Portfolio Recovery Associates, LLC v. Iris Pounds, et al.

The Federal Arbitration Act prohibits contract-law rules that discriminate against arbitration, as this Court has held again and again. See, e.g., Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1622 (2018); Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 631 (2009). Yet the guerrilla war on arbitration wages on. Here, the state courts created a novel rule of contract law that discriminates against arbitration rights exercised by assignees. Those courts held that an undisputed assignee could not enforce undisputedly valid arbitration agreements without presenting evidence of “additional intent by the original creditors to assign” the right to arbitrate to the assignee. Pounds v. Portfolio Recovery Assocs., LLC, 851 S.E.2d 423, 431 (N.C. Ct. App. 2020). The question presented is: Whether the FAA preempts a state rule of contract law that requires assignees seeking to enforce arbitration rights to meet a higher evidentiary burden than is needed to enforce other contractual rights.