New Supreme Court Arbitration Decision Foreshadows Confrontation With CFPB

The Supreme Court's latest arbitration decision is but the latest in a long line of decisions enforcing the strong federal policy enforcing arbitration clauses in consumer contracts. In DirecTV v. Imburgia, a 6-3 decision, Justice Breyer held that the Federal Arbitration Act preempts state laws, in this instance California's, that invalidate arbitration clauses if they contain a prohibition on class-wide arbitration.

While the United States Supreme Court continues to enforce the strong federal policy favoring arbitration, another part of the federal government, the Consumer Financial Protection Bureau (CFPB) has been busily preparing to ban mandatory arbitration clauses in a broad swath of consumer contracts. The CFPB's plans are based on a view of consumer arbitration that is wholly contrary to that expressed by the Supreme Court. The CFPB views arbitration clauses as an unreasonable restriction on consumer's ability to file class action lawsuits, and has launched a