Espin v. Citibank, N.A.
The Servicemembers Civil Relief Act (SCRA) provides numerous protections for servicemembers in areas such as court proceedings, interest rates, mortgages, auto loans, and housing leases, including giving servicemembers the right to have their interest rate on any pre-service debts capped at six percent during active-duty military service. So that servicemembers can vindicate their rights under the SCRA, the statute provides that any person who has suffered a violation “may in a civil action . . . be a representative party on behalf of members of a class or be a member of a class, in accordance with the Federal Rules of Civil Procedure, notwithstanding any previous agreement to the contrary.” 50 U.S.C. § 4042(a)(3). The CFPB and Department of Justice filed an amicus brief arguing that this provision bars financial institutions from enforcing arbitration agreements against plaintiffs representing a class asserting SCRA claims.
First, the brief argues that Section 4042(a)(3) demonstrates Congress’s clear intent to render unenforceable prior arbitration agreements that would bar SCRA plaintiffs from seeking class relief in federal court. Second, the brief argues that Section 4042(a)(3) applies to a financial institution’s current attempts to enforce arbitration agreements, even when those agreements were entered into before Congress enacted Section 4042(a)(3).