Goldman Sachs v. Brown: Supreme Court Will Decide If Bankruptcy Stay Claims Must Be Arbitrated

The U.S. Supreme Court agreed on Friday, Nov. 6, 2026, to decide Goldman Sachs v. Brown, a case asking whether a bankruptcy court can refuse to send a debtor's claim that a creditor willfully violated the automatic stay to arbitration, even though the debtor signed a valid arbitration clause. The answer will decide whether card issuers can move stay-violation suits, including putative class actions over post-petition collection, out of bankruptcy court and into individual arbitration. The grant puts the Federal Arbitration Act (FAA) and the Bankruptcy Code in front of the justices together for the first time in years.

The case, Goldman Sachs Bank USA v. Brown, No. 25-1408, comes from a divided Fourth Circuit decision of March 18, 2026. Two Virginia debtors say Goldman, which issues the Apple Card, kept trying to collect their card balances after they filed for bankruptcy. Goldman filed a motion to compel arbitration under its cardholder agreement. The bankruptcy court denied it, the district court affirmed, and the Fourth Circuit affirmed 2-1. Goldman says that result conflicts with the Second Circuit, and the Court will now resolve the dispute in the October 2026 Term.

What is Goldman Sachs v. Brown about?

Goldman Sachs v. Brown is about which body enforces the automatic stay: the bankruptcy court that imposed it, or a private arbitrator chosen under a consumer card agreement. When a debtor files a petition, 11 U.S.C. § 362(a) immediately bars most collection activity against the debtor and the estate. Section 362(k) gives an individual injured by a willful violation of the stay the right to recover actual damages, including costs and attorneys' fees, and, in appropriate circumstances, punitive damages.

Rhea Ann Brown and Gregory Kevin Maze brought those claims against Goldman Sachs Bank USA, which does business as Marcus by Goldman Sachs. They allege the bank continued collection efforts on pre-petition Apple Card debt after their bankruptcy filings. They also seek to represent a nationwide class of similarly situated debtors. Goldman's position is simple: the cardholder agreement contains an arbitration clause, the FAA requires courts to enforce it as written, and nothing in Section 362(k) overrides that command.

The question presented, as framed in Goldman's petition, is whether, and under what circumstances, a bankruptcy court may decline to enforce a valid arbitration agreement with respect to Section 362(k) claims.

What did the Supreme Court decide on November 6, 2026?

On Nov. 6, 2026, the Supreme Court granted certiorari in Goldman Sachs v. Brown and added the case to its argument docket for the 2026-27 term; it did not decide the merits. A grant means at least four justices voted to hear the case. It says nothing about how the Court will rule.

The grant followed a long stay on the conference list. SCOTUSblog flagged the petition among the first relists of the term in October, and Bloomberg Law reported that the justices considered it at four consecutive conferences before granting review. Goldman filed the petition on June 16, 2026. The debtors filed their brief in opposition at the end of August. Goldman's reply followed on Sept. 9, 2026. The American Bankers Association filed an amicus brief supporting Goldman in August. Bloomberg Law reported that Latham & Watkins represents the bank.

The Apple Card dispute behind the case

The facts are ordinary for consumer bankruptcy, which is part of why the case matters. Brown filed under Chapter 13 in 2023 (main case No. 23-70426, Bankr. W.D. Va.). Maze filed under Chapter 7. Both listed Goldman Apple Card debt. In March 2024 they filed an adversary proceeding (A.P. No. 24-07009) in the U.S. Bankruptcy Court for the Western District of Virginia, Roanoke Division. They alleged that Goldman sent payment demands and collection calls after the petitions were filed, which would violate the stay.

The complaint seeks damages under Section 362(k), including punitive damages, and class-wide relief. That class allegation is the economic heart of the fight. A single debtor's stay claim may be worth only a few thousand dollars in damages and fees. A class of debtors across the country who received the same post-petition communications is a different exposure. The Apple Card agreement, like most card agreements, pairs its arbitration clause with a class action waiver. If the claims must be arbitrated, they proceed one debtor at a time before a private arbitrator, not as a class before a bankruptcy judge.

Since the complaint was filed, the two debtors' cases have diverged. According to the debtors' brief in opposition, Brown's Chapter 13 case remains open and the stay is still in effect for her. Maze's Chapter 7 case closed after his discharge. That split matters for the circuit-conflict argument discussed below.

What did the Fourth Circuit hold in Goldman Sachs v. Brown?

The Fourth Circuit held that a bankruptcy court may refuse to compel arbitration of a debtor's Section 362(k) claim for willful violation of the automatic stay when arbitration would inherently conflict with the purposes of the Bankruptcy Code, and it found that conflict here. The panel heard argument on Jan. 29, 2026 and decided the case on March 18, 2026 in a published opinion, No. 25-1439. Judges Paul V. Niemeyer, Robert B. King and Pamela Harris sat on the panel. Judge King dissented, so Judges Niemeyer and Harris formed the majority.

The majority applied the framework from Shearson/American Express Inc. v. McMahon, 482 U.S. 220 (1987). Under McMahon, a party opposing arbitration of a federal statutory claim must show that Congress intended to preclude arbitration of that claim. That intent can appear in the statute's text, its legislative history, or an inherent conflict between arbitration and the statute's underlying purposes. The court treated the stay claim as core to the bankruptcy, both statutorily and constitutionally. It reasoned that sending such claims to arbitration would weaken the bankruptcy court's power to supervise and enforce its own stay. It would also undercut the centralized resolution of disputes that the Bankruptcy Code is designed to achieve.

The majority distinguished the Second Circuit's decision in MBNA America Bank, N.A. v. Hill, 436 F.3d 104 (2d Cir. 2006). In Hill, the court ordered arbitration of a stay-violation claim, but the debtor's bankruptcy case had already closed. In Brown and Maze's adversary proceeding, by contrast, the bankruptcy proceedings were open when the motion to compel arbitration was decided. Consumer bankruptcy advocates who filed amicus briefs below added a uniformity point that echoes the majority: arbitral awards are individualized and subject to only narrow judicial review, so arbitrators could apply the stay inconsistently.

Judge King's dissent would have reversed and ordered arbitration. He read McMahon, the Fourth Circuit's own earlier decision in Moses v. CashCall, Inc., 781 F.3d 63 (4th Cir. 2015), and Hill as pointing the other way. He also warned that the majority had needlessly created what he called a clear circuit split with the Second Circuit. That language became the centerpiece of Goldman's petition.

Before the Fourth Circuit, U.S. District Judge Robert S. Ballou of the Western District of Virginia had affirmed the bankruptcy court's order denying arbitration (No. 7:24-cv-00490).

Can a bankruptcy court refuse to enforce an arbitration agreement?

Under current lower-court law, a bankruptcy court can refuse to enforce an arbitration agreement only in narrow circumstances: generally when the claim is a core bankruptcy proceeding and arbitrating it would inherently conflict with the purposes of the Bankruptcy Code. For non-core claims, such as ordinary state-law contract disputes that merely involve a debtor, courts usually hold that the bankruptcy judge has no discretion to deny arbitration.

That two-step approach is not in the text of either statute. The FAA makes arbitration agreements "valid, irrevocable, and enforceable," subject to ordinary contract defenses. The Bankruptcy Code does not mention arbitration. The circuits built the test from McMahon. The Fifth Circuit was the first to apply it in bankruptcy, in In re National Gypsum Co., 118 F.3d 1056 (5th Cir. 1997). It asked whether there is an inherent conflict between arbitration and the underlying purposes of the bankruptcy laws, and it framed the inquiry around core proceedings.

The doctrine is unstable for a familiar reason. The Supreme Court has spent four decades enforcing arbitration agreements against federal statutory claims. Its decisions include McMahon (securities and RICO claims), CompuCredit Corp. v. Greenwood, 565 U.S. 95 (2012) (Credit Repair Organizations Act), and Epic Systems Corp. v. Lewis, 584 U.S. 497 (2018) (class waivers in employment). In each case the Court demanded a clear congressional command before displacing the FAA. Goldman's petition argues that the "inherent conflict" route lets lower courts find that command in policy rather than text. The ABA amicus brief made the same pitch, urging the Court to anchor any inherent-conflict analysis primarily in statutory text.

The debtors' answer is that the automatic stay is unlike any other federal right. It is an injunction that arises from the bankruptcy filing itself. The court that administers the estate enforces it, and it protects creditors collectively as well as the debtor. On that view, letting an arbitrator decide whether a creditor violated it is not a matter of choosing a forum for a private claim. It hands part of the bankruptcy court's own enforcement power to a private decision-maker.

What is the circuit split in Goldman Sachs v. Brown?

The circuit split in Goldman Sachs v. Brown is between the Fourth Circuit, which let a bankruptcy court keep a Section 362(k) stay-violation claim out of arbitration, and the Second Circuit, which in MBNA v. Hill (2006) required arbitration of a similar stay claim. The debtors deny that the split is real. They say Hill turned on the fact that the bankruptcy case had closed, so the decisions are consistent. The Court evidently found the conflict, or the question, important enough to resolve.

The wider landscape shows why the Court may have wanted to step in. The circuits use the same McMahon-based test but reach results that depend on how each panel weighs the facts.

Circuit	Decision	Claim type	Result
Second	MBNA America Bank, N.A. v. Hill, 436 F.3d 104 (2006)	Automatic-stay violation; bankruptcy case closed	Arbitration compelled
Second	In re Anderson, 884 F.3d 382 (2018)	Violation of the discharge injunction under 11 U.S.C. § 524	Arbitration denied; core claim, inherent conflict
Fourth	Goldman Sachs Bank USA v. Brown, No. 25-1439 (2026)	Willful automatic-stay violation under § 362(k); cases open when decided	Arbitration denied, 2-1
Fifth	In re National Gypsum Co., 118 F.3d 1056 (1997)	Core bankruptcy claims	First circuit to adopt the inherent-conflict test
Ninth	In re Thorpe Insulation Co., 671 F.3d 1011 (2012)	Dispute over insurer settlement in an asbestos Chapter 11	Arbitration denied

The table shows the pattern Goldman will press. The same court can compel arbitration of one bankruptcy claim and refuse it for another, with the line drawn case by case. A ruling from the Supreme Court could keep that case-by-case approach, replace it with a text-only test that almost always favors arbitration, or carve out stay and discharge claims as a category.

Timeline: from Apple Card collection calls to the Supreme Court

Date	Event
2023	Rhea Ann Brown files a Chapter 13 petition in the Western District of Virginia (No. 23-70426); Gregory Kevin Maze files under Chapter 7
March 2024	Brown and Maze file adversary proceeding No. 24-07009 against Goldman Sachs Bank USA, alleging willful stay violations and seeking class relief
2024	Bankruptcy court denies Goldman's motion to compel arbitration
2025	U.S. District Judge Robert S. Ballou (W.D. Va., No. 7:24-cv-00490) affirms
Jan. 29, 2026	Fourth Circuit hears argument (No. 25-1439)
March 18, 2026	Fourth Circuit affirms 2-1; Judge King dissents
June 16, 2026	Goldman files its petition for certiorari (No. 25-1408)
August 2026	American Bankers Association files amicus brief; debtors file brief in opposition
Sept. 9, 2026	Goldman files its reply brief
October 2026	Petition relisted across multiple conferences
Nov. 6, 2026	Supreme Court grants certiorari
2027 (expected)	Oral argument; decision expected by late June or early July 2027

What the parties will argue

Goldman's merits case will likely follow the petition. First, it will say an arbitration agreement covering the dispute is valid and the FAA requires enforcement. Second, it will argue that a party seeking to avoid arbitration of a federal claim must point to a contrary congressional command, and Section 362(k) contains none. Third, it will say that any "inherent conflict" exception must rest on a true, irreconcilable clash with the statute's text, not on general bankruptcy policy. Goldman will also stress that the issue arises often, because consumer creditors with arbitration clauses face stay-violation suits in bankruptcy courts across the country.

The debtors will defend the judgment on narrower ground. They will argue that the automatic stay is a court-enforced injunction, not a private right, and that enforcing it is central to what a bankruptcy court does. They will also argue that the rule Goldman wants would divide stay enforcement between bankruptcy judges and arbitrators. They may press the vehicle points from their brief in opposition: Brown's Chapter 13 case is still open, Maze's Chapter 7 case is closed, and Hill involved a closed case. If the Court sees a difference between open and closed cases, that distinction could decide the outcome.

The National Consumer Bankruptcy Rights Center and the National Association of Consumer Bankruptcy Attorneys, which filed amicus briefs for the debtors in the Fourth Circuit, said they would participate at the merits stage if review was granted. Bank trade groups and consumer creditor coalitions can be expected to file on Goldman's side.

When will the Supreme Court decide Goldman Sachs v. Brown?

The Supreme Court is expected to hear argument in Goldman Sachs v. Brown in 2027 and decide it by late June or early July 2027, the end of the October 2026 Term. Because cert was granted in early November, merits briefing will run through the winter. The case will likely be argued in the late winter or spring. The Court publishes its argument calendars a few weeks in advance.

Until then, the Fourth Circuit's decision remains binding in Maryland, Virginia, West Virginia, North Carolina and South Carolina. A cert grant does not vacate it. Creditors facing new stay-violation suits in those states may ask bankruptcy courts to stay the proceedings pending the Supreme Court's ruling. Debtors' counsel may resist on the ground that the stay itself needs immediate enforcement. Note also that under Coinbase, Inc. v. Bielski, 599 U.S. 736 (2023), an appeal from the denial of a motion to compel arbitration automatically halts district court proceedings while it is pending.

What it means for card issuers, debtors' counsel and mass arbitration practitioners

For card issuers and other consumer creditors. The case decides whether an arbitration clause and class action waiver protect a creditor once the borrower files for bankruptcy. A win for Goldman would mean that stay-violation suits, even ones pleaded as nationwide classes, could be pushed into individual arbitration. That would sharply reduce the aggregate exposure from collection systems that fail to flag bankrupt accounts. A loss would confirm that, at least in some circuits, the bankruptcy court is a forum where class claims over post-petition collection can proceed regardless of the contract. Compliance teams should treat bankruptcy-flag failures as litigation risk now, not after June 2027.

For consumer bankruptcy counsel. Section 362(k) suits remain viable in the Fourth Circuit for now, and Anderson still protects discharge-injunction claims in the Second Circuit. Debtors' lawyers in other circuits should expect more motions to compel arbitration while the case is pending. They should build the record on why the claim is core, whether the bankruptcy case is open, and how arbitration would affect the stay. Those are the facts the Fourth Circuit relied on.

For drafters. Most consumer arbitration clauses say nothing about bankruptcy. If the Court adopts a text-only test, standard clauses will reach stay-violation claims without change. If it preserves a bankruptcy exception, drafters may add express carve-outs, or bankruptcy-specific delegation language, to avoid litigating the question claim by claim. A delegation clause that sends arbitrability questions to the arbitrator may not settle this one either, because the McMahon inquiry asks whether Congress displaced the FAA, a question that bankruptcy courts in this line of cases have resolved themselves.

For mass arbitration practitioners. The case is a reminder that the battle over aggregation is often a battle over forum. Bankruptcy courts are one of the few federal venues where consumers can still pursue class-wide relief against companies whose contracts require individual arbitration. If the Court closes that door, claimants' firms that already file mass arbitration demands against card issuers before the American Arbitration Association (AAA) or JAMS may begin filing stay-violation claims the same way. Thousands of individual demands would then replace a single adversary class action, with the provider fee exposure that comes with them. If the Court keeps the door open, expect more stay-violation class actions in bankruptcy courts and pressure on issuers to settle them there.

For the broader FAA debate. Brown is the Court's chance to say whether the McMahon "inherent conflict" route survives at all. A sweeping opinion could affect arbitrability fights well beyond bankruptcy, wherever litigants argue that a federal statute's structure, not its words, rules out arbitration.

Frequently asked questions

What is Goldman Sachs v. Brown?

Goldman Sachs v. Brown, No. 25-1408, is a U.S. Supreme Court case asking whether a bankruptcy court may refuse to enforce a valid arbitration agreement for a debtor's Section 362(k) claim that a creditor willfully violated the automatic stay. The Court granted review on Nov. 6, 2026.

What did the Fourth Circuit decide in Goldman Sachs v. Brown?

On March 18, 2026, the Fourth Circuit held 2-1 that the bankruptcy court properly refused to compel arbitration. It found that arbitrating the stay-violation claims would inherently conflict with the Bankruptcy Code's purposes. Judge Robert B. King dissented.

Does Goldman Sachs v. Brown affect Apple Card holders in bankruptcy?

Not yet. The case arises from Apple Card debt, but the Supreme Court has only agreed to hear it. Until a decision, expected by mid-2027, the Fourth Circuit's ruling stands in that circuit, and cardholders' stay-violation claims there can proceed in bankruptcy court.

What is the circuit split in Goldman Sachs v. Brown?

Goldman argues the Fourth Circuit's ruling conflicts with the Second Circuit's 2006 decision in MBNA America Bank v. Hill, which compelled arbitration of a stay-violation claim. The debtors say there is no real split, because the bankruptcy case in Hill had already closed.

When will the Supreme Court rule in Goldman Sachs v. Brown?

Argument is expected in 2027, and a decision is likely by late June or early July 2027, at the end of the October 2026 Term.