Like Causes?

Install the App
TRY NOW

house Bill H.R. 1423

Should Forced Arbitration Agreements be Invalidated?

Argument in favor

Forced arbitration agreements undermine the rights of workers and consumers in disputes with employers and companies, respectively. This bill would make predispute arbitration agreements invalid and unenforceable.

burrkitty's Opinion
···
09/20/2019
Forced arbitration is unconstitutional as it is denying the right to the due process of law. For example, the 7th Amendment of the Constitution guarantees all Americans the right to a trial by jury. Yet, there is a shady practice found within many businesses that makes exercising your 7th amendment rights a near impossibility in civil cases. That practice is known as forced arbitration. It is not uncommon for businesses to bury arbitration agreements within the fine print of a contract for consumers to sign. If you’ve ever applied for a credit card, opened a bank account, bought a car, or put a loved one in a nursing home, you’ve almost certainly signed an arbitration agreement without even knowing it! When you have to sign a contract with an arbitration agreement, you have been forced to waive your 7th Amendment rights. That means if you have a dispute with the company in question, you must settle it through arbitration. In these proceedings, there is no judge. There is no jury. Usually, you are not allowed to appeal the final decision. Additionally, arbitrations can be expensive to the plaintiff. The arbitration agreement often dictates what arbitration company must be used, a list from which the arbitrator must be selected, and what law will apply. As you can imagine, the companies that draft arbitration agreements are sure to include terms that favor them instead of you. Forced arbitration clauses create a barrier to holding wrongdoers responsible. The only way to change the enforcement of forced arbitration clauses is to change the Federal Arbitration Act. Congress has proposed several limitations on the scope of the Act in recent years. These efforts can be encouraged and supported.
Like (92)
Follow
Share
jimK's Opinion
···
09/20/2019
Yes, forced arbitration can obviously be abused and run counter to adequately addressing plaintiff concerns. Employees looking for work just agree because they need to work. Kind of like signing those cell phone agreements, or software update agreements if you want your cell phone to still work or have the software that you have already purchased work. I do think that agreed-to optional arbitration as a way to quickly resolve pertinent issues can still be an effective choice for all involved. I was asked to testify in a forced arbitration case involving federal employees (who cannot sue their employer nor ’officially’ go on strike). The process was fair. The arbitrator was chosen from a pool with some involvement of an employee union representative. I was in management and greatly pissed off way-high-up agency management by supporting the case for the employees. I thought the arbitrator and the process was fair; of course, we won. My point is that arbitration can be fair, but I can certainly see where a company appointed arbitrator could be greatly biased.
Like (60)
Follow
Share
Cheryl's Opinion
···
09/15/2019
Banned and invalidated..... about time politicians do what you always promise in your campaigns and be on the side of CONSUMERS, not corporations. Last I checked corporations were running to their offshore accounts weekly to shovel in the money you stole for them from consumers.
Like (45)
Follow
Share

Argument opposed

Arbitration agreements save time, money, and effort for everyone involved when disputes arise between employers & employees or companies & consumers. It would be better to reform arbitration than ban it altogether.

Doug's Opinion
···
09/20/2019
Like any legal contract, it’s only binding if all parties agree to the terms. No one is holding a gun to anyone’s head to sign these agreements. If a person has an objection they are free to negotiate terms of their liking or not enter in to the agreement.
Like (22)
Follow
Share
SneakyPete's Opinion
···
09/20/2019
Arbitration agreements save time, money, and effort for everyone involved when disputes arise between employers & employees or companies & consumers. It would be better to reform arbitration than ban it altogether.
Like (16)
Follow
Share
J's Opinion
···
09/20/2019
Why would labor unions be precluded from this law? That alone says there’s something seriously wrong with this law!
Like (11)
Follow
Share

What is House Bill H.R. 1423?

This bill — the FAIR Act — would make predispute arbitration agreements invalid or unenforceable if they require arbitration of an employment, consumer, antitrust, or civil rights dispute. It would also prohibit agreements and practices that interfere with the rights of individuals, workers, and small businesses to participate in a joint, class, or collective action related to an employment, consumer, antitrust, or civil rights dispute.

This bill wouldn’t affect arbitration provisions in contracts between employers and labor organizations or between labor organizations. However, it does nullify arbitration provisions that waive a worker’s right to seek judicial enforcement of a right arising from the U.S. Constitution, a state constitution, or a federal or state statute or policy.

This bill’s full title is the Forced Arbitration Injustice Repeal Act.

Impact

Consumers; workers; small businesses; predispute arbitration agreements; forced arbitration between employees and employers; forced arbitration between consumers and companies; employment, consumer, antitrust, or civil rights disputes; and joint, class, or collective actions related to employment, consumer, antitrust, or civil rights disputes.

Cost of House Bill H.R. 1423

A CBO cost estimate is unavailable.

More Information

In-DepthHouse Judiciary Subcommittee on Court, Intellectual Property and the Internet Chair Hank Johnson (D-GA) introduced this bill to eliminate forced arbitration clauses in employment, consumer, and civil rights cases and allow consumers and workers to agree to arbitration after a dispute occurs: 

“Forced arbitration agreements undermine our indelible Constitutional right to trial by jury, benefiting powerful businesses at the expense of American consumers and workers. Americans with few choices in the marketplace may unknowingly cede their rights when they enter contracts to buy a home or a cell phone, place a loved one in a nursing home, or start a new job. We must fight to defend our rights and re-empower consumers.”

Senate sponsor Sen. Richard Blumental (D-CT) adds

“There is a lot of use of the phrase ‘rigged system’ these days. One of the systems that is truly rigged against consumers, workers, and the American people is our current system of forced arbitration. Forced arbitration is unfair, unjust, and un-American. One of the fundamental principles of our American democracy is that everyone gets their day in court. Forced arbitration deprives Americans of that basic right. This kind of injustice has to end. The Forced Arbitration Injustice Repeal Act is a measure whose time has come.”

House Judiciary Committee Chairman Jerrold Nadler (D-NY), who is an original cosponsor of this bill, observes that mandatory arbitration hurts victims of numerous forms of injustices

“I am proud to join Senator Blumenthal and Congressman Johnson as an original cosponsor of the Forced Arbitration Injustice Repeal Act, or the FAIR Act, which would end the use of forced arbitration in consumer, employment, civil rights, and antitrust disputes. Victims of sexual assault, racial discrimination, and other forms of corporate abuse and misconduct deserve their day in court. As the Chairman of the House Judiciary Committee, I will not rest until we have fully restored these rights by passing historic legislation to end forced arbitration.”

The American Association for Justice supports this bill. Its CEO, Linda Lipsen, says: 

“Forced arbitration clauses buried in the fine print hurt everyone. If corporations know they won’t ever be held publicly responsible, our civil rights, as well as our public health and safety are at risk, from the cars we drive, to the jobs we take, and the food we eat. That’s what makes this legislation so important, and I commend the advocates and Members of Congress who stood up today to demand action.” 

In the context of sexual assault, #MeToo advocates argue that mandatory arbitration agreements often keep survivor experiences and perpetrator behaviors secret due to non-disclosure agreements. In response to these arguments, some large employers have begun reassessing their use of mandatory arbitration agreements, sometimes eliminating them altogether.

The American Health Care Association opposes efforts to ban the use of pre-dispute arbitration agreements. In a statement to McKnight’s Long-Term Care News, the organization’s senior vice president of government relations, Clif Porter II, says: 

“Banning arbitration agreements would eliminate a fair and efficient legal remedy that provides benefits to patients and providers. Skilled nursing facilities are just one of many healthcare providers that use pre-dispute arbitration. Residents with legitimate claims are awarded reasonable damages, oftentimes equal to the amount that would be awarded under litigation. We strongly oppose efforts to ban this long-used, effective procedure for residents and families to pursue legal recourse.”

Writing in the National Law Review, Sheppard, Mullin, Richter & Hampton LLP attorneys Garen E. Doge and David A. Alvarez note that arbitration has both positives and negatives. On the positive side, it’s typically much faster than court proceedings, thereby saving employers attorney hours and internal resources. Because many arbitration agreements also include confidentiality clauses to help shield employers from the embarrassment and reputational harm that can come from a public trial or media focus, arbitration agreements can also protect employers’ public images. Finally, arbitration agreements can compel aggrieved employees to pursue their claims individually, which makes collective actions much less likely. With these advantages in mind, Doge and Alvarez conclude, “It is easy to see how the advantages offered by mandatory arbitration agreements have resulted in their widespread implementation across the private sector.”

J.P. Morgan Chase, which uses arbitration agreements in the terms for all its credit cards, argues that arbitration agreements save everyone involved time and money. In a statement to CNBC Make It, Chase spokeswoman Patricia Wexler says: 

“When an arbitration process is designed appropriately, there are fewer barriers to bringing a claim in arbitration than bringing a claim in court, and it can be more convenient for claimants to obtain a hearing and to achieve a resolution of their claims. Arbitration may be conducted in person, by phone, email, or Skype, avoiding the need to take time off from work.”

However, on the downside, Doge and Alvarez note that because judicial review of arbitration decisions is severely constrained under both federal and state law, arbitration makes it difficult to appeal an arbitrator’s decision. Additionally, employers find it difficult to prevail using a motion to dismiss prior to trial, must pay the full cost of arbitration, and can be subject to very broad discovery obligations.

This legislation passed the House Judiciary Committee by a 22-14 vote with the support of 222 bipartisan House cosponsors, including 221 Democrats and one Republican, plus the support of a broad coalition of public-interest groups. Four amendments were proposed, of which three failed and one passed. 

This legislation's Senate companion, sponsored by Sen. Richard Blumental (D-CT), has 34 Senate cosponsors, including 33 Democrats and one Independent, and hasn’t yet received a committee vote. Writing in the National Law Review, Sheppard, Mullin, Richter & Hampton LLP attorneys Garen E. Doge and David A. Alvarez observe that this legislation is unlikely to pass the Republican-controlled Senate.  


Of NoteA study by the Economic Policy Institute, a nonprofit employee advocacy group, found that more than half (53.9%) of non-union private sector employers have mandatory arbitration procedures, and 65.1% of companies with 1,000 or more employees have mandatory arbitration procedures. The study also found that 56.2% of private sector nonunion employees were subject to mandatory employment arbitration procedures.

In a study of consumer and employment cases filed at the two major arbitration associations (the American Arbitration Association and Jams) over a five-year period from 2013-2018, the American Association for Justice (AAJ) found only about 30,000 recorded cases on file. Observing the small number of cases that end up in arbitration versus the number of consumers and workers subject to such agreements, AAJ’s public affairs director, Julia Duncan, argued that the data shows “forced arbitration is not really an alternative forum, it’s virtual immunity [for companies].”

In a 5-4 decision in May 2018, the Supreme Court held in Epic Systems v. Lewis that employers can use forced arbitration clauses that require workers to resolve disputes with their employer through arbitration and waive their right to pursue class action lawsuits.  

Justice Ruth Bader Ginsburg, who dissented in the Epic Systems v. Lewis decision, called the Court’s decision “egregiously wrong” and argued that the decision would lead to “huge under-enforcement of federal and state statutes designed to advance the well being of vulnerable workers.”

The majority argued that there are policy arguments on both sides of the issue when it comes to forced arbitration agreements, but concluded that the role of the courts is to interpret governing statutes. In the majority opinion, Justice Neil Gorsuch wrote:

“The respective merits of class actions and private arbitration as means of enforcing the law are questions constitutionally entrusted not to the courts to decide but to the policymakers in the political branches where those questions remain hotly contested.”


Media:

Summary by Lorelei Yang

(Photo Credit: iStockphoto.com / designer491)

AKA

Forced Arbitration Injustice Repeal Act

Official Title

To amend title 9 of the United States Code with respect to arbitration.

bill Progress


  • Not enacted
    The President has not signed this bill
  • The senate has not voted
      senate Committees
      Committee on the Judiciary
  • The house Passed September 20th, 2019
    Roll Call Vote 225 Yea / 186 Nay
      house Committees
      Committee on the Judiciary
      Antitrust, Commercial and Administrative Law
    IntroducedFebruary 28th, 2019

Log in or create an account to see how your Reps voted!
    Forced arbitration is unconstitutional as it is denying the right to the due process of law. For example, the 7th Amendment of the Constitution guarantees all Americans the right to a trial by jury. Yet, there is a shady practice found within many businesses that makes exercising your 7th amendment rights a near impossibility in civil cases. That practice is known as forced arbitration. It is not uncommon for businesses to bury arbitration agreements within the fine print of a contract for consumers to sign. If you’ve ever applied for a credit card, opened a bank account, bought a car, or put a loved one in a nursing home, you’ve almost certainly signed an arbitration agreement without even knowing it! When you have to sign a contract with an arbitration agreement, you have been forced to waive your 7th Amendment rights. That means if you have a dispute with the company in question, you must settle it through arbitration. In these proceedings, there is no judge. There is no jury. Usually, you are not allowed to appeal the final decision. Additionally, arbitrations can be expensive to the plaintiff. The arbitration agreement often dictates what arbitration company must be used, a list from which the arbitrator must be selected, and what law will apply. As you can imagine, the companies that draft arbitration agreements are sure to include terms that favor them instead of you. Forced arbitration clauses create a barrier to holding wrongdoers responsible. The only way to change the enforcement of forced arbitration clauses is to change the Federal Arbitration Act. Congress has proposed several limitations on the scope of the Act in recent years. These efforts can be encouraged and supported.
    Like (92)
    Follow
    Share
    Like any legal contract, it’s only binding if all parties agree to the terms. No one is holding a gun to anyone’s head to sign these agreements. If a person has an objection they are free to negotiate terms of their liking or not enter in to the agreement.
    Like (22)
    Follow
    Share
    Yes, forced arbitration can obviously be abused and run counter to adequately addressing plaintiff concerns. Employees looking for work just agree because they need to work. Kind of like signing those cell phone agreements, or software update agreements if you want your cell phone to still work or have the software that you have already purchased work. I do think that agreed-to optional arbitration as a way to quickly resolve pertinent issues can still be an effective choice for all involved. I was asked to testify in a forced arbitration case involving federal employees (who cannot sue their employer nor ’officially’ go on strike). The process was fair. The arbitrator was chosen from a pool with some involvement of an employee union representative. I was in management and greatly pissed off way-high-up agency management by supporting the case for the employees. I thought the arbitrator and the process was fair; of course, we won. My point is that arbitration can be fair, but I can certainly see where a company appointed arbitrator could be greatly biased.
    Like (60)
    Follow
    Share
    Banned and invalidated..... about time politicians do what you always promise in your campaigns and be on the side of CONSUMERS, not corporations. Last I checked corporations were running to their offshore accounts weekly to shovel in the money you stole for them from consumers.
    Like (45)
    Follow
    Share
    I'm sick of big business bending the rules to always take unfair advantage of consumers. It's time that consumers get fair treatment.
    Like (24)
    Follow
    Share
    You are forced into signing these arbitration agreements in order to receive services (like Kaiser healthcare). I always feel blindsided when confronted with these forms. It’s like sign or die. You don’t know in advance what egregious harm may come to you and you should not have your right to sue taken from you.
    Like (22)
    Follow
    Share
    Arbitration agreements save time, money, and effort for everyone involved when disputes arise between employers & employees or companies & consumers. It would be better to reform arbitration than ban it altogether.
    Like (16)
    Follow
    Share
    Absolutely!!! I can’t tell you how fantastic it is to see a bill that will have a phenomenally positive impact on every citizen come to a vote! About damn time something is done to stop ridiculous forced arbitrations! Thank you for being on the consumer’s side, not the corporations side! More bills like this to protect consumers please!!
    Like (16)
    Follow
    Share
    Forced Arbitration denies a person their due process. If a person voluntarily chooses arbitration, that's one thing, being forced into it is quite another...and that flys in the face of due process.
    Like (15)
    Follow
    Share
    In general, I favor this. However, trials are costly. I would further support making trial costs free so poor people could access our legal system without the scariest phase: legal fees. How that should be done is a matter of debate, but that’s the debate I’d like to have! I don’t want to debate if you can only work for someone if (in essence) your employer’s lawyer gets to decide the outcome of a dispute.
    Like (15)
    Follow
    Share
    Why would labor unions be precluded from this law? That alone says there’s something seriously wrong with this law!
    Like (11)
    Follow
    Share
    The power that corporations and employers wield over us is already immense! There is no need or justification for this power to be magnified by barring us from the courts! These corporations are afraid that their crimes will cost them--so they block all access to those who can hold them accountable!
    Like (11)
    Follow
    Share
    Forced arbitration agreements undermine the rights of workers and consumers in disputes with employers and companies, respectively. This bill would make predispute arbitration agreements invalid and unenforceable.
    Like (10)
    Follow
    Share
    For any company to require an American to sign away a basic American right in order to obtain services should be illegal. Everyone knows it’s wrong. If forced arbitration didn’t favor corporations, they would not require it. Please pass this legislation and stop it now.
    Like (8)
    Follow
    Share
    This is not the governments business.
    Like (7)
    Follow
    Share
    When will the worker have rights over the employer? They are the ones doing the work.
    Like (6)
    Follow
    Share
    We should not be forced into arbitration.
    Like (6)
    Follow
    Share
    Finally. It is about time we see a bill that will positively impact every citizen. About time something is done to stop ridiculous forced arbitrations! It’s about time the government is doing something for the consumer, not the corporations! We must have More bills like this to protect consumers.
    Like (6)
    Follow
    Share
    Forced arbitration agreements undermine the rights of workers and consumers in disputes with employers and companies, respectively. This bill would make predispute arbitration agreements invalid and unenforceable.
    Like (6)
    Follow
    Share
    No one should be forced into arbitration. Our country pledge states: with liberty and justice for all. That should include pursuing a case in the courts—and everyone should be allowed to do so.
    Like (6)
    Follow
    Share
    MORE