Green Tree Financial Corporation-Alabama v. Randolph

PETITIONER: Green Tree Financial Corporation-Alabama
LOCATION: Attorney General's Office of MA

DOCKET NO.: 99-1235
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the Eleventh Circuit

CITATION: 531 US 79 (2000)
ARGUED: Oct 03, 2000
DECIDED: Dec 11, 2000

Carter G. Phillips - Argued the cause for the petitioners
Joseph M. Sellers - Argued the cause for the respondent

Facts of the case

Larketta Randolph financed the purchase of a mobile home through Green Tree Financial Corp.-Alabama. Randolph's financing agreement with Green Tree required that she buy insurance against default and provided that disputes under the contract would be resolved by binding arbitration. Randolph sued Green Tree, alleging that it violated the Truth in Lending Act (TILA) by failing to disclose the insurance requirement as a finance charge and that it violated the Equal Credit Opportunity Act by requiring her to arbitrate her statutory causes of action. The District Court granted Green Tree's motion to compel arbitration and denied her request for reconsideration, which stated that she lacked the resources to arbitrate and, therefore, would have to forgo her claims. The Court of Appeals, under the Federal Arbitration Act (FAA), which allows appeals from "a final decision with respect to an arbitration that is subject to this title," held that it had jurisdiction. Ultimately, the court concluded that because the agreement was silent with respect to payment of arbitration expenses, it was unenforceable.


Is an order compelling arbitration a "final decision with respect to an arbitration" within the meaning of the Federal Arbitration Act? Is an arbitration agreement that does not mention arbitration costs and fees unenforceable because it fails to protect a party from potentially expensive arbitration costs?

Media for Green Tree Financial Corporation-Alabama v. Randolph

Audio Transcription for Oral Argument - October 03, 2000 in Green Tree Financial Corporation-Alabama v. Randolph

William H. Rehnquist:

We'll hear argument now in number 99-1235, the Green Tree Financial Corporation v. Larketta Randolph.

Mr. Phillips.

Carter G. Phillips:

Thank you, Mr. Chief Justice and may it please the Court--

The central flaw in the jurisdictional and the enforceability of holdings in the court of appeals in this case is the manifest hostility that court demonstrated towards arbitration.

The view reflected in those holdings is, to use a phrase that this court used in similar circumstances, quote, far out of step with this Court's endorsement over the past 15 years of arbitration as an effective and an efficient method of dispute resolution of Federal statutory claims.

William H. Rehnquist:

I can understand your characterization of the second holding that way about the possibility that the arbitration might entail costs, but the jurisdictional holding, do you think that manifests a hostility to arbitration?

Carter G. Phillips:

I do, Mr. Chief Justice, largely because it's reasonably clear that had the Court treated that order as an interlocutory order, then this matter would have gone immediately to arbitration, and the arbitration process would have been allowed to go forward.

By treating it as a final judgment, as the Court did, it then undertook to review the merits of arbitrability--

Sandra Day O'Connor:

Well, Mr. Phillips, there was a crucial difference here. The Court purported to dismiss all the claims.

It didn't just enter a stay order, as would typically be the case.

It said everything else is dismissed, and I take it that would mean then that the statute of limitations might run before the case ever got back, or something like that, and isn't there a real difference between the entry of a stay order pending the arbitration versus a dismissal?

Carter G. Phillips:

--There is no question, Justice O'Connor, that this case would have and probably should have been dealt with as a stay order.

Sandra Day O'Connor:


Carter G. Phillips:

Section 3 of the Federal Arbitration Act quite plainly states that the Court shall enter a stay. In this context I think he did this to clear his docket, although that was not specifically our request.

That was his decision.

Ruth Bader Ginsburg:

Well, why is that wrong, Mr. Phillips, if what the district judge says is, gee, there's nothing before me, I think every single issue in this case belongs in the arbitral forum, so I'm going to dismiss, and I look at section 3.

What I see that as telling me is, don't move forward.

It's not stay versus dismissal, but it's stay versus letting the case continue.

Why should a district judge who says, there's nothing to come back to me, this is not a case where some issues are to be referred to other... to the arbitral forum, and then there are other issues that I'll decide after the arbitration.

Why isn't it perfectly proper for a district judge to say, there's nothing here for me to decide, everything is for the arbitrator?

Carter G. Phillips:

Well, I think at the end of the day this is still an embedded proceeding, and even though he ultimately dismisses everything, it is certainly available to come back to him at the end of the arbitration and have these issues reviewed, and it would certainly be much easier--

Ruth Bader Ginsburg:

What issues?

Carter G. Phillips:

--as a matter of judicial--

Ruth Bader Ginsburg:

What issues? In this case, as I understand it, I understand the formal distinction.

This is the plaintiff consumer suing rather than an action to order arbitration, but it seems to me even if you're right that the district judge should have stayed, what in fact happened was the district judge dismissed, total, case gone, and that seems to me as final a judgment as there could be.

You could argue, he shouldn't have done that.

Carter G. Phillips:


Ruth Bader Ginsburg:

Just like erroneously entering summary judgment, we don't say it isn't the final judgment.

Judge says, I award summary judgment to defendant.

Plaintiff says, gee, judge, you shouldn't have done that, but it doesn't make the judgment any less final that the judge maybe should have done something other than dismiss.