Greenspoon Marder Client Alert: Senate Votes To Rescind CFPB’s Final Arbitration/Class Action Waiver Rule

Publications Oct 25, 2017 Tampa, FL

Greenspoon Marder Client Alert: Senate Votes To Rescind CFPB’s Final Arbitration/Class Action Waiver Rule by Murray Silverstein and Jacob Boehner

Late Tuesday, the United States Senate voted to overturn the Consumer Financial Protection Bureau’s (“CFPB’s”) final rule, which prohibited inclusion of class action waivers in consumer arbitration clauses. The CFPB originally passed the final rule on July 10, 2017 to significant criticism. Many argued that the CFPB’s studies were flawed, stating that consumers receive higher awards through arbitration than class-action litigation, which provides plaintiffs’ attorneys with fee awards of up to $1 million per case but, on average, pays out $30 to each class member. The Congressional Review Act (“CRA”), created in 1996 and seldom-used before the current administration, allows Congress 60 legislative days from receipt of a regulation by Congress (or publication in the Federal Register) to rescind that regulation upon a simple majority vote of both the House of Representative and the Senate. On July 25, 2017, the House voted to nullify the rule, passing H.R. 111 by a margin of 231-190, leaving rescission of the final rule to the Senate. After much uncertainty as to whether the Senate Republicans could acquire enough votes to attain the simple majority required to overturn the CFPB’s final rule, the Senate obtained the 50 votes needed to nullify the rule (achieving a simple majority with the tiebreaking vote of Vice President Pence).

The President commended the Senate’s successful vote and stated that he plans on signing the resolution as soon as it hits his desk. In a statement, he echoed the early criticism of the CFPB’s final rule: “By repealing this rule, Congress is standing up for everyday consumers and community banks and credit unions, instead of the trial lawyers, who would have benefited the most from the CFPB’s uninformed and ineffective policy.” In addition to being a vehicle for nullifying the CFPB’s final rule, the CRA also prohibits regulators from issuing substantially similar rules to those that have been overturned by Congress. Therefore, the CFPB will be unable to “try again” and attempt to pass another rule banning class action waivers in consumer arbitration clauses. In the eyes of many, the Senate’s vote is a victory for both financial institutions and consumers alike, as it keeps down litigation costs for both sides and allows for prompt, comprehensive resolution of claims.

About Greenspoon Marder

Greenspoon Marder LLP is a full-service law firm with over 240 attorneys and more than 20 office locations across the United States. With operations from Miami to New York and from Denver to Los Angeles, our firm attracts some of the nation’s top talent in key markets and innovation hubs. Our core practice areas include Real Estate, Litigation, and Transactional Services, complemented by the capabilities of a full-service firm. Greenspoon Marder has upheld a spot on The American Lawyer’s Am Law 200 as one of the top law firms in the U.S. since 2015, and our goal is to provide exceptional client service by developing a thorough understanding of each client’s business needs and objectives in order to provide strategic, cost-effective solutions.

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This Greenspoon Marder LLP Client Alert is issued for informational purposes only and is not intended to be construed or used as general legal advice nor a solicitation of any type. Please contact the author(s) or your Greenspoon Marder LLP contact if you have any questions regarding the currency of this information. The hiring of a lawyer is an important decision. Before you decide, ask for written information about the lawyer’s legal qualifications and experience.

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Greenspoon Marder Client Alert: Senate Votes To Rescind CFPB’s Final Arbitration/Class Action Waiver Rule

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