Rudolph J. DiMassa Jr., left, and Drew McGherin, right, of Duane Morris.
In Anderson v. Credit One Bank, Case No. 16-2496 (2d Cir., March 7), the U.S. Court of Appeals for the Second Circuit affirmed decisions of both the District and Bankruptcy Courts for the Southern District of New York in addressing the enforceability of arbitration clauses in bankruptcy proceedings. The Court of Appeals ruled that the arbitration of a debtor’s cause of action alleging a creditor’s violation of the discharge injunction was in conflict with one of the crucial pillars of the Bankruptcy Code. That ruling notwithstanding, the court’s approach signaled at least a potential that it might take a more deferential stance in favor of arbitration under certain factual scenarios.
Facts
Orrin Anderson, the debtor in this case, held a credit card with Credit One Bank. The cardholder agreement underlying the credit card provided for an arbitration clause, allowing “either Anderson or Credit One to, without the other’s consent, require that any controversy or dispute … be submitted to mandatory, binding arbitration.”
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