Green Tree Financial Corp.-Ala. v. Randolph
Encyclopedia
Green Tree Financial Corp-Ala. v. Randolph, , is a case decided by the United States Supreme Court in 2000. The case dealt with the enforceability of arbitration agreements that did not discuss the cost of the arbitration itself and with the finality of certain arbitration decisions.
The Court of Appeals for the Eleventh Circuit made two rulings. Firstly, it held that under the Federal Arbitration Act
, the decision of the District Court was a "final decision", thus giving the appellate court jurisdiction. Secondly it held that the arbitration agreement was unenforceable because it was silent with respect to the payment of filing fees, arbitrators' costs and other arbitration-related expenses. Because the agreement would therefore force Randolph to pay the "steep" arbitration costs, and thus was unfair and invalid. It was this point on which the Supreme Court split when they heard the appeal in 2000.
delivered the opinion of the Court. Firstly, the Court unanimously upheld the Court of Appeals' jurisdiction to hear the case, saying that the order compelling Randolph into arbitration was a "final decision". However, the Court divided on whether the arbitration agreement was enforceable even when it was silent on arbitration costs and fees. Writing for the majority, Rehnquist wrote that "[a]lthough the existence of large arbitration costs may well preclude a litigant...from effectively vindicating [her statutory rights], the record does not show that Randolph will bear such costs if she goes to arbitration." Justice Ruth Bader Ginsburg
wrote a brief dissent, arguing that the fact that Randolph had no idea how much the arbitration proceedings could cost her would cause the agreement to be unenforceable. The majority, in disagreeing, remanded the case back to the Eleventh Circuit with instructions to find the agreement valid under law.
Background
Larketta Randolph purchased a mobile home from Better Cents Home Builders, Inc., in Opelika, Alabama. This was financed through Green Tree Financial Corporation and its subsidiary, Green Tree Financial Corp.-Alabama. Randolph's Manufactured Home Retail Installment Contract and Security Agreement required that Randolph buy a specific type of insurance and that disputes about this provision would have to be settled by arbitration. Randolph sued and sought a formal trial and not arbitration. However, Green Tree Financial Corporation asked the District Court to compel arbitration. The District Court granted that motion to compel arbitration and Randolph appealed to the Eleventh Circuit Court of Appeals.The Court of Appeals for the Eleventh Circuit made two rulings. Firstly, it held that under the Federal Arbitration Act
Federal Arbitration Act
In United States law, the Federal Arbitration Act is a statute that provides for judicial facilitation of private dispute resolution through arbitration. It applies in both state courts and federal courts, as was held in Southland Corp. v. Keating...
, the decision of the District Court was a "final decision", thus giving the appellate court jurisdiction. Secondly it held that the arbitration agreement was unenforceable because it was silent with respect to the payment of filing fees, arbitrators' costs and other arbitration-related expenses. Because the agreement would therefore force Randolph to pay the "steep" arbitration costs, and thus was unfair and invalid. It was this point on which the Supreme Court split when they heard the appeal in 2000.
Opinion of the Court
Chief Justice RehnquistWilliam Rehnquist
William Hubbs Rehnquist was an American lawyer, jurist, and political figure who served as an Associate Justice on the Supreme Court of the United States and later as the 16th Chief Justice of the United States...
delivered the opinion of the Court. Firstly, the Court unanimously upheld the Court of Appeals' jurisdiction to hear the case, saying that the order compelling Randolph into arbitration was a "final decision". However, the Court divided on whether the arbitration agreement was enforceable even when it was silent on arbitration costs and fees. Writing for the majority, Rehnquist wrote that "[a]lthough the existence of large arbitration costs may well preclude a litigant...from effectively vindicating [her statutory rights], the record does not show that Randolph will bear such costs if she goes to arbitration." Justice Ruth Bader Ginsburg
Ruth Bader Ginsburg
Ruth Joan Bader Ginsburg is an Associate Justice of the Supreme Court of the United States. Ginsburg was appointed by President Bill Clinton and took the oath of office on August 10, 1993. She is the second female justice and the first Jewish female justice.She is generally viewed as belonging to...
wrote a brief dissent, arguing that the fact that Randolph had no idea how much the arbitration proceedings could cost her would cause the agreement to be unenforceable. The majority, in disagreeing, remanded the case back to the Eleventh Circuit with instructions to find the agreement valid under law.