William H. Rehnquist: We'll hear argument now in Number oh oh twelve ninety-three, John Ashcroft versus The American Civil Liberties Union. Mr. Olson. [Inaudible]
Speaker: Mr. Chief Justice, and may it please the Court. All three branches of our National Government have repeatedly determined that pornography causes substantial, incalculable damage to our children, that assisting parents in protecting children from that damage is a compelling national interest, and that pornography is widely available and readily accessible to our children on the Internet. The Child Online Protection Act is Congress' response to that urgent national problem. It was drafted after testimony, hearings, and findings in direct response to explicit and detailed guidance in this Court's nineteen ninety-seven Reno versus ACLU decision explaining how to solve the problem of Internet pornography in a constitutional manner. COPA directly responds to several of the Court's explicit suggestions in its nineteen ninety-seven Reno versus ACLU decision. In the first place, Congress gave explicit, substantive meaning to the terms, harmful to minor, utilizing standards developed over several decades by this Court describing what would be prohibited in the terms used by this Court in the context of minors. I won't I won't gud [: get] into the specifics of that, because those are before the Court, and the Court is quite familiar with them. The Court the Congress also added, however, in response to this Court's explicit suggestion, the third prong of the so-called Ginsberg-Miller test, that the material taken as a whole would have to lack serious literary, artistic, political, or scientific value for minors, an objective standard developed by this Court to protect the pr- producers of communications. Congress limited the statute to commercial pornographers at this Court's suggestion, those whose trade or business, in an effort to produce profits, are engaged regularly in the production of explicit sexual material for profit. [Inaudible]
Anthony M. Kennedy: In in your view, is the provision that it has to be objectionable t- f- from the st- t- to minors, is that a c- a national standard?
Speaker: Well, wh- as the reference to community standards in the statute is in the first and second prongs of a three part test. This Court has introduced that community standard provision to protect the communicator from individualized determinations by jurors, and from particularly sensitive, or or particularly insensitive communities. The Court has explained again and again that it's an average standard. It's an adult approach to what might be prohibited from the standpoint of damage to minors. The Court has repeatedly said that it might be it doesn't n- refer to any specific geographic limitation. In fact, in the Hamling case and and in the Jenkins case decided by this Court several years ago, the Court made it clear that the the community standards prong does not have to apply to any specific community.
David H. Souter: But Mis- Mr. No-
David H. Souter: Olson, isn't the problem with that argument that this that the definition always also refers to the average person, so it's working average in by a separate provision.
Speaker: Well this court has repeately said well in in for example, in the H- in the Hamling case the Court was tal- looking at a geographic standard that covered the entire State of California.
David H. Souter: But did it otherw- did that and I just don't remember this.
Speaker: That well, yes, because the Court was at at in that case applying the two the there other two prongs that this...
Speaker: Court had...
David H. Souter: did it have a the average person provision in the...
Speaker: definition?
Speaker: definition in the statute itself.
David H. Souter: Okay.
Speaker: definition.
Speaker: may be, but what the Congress was attempting to do was to develop and put into the statute the protections which this Court over the years have said are very important...
Speaker: to protect the communicator.You're...
David H. Souter: saying it's a belt and suspenders definition.
Speaker: Well, what this Court has decided is that something that to prevent jurors from deciding imposing their own individual standards, or imposing the least sensitive standards o- o- of the community, or the most sensitive...
Speaker: standards...
Ruth Bader Ginsburg: Olson, there's there's one thing that you i- i- so- some new thing comes up in your brief.
Speaker: Well, there's two parts to that.
Speaker: Well, I I...
Ruth Bader Ginsburg: the words that I used, the the they invoke Miller, so it sounds like Congress didn't write any word formula that was any different, but you do say something it's not...
Speaker: Th- that was a...
Speaker: that was a a a finding, so to speak, by the House committee that there is not with respect the years have changed since the the Miller and the Hamling case.
Speaker: three...
Ruth Bader Ginsburg: and what was the basis for thinking that that that na- harmful to minors would be reasonably constant to a greater extent than what is obscene?
Speaker: Well, the House the House report that specifically talked about that did not explain.
Anthony M. Kennedy: Well, I I think it's it's i- it's a difficult question.
Speaker: Well, er t- the the courts have permitted expert testimony with respect to that, but there's a great deal of supervision that the trial courts and the appellate courts impose with respect to that to make sure that these definitions are being applied in...
Speaker: a nonaberrational...
Anthony M. Kennedy: how how does it work? I have a California jury.
Speaker: I thi- I I would t- I would submit, Justice Kennedy, that that yes, that would be possible.
Speaker: I submit that what C-
William H. Rehnquist: it neither way.
Speaker: They want to have it neither way.
Speaker: Well, when you say relative...
Stephen G. Breyer: You say relatively.
Speaker: I'd I'd d- I think that this Court has said that that is not a requirement to the first...
Speaker: amendment from the sta- -- Yes.
Stephen G. Breyer: of the First Amendment.
Speaker: Now,
Stephen G. Breyer: if those words were in the opinion, would you consider that you had won this case?
Speaker: I think I would, Justice...
Speaker: Breyer, and I think that and I think that would...
Speaker: be a a a ra- the the the statute is readily to use the words of this Court, the statute is readily susceptible to the narrowing construction, if that's how you would regard that, or a leveling construction.
Speaker: I w- w-
David H. Souter: me what the difference is between the construction that Justice Breyer has suggested and the result of your argument that the that the third prong, the the value prong, is in fact an objective prong and hence a national stan- I t- assume it's a national standard.
Speaker: I don't think so.
Speaker: I should I sh-
David H. Souter: necessarily saying it.
Speaker: W-
David H. Souter: I think you're saying it.
Speaker: Well then, I agree with your construction...
Speaker: of what I'm saying.
David H. Souter: [Inaudible]
Speaker: And I think  I think it's a very...
Speaker: important point to make, that the C- the Court has said that that is another way in which we protect the speaker from aberrational,
Speaker: highly cynical.
John Paul Stevens: you aren't you then saying to us that Congress, when it used the word community, really meant to say national?
David H. Souter: Yes.
Speaker: Well, I sus- I suspect, Justice Stevens, that the people who assisted the Members of Congress in drafting the statute read this Court's decisions, as there's every indication in the two committee reports and in the hearings that were taken, that the Court was attempting in every way to live up to the standards of this Court.
Speaker: entirely...
John Paul Stevens: answering my question by saying yes.
Speaker: Well, I what I think wh- no, I don't necessarily think that the Court the the Congress was intending to impose a national standard, because this Court had said that it wasn't required under the First Amendment, and that the community standards did not have to be judged by any particular geographical area.
Speaker: Well, I'm not...
John Paul Stevens: I'm not trying to find out what what the Constitution requires or what our cases might have required.
Speaker: of the statute.
Speaker: what Congress was attempting to do was come as close as possible to adopting what this Court had said in the context of obscenity.
Speaker: I I I just don't know where we are here.
Antonin Scalia: for a North Carolina jury to sit in judgment of a particular pornographic transmission and decide whether this would offend the standards of Las Vegas and New York City? I mean, doesn't any jury necessarily apply the standards of its own community? Ar- aren't we really talking about an imaginary distinction here?
Speaker: Well, we yes,
Speaker: Justice.
Antonin Scalia: assume that you instruct the jury, Jury, you must apply a national standard.
Speaker: Well, I would su- I would submit that the the the judge would instruct the jury, and the judge examining the decision of the jury afterwards in appellate courts would do exactly what this Court has said.
Speaker: community to community but...
William H. Rehnquist: the defendant could call an expert witness in your the case in North Carolina and say that in New York this is fine.
Speaker: I I I think the defendants can put on expert testimony with respect to what general standards are, to use the phrase in Hamling, country-wide.
Speaker: But but then the tr-
Anthony M. Kennedy: but then the trial judge must instruct the jury, ladies and the gentlemen of the jury, this is a national standard, and that's consistent with what Justice Breyer suggested to you, that w- we might consider in putting in the opinion, so it's a national...
Speaker: standard.
Speaker: I'm not objecting to that.
Speaker: accessible.
Anthony M. Kennedy: I...
Speaker: think...
Anthony M. Kennedy: we're asking what the que- what what the w- which the Congress wanted.
Speaker: Internet. The Internet would be...
Anthony M. Kennedy: very different than a local bookseller.
Speaker: I think that is a reasonable solution to the problem, and is consistent with what Congress was saying.
Speaker: This Court has also said...
Ruth Bader Ginsburg: in this context, if you could I didn't get a clear answer to my question.
Speaker: Yes.
Speaker: That's what...
Speaker: this C- that's what this Court has said again and again, and w- we c- of course accept that, and and that that that is Congress acc- accepted that as well.
Ruth Bader Ginsburg: And is...
Speaker: w-
Ruth Bader Ginsburg: point, then, that we first take out that category.
Speaker: Yes.
Ruth Bader Ginsburg: And it's only when it doesn't have serious value, then you get into the question of national...
Speaker: Yes, that's right, and but but remember that it seems important to emphasize that these definitions are highly specific with respect to the material which is prohibited.
Speaker: so...
Ruth Bader Ginsburg: take i- account in any of this? I mean, one one ob- objection that's raised is, well it's it's all futile, because you're just giving Competitors from abroad, they will come in and fill the gap if US providers are not available.
Speaker: Well, Congress did s- explicitly consider that.
Antonin Scalia: And maybe Congress wouldn't mind even if the child pornography industry flourished, at least drive it overseas.
Speaker: Well...
Speaker: [Inaudible]
Antonin Scalia: mind.
Speaker: I think I think that and the Court considered a case earlier this year of the damage that that industry does, earlier this term.
Speaker: Congress in this...
Ruth Bader Ginsburg: least from the exhibits that you gave us, it doesn't seem that this material is d- i- There're no virtual children, no n- no real children.
Speaker: least.
Speaker: not talking about that aspect of the issue that you're considering in that other case, but wha- but I what I was simply trying to address is Justice Scalia's question, that that there this is a this is a major problem.
Speaker: And...
Ruth Bader Ginsburg: much of it you say and if I understand you correctly, you this law doesn't touch I mean, y- I was impressed at that set of exhibits.
Speaker: Possibly.
Ruth Bader Ginsburg: Oh.
Speaker: Well,
Speaker: one of the ones that we were concerned about is a series of very explicit pictures, and I think the Court knows which ones I'm talking about.
William H. Rehnquist: Thank you, General Olson.
Ann E. Beeson: Mr. Chief Justice, and may it please the Court.
Speaker: COPA...
Antonin Scalia: me.
Ann E. Beeson: [Inaudible]
Speaker: e- Justice...
Antonin Scalia: I I don't see why Salon or any other a- a- a- any other commercial operator sh- should be immune by saying, well, I you know, all of my business isn't pornography, just j- just a little bit.
Ann E. Beeson: Yeah Justice Scalia, whether or not we talk about them as commercial pornographers, the fact is, the speech they communicate, which even the Government I don't think would label them commercial pornographers in the sense that we imagine.
Speaker: codes.
Stephen G. Breyer: think of an example of something that would have serious literary, artistic, political, or scientific value for an adult, but it would not have it for a seventeen-year-old?
Ann E. Beeson: Yes, Your Honor.
Speaker: think that...
Ann E. Beeson: I think that...
Speaker: all of our...
Speaker: sixteen...
Ann E. Beeson: think that all of our client's exhibits are precisely that sort of material, and that, of course...
Speaker: is wh-
Stephen G. Breyer: you I looked at some of the...
Speaker: exhibits,
Stephen G. Breyer: and I think seventeen-year-olds are pretty sophisticated, and I don't understand why they wouldn't have Salon Magazine, the same kind of value for a seventeen-year-old that they have for a twenty-one-year-old.
Speaker: It's sixteen...
Antonin Scalia: actually isn't it we're...
Speaker: talking about sixteen here.
Speaker: in fact.
Ann E. Beeson: There are m- There...
Speaker: There are...
Stephen G. Breyer: there are even quite mature sixteen-year-olds who know about...
Ann E. Beeson: Right.
Stephen G. Breyer: Or that's a...
Speaker: Perhaps...
Stephen G. Breyer: in the case, correct.
Speaker: in some...
Stephen G. Breyer: communities...
Ann E. Beeson: I'm...
Speaker: sorry to...
Ann E. Beeson: perhaps in even most communities that believe that providing any information about experiencing sexual pleasure, about sex toys, to teenagers, is sinful and is definitely harmful,
Speaker: Okay, that's that's probably so...
David H. Souter: but I mean, the what Justice Breyer is addressing and what I was concerned with with Mr. Olson was his argument that the third prong, the value prong, in effect, sort of sands off the rough edges, and and i- it gets the in in practical terms it gets the the community peculiarity out of it, and and is that i- obviously you don't agree with it.
Ann E. Beeson: Your Honor, first of all, I think because all of the millions of speakers, including our clients on the web, they are the ones that have to understand this law, and as Mitch Pepper, who runs a Sexual Health Network which provides specific information about how to experience sexual pleasure to disabled persons, testified, I I think very strongly, based on my interpretation of the words in this statute, even with the serious value prong, that value prong is value for minors, and he has to believe, as he testified, that discussion of masturbation, oral sex, anal sex, descriptive positioning, all of that can be construed as pandering to the prurient interest of minors.
Stephen G. Breyer: Oh...
Speaker: but th-
Stephen G. Breyer: the the particular issue is really not the third prong.
Ann E. Beeson: Absolutely not, Your Honor, for for two reasons which I want to explain.
William H. Rehnquist: That was true in Hamling, too.
Ann E. Beeson: Mister Chief Justice, there's a very real distinction here, and and that is that Hamling was about the obscenity standard.
Speaker: point is that...
William H. Rehnquist: why wo- just a minute.
Ann E. Beeson: Because by definition all of the material targeted by the statute is protected speech for adults.
William H. Rehnquist: No, that's true, but you run th- s- people in Hamling ran the same risk.
Ann E. Beeson: Well, the range of speech, however, of course, protected speech that is limited by the by any harmful-to-minors display statute.
Speaker: for everyone.
Antonin Scalia: obscenity cases, whether it was obscenity or not depended upon the community standards.
Ann E. Beeson: Again, most importantly, Your Honor, under any standard under any standard, COPA is unconstitutional...
Speaker: Okay but...
Ann E. Beeson: deter such a great amount of adults from...
Speaker: accessing s-
David H. Souter: going back to Justice Breyer's question.
Ann E. Beeson: Mhm.
David H. Souter: We're not here to make a final judgment on the statute.
Ann E. Beeson: Your Honor, I don't believe so, because we have a very strong record here, which again the Third Circuit explicitly affirmed the findings of fact by the district court that show that adults are going to be deterred by this law.
David H. Souter: Yeah but that's not a community standards problem.
Ann E. Beeson: I- it's a Your Honor, it's a burden-on-speech problem.
Speaker: It may be a burden on...
David H. Souter: speech but we did that look at the question we took.
Stephen G. Breyer: I'm trying to get you to ask answer one specific question.
Speaker: Yes a-
Stephen G. Breyer: that how does that affect the case, to answer that question nationally?
Ann E. Beeson: Yes, and as and our answer is that even under a national standard this law clearly fi- violates the First Amendment.
Stephen G. Breyer: I know that, but is the right thing to do, then, for us to say, court of appeals, you were wrong about the meaning of the word, community standards.
Ann E. Beeson: Your Honor, we again, i- if that were the course that you decided to take, we do not think that the appropriate thing would be to vacate the injunction, but whether to leave the injunction in place, and then...
Speaker: We're not not vacating...
Anthony M. Kennedy: the injunction, vacate the order of the court of appeals and say, you consider these other these other points...
Ann E. Beeson: Mhm.
Antonin Scalia: So why is it okay for obscenity but not okay here for of...
Ann E. Beeson: But...
Antonin Scalia: Not not fo- that I'm putting it too t- too favorably.
Ann E. Beeson: Mhm.
Speaker: the...
Antonin Scalia: not okay for taking your chance on whether what you publish is pornographic a- and and harmful to minors.
Ann E. Beeson: Well, for one reason of course, one of the crucial distinctions here is the nature of the Internet.
Speaker: only certain communities.
Sandra Day O'Connor: about commercial speech, something that people are going to have to pay...
Ann E. Beeson: Mhm.
Sandra Day O'Connor: to see.
Ann E. Beeson: Mhm.
William H. Rehnquist: Well, Ha- Hamling didn't rely at all, the opinion in Hamling, on the fact that the people could choose where to where to circulate.
Ann E. Beeson: Your Honor, I think that's a very different conclusion to reach when you're talking about an environment in which you can control where you send the material.
Speaker: You you mean...
Ann E. Beeson: want to communicate locally, you can't.
Antonin Scalia: You mean, we would have to make this exception even for obscenity, even for out-and-out stuff that sows so go- so far beyond that it's it's not even just pornography.
Speaker: Your Honor...
Antonin Scalia: for obscenity.
Ann E. Beeson: We think that that is a very different question, and and that is not a necessary conclusion for the reason that I said before and that is because, by definition, a national standard for what is displayed as harmful to minors on the web would impact far more protected speech than a national standard for obscenity, which is by definition unprotected for adults as well as minors, and to put it another way, no adult has the right to materials that are obscene in even the most tolerant community.
Speaker: It seems...
Ann E. Beeson: have the right to materials.
Antonin Scalia: Whatever's the issue is how unconstitutionally unfair it is to the publisher, regardless of how many publishers ar- are covered.
Ann E. Beeson: Mhm.
Antonin Scalia: is an unconstitutional thing, y- you're going to go to jail just the same, whether you're going to jail for pornography or obscenity.
Ann E. Beeson: We are saying...
Antonin Scalia: We cannot use community standards for this, I don't see why we can use it for obscenity.
Ann E. Beeson: We, of course, don't think you need to even reach that question but to the extent that you do, again, I think that it is quite a different question because of the amount of protected speech that is impacted.
Ruth Bader Ginsburg: But what about the Government's position that of all the exhibits that are at least in in the record presented to us, there's only three that they say, even as a matter of law, might be subject to prosecution, so they're giving you a clean bill of health on all these others, and they say i- it's really a very narrow category, not the broad category that you're describing.
Ann E. Beeson: I Justice Ginsburg, in fact that that concession in the reply brief makes us more nervous than ever, and that is because the Government has changed their mind.
Speaker: Ms.Beeson...
Ann E. Beeson: in fact the the the the speech is indistinguishable from many other exhibits that are in the joint appendix...
Speaker: Ms. Beeson...
Antonin Scalia: le- let's talk about artnet.
Ann E. Beeson: Mhm.
Antonin Scalia: Do you really think that when artnet puts out the Andre Serano photographs, do you think it expects to avoid being held under this statute because of six A that it would hope that the average person applying contemporary community standards would find this material as a whole not designed to appeal to or to pander to the pur- prurient interest, or do you rather think that artnet's protection would surely be sought under C namely, that the material taken as a whole possesses serious literary, artistic, political, or scientific value? Isn't that their real protection?
Ann E. Beeson: Your Honor, they really do not believe it is their protection, and that again is because it says, serious value for minors, and that, of course, is one of the primary distinctions between this category and obscenity.
Speaker: There are many people who would think that the fine art...
Stephen G. Breyer: I guess I might be go back to that, but I didn't get an answer.
Speaker: Well, Your Honor...
Stephen G. Breyer: a thing.
Ann E. Beeson: Well, Your Honor, the the Government itself is saying that...
Speaker: artnet won...
Stephen G. Breyer: I'm asking for your opinion.
Ann E. Beeson: I- I- I I'm sorry, Your Honor, but they're the ones that are going to...
Speaker: That may be,
Stephen G. Breyer: but the very fact that your clients could be prosecuted does not mean they win this case, because after all, they might be prosecuted under Miller, too, and everyone agrees that that's the law, so I'm asking you for your opinion, if you can find an example of a work of art that would have serious value for a twenty-one-year-old but not for a minor.
Ann E. Beeson: Your Honor, with respect, we believe that all of the exhibits that we have put in, the artistic ones and the literary works, the column, the the nude artworks by several clients, all of these could be targeted under the statute, and again, what the effect, the First Amendment effect of the statute is whether or not our clients legitimately feel like they have to self-censor under this law as compared to the obscenity law.
Ruth Bader Ginsburg: Are you saying that you have to give some effect to Congress' words? It didn't say serious value, period.
Speaker: so for...
Ruth Bader Ginsburg: the Court to say, well, Congress you just used those words, they didn't mean anything.
Ann E. Beeson: Yes, Your Honor, and and the history of the harmful-to-minors definition, that is one of the primary points.
Speaker: But I thought you might I mean...
Stephen G. Breyer: I thought that the word, for example, for minors comes out of cases that permit the Government to require certain magazines to be placed in certain places in the...
Speaker: bookstores,
Stephen G. Breyer: or in the retail...
Speaker: shops,
Stephen G. Breyer: with brown...
Speaker: covers,
Stephen G. Breyer: so perhaps there's some experience, since we have worked with the word for...
Speaker: minors,
Stephen G. Breyer: of something that has to be done under that law, but doesn't fall within Miller.
Speaker: and...
Ann E. Beeson: Yes, absolutely.
Speaker: in fact...
Ruth Bader Ginsburg: then it's you're saying, which was an issue last time around, it it's up to the parent, Government can do nothing.
Ann E. Beeson: Your Honor, we believe that Congress did two things already that it that we're not challenging here.
Anthony M. Kennedy: Well, of course, all all this goes to these other aspects of the statute.
Speaker: As...
Anthony M. Kennedy: as I understand where we are in the argument,
Antonin Scalia: Right.
Anthony M. Kennedy: the the court of appeals decided for reasons that I I I think we cannot criticize on this record that it's going to sustain this injunc- injunction based on the community p- standards problem, and we're asking you, if the s- community standard is national, doesn't that solve that problem,
Ann E. Beeson: Mhm.
Anthony M. Kennedy: and I'm coming away from this argument w- with the impression that you're saying, well, I'm not going to bother to help you on that, because there are so many other things in the statute I want to talk about.
Speaker: Yeah, I'm sorry.
Anthony M. Kennedy: doesn't that doesn't help help me answer this question.
Ann E. Beeson: and I and I don't mean to leave that impression.
John Paul Stevens: But is it not...
Speaker: true that...
Anthony M. Kennedy: standard can't be enforced with any jury.
Ann E. Beeson: I don't think that it can, because again jurors are going to have to enforce that.
Speaker: their own...
Ann E. Beeson: community.
David H. Souter: Then you're and I I I don't mean this dismissively, but I think we have to accept this.
Ann E. Beeson: Your Honor, I'm saying that there isn't any way to make it a crime to display material harmful to minors on the web.
David H. Souter: Yeah.
Ann E. Beeson: That is our position, and and again, that we believe is very consistent with with many other statutes that have recently been struck down by the Court.
David H. Souter: No, but I'm I'm I'm not again, I'm not asking you the global...
Speaker: question.
Ann E. Beeson: understand.
David H. Souter: I'm just asking you the question that goes to the specific issue that we took for review, and that is the the legitimacy of baiksing [: basing] basing an injunction, or sustaining the...
Speaker: district...
David H. Souter: court's injunction...
Ann E. Beeson: Mhm.
David H. Souter: on the community standards portion of the...
Speaker: statute,
David H. Souter: and and all my question to you is simply, I take it you're saying that there is no way to write a standard into the statute, call it community, call it national, call it some third thing that you dream up, that will ever suffice constitutionally.
Ann E. Beeson: There is no way to do it, and again, I I do want to be clear that I I don't think that we can divorce the rest of the language of the statute, even aside from the deterrence issues, and what I mean by that is, because the statute was written so broadly as to cover anybody who had even just one image, for example, because the statute was written to include not just images but text, I think, you know, e- I think those problems still remain even just looking at the textual language, even if you're focusing just on the the community standard versus the national standard, and that's another reason why we don't think that fixing that problem is enough to save the statute.
Speaker: May I ask another...
John Paul Stevens: it's another jerded [: general] general question? Do you think there's any way in which Congress can deal with the problem of what they call teasers, which everyone would agree would violate the standard here, but and would also not have serious artistic value?
Ann E. Beeson: Mhm.
Speaker: which again...
John Paul Stevens: I'm assuming not ob- nonobscene...
Speaker: Nonobscene.
John Paul Stevens: clearly pornographic...
Ann E. Beeson: hm...
John Paul Stevens: teasers.
Ann E. Beeson: Mhm Well, I mean I I I I have course don't want to be the one to rewrite the statute but I I do think, as I...
Speaker: suggested before, that if they...
John Paul Stevens: if it's your position that that's beyond the power of Congress to control.
Ann E. Beeson: I think that a statute that did just apply, for example, to web sites who were actually selling things already this one isn't limited to that and secondly, web sites who the predominant portion of their site was actually harmful to minors.
John Paul Stevens: You still haven't answered my question.
Ann E. Beeson: Justice Stevens, m- m- my my answer is that I think if they if they wrote a statute are you asking me whether I think that would that statute would be unconstitutional also, because of course, I have to argue yes, it would be, but it was certainly be you don't have to bel- believe me on that.
Speaker: clear that that...
Antonin Scalia: one, right?
Ann E. Beeson: that would be a that's what I mean.
Speaker: be more narrowly tailored to the...
John Paul Stevens: there is a genuine problem that Congress is trying to address, and if your position is you just forget about it, that you've got to live with the problem, that's quite a different position than if you think, well, there's a less restrictive alternative that would accomplish what the Congress is trying to do, and you're suggesting to me there isn't a less restrictive alternative.
Ann E. Beeson: Well, the less restrictive alternative for actually protecting children is the user-based mechanisms, and that again, the Congress itself found to be actually more effective at protecting children.
Antonin Scalia: What what would Congress do, pass a...
Speaker: law requiring...
Antonin Scalia: parents at their own expense to impose user-based screening?
Ann E. Beeson: Your Honor, we certainly believe that the...
Speaker: Federal Government could...
Antonin Scalia: That is not a solution within the power of Congress.
Ann E. Beeson: N- no and we don't think it needs to be, because we think, of course, the ultimate decision ought to be resting on parents, where it always has, to make a...
Speaker: decision as to whether they believe...
Stephen G. Breyer: Justice Stevens,
Ann E. Beeson: Mhm.
Stephen G. Breyer: in your capacity as a lawyer, the that whatever statute Congress came up with, you would believe in that capacity was unconstitutional.
Ann E. Beeson: [Inaudible]
Stephen G. Breyer: You're not prepared to say that there's any statute that is constitutional.
Ann E. Beeson: W- we are not prepared to say that any statute which significantly burdens adult speech is is constitutional, and I think that is very consistent with the opinions of this Court, as in the Playboy case and the Denver Area case.
John Paul Stevens: Let me...
Speaker: ask you a...
John Paul Stevens: modification to my question.
Ann E. Beeson: Your Honor, the problem with that would be, if course, without some kind of mechanism that then allowed you know parents to...
John Paul Stevens: No, that's right, the but then...
Speaker: that would...
John Paul Stevens: simplify the problem of p- of the p- of of buying of setting up software that could screen out this stuff.
Ann E. Beeson: I think that it might have some compelled speech concerns, especially, again, where you're talking about a medium where you have these individuals e- just because it's commercial businesses doesn't mean there's a big you know, a lot of employees to make these determinations.
Speaker: important issues prosecuting the child pornographers.
Ruth Bader Ginsburg: colloquy with the Government on this subject, and they were candid to say, we're not trying simply to maximize parents' choices.
Ann E. Beeson: Mhm.
Ruth Bader Ginsburg: The Government's saying, we have an independent interest, and we can do something.
Ann E. Beeson: Yes, I do believe that that issue came up in the Playboy case last term, and the Court, you know, did rule that again voluntary we can't assume, especially without a record to the contrary, that parents are going to fail to act.
Speaker: Thank you,
William H. Rehnquist: Ms. Beeson.
Ann E. Beeson: Thank you.
William H. Rehnquist: Mr. Olson, you have four minutes remaining.
Speaker: Thank you, Mr. Chief Justice.
Speaker: Thank you, General Olson.
Speaker: taking your chances.
William H. Rehnquist: The case is submitted.


John G. Roberts, Jr.: We will hear argument next in case 10-948, CompuCredit Corporation v. Greenwood. Mr. McConnell.
Michael W. McConnell: Mr. Chief Justice, and may it please the Court: This Court has consistently rejected the argument that Federal statutes that both create a right to sue and also bar waiver of rights under the statute are sufficiently explicit to override the strong Federal policy in favor of arbitrability expressed in the Federal Arbitration Act. In two of those cases, Gilmer and Piette, the Court construed a statute the relative language of which is virtually indistinguishable from that and the credit repair organization fact that we have before us today. Those cases involve the ADEA. Both the ADEA and CROA, as I will call it, create a cause of action for aggrieved parties to bring actions for damages. And both statutes explicitly bar waiver of quote "any right under the statute".
Sonia Sotomayor: Well, that statute didn't have as this one has a disclosure requirement that says you have a right to sue.
Michael W. McConnell: And that's the sole distinction between the two statutes.
Sonia Sotomayor: Well, but it's a meaningful one.
Michael W. McConnell: So the -- first of all the disclosure statute is a -- describes in layman's terms, gives a quick description of an operative civil liability section which is set out in 1679(g) and which tells us exactly what Congress had in mind in creating a cause of action. And when you look at the language of the actual operative provisions in (g), it's almost as if Congress deliberately went out of its way to use language that would not preclude arbitration. That language provides that a person who violates the statute shall be liable to the persons to whom--
Elena Kagan: Suppose it said something different, Mr. McConnell. Suppose the disclosure provision didn't exist at all but that instead of the liability provision you had a provision that simply said: any person injured by a violation of this act will have a right of action or will have a right to sue under this statute. And then you had the waiver provision that you have in this statute. Is that enough?
Michael W. McConnell: --Justice Kagan, I think that would be exactly the same. Because a cause of action and a right to sue are the same thing. They mean the same thing and this Court has consistently since Mitsubishi held that just because Congress creates a cause of action which is a right to sue does not preclude arbitration.
Ruth Bader Ginsburg: Mr. McConnell, you started with the notion that the disclosure provision, the statute is meant to apply to ordinary people and if an ordinary person not schooled in the law read "you have a right to sue. " wouldn't they understand that to mean: I have a right to sue in court?
Michael W. McConnell: Well, Justice Ginsburg, in the ADEA context, the government itself, the EEOC sends discriminated against workers a right-to-sue letter that tells them they have a right to sue. But this Court has twice said that does not preclude arbitration. And that's because a right to sue is simply a cause of action. It doesn't actually -- that doesn't mean that exclusively a right to be in court. It gives you rights which may be vindicated, and there are various ways in which they can be vindicated. And the Federal Arbitration Act provides that the -- that this Court or that the courts must enforce private contractual agreements that provide for the vindication, even of statutory rights through arbitration.
Samuel A. Alito, Jr.: Can you imagine any statutory language that would eliminate the right, the ability of the parties to enter into an arbitration agreement other than language that expressly prohibits the waiver of the right to sue in court in favor of arbitration?
Michael W. McConnell: Yes, Justice Alito, I can imagine it. Now Congress has to date has not used it. Congress knows perfectly well how to bar arbitration. They have done it in a number of statutes. In fact, in the very Congress that enacted CROA, there were three different statutes that were proposed that would have eliminated arbitration for particular statutory schemes. None of them were adopted. But Congress is perfectly aware of how to do this. I don't think they have to use the magic words "no arbitration", but they certainly have to do something considerably more direct than this. Here they've created a statute that provides that there must be liability and creates a cause of action, and then they tell people in a separate disclosure provision -- by the way, added very late in the drafting process, right -- simply to tell people that they have what is colloquially known for laymen as a right to sue. Now, we lawyers call things causes of action. We call on things like the right to bring a civil action in a court of competent jurisdiction. That is lawyers' language. But when ordinary people talk about that, they think that's a right to sue. But a cause of action and a right to sue are exactly the same thing.
Elena Kagan: Mr. McConnell, the cases that you cite in support of your position rest on a distinction between procedural rights and substantive rights, which you invoke here. But where does that distinction itself come from? Because, it seems very atextual in nature, that distinction, which does appear in the cases. But when Congress talks about rights, why should we think of rights as limited to substantive rights rather than also procedural rights?
Michael W. McConnell: First of all, only our waiver argument depends upon those particular cases; we have a second argument. But nonetheless, I think this comes from the very long tradition, at least back to the 1980s in Mitsubishi, of understanding that arbitration is a choice of a forum, but it must vindicate the substantive rights of the particular statute. So this is the way courts have talked about the relationship between arbitration and the substantive statute. So you look at the statute and you see what are the prohibitions, what are the substantive rights and so forth, and the arbitrators enforce all of those, but that the term rights does not include -- it does not mean that there is an exclusively judicial forum, just that whoever is the decisionmaker is going to enforce exactly the same set of substantive rights which are in the statute. But Justice Kagan, even if that were not persuasive, Congress is perfectly aware that that's the way that this Court had been interpreting the words, because Gilmer, which interprets the very words 5 years, before enactment of this statute. And we know Congress was aware of Gilmer, because the very same Congress that passed CROA also considered a bill considered a bill, considered and rejected, a bill that would have reversed the decision in Gilmer. So Gilmer and the very question of -- of arbitration was before this Congress, and they knew that the word "any rights" was interpreted, interpreted by this Court, the way that it was in Gilmer, and they used precisely the language that was interpreted that way in Gilmer. And so at this point there's a vocabulary. It's like there is a glossary, Congress is using it, and even if it may not be, you know, fully textual, as you say, that's -- that's the way Congress now addresses the matter.
Ruth Bader Ginsburg: But the -- the act in Gilmer did not designate court action or right to sue as a right within the non-waivable provision.
Michael W. McConnell: That's true, Justice Ginsburg and the question is does it matter. I would say anyone looking at the ADEA's language, which says that an aggrieved person may bring a civil action in court, anyone would say that that is a right to sue. It is surely a right. And indeed when this Court interpreted that statute in Piette, this Court called it a right -- a right to a judicial forum. Three times in the opinion, the Court refers to that as a "right". And the fact that our statute here refers to a right to sue, rather than a right to bring a civil action, seems -- certainly against the backdrop -- recall, please, that the question here is whether Congress has explicitly abrogated the -- specifically disavowed, specifically barred the use -- the arbitrability of the -- of the contract, and that all doubts are supposed to be resolved in favor of arbitrability, and the -- the statutes must be interpreted with a healthy regard for the policy in favor of arbitrability. Considering this, and considering the paltry basis in the text for -- for that conclusion, I don't see how the Ninth Circuit's decision can be withstood -- could be upheld.
John G. Roberts, Jr.: Do you think a -- the word "lawsuit" typically describes an arbitration proceeding? If you're subject to an arbitration, would you say, I'm in a lawsuit?
Michael W. McConnell: I do not think so.
John G. Roberts, Jr.: Well, why doesn't a right to sue refer to a lawsuit?
Michael W. McConnell: It refers to a cause of action, Your Honor, and we can call that a lawsuit, too. Often that's another layman's term for a cause of action, but this Court has held I don't know how many times, I believe it's at least six times since -- since Mitsubishi, that just because Congress creates a cause of action and says that it will be in court, that does not mean that -- that that does not preclude arbitration, that that creates a cause of action. And I think the -- the underlying logic of this is that the existence of a cause of action or of a right to sue, which I many suggest is a synonym for cause of action, is -- is not inconsistent with arbitration; it's the precondition for arbitration. If there were not a cause of action, there would be nothing to arbitrate, right? So in every case in which there is a legal arbitration, there is a cause of action. It might arise from contract, it might arise from a statute, but in every single arbitration there is a cause of action. If this Court were to interpret--
Ruth Bader Ginsburg: You know, if this were written to be read by and understood by lawyers, I think you would have a stronger argument. But this is meant for consumers, and they read "You have a right to sue, and that right is not waivable. " "A right to sue, they are not going to think about cause of action. " "They don't know what cause of action is. " "But they do know that a right to sue is a right to bring a lawsuit. "
Michael W. McConnell: --Justice Ginsburg, again, if that is so, it would apply to other cases in which the language "right to sue" is used. For example, the EEOC's right to sue letters, what could be more explicit than that? But this Court has held several times that just because the EEOC sends a right to sue letter doesn't mean that Congress--
Ruth Bader Ginsburg: Is that in -- is that in the statute? Or is it just a colloquial--
Michael W. McConnell: --It's in the regulations, Your Honor.
Ruth Bader Ginsburg: --Yes, but Title VII doesn't say "right to sue". It's a name that the agency uses, but it's not -- it's not in the statute. The statute doesn't say you have a right to sue.
Michael W. McConnell: Well, what the statute says is you may bring a suit in court. And so, if this Court -- I do not see how the Court can say that the right -- that the language "the right to sue" is different from a right of action. It certainly -- it is the same thing.
John G. Roberts, Jr.: One way you could do it is that the right to sue is more familiar colloquially. If somebody, you know, hits your car and you jump out angrily and you say -- you can say: I'm going to sue you. You are not likely to say: I'm going to bring a cause of action against you.
Michael W. McConnell: We have -- there is no reason to think that when Congress appended a disclosure provision toward the end of the drafting of this statute and simply used a colloquial version of cause of action so that ordinary people would understand that they intended to change the meaning of the operative provision. The operative provision tells us, I think very clearly, what Congress meant, and then in this sort of quick shorthand, colloquial way, they are telling people, yes, they have an action, but just like they have an action -- persons have an action under the Sherman Act, they have an action under RICO, they have an action under the ADEA and they have an action under the Truth in Lending Act. In all of these cases people have a right to sue, but this Court has held that arbitration vindicates the cause of action.
Anthony M. Kennedy: In the standard arbitration agreement, if Smith and Jones agree to arbitrate and Jones then brings suit in court, and that action is then stayed pending arbitration, has there been a breach of the arbitration agreement simply by bringing the suit?
Michael W. McConnell: I don't--
Anthony M. Kennedy: I mean, doesn't that happen rather often?
Michael W. McConnell: --It does happen rather often. I'm not sure what the -- I would say no. What I would say is that the -- is that the question of arbitrability has been put before the court and the court will decide whether to enforce the arbitration clause or not.
Anthony M. Kennedy: And of course the suits are brought after arbitration to enforce the arbitration award.
Michael W. McConnell: Exactly, Exactly. So in this sense, it's not that the cause of action goes away. It's not the -- the cause of action is not being waived. It's simply being vindicated in a different way, in a way which Congress in the Arbitration Act has told us is perfectly appropriate, just as appropriate as a -- as a vindication in Court, and that we should leave it to -- and that the -- a contract between the parties to decide which of the forums for vindication of their rights would be used should be enforced.
Ruth Bader Ginsburg: But this is not what the parties decide. These are take it or leave it contracts. So the consumer doesn't really elect arbitration. It's just presented as part of the terms that the consumer can take or leave and not negotiated.
Michael W. McConnell: That is an argument against arbitration that this Court has rejected several times.
Ruth Bader Ginsburg: It's a question of whether we take that into account in -- in determining what "You have a right to sue. " means.
Michael W. McConnell: Well, Justice Ginsburg, Congress -- that's a policy question and Congress has given us an answer. Recently, by the way, Congress has indicated a slightly different answer which will affect cases like this in the future. As part of the Dodd-Frank regulatory reform bill, Congress required the new Consumer Financial Protection Bureau to conduct a serious study of the use of arbitration procedures in consumer financial matters to find out whether things like what you refer to, Justice Ginsburg -- the -- the types of contracts and so forth are fair to consumers. So we'll get an authoritative answer to this, and Congress then vested this new bureau with authority either to outlaw arbitration awards or to require conditions or to reform them. But in the meantime, the policy that Congress has set is the policy in the Federal Arbitration Act, which is one of a -- a strong policy in favor of enforcing arbitration contracts.
Elena Kagan: Except if Congress indicates otherwise and--
Michael W. McConnell: Unless Congress has indicated otherwise.
Elena Kagan: --And I guess the problem here is that there is this language in this disclosure provision which is meant, you know, truly to inform consumers about -- about their rights and about where they are going to end up resolving their disputes, and it says you have a right to sue, and you are asking us essentially to read that language as: You have a right to bring a claim in court, but it's probably going to end up in arbitration because of the nature of your form contract. And that seems a very different kind of statement to consumers.
Michael W. McConnell: Justice Kagan, I do not see how it would be any different from a consumer who reads any of the statutes that this Court has held are subject to arbitration. If, for example, in the Truth in Lending Act, which this Court interpreted in the Green Tree case that as part of the arbitration contract it was required to send the consumer a copy of the statute. The consumer would read in the statute that there is a cause of action, that they can bring suit in court to enforce their rights under the Truth in Lending Act. They would read that statute and they would draw exactly the same conclusion that they do from the shorthand layman's language of "a right to sue". But again, even if that were so, I think as a matter of -- of how -- statutory interpretation, that a disclosure provision cannot change the meaning of the operative section. The operative section which creates the rights and liabilities here is 1679g, and not even Respondents seriously claim that that section is -- shows congressional intent to prevent arbitrability. And that seems -- the fact that there is a disclosure provision that uses more informal language instead of the lawyers' language used in 1679g does not change the meaning of the statute. Unless there are further questions, I will reserve the remaining part of my time for rebuttal.
John G. Roberts, Jr.: Thank you, counsel. Mr. Nelson.
Scott L. Nelson: Mr. Chief Justice, and may it please the Court: The Credit Repair Organizations Act provides consumers with what it explicitly denominates a right to sue, and then it says that any right of the consumer under the statute is non-waivable. As this Court has said--
Sonia Sotomayor: Does that mean that there is a violation of the statute the minute one of these organizations asks someone to sign an arbitration clause? A $1,000 penalty for the mere asking?
Scott L. Nelson: --There is -- there is a technical violation in asking, because in 1679f not only are waivers made unenforceable, but it is -- it is prohibited to ask someone to waive their rights. However, that does not mean that you actually have a cause of action to go in and sue somebody for that, because, remember, under 1679g, what you can sue for is your money back. If somebody's asked you for a waiver and you didn't sign the contract and you didn't pay them any money -- or your damages; somebody asked you for a waiver and you never signed up with them, you don't have any damages; and then punitive damages in addition, which -- you know, the general rule about punitive damages is you get them on top of actual damages if you have actual damages. So, yes, it's a technical violation. If a company engaged in a pattern or practice of it, the FTC could quite rightly go in and get an injunction against that. But it's not a case where there would be some onerous penalty imposed on a company merely for asking for a waiver.
Sonia Sotomayor: Well, doesn't that reading, however, make suspect your claim that Congress would have intended -- without any discussion in the legislative history -- and our case law has said you have to read the intent to bar arbitration both from the language of the statute, its context, and its history. I just don't see any history here that supports your reading.
Scott L. Nelson: Well, Justice Sotomayor, I want to take that in two parts, because the first was -- was tied to the -- the attempt to procure a waiver and whether that calls into question whether Congress really could have meant this. It's sort of an unusual provision to say not only can you not waive rights, but it's a violation even to ask somebody to waive them. But that's no more unusual with respect to the right to sue than with respect to any other right under this statute. For example, the right to cancel after 3 days. Everybody would concede, I think, that that's a non-waivable right under the clear language of this statute. It's an unusual and perhaps onerous provision to say that if somebody just suggested that you waive that right to cancel and you never actually waived it, they still violated the statute. But you know, that's what Congress wrote here, because in this statute, it was concerned with an industry that it saw as overreaching pervasively in relation to the people that it was -- it was trying to sign up for its services. And that's why Congress wanted a very strong prohibition of waiver of rights that even attempted -- that even extended to attempt. Now, as to the--
Elena Kagan: Well, Mr. Nelson, but your friend Mr. McConnell says quite rightly that the rules in this area have been fairly clear, that Congress knew it had to make especially clear that it wanted to void arbitration agreements. So if that's the case, why didn't Congress do what it has the done in a thousand other statutes -- or maybe that's an overstatement, but a number of other statutes -- which is to say so?
Scott L. Nelson: --First of all, the rules -- the rules are not that Congress has to be especially clear in this context. And in fact, the Court has said over and over in the line of cases starting with Mitsubishi, McMahon, Rodriguez de Quijas and Gilmer that what has to be discernible -- and this also gets back to Justice Sotomayor's question -- it merely has to be discernible from the text or the legislative history or the structure and policies of the Act that -- that there's an intent to preclude waiver of the right to judicial remedies. That's not an unmistakable plain statement of rule; it's not a requirement of explicitness in the sense of explicitly using the term "arbitration". As even my friend stated, there is no requirement of magic words. What this Court said, what it told Congress in the years leading up to this statute is, you have to express a discernible intent to preclude waiver of the right to judicial remedies.
Antonin Scalia: Right. And -- and you don't need a magic word, but it seems to me you need something more than a provision dealing with what you have to tell to the people who -- who accept these contracts. I mean it's not in the substantive part of the statute. It's in the part of the statute that tells you what provisions of the -- of the act you have to notify the consumer of. It's a very strange way for Congress to say, "no arbitration". By putting this language in a section that has nothing to do with the rights under the act. It is intended to be a summary of the rights under the act.
Scott L. Nelson: Justice Scalia, I think it's not a strange way at all but a very direct way in the context here. Remember in Gilmer, what the Court was dealing with was a statute that as amended in an amendment that actually wasn't before the Court in Gilmer said you can't waive any right under the statute. But that then raises the question, well, what do we mean by rights under this statute. And the Court concluded there and reinforced in Piette that it interpreted that to mean substantive rights. In the absence of a textual indication, that when Congress used the words "rights" in this statute it was intending to protect the procedural right to go to court. Here we have something very different. Congress creates a cause of action which, as my friend says, colloquially someone could call that a right if they wanted to. But the cause of action says you can obtain this liability, the Court will determine that you obtain it through an action. That certainly gives you an entitlement to go to court. But Congress then goes further and it denominates that one of the rights under this statute, one of only two rights under this statute that are so-called.
Antonin Scalia: Do you think Gilmer would have come out differently with regard to one of the procedural rights involved in that case if the statute had happened to refer to procedural right as a right? Procedural rights are rights, aren't they?
Scott L. Nelson: Yes, they are definitely rights, and--
Antonin Scalia: And so if the statute in Gilmer had referred to one of the procedural rights in passing as a right, do you think that one would have been nonwaivable?
Scott L. Nelson: --I think that if Congress had expressly denominated something in that statute as a right--
Antonin Scalia: But procedural rights are rights. To denominate it as a right is--
Scott L. Nelson: --Well, but the question is does any right refer to both procedural and substantive rights.
Antonin Scalia: --Exactly.
Scott L. Nelson: Which is what this Court held did not in Payette. When Congress -- you know, it does matter what words Congress uses and "rights" is a word that can have a lot of meanings. This is a statute--
Antonin Scalia: But you're saying -- in answer to my question you're saying that just because the statute refers to procedural rights as rights, just as we do. All of a sudden, simply because the statute uses our normal language, procedural rights are elevated to the level of substantive rights and can't be waived. That can't be right.
Scott L. Nelson: --I think if Congress makes clear in the statute that what it means when it's talking about rights includes procedural rights and then it has a provision that says: any right under this statute is not subject to waiver, that creates a very strong inference that Congress meant what it said. But in fact--
Antonin Scalia: You are effectively referring to a procedural right as a right creates any inference at all. It is a right.
Scott L. Nelson: --It is a right, and when Congress has said -- I mean many of these statutes such as Title VII and FELA don't say that rights are nonwaiverable. This statute is a unique statute in its phrasing. It has a nonwaiver provision applicable to any right, and it has a list of rights. That's pretty unusual.
Ruth Bader Ginsburg: What else is nonwaivable besides the three days to back out?
Scott L. Nelson: Well the other thing that this statute makes nonwaivable besides rights is protections, which is a phrase that hasn't been tied to anything defined in the statute. But I think that, for example, all of the prohibited practices listed in section 1679(b) which are at pages 4A to 5A of the red brief, those would be nonwaivable. You couldn't waive your right not to have the credit repair organization make false statements to you. You couldn't waive your right under 1679 b (B) not to have to make a payment in advance to a credit organization. You can't waive the right to the disclosures provided for in 1679(c) or the protection provided by those disclosures. And 1679(d) requires written contracts and specifies those terms. Those would all be subject to the provision in the statute that says you can't waive any protection or any right provided by the statute.
Elena Kagan: Do you know, Mr. Nelson, whether this statute is unique in this sense: Do you know of any other statute that arguably voids arbitration agreements without saying that they are voiding -- that it's voiding an arbitration agreement?
Scott L. Nelson: No. There's a -- sort of a pending disagreement, perhaps, over whether the Magnus and Moss Warranty Act does have some very specific language in that statute about informal dispute resolution mechanisms and the manner in which that has been interpreted in agency regulations. So this is really the only statute that I'm aware of that uses this formulation. But you remind me of your earlier question which I never got to finish answering about the thousands of other statutes that say specifically that you can't enforce arbitration agreements. In fact there are very few such statutes. There were none at the time this statute was enacted. The first one appeared six years later. The only time that there has been any number of them is in the 2010 Dodd-Frank Act which came after what I would say is a lengthy period of considerable attention that had been paid by advocates before Congress to the issue of arbitration that I think led to the desire to use as sort of a belt and suspenders approach in those statutes. But what we have here in 1996 that had never before been a statute that prohibited the enforcement specifically of an arbitration agreement in those terms. And as Mr. McConnell said, there were some proposals, unenacted proposals that had been floated at that time. But I think the one thing that is clear is that we don't learn how Congress does things by looking at things that it didn't do. And that's all those unenacted proposals were.
Ruth Bader Ginsburg: Would your position of right to a lawsuit, would that extend to a post-dispute genuinely bargained for right to arbitrate?
Scott L. Nelson: No, I think not, Justice Ginsburg, and for this reason: The Court has always differentiated between post dispute settlements of claims and pre-dispute waivers, and has not considered agreements to settle, absent very special either statutory language such as in the ADEA which does apply a waiver provision to some types of settlements, and in the Fair Labor Standards Act where there's a very specific policy reason for prohibiting certain kinds of settlements. But generally the Court has not considered the settlement of a case to be a waiver of the right to bring a case. And that primarily came in the FELA cases that we cited in our briefs. But I think it was significant that in Wilko v. Swan, where the Court said we are going to interpret the securities act not to allow waivers of the right to sue, the Court said of course this wouldn't apply to something that came post dispute. And in McMahon v. Rodriguez de Quijas, what the Court disagreed with WILKO v. Swan about was whether the right to sue under that particular statute was nonwaivable. But it favorably commented on the notion that of course, even if it were, it wouldn't bar a post dispute agreement to arbitrate a claim as a way of settling an actually pending dispute. And that's why I think that when Congress enacted this statute, it would have been acting against that backdrop and would not have -- no one would have thought that a settlement agreement is a waiver of a right to sue. A settlement agreement is a resolution of the right to sue.
Ruth Bader Ginsburg: Another argument that is made, and perhaps to your position, is that the statute says that any waiver of any protection or right may not be enforced by any court or any other person. And the suggestion is "any other person" must contemplate an alternate dispute method that doesn't involve court, court or any other person.
Scott L. Nelson: Well I don't think that it necessarily contemplates an alternative dispute mechanism, because I think, for example, that would bar -- when someone goes to court to compel arbitration, they are enforcing an arbitration agreement by bringing an enforcement action. So that would bar them from doing that. So "any other person" doesn't necessarily mean arbitrators. But even to the extent that it comprehends arbitrators and maybe even one might have thought was principally applicable to them, you've got to realize that this statute, what it prohibits is only the waiver of the consumer's ability to arbitrate her CROA claim. It doesn't bar a credit repair organization from requiring a consumer to arbitrate the credit repair organization's breach of contract action. And in fact, most -- well over 99 percent of the consumer arbitrations that were handled by the arbitration forum that was designated in this contract were collection actions brought by a company that says this consumer owes me some money. So that's kind of the norm. That's the general run of arbitration cases. And if a credit repair organization were to initiate an arbitration against a consumer, that wouldn't violate the nonwaiver provision; but if the consumer then defended and said, wait a second, this contract is void because I never got the right to cancel, the provision would quite clearly prevent the arbitrator in that circumstance from saying, you waived the right to cancel.
John G. Roberts, Jr.: What about the argument that the consumer retains the right to sue since they can go into court with their complaint, but it's simply the rule that the court will apply is that you have to proceed to arbitration?
Scott L. Nelson: Well, I think it's -- it would be a remarkably crabbed notion of having a right to sue that meant you could file a complaint that was mandatorily subject to decision elsewhere. And second, and this goes to Justice--
John G. Roberts, Jr.: But that's frequently -- that's frequently the way these issues come up. I mean, people--
Scott L. Nelson: --Certainly.
John G. Roberts, Jr.: --You cannot be forced to arbitrate either under the agreement or any other provision, they will bring their complaint in court, and then there will be a judicial resolution of whether or not the proceeding should go to arbitration.
Scott L. Nelson: But -- but all that has been resolved in that -- in that suit is not the plaintiff's claim under CROA, which is what he has a right to sue on, all that's resolved is the issue of whether he has a contractual obligation to arbitrate which he has breached by going into court. And -- and this goes to Justice Kennedy's question. Under the FAA, you can compel arbitration when someone has filed a complaint that is in breach of an agreement to arbitrate. So they -- they don't actually have a right to sue. You can't stop them from going and filing a complaint, but once they do, you come in and say, no, you have no right to -- to proceed on the merits with this claim in court. And in fact that's -- that's exactly what the arbitration--
Anthony M. Kennedy: Can you -- can you get -- can you get damages in the arbitration for the cost of attorney's fees to go to the court to say that you had to go to the arbitration?
Scott L. Nelson: --No, I don't think you would generally have that entitlement under any -- any rule of law that is -- that is normally applicable in American courts. However, if your -- if your arbitration agreement provided for that, I'm afraid I can't point to any decision that would make it unenforceable, much as I would regret that result. So, you know, I think in a -- in a real sense the consumer has no right to -- right to sue merely because they can run into court and -- and then be compelled to arbitrate. And that's exactly why this Court in every one of its decisions enforcing arbitration agreements, or not, has referred to the arbitration agreement as a waiver of the right to proceed judicially. It's used that phrase over and over again in McMahon, Rodriguez de Quijas, Mitsubishi, and -- and Gilmer itself. The -- the common recognition of all those cases is that the arbitration agreement is a waiver of the person's right to proceed in court.
John G. Roberts, Jr.: You agree, I take it, that you would lose if the statute said "you have a cause of action? "
Scott L. Nelson: Yes. I -- you know, a cause of action I don't think would -- would do it for us. In fact, that's exactly what the ADEA says, the section that creates a judicial remedy is headed "Cause of Action". And so, you know, the question again is "right" is a word that -- that can be used in many senses. It's -- it's a word sort of like jurisdiction, it gets thrown around loosely. But when Congress says a right is non-waivable, it's referring to something specific, and the question is what is it referring to in a statute that uses the term "right" and uses it to describe the -- the ability to go to court. And -- and again, that right to sue language is important in two ways, because it not only specifies that the 1679(g) remedies are a right for purpose of this statute, but it says something about the nature of the right. It's a right to sue. It's not just a right to get those damages, to get your money back. And sue, as -- as I -- I think my friend agrees--
Antonin Scalia: Well -- well I guess it goes farther than that, your argument does, it seems to me. Your argument is the waiver, the non-waiver of rights provision would normally be read to mean non-waiver of substantive rights, but the notice given to the consumer here which refers to the procedural right to sue as a "right" eliminates that presumption. So I presume, therefore, that your position is that all procedural rights under this statute cannot be waived. Because, I mean, that's what we are talking about, what does right mean--
Scott L. Nelson: --Justice Scalia--
Antonin Scalia: --when it says rights are not waived? And our prior case law says ordinarily that means only substantive rights; but here in this statute, it refers to the right to sue which is certainly is a procedural right as a right. So I presume all the other procedural rights in this statute likewise cannot be waived.
Scott L. Nelson: --Well, I -- I'm not really sure there are other procedural rights in the statute.
Antonin Scalia: Oh, there are -- none.
Scott L. Nelson: I mean, unless -- the right to cancel within 3 days I suppose could be called a procedure in one sense, although it's -- it's -- I think it -- it probably would -- would generally be categorized as a substantive right. But as far as procedural rights of the consumer, they are set forth in 1679(g) and they are the right to bring an action either on an individual or class basis for the damages and attorney fees specified in that section. And that's what I think is being referred to as the right to sue. Now if there were something else in the statute that one might arguably call a right and arguably call procedural -- I mean, it's hypothetical because I don't think it's there -- but I -- I would not jump to the conclusion that it was a right if it was not comprehended by "right to sue". Because I think what that statement "right to sue" makes non-waivable is the right to sue. It's not just any procedural thing in this statute that one might loosely call a right.
Anthony M. Kennedy: Suppose the case were reversed. The liability section says you have a right to sue, and the disclosure section says you have a right to sue and go to arbitration. What result then?
Scott L. Nelson: Well--
Anthony M. Kennedy: It seems to me that under your -- well, I will let you answer.
Scott L. Nelson: --Well, Justice Kennedy, let -- let me divide it up. If the liability section said you had a right to sue and there were no disclosure -- disclosure section at all, I would say that's -- that's plenty good enough. If -- if the disclosure section says, you have a right to sue or to go to arbitration, I think you would have to then say sensibly what is Congress talking about when it's -- when it's referring to this, and you would have to read them together. And I would have a hard time standing up here and saying that a statute that told people "right to sue or arbitrate" meant right to sue only and foreclosed arbitration. And -- and, you know, I think -- I think that really would be a very different matter.
Elena Kagan: Mr. Nelson, you just said if the liability section said you have a right to sue that's okay, but if it says you have a cause of action that's not okay. But the right to sue is really just a colloquial way of expressing the first, so why should we draw the line between those two things?
Scott L. Nelson: Well, when you say "colloquial", I'm not -- I don't want to take offense with you, but I think that that's selling it a bit short. This -- this is a statute where Congress prescribed a notice, prescribed it in statutory terms, did it so people would have an understanding of what their rights were, and did it in a way that no reasonable consumer would understand meant oh, this non-waiverable right is not really to sue in the way that I would ordinarily understand the word, and even that way that courts use it, but actually to -- to do something else. So I -- I don't think it's colloquial in -- in a disparaging sense. What it is, is something that is designed to convey a clear meaning, and the clear meaning that it conveys is that you have a right to go to court. Now, of course, even a disclosure that you have a right to go to court wouldn't be enough to get you over the hump if you didn't also have a provision that made that right non-waiverable. But again, here, what you have is both. And -- and in doing that, in writing that statute, Congress was doing exactly what the Court had told it, it didn't do in Gilmer, it didn't do in McMahon, it didn't do in Mitsubishi. It created a right to a judicial remedy that is not subject to waiver. Unless the Court has any further questions, I will--
John G. Roberts, Jr.: Thank you, counsel. Mr. McConnell, you have ten minutes remaining.
Sonia Sotomayor: Actually, Mr. McConnell, can we go to the issue of class action? If we buy your argument that procedural and substantive rights are different, is it your position that you could seek a waiver of the class action even though this statute expressly contemplates class actions?
Michael W. McConnell: Actually, Justice Sotomayor, I think this statute specifically does not require -- it contemplates but does not require our -- class actions. If you look at -- at 1679b(a)(2)(B), which is the class action provision that is on page 59(a) of the appendix to the -- to the petition, all that it says is that in the case of a class action, here is how we would -- here's how the damages, the punitive damages, would be calculated. It does not say that there must be class actions. It doesn't make that a non-waiverable right at all.
Sonia Sotomayor: So your answer to me is that is waiverable. That is not a right contemplated by the right to sue.
Michael W. McConnell: Actually, my answer to you is that it's not a right to begin with--
Sonia Sotomayor: You have to meet--
Michael W. McConnell: --Whether waiverable or not.
Sonia Sotomayor: --But -- you have to meet the prerequisites of a class action before you are entitled to seek one. But your position is that's not a protected right?
Michael W. McConnell: May I -- if we were to hypothesize that the statute did provide that there shall be class provisions, which this does not -- I think this statute is agnostic on that, but the hypothetical statute were class actions are contemplated, I would not argue that that is necessarily waiverable. What I would argue is -- is that that could be vindicated through arbitration, that there can be, as this Court discussed just last term in Concepcion, there can be class arbitration proceedings--
Ruth Bader Ginsburg: But you -- but this arbitration agreement precludes class action, doesn't it?
Michael W. McConnell: --Yes, it does. And again, this statute does not require that there be class proceedings, I am only addressing a hypothetical statute that did.
Sonia Sotomayor: Unless -- unless we read the disclosure requirement of a right to sue to mean that you are entitled to bring your action in court, with whatever protections, procedural and substantive protections that entails.
Michael W. McConnell: Yes, and that seems to me just a further reason not to interpret a disclosure provision with a layman's language as importing, you know, very specific legal notions. I think this simply means -- right to sue simply means cause of action. And it's -- each of the rights I should point out in the disclosure provision is -- has its actual textual home elsewhere. None of them are created in the disclosure provision. Each of them is created elsewhere, either in this statute or another. To find out exactly what they entail, you look to the substantive provisions. Here, you would look to 1679g, and you would see that class actions are possible, but not required under this particular statute.
John G. Roberts, Jr.: Could you in an agreement waive the provisions of 1679g(b) that specify what a court shall consider in awarding punitive damages?
Michael W. McConnell: I don't think so, Mr. Chief Justice. Most lower courts create the right to punitive damages as a substantive right which would not be waiverable.
John G. Roberts, Jr.: Now, what -- what if you don't want your arbitrator to consider those four requirements? Could you waive particular aspects? I mean, that tells you that -- first of all, it says, of course, "the Court shall consider" but I take it your position is when they say "the Court", they mean the Court or arbitrator?
Michael W. McConnell: It means the decisionmaker. Many statutes of course refer to things that courts might do, even though those statutes can be vindicated in arbitration. Title VII for example has several provisions in which it says if the Court determines this, then it may do that, for example, issuing injunctions and so forth. I -- when you import the substantive provisions of a statute into an arbitration proceeding, everything that would be substantively available from a court becomes available from the arbitrator, and that's the way I would read the punitive damages section here. I note, by the way -- if I might just respond to a few of the points made by my friend in response to questions -- begin with Justice Sotomayor's interesting question about the fact that the statute appears to make even offering a waiver, offering an arbitration clause, a violation; it's actually even worse than that for two reasons. One is that under their reading, a settlement is surely just as much a waiver as an arbitration is. Now, they say, well, oh, well, it only means post-dispute waivers, but that is not what this statute says. This statute is about all waivers. In contrast to other statutes previously enacted, like the ADEA, which distinguish between pre-dispute and post-dispute waivers, this one does not. So their position suggests that even a settlement offer is a violation of this statute.
Ruth Bader Ginsburg: Well, Mr. Nelson just said no, that his position does include that fact. And I asked him about post-dispute and he brought up settlement as well. He said that their interpretation does not exclude settlement, in which the Plaintiff agrees--
Michael W. McConnell: Well, Justice Ginsburg, that was his answer, but what that tells us is that he is he is not giving us a plain language meaning of the statute, which is all that they have. Their entire position is based upon a plain language reading of the statute. Remember the way the Ninth Circuit begins its opinion by quoting Alice in Wonderland. It's -- it's all about plain language, but they do not offer us a plain language interpretation of this statute. In order to avoid absurd consequences like making settlement offers a violation of the statute, they have to create exceptions, unspecified exceptions, to the text. It would be much easier simply to follow the rules of construction that this Court had announced before this statute was enacted, and against which Congress operated.
John G. Roberts, Jr.: Well, one of those rules of construction is that you don't read statutes when -- to the extent they lead to absurd results. I think you can still say follow the plain language, but that doesn't mean you go so far as to say you can't enter into a settlement.
Michael W. McConnell: I think it's easier though simply to assume that Congress was using words in the way that this Court used them in Gilmer just a few years before, that that's a much more straightforward way of reading the statute.
Antonin Scalia: I'm not sure that a settlement is a waiver anyway. It's a vindication. You vindicate your right to a settlement. I don't know that you waive it.
Michael W. McConnell: Just as I think you can say that when you go to arbitration, you vindicate the substantive rights of the statute as well, and indeed this Court has used that very language in Mitsubishi with respect to -- to arbitration. The -- just a couple of other small points. My friend points out that this is the first statute in -- that at the time of this statute in 1996, that there had been no statute that explicitly barred arbitration, which is historically true but I think not particularly revealing. It was only in '85 in Mitsubishi and then '91 in Gilmer that Congress became aware that it needed to do this in statutory causes of action. And in -- by 1996, they were considering bills that explicitly avoided arbitration clauses. They weren't enacted, but this is for political reasons. Remember the political composition of Congress in 1996. It is not surprising that statutes voiding arbitration agreements become more common when the political composition of the Congress changes. This is fundamentally a political choice, and ought to be -- we ought to respect the choices that Congress has made. Unless there are further questions, I will waive the remainder of my time.
John G. Roberts, Jr.: Thank you, counsel.
Michael W. McConnell: Unless it's an un-waivable right.
John G. Roberts, Jr.: You have no right to time before the Court. Thank you, counsel. The case is submitted.