On June 16, 2006, in Merrill v. MBNA America Bank, N.A., Judge Haines ruled against MBNA's request for arbitration regarding an automatic stay violation, although he held that various other federal and state law violations should be determined by arbitration. Arbitration is a private claims resolution method favored by credit card companies to eliminate cost, delays and publicity associated with a public court process. Credit card companies have aggressively promoted arbitration to settle disputes over the past 10 years. Arbitration usually does not provide a consumer with the extensive discovery rights available through a court.
Judge Haines concluded that violations of the automatic stay are issues governed by the Bankruptcy code, and strictly the province of the Bankruptcy Court. By so ruling, Judge Haines disagreed with a significant opinion by the Second Circuit Court of Appeals in New York. As a result, MBNA will need to defend itself in the Maine Bankruptcy Court regarding its alleged violations of the automatic stay while also participating in an arbitration proceeding regarding several federal and state law violations.
For further explanations of the automatic stay and consumer rights against creditors, see information provided in articles in this website.