate Truth
In Lending Act Claims 17




Allied-Bruce Terminix, Inc. v. Dobson, 513 U.S.
265 (1995) 17
Bailey v. United States, 516 U.S. 137 (1995) 6
Catlin v. United States, 324 U.S. 229 (1945) 3
Cedar Coal Co. v. United Mine Workers, 560
F.2d 1153 (4th Cir. 1977) 4
Cole v. Burns int'l Sec. Servs., 105 F.3d 1465
(D.C. Cir. 1997) 13
Coopers & Lybrand v. Livesay, 437 U.S. 463
(1978) 6
Cortez Byrd Chips, Inc. v. Bill Harbert Constr.
Co., 120 5. Ct. 1331 (2000) 3,7
Crawford Fitting Co. v. J.T. Gibbons, inc., 482
U.S.437(1987) 16
Dole v. United Steelworkers of Am., 494 U.S. 26
(1990) 7
Farr & Co. v. CIA. Intercontinental De Navega--
cion de Cuba, S.A., 243 F.2d 342 (2d Cir.
1957) 4
Gilmer v. interstate/Johnson Lane Corp.. 500
U.S. 20(1991) passim
Hartford Fin. Sys. Inc. v. Florida Software
Servs., Inc., 712 F.2d 724 (1st Cir. 1983) 4
John hancock Mut. Life Ins. Co. v. Olick, 151
F.3d 132 (3d Cir. 1998) 5
Lackey v. Central Bank, 710 So. 2d 419 (Ala.
1998) 13
Locklear Dodge City, Inc. v. Kimbrell, 703 So.
2d 303 (Ala. 1997) 9
Lummus Co. v. Commonwealth Oil Refining Co.,
297 F.2d 80 (2d Cir. 1961) 4, 7
Mastrobuono v. Shearson Lehman Hutton, inc.,
514 U.S. 52(1995) 10

Mitsubishi Motors Corp. v. Soler Chrysler Plymouth, inc.. 473 U.S. 614 (1985)
Moses ii. Cone Meni. Ilosp. v. Mercury Constr.
Corp., 460 U.S. 1(1983)
Nationwide Ins. Co. v. Patterson, 953 F.2d 44 (3d Cir. 1991)
Pererra v. Siegel Trading Co.. 951 F.2d 780 (7th Cir. 1992)
Rodriguez de Quijas v. Shearson/Am. Express, Inc., 490 U.S. 477 (1989)
Rogers v. Schering Corp., 262 F.2d 180 (3d Cir.
Schoenamsgruher v. Haml,urg Am. Line, 294 U.S. 454 (1935)
Shearson/Am. Express Inc. v. McMahon. 482
U.S.220(1987) 11,
Sparling v. Hoffman Consir. Co., 864 F.2d 635 (9th Cir. 1988)
Sullivan, Long & Hagerty v. Southern Flec. Generating Co., 667 So. 2d 722 (Ala. 1995)
Sullivan v. Finklestein, 496 U.S. 617 (1990) United Say. Ass',i v. Timbers of Inwood Forest
Assocs., 484 U.S. 365 (1988)


4, 5


11, 12



15, 16



9U.S.C.2 10,11
9 3
10 3
11 3
13 3
16 1,6
15 U.S.C. 1640(a) 8, 15, 16, 18
1691e 8, l5, 16
Ala. Code 12-12-31(a) 17


S. Rep. No. 68-536(1924)
S. Rep. No. 93-278 (1973)
H.R. Rep. No. 97-54~ (1982), reprinted in 1982 U.S.C.C.A.N. 765

In their opening brief, Petitioners Green Tree Financial Corp.Alabama and Green Tree Financial Corp. ("petition-ers") demonstrated that the district court's order compelling arbitration of respondent's underlying federal claims was not a "final decision with respect to an arbitration" under 9 U.S.C. 16(a)(3). Brief of Petitioners ("Pet. Br.") 19-30. Pe-titioners showed that the language of Section 1 6(a)(3), the structure of Section 16. and the purpose of the Federal Arbi-tration Act ("FAA") all confirmed that an order compelling arbitration in an "embedded" proceeding is not a "final deci-sion." Id.

Further, petitioners explained that the arbitration agreement was enforceable under the FAA because respondent failed to satisfy her burden of showing that Congress intended to pre-vent private parties from agreeing to arbitrate disputes under the Truth in Lending Act ("TILA') or the Equal Credit Op-portunity Act ("ECOA"). Pet. Br. 30-49. As to the issue of arbitration costs, petitioners first showed, contrary to the court of appeals' decision, that the arbitration agreement au-thorized the arbitrator to award respondent her costs in accordance with the requirements of TILA and ECOA. Id. at 36-
39. Second, petitioners explained that respondent failed to satisfy her burden of proof by identifying what the costs of arbitration would be and showing precisely how such costs would be inconsistent with TILA or ECOA. Id. at 18, 41-42.

Finally, as to the issue of class actions, the Court need not address this issue, Pet. Br. 42-43 & n.12, but, if it did, the ar-bitration agreement is enforceable because respondent can ef-fectively vindicate her substantive rights under TILA through individual arbitration. This argument is fully supported by Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 32 (1991), which held that merely because Congress anticipated some litigants would seek to proceed collectively does not mean that Congress sought to prohibit all agreements to arbi-trate such claims individually. Pet. Br. 43-44. Moreover, Congress created incentives in TWA actual damages, plus
2 3
statutory damages, costs, and a reasonable attorney's fee that ensure that individual litigants could and would continue to prosecute meritorious claims under TWA. Id. at 46-48.
Respondent's brief ("Resp. Br.") calls none of these conclusions into question. Instead, her arguments proceed from a fundamental distrust of arbitration that is out of step with Congress' emphatic policy~ recognized by this Court, in favor of arbitral dispute resolution.

Respondent argues (Resp. Br. 9-28) that the district court's order compelling arbitration of her embedded lawsuit is a "final decision" under Section 16(a)(3). Her contentions are without merit and should be rejected.

I. Respondent agrees that Congress intended that the term "final decision" in Section 16(a)(3) should "'be construed in accordance with pre-existing... interpretations,"' Resp. Br. 9 (omission in original) (quoting Bragdon v. Abbott, 524 U.S. 624, 632 (1998)), and that, under those prior interpretations, an "action qualifies as [a] 'final decision' when it 'ends litigation on the merits and leaves nothing for the court to do but execute the judgment,"' id. at 9-10 (quoting Catlin v. United States, 324 U.S. 229, 233 (1945)). These concessions foreclose respondent's argument here because an order compelling arbitration in an embedded proceeding does not "'endfl litigation on the merits given that "an 'arbitration cannot produce an enforceable result without further judicial action."' Id. at 22 n.13 (quoting Lummus Co. v. Commonwealth Oil Refining Co., 297 F.2d 80, 86 (2d Cir. 1961)). As re-spondent recognizes, under the FAA, even after a court has compelled arbitration in an embedded proceeding, further ju-dicial action will be necessary to "make[I what is already a final arbitration award a judgment of the court." Id. at 23 (in-temal quotation marks omitted).
Despite these settled principles, respondent argues that the district court's order in this case is final because "Itihere is no material difference . . . between appeals from orders compel-ling arbitration in independent proceedings and the appeal at issue here" in that, in both cases, "the rulings [are] issued in deference to arbitration and they disposef I of the entire matter before the court." Resp. Br. 19. But that argument is clearly wrong. In an independent proceeding, which seeks only to compel arbitration, an order that compels arbitration is a "fi-nal decision" because it "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Catlin, 324 U.S. at 233. In contrast, in an embedded proceed-ing, which seeks relief on the merits apart from the issue of arbitrability, an order that compels arbitration does not "dis-pose of the entire matter before the Court" because further ju-dicial involvement after the arbitration will be "necessary for Ithe arbitration] award to hecome enforceable." Pererra v.
Siegel Trading Co., 951 F.2d 780, 784 (2d Cir. 1992); see also9U.S.C.9, 10,11.

Respondent acknowledges that further judicial action will be necessary, Resp. Br. 23, but she argues that such action does not affect finality because "confirmation of an arbitration award is simply akin to the execution of a judgment in a judicial forum." Id. Respondent is mistaken. The FAA provides detailed substantive standards goveming post-arbitration review of arbitration awards. See 9 U.S.C. 9, 10, II. As this Court noted just last Term, during post-award review of an arbitration award, the district court is authorized "'to confirm the award or to set it aside for irregularity, fraud, ultra vires or other defect."' Cortez Byrd Chips, Inc. v. Bill 1-larhert Constr. Co., 120 5. Ct. 1331, 1338 (2000) (quoting Marine Transit Corp. v. Drexfus, 284 U.S. 263, 275-76 (1932)). It is only after an arbitration award has been con-firmed by a district court pursuant to Section 9 of the FAA, that the award "may be enforced as if it had been rendered in an action in the court." 9 U.S.C. 13. Indeed, respondent acknowledges that confirmation under the FAA, unlike exe-

cution of a judgment, provides "an opportunity to obtain modification of an award." Resp. Br. 35 n.19.

Nor does respondent call into question that the "embeddedindependent framework" was, and remains, well established among the federal courts of appeals as the means for determining whether an arbitration order constituted a "final decision." See, e.g., Farj & Co. v. CIA. Intercontinental De Navegacion de Cuba, S.A., 243 F.2d 342, 345 (2d Cir. 1957); Hanford Fin. Sys. Inc. v. Florida Software Servs., Inc., 712 F.2d 724, 728 (1st Cir. 1983) (Breyer, J.); Rogers v. Schering Corp., 262 F.2d 180, 182 (3d Cir. 1959); see also Pet. Br. 24 n.6 (citing post-1988 cases). Although respondent argues that some courts of appeals differed regarding how to characterize "Section 4 motions to compel arbitration, which were brought in conjunction with Section 3 motions to stay litigation," Resp. Br. 14, she notes that where such proceedings were deemed "independent," they were "therefore appealable," and where they were deemed "embedded," they were "therefore unappealable," id. at 14 (citing Hartford Fin .Sys., 712 F.2d at 728~29).2 Here, the district court's order compelling arbitra-Although respondent does not dispute that "arbitration cannot pro-duce an enforceable result without further judicial action," Lummus, 297 F.2d at 86, she argues that Lummus shoutd be ignored because it "was written before Section 16 was enacted." Resp. Br. 22 n.13. But that argument rails because respondent admits that Congress, in enacting Section 16(a)(3), sought to adopt the pre-existing "definition of 'final decision.
Id. at tI.
2 The decisions from outside the Eleventh Circuit cited by respondent do not undermine that conclusion. See Resp. Br. 12. In Sparling v. Hoff-man Construction Co., 864 F.2d 635 (9th Cir. 1988), the Ninth Circuit did not address the question of jurisdiction. Id. at 637-39. In Cedar Coal Co. v. United Mine Workers, 560 F.2d 1153 (4th Cir. 1977). the Fourth Circuit ruled only that "an order dismissing a complaint with prejudice for failure to state a claim upon which relief may be granted . . . is a final appealable order uRder 1291." Id. at 1161. Finally, the Third Circuit's 1991 deci-sion in Nationwide Insurance Co. v. Patterson, 953 F.2d 44 (3d Cir.). could not have affected Congress' understanding of the law when it en-acted Section 16 in 1988. Indeed, the Patterson Court confirmed that the law, as of 1988, was that "an order requiring arbitration is appealable as
tion clearly was entered in an "embedded" proceeding in which respondent sought relief under TILA and ECOA.

Next, although respondent initially agrees that courts must look to the substance of orders and "not the labels attached to the decisions," Resp. Br. 16, she later insists that the district court's label should control, regardless of substantive effect, because "stays and dismissals are governed by very different rules in Section 16 regarding their susceptibility to appeal." Id. at 17. Section 1 6(a)(3), however, draws no such distinc-tion, and respondent never identifies how the label "dis-missed," or "with prejudice," affixed by the district court in this case makes its order substantively different than the same order compelling arbitration if it were labeled a "stay." Be-cause an order that requires "the parties to proceed to arbitra-lion" and "stayls] trial of the action pending filing of the award" "definitely" is "not final," Schoenamsgruber v. Ham-burg Am. Line, 294 U.S. 454, 456 (1935), respondent must argue against settled law that appealability should turn on an "artificial[I" and "substanceless distinction between stays and dismissals." Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 9 n.8 (1983); see also Sullivan v.
Finklestein, 496 U.S. 617, 628 n.7 (1990) ("The label used by the District Court of course cannot control the order's appeal-ability"). Indeed, respondent never addresses the anomaly that, under her interpretation, the district court would be em-powered to transform unilaterally what is in substance an in-terlocutory order into a "final decision" through the simple expedient of the label affixed to the order, thereby circum-venting the requirement in Section 16(b) that such interlocu-tory orders may be appealed only if the district court and the

final . . . 'where it is not merely a step in the judicial enforcement of a claim . . . but is the full relief sought."' Id. at 46 (quoting Zosky v. Boyer, 856 F.2d 554. 557 (3d Cir. 1988)); see also John Hancock Mut. Life Ins. Co. v. Olick, 151 F.3d 132, 135-36 (3d Cir. 1998) (arbitration order in an "embedded" proceeding "cannot be considered a final order").

6 7
court of appeals conclude that 28 U.S.C. 1292(b)(2) has been satisfied.3
2. Respondent also is mistaken in claiming that the "structure" of Section 16 supports an immediate appeal of the district court's order. Resp. Br. 20-24. She argues that Section 16(a)(3) should not be given a "pro-arbitration tilt" because (i) "neither the statutory language nor the legislative history
indicate that appellate jurisdiction for all appeals from orders compelling arbitration should be denied," id. at 21, and (ii) "Congress plainly contemplated appeals under circumstances other than those addressed specifically by the [other subsections of Section 16]," id.
First, there can be no dispute that Section 16 reflects a pro-arbitration bias. Sections 1 6(a)( 1) and (a)(2) authorize im-mediate appeals from orders, whether final or interlocutory, that are hostile to arbitration. 9 U.S.C. 16(a)(l), (a)(2). Section 16(b), in turn, denies immediate appeals as of right from interlocutory orders that favor arbitration. 9 U.S.C.
16(b). Respondent provides no basis for ignoring the pro-arbitration bias in Section 16(a)(l), (a)(2) and (b), when in-terpreting the language of (a)(3), the one remaining subsec-tion of Section 16. Nor can she dispute that this Court "con-siderfs] not only the bare meaning of the wordIs~ but also [their] placement and purpose in the statutory scheme," Bai-ley v. United States, 516 U.S. 137, 145 (1995). as well as

Nor is the district court's order appealable under the "death knell" doctrine. Resp. Br. 13 n.7. Respondent's claim that "if she were com-pelled to proceed through arbitration alone," then "she would have to 'forego any claims she might have,"' id., was unsupported both here and below, and is belied by respondent's ability to litigate and bear the costs associated with a case that has been active for more than tour years in the district court, the court of appeals, and now this Court. Moreover, Coo-pers & Lybrand v. Livesay, 437 U.S. 463 (1978) the decision upon which her argument rests held that "the fact that an interlocutory order may induce a party to abandon his claim before final judgment is not a sufficient reason for considering it a 'final decision' within the meaning of 1291." Id. at 477.
"'the provisions of the whole law"' including "'its object and policy."' Dole v. United Steelworkers of Am., 494 U.S. 26, 35 (1990). These principles compel the conclusion that Congress did not intend an expansive interpretation of "final deci-sion" in Section 16(a)(3) because it would open the door to immediate appeals of a substantial number of orders that fa-vor arbitration and thus undermine the FAA's "'statutory pol-icy of rapid and unobstructed enforcement of arbitration agreements."' Cortez Byrd Chips, 120 S. Ct. at 1337 (quoting Moses H. Cone. 460 U.S. at 23). Thus, to the extent that there was any dispute among the courts regarding the meaning of "final decision" when Congress enacted Section 16, the pro-arbitration bias reflected in the structure of Section 16 supports the conclusion that Congress intended to adopt the less broad construction of "final decision" reflected in cases adopting the embedded/independent framework.

Nor does this reading "render Section 16(a)(3) superfluous." Resp. Br. 22. To the contrary, as respondent is aware, id. at 21 n.12, under petitioners' reading, an order compelling arbitration in an independent proceeding a situation that is not addressed elsewhere in Section 16 would be a "final decision" under Section 1 6(a)(3).

3. Finally, respondent argues that the "legislative history" may "be dispositive." Resp. Br. 25. She relies on a snippet from the congressional record which states, in a circular fashion, that a "final decision" under Section 16 includes "'a final judgmetit dismissing an action in deference to arbitration."' Id. at 27 (quoting 134 Cong. Rec. at 31,065 (1988)). But as respondent recognizes, the legislative history also states that a decision is final "where there is nothing left to be done in the district court." Id. (internal quotation marks omitted). Thus, this evidence appears to do no more than reflect the embed-ded/independent framework. Where, as here, a court compels arbitration in an embedded proceeding, further court in-volvement is necessary because "arbitration cannot produce an enforceable result without further judicial action." Lum-mies, 297 F.2d at 86. Because the legislative history can be

8 9
construed as consistent with this meaning of "final decision," it should be so understood because a change in a judicial interpretation will not be presumed "without specific provision in the text of the statute." United Say. Ass'n v. Timbers of lnwoodForestAssocs., 484 U.S. 371, 380 (1988).

Respondent argues, despite the "policy favoring enforcement of. . . agreements to arbitrate," that the court of appeals "properly barred enforcement of the agreement" in this case. Resp. Br. 28. Neither her unproved arbitration costs argument nor her putative class action argument establishes that Congress intended to preclude arbitration of her claims under TWA and ECOA.
At the outset, it is important to clarify the record. Respon-dent repeatedly states that "the $15 value of [her] claim," Resp. Br. 45, reflects that the "economic damages" in this case "are modest," id. at 8; see also id. at 34 (speculating that costs could have "dwarfjjed] the $15 value of [respondent's] actual damages"). As petitioners explained previ-ously, Pet. Br. 46-47, TWA and ECOA permit recovery of not only actual damages, (15 U.S.C. 1640(a)(l); id. 169 le(a)), but also statutory damages of up to $2000 under TWA, (id. 1640(a)(2)(A)), punitive damages of up to $10,000 under ECOA, (id. 1691e(b)), and "the costs of the action, together with a reasonable attorney's fee" under both TWA and ECOA (id. 1640(a)(3); id. 1691e(d)). It is thus inexplicable that respondent continues, misleadingly, to sug-gest that the value of her claimed damages is $15 when her own Complaint seeks all of these categories of relief. J.A. 26-28 (Second Amended Compl.).4

Respondent also suggests that she never agreed to arbitrate, claiming that she "did not have the opportunity to read carefully the installment contract." Resp. Br. 2. That claim (i) is false factually because she testi-fied that she "could have" reviewed the agreement, l.A. 49. (ii) was aban-
A. The Arbitration Agreement Is Enforceable To
Resolve Respondent's Claims Under The Truth
In Lending Act And Equal Credit Opportunity
Respondent makes three arguments regarding the "potential" costs associated with arbitration. First, she argues for a sweeping and unsupported change in federal law whereby an "arbitration agreement" will be held "unenforceable" unless it "ensurels] that the costs [a plaintiff] would bear in arbitration [are] no greater than those that would be borne in court.~~ Resp. Br. 30 (capitals altered). Second, recognizing that settled law places the burden of proof squarely on her, respondent insists that she satisfied that burden or. at worst, she "made the best record possible." Id. at 33. Finally, although she acknowledges that the cost and fee shifting provisions of TILA and ECOA "may apply by virtue" of the language of the arbitration agreement, id. at 37, respondent contends that the arbitration agreement is nevertheless unenforceable. These arguments are without merit.
I. Respondent's principal argument is that an arbitration agreement is unenforceable if it "fail~s] to ensure that the costs ja plaintiff] would bear in arbitration [are] no greater than those that would be borne in court." Resp. Br. 30 (capitals altered). That argument. if adopted, would constitute a radical change in the settled arbitration law whereby (i) every arbitration agreement covered by the FAA would be subject to challenge based on nothing more than an unsupported "concern~~ that arbitratioti might be more expensive than liti-gation, and (ii) the party seeking to enforce an arbitration clause would be required to allay that "concern" by proving both what arbitration costs might be and that they would not exceed litigation costs. Although respondent suggests that

doned below. Pet. App. 22a n.3. and (iii) is frivolous because '~a person who signs a contract is . . . bound thereby even if he or she fails to read the document." l,ocklear I)odge City. inc. v. Kimbrell, 703 So. 2d 303, 3t)6 (Ala. 1997) ("Itlo hold otherwise would turn the concept of 'sanctity of contract upside down an(l ~'would encourage irresponsibility").

10 II
this approach could be limited to "costs," which she insists "are virtually unique in their power to discourage parties from exercising their rights," id. at 31 (emphasis added), only pages later, respondent argues, apart from costs, that "absent the ability to aggregate their claims and proceed on a class wide basis," consumers also "would be unlikely" to exercise their rights under TWA arbitration. Id. at 45. Respon-dent's amici complete the picture, arguing that this Court should adopt this presumption against arbitration based on their "concerns" about discovery, arbitrator competence, arbi-trator bias, appellate review and virtually every other aspect
of the arbitral process: Taken together, respondent and her
amici's arguments constitute a wholesale break with settled law in favor of an approach that presumes that arbitration is suspect and imposes the burden of proof on the party seeking enforcement of the arbitration agreement.

These arguments misunderstand the purpose of the FAA and provide no basis for undoing this Court's settled precedent. As the Court has explained, Congress enacted the FAA "to ensure 'that private agreements to arbitrate are enforceable."' Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 53-54 (1995) (quoting Volt Info. Sciences, Inc. v.
Board of Trustees of Leland Stanford Junior Univ., 489 U.S.
468, 479 (1989)). Congress understood that the procedures associated with arbitration and litigation differ, but Congress nevertheless decided that private parties should be able to choose arbitration over litigation. See 9 U.S.C. 2. ResponSee, e.g., Amicus Curiae Brief of the National Association of Con-sumer Advocates 12 ("limits on discovery in arbitration ... niake it im-possible for consumers to prove" their cases): id. at 19 ("any right to ap-peal is essentially eliminated"); id. at 24 (arguing that "lairbitrators are of-ten biased"); Brief A,nicus Curiae of Consumers Union 21 ("There is no way to know whether arbitrators, even if they have expertise to do so, will follow the law"); Brief Amici Curiae of AARP and the National Con-sumer Law Center 24 (arguing that "it is difficult, if not impossible, to de-termine whether an aggrieved party's substantive rights have been up-held").
dent, however, argues for a standard that would deny any real choice because, in her view, an arbitration agreement is unenforceable unless the party seeking enforcement could establish that the costs of arbitration (or any other procedure that could "discourage parties from exercising their rights," Resp. Br. 3 I) would be the same, or more favorable, than those as-sociated with litigation. As this Court has explained, however, the choice between arbitration and litigation is a tradeoff based on a series of competing concerns: "[B]y agreeing to arbitrate, a party 'trades the procedures and opportunity for review of the courtroom for the simplicity, informality and expedition of arbitration."' Gilmer, 500 U.S. at 31 (quoting Mitsubishi Motors Coip. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985)Y'
Relying on this understanding, this Court has held that the FAA manifests an "emphatic federal policy in favor of arbitral dispute resolution," Mitsubishi, 473 U.S. at 631, and that judicial "suspicion of arbitration," such as that advocated by respondent and her amici, is "far out of step with [the Court'sI ... strong endorsement of the federal statutes favor-ing this method of resolving disputes." Rodriguez de Quijas v. Shearson/Arn. Express, Inc., 500 U.S. 477, 481 (1989). In-deed, respondent recognizes, but then ignores, that "[tihe fed-eral policy favoring the enforcement of arbitration agree-ments is predicated on the assumption" that "'[bly agreeing to arbitrate a statutory claim, a party does not forgo the substan-tive rights afforded by the statute."' Resp. Br. 30 (quoting Mitsubishi, 473 U.S. at 628). As a result, the "burden is on the party opposing arbitration . . . to show that Congress in-tended to preclude a waiver of judicial remedies for the statu-tory rights at issue." Shearson/Am. Express, Inc. v. McMa-Congress did not limit enforcement, as some amici suggest, to arbi-tration agreements made "after a dispute arises." E.g., Brief Anzicus Cu-riac of Consumers Union 28. Under the FAA, agreements to arbitrate disputes, whether "existing" or "thereafter arising," both are "valid, ir-revocable, and enforceable, save upon such grounds as exist at law or iii equity for the revocation of any contract.' 9 tJ.S.C. 2.

12 13
hon. 482 U.S. 220, 227 (1987); see also Gilmer, 500 U.S. at
26. In short, respondent's principal argument is iticonsistent with and provides no basis for reconsidering this Court's "strong endorsement of the federal statutes favoring [arbitration]." Rodriguez de Quijas, 490 U.S. at 481.
2. Settled law dictates that respondent bears the hurden of establishing that congress~nal intent to preclude arbitration appears in "the text of the [federal statute], its legislative his-tory, or an 'inherent conflict' between arbitration and the fed-eral statute's underlying purposes." Gilmer, 500 U.S. at 26 (quoting McMahon, 482 U.S. at 227). Respondent nowhere argues that the statutory texts or legislative histories of TILA or ECOA preclude arbitration. Nor does she undermine this Court's holdings that Congress' grant of concurrent jurisdic-tion over an underlying statutory claim in State and federal courts "constitutes explicit authorization" for parties to agree to arbitrate such claims. See Rodriguez de Quilas, 490 U.S. at 482; see also Gilmer, 500 U.S. at 29. Instead, she appears to argue that there is an "inherent conflict" between TILA and ECOA and arbitration because the agreement "failed to pro-tect [respondent] from the imposition of prohibitive costs." Resp. Br. 7.

On this point, respondent has failed to carry her burden. As her brief makes clear, respondent's only effort to present evidence regarding the costs associated with the Green Tree arbitration provision was an afterthought in her Motion for Reconsideration, after the district court had ordered arbitration. Resp. Br. 3, 33-34. In the course of a "procedural due process argument," respondent made the following "showing":

For purposes of this discussion, we will assume filing with the AAA, the filing fee is $500 for claims under $10,000 and this does not include the cost of the arbitra-tor or administrative fees. . . . AAA further cites $700 per day as the average arbitrator's fee.

Plaintiff's Motion for Reconsideration 8-9 (J.A. 14) (emphasis added). In reply, petitioners pointed out that respondent's
assumption that the AAA would conduct the arbitration was "without support in the record." Brief of Appellees 41 (J.A. 17). After reviewing these arguments, even the court of appeals acknowledged that it lacked a record "about how claimants fare under Green Tree's arbitration clause." Pet. App. 19a.7
Respondent's failure of proof stands in stark contrast to the decisions upoti which she relies in which the party seeking to invalidate an arbitration agreement presented a clear record of the costs associated with arbitration. Resp. Br. 31-32; see also Brief of Arnici Curiae Trial Lawyers for Public Justice, the National Employment Lawyers Association, and the As-sociatioti of Trial Lawyers of America in Support of Respon-dent 8- I I (noting cases where claimants established record on issue of arbitration costs). In particular, respondent's reliance on Cole v. Burns International Security Services, 105 F.3d 1465 (D.C. Cir. 1997), is utterly misplaced. Resp. Br. 35-36. In Cole, not only was the court of appeals presented with a clear record of the applicable arbitration costs and fees, 105 F.3d at 1480-8 1, but it enforced an ambiguous arbitration agreement, holding that "where a contract is unclear on a point, an interpretation that makes the contract lawful is pre-ferred to one that renders it unlawful," id. at l48S.~ Indeed, respondent conceded in her brief in opposition that the court

Respondent's failure of proof is underscored by her resort, in lieu of evidence, to a series of empty adjectives. Resp. Br.3("intolerable risk of incurring excessive arbitration costs"); id. at 7, 28, 34, 35 ("risk" of "pro-hihitii'e costs"); id. at 29 ("risk of high costs"); id. ("potential/v large arbi-tration costs"); id. at 30 ("failed to protect against ... exorbitant arbitra-tiofi costs); id. at 33, 35 ("risk" of "substantial costs"); id. at 33 ("poten-nat/v high costs") (emphases added).

The same is true under Alabama law. Sullivan, Long & Hagerty v. Southern Elec. (;enerahing Co. 667 So. 2d 722, 725 (Ala. 1995) (explain-ing that contracts are construed to uphold their validity); (f. Lackey v. Central Bank. 710 So. 2d 419. 422 (Ala. i998) (under Alabama law, the rule of contra proferenteni, i.e., ambiguity must be construed against the drafter, is "a rule of last resort that should be applied only when other rules of construction have been exhausted").

14 15
of appeals' decision in this case created a circuit conflict with the Cole decision. Opp. 14 & n.8.
Aware that she has failed to provide any evidence of arbitration costs under the arbitration agreement, respondent argues that (i) she "was unable to present additional evidence of the actual costs of arbitration" because "Green Tree apparently entrusted broad disc$etion to its arbitrators," Resp. Br. 34, and (ii) she should not be "expected to commence the arbitration . . . to ask the arbitrator assigned . . . about the costs of arbitration." id. at 35. These arguments are wrong. Under the arbitration agreement, the choice of arbitrator is a joint decision shared by Green Tree and respondent. Pet. App. 57a. Nothing prohibited respondent from asking an arbitrator proposed by Green Tree "about the costs of arbitration." Resp. Br. 35. Nor was she prevented from conducting discovery to determine the scope of arbitration costs. Despite having ample opportunity to do so, respondent failed to sustain her burden by presenting any relevant evidence of arbi-9
tration costs under the arbitration agreement in this case.
3. Finally, even if respondent had presented evidence regarding the costs associated with arbitration under her agreement, that would not have established an "inherent conflict" between arbitration and TWA and ECOA's underlying purposes. See Gilmer, 500 U.S. at 26. TWA and ECOA do not insulate a plaintiff from litigation costs in federal or in State court. For example, since this lawsuit was filed more than 4 years ago, J.A. 1. petitioners and respondent have been re-quired to bear the costs of litigation associated with discovery and motions practice before the district court, J.A. 1-16, mul-tiple rounds of briefing and an oral argument before the court of appeals, l.A. 17-19, and two sets of briefing before this Court. Yet there is no plausible argument that the magnitude

Contrary to respondent's suggestion, the court of appeals never "con-strued Green Tree's silence in its arbitration agreement as an unwilling-ness to bear such costs." Resp. Br. 35 (citing Pet. App. I 7a- I 8a). Re-spondent has never asked whether, or under what circumstances, petition-ers might be willing to pay her share of arbitration costs.
of this litigation burden creates an "inherent conflict" with TILA or ECOA. Instead, in TILA and ECOA, Congress addressed concerns about costs by ensuring that a prevailing plaintiff will recover "the costs of the action, together with a reasonable attorney's fee." 15 U.S.C. 1640(a)(3); id.

Although respondent recognizes that, under the agreement, the arbitrator "may apply" the fee shifting provisions of TILA and ECOA. Resp. Br. 37, she erroneously maintains that this is inadequate, id. at 37-39. In this regard, her concern that the arbitrator may "not follow the fee-shifting provisions of TILA and ECOA," id. at 37 n.21, is answered by this Court's deci-sions which hold that "there is no reason to assume at the out-set 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 636-37. But even if the arbitrator were to disregard the law, review under the FAA is "sufficient to ensure that arbitrators coniply with the requirements of the statute." McMahon, 482 U.S. at 232; see also Gilmer, 500 U.S. at 32 n.4; Mitsubishi, 473 U.S. at 636-37 & n.l9.

Similarly misguided is her suggestion that recovery of costs under TILA and ECOA would not include "the cost of an arbitrator's time or the additional expenses of arbitration." Resp. Br. 38. First, if, as respondent claims, recovery of these costs is essential to vindication of her federal rights un-der TILA and ECOA, then plainly the arbitration agreement, which grants the arbitrator "all powers provided by the law and Contract" and "all legal and equitable remedies," in con-junction with the statutory mandates of TILA and ECOA, would authorize an arbitrator to award respondent these arbi-tration costs. As this Court has explaiiied, "[wihere the par-ties have agreed that the arbitral body is to decide" a claim "arising from the application of [federal law]," the arbitral body "should be bound to decide that dispute in accord with the [federal) law giving rise to the claim." Mitsubishi, 473 U.S. at 636-37.

16 17
Respondent's claim that Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437 (1987), suggests a different result is baseless. There, the Court held that "absent explicit statutory or contractual authorization" a party seeking recovery of "the expenses of a litigant's witness" based solely on Federal Rule of Civil Procedure 54(d) was "bound by the limitations set out in 28 U.S.C. 1821 and 1920." Id. at 445. Here, TWA
and ECOA explicitly provide that a prevailing plaintiff shall
recover "the costs of the action" as part of an award of damages, 15 U.S.C. 1640(a)(3); id. 1691e(d), and the agreement provides the arbitrator with express authority to award "all legal and equitable remedies" in connection with "all disputes arising under case law, statutory law, and all other laws." Pet. App. 57a. Thus, unlike the district court in Craw-ford, where the only authority to award "costs" was Rule 54(d). an arbitrator resolving respondent's claims would have ample authority under TWA, ECOA and the arbitration agreement to award respondent her arbitration costs if she prevailed. 10

Finally, respondent complains that "even if the costs of ar-bitration were covered by the fee shifting provisions of TILA and ECQA. such costs would only be recoverable in the event that [she] prevailed on her statutory claims." Resp. Br. 38. To the extent that respondent contends that she should re-cover her costs whether or not she prevails, neither TILA nor ECOA supports this view. Cf. 15 U.S.C. 1640(a); id.
169 le(d). Congress plainly did not seek to provide incen-tives for non-meritorious claims. And, to the extent respon-dent contends her rights under TWA and ECOA would be hindered because the costs of arbitration would be "substantially greater than those borne in a judicial forum." Resp. Br.

"' Respondent acknowtedges that she could seek modification of an award if the costs assessed were insufficient, Resp. Br. 35 n. 19, but specu-lates that such review does not provide "adequate protection." id. Al-though such review "necessarily is limited," this Court has made clear that it "is sufficient to ensure that arbitrators comply with the requirements of the statute." Gilmer. 500 U.S. at 32 n.4; McMahon, 482 tJ.S. at 232.
28; id. at 38, she has failed to present evidence regarding the costs of arbitration or the costs of litigation.'
Nor can respondent blandly assume that litigation costs would be lower. The delay and high costs of litigation are prime reasons that Congress enacted the FAA. See 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 [andi . . . individuals"); H.R. Rep. No. 97-542, at 13 (1982), reprinted in 1982 U.S.C.C.A.N. 765, 777 ("The advantages of arbitration are many: it is usually cheaper and faster than litigation"). In-deed, this Court recently explained that "Congress, when en-acting [the FAA] had the needs of consumers, as well as oth-ers, in niind" because "arbitration's advantages often would seem helpful to individuals, say, complaining about a prod-uct, who tieed a less expensive alternative to litigation." Al-lied-Bruce Terminix, Inc. v. Dobson, 513 U.S. 265, 280

B. Congress I)id Not Intend To Preclude Individual Agreements To Arbitrate Truth In Lending Act Claims.
If the Court addresses respondent's claim regarding her inability to proceed collectively in arbitration, that claim should be rejected based on settled precedent.
1. Gilmer, 500 U.S. at 32, is controlling, in Giltner, this Court considered and rejected the argument that "arbitration procedures cannot adequately further the purposes of the ADEA [Age Discrimination in Employment Act] because

Because respon(lent's alleged damages far exceed the $3.00Ojuris-dictional limit for small claims court in Alabama, Ala. Code 12-12-
31(a). she simply could not "have prosecuted her claim in the small claims court" for a "filing fee" of "$57," Resp. Br.3~~ n. 18.

2 Thus, contrary to the suggestion of respondents antici (see Brief Amicus Curiae of Consumers tJnion 8-19; Brief Anzicus Curiae of Public Citizen 5-18), there is no basis in the text or legislative history of the FAA to create a "consumer" exception to the federal policy in favor of arbitra-tion.

18 19
they do not provide for.., class actions." Id. The Court did not, as respondent suggests, rely on the fact that "Gilmer in-volved only an individual action." Resp. Br. 46. Itideed, the respondent in Gilmer made precisely that point, arguing that that "unavailability of a class action has no bearing on whether arbitration is sufficient" because "Petitioner's claim [is] an individual one." See Brief on the Merits of Respon-f
dent at 21-22, Gilmer v. Interstate/.Iohnson Lane Corp., 500
U.S. 20 (1991) (No. 90-18). The Court did not adopt that argument, but instead held that "even if the arbitration could not go forward as a class action or class relief could not be granted by the arbitrator, the fact that the [ADEA] provides for the possibility of bringing a class action does not mean that individual attempts at conciliation were intended to be barred." Gilmer, 500 U.S. at 32 (internal quotation marks omitted). Because there is no reason to treat claims under TWA differently than claims under the ADEA, Gilmer provides a complete answer to respondent's argument.
2. Nor are class action procedures essential for respondent effectively to vindicate her rights under TWA. To argue otherwise, respondent mischaracterizes her claim as limited to the recovery of $15 in "economic damages," Resp. Br. 45, and contends that "[g]iven the limited economic damages at issue individually," a class action is "the only viable means of prosecuting" the claims of respondent and members of the putative class. Id. That argument ignores that Congress provided remedial incentives to ensure that plaintiffs could and would bring individual suits under TILA. Thus, if respondent prevails, TILA provides that she shall recover "any actual damage," statutory damages of up to $2000, and "the costs of the action, together with a reasonable attorney's fee." 15
U.S.C. 1640(a).'3 Given these incentives, respondent sim-

~ That these structural incentives make individual TILA actions eco-nomically viable is clear because "TILA cases brought by individuals" have made their way to this Court. Resp. Br. 42 n.25; Pet. Br. 47 n.13 (citing cases). Indeed, the principal case respondent cites to argue that "Congress expected consumers to enforce TILA as 'private attorneys gen-
ply cannot demonstrate that she (or any of the members in her putative class) could not effectively vitidicate statutory TILA rights through individual arbitration. And, "'[slo 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 remedial and deterrent function."' Gilmer, 500 U.S. at 28 (quoting Mitsubishi, 473 U.S. at 637).
3. Finally, respondent contends that the legislative history of TILA reflects that "Congress believed that the availability of class action liability was critical to securing compliance with the lILA." Resp. Br. 43. As petitioners demonstrated previously, the legislative history does not support the con-clusion that Congress intended class actions to provide the sole means for securing compliance with TILA. Pet. Br. 48
n.16. Indeed, respondent does not address the statements in the legislative history that make clear that Congress envisioned that "consumers" would continue to "bring individual or class actions against creditors" and that the amendments did not "prevenit] a series of individual civil actions." S. Rep. No. 93-278, at 15, 16 (1973). Moreover, her claim that class actions are essential to ensure compliance with TILA, Resp. Br. 43, ignores not only the incentives for litiga-tion by individuals, but also that TILA authorizes governmen-lal agencies to bring enforcement actions to ensure compli-ance with TILA and to obtain class-wide relief for aggrieved consumers. Cf. Gilmer, 500 U.S. at 32 (rejecting claim that class actions were essential because "arbitration agreements will not preclude the Ifederal agency] from bringing actions seeking class-wide relief"); Brief of the Chamber of Commerce of the United States of America as Amicus Curiae in Support of Petitioners 19-29 (noting enforcement efforts of governmental agencies). Indeed, no State or federal agency is participating in this case to argue that enforcement of TILA

eral,'~' Resp. Br. 41 (quoting McGowan v. King. Inc., 569 F.2d 845, 848 (5th Cir. 1978)), was an individual action in which the plaintiff recovered $218.02 in statutory damnages, plus "the costs of the action and a reason-able attorney's fee.~' Id. at 85t).

requires that all prospective TILA plaintiffs be denied the right to choose to arbitrate their claims through individual ar-bitration.

In sum, respondent cannot remotely satisfy her heavy bur-den to show that there is an "inherent conflict" between the arbitration process and TWA and ECOA that would justify rendering her private agrew~nent to arbitrate unenforceable.'4

For these reasons, the judgment of the court of appeals should be reversed.

Respectfully submitted,

184 Commerce Street
Montgomery, AL 36101-0270
(334) 206-3100
August 24, 2000
1722 Eye Street, N.W.
Washington, D.C. 20(X)6
(202) 736-8000
Counsel for Petitioners
* Counsel of Record
'~ Finally, respondent's claims that she did not "waive her right to bring a class action by agreeing to arbitrate her claims," Resp. Br. 45 n.30, and that courts may "permitil class actions to proceed to arbitration," id. at 48. are not properly before the Court. Respondent waived these issues by arguing to the court of appeals that "Green Tree's form contract does not provide for consolidation of complaints" and that "the right to a class action . . . cannot be duplicated in arbitration." Brief for Appellant IS, 24 (J.A. 17) (capitals altered).

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