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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.
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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.
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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.
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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.
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SneakyPete's Opinion
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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.
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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!
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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

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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.

    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 (90)
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    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)
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    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)
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    I'm sick of big business bending the rules to always take unfair advantage of consumers. It's time that consumers get fair treatment.
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    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.
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    An ever growing list of trumps accomplishments and of those in congress who support him: Most recent: Blocking information that pertains to the safety of our country from reaching congress. Has been threatening NOAA, a federal agency, with punishment if they do not disavow the truth and side with his lies. Invited the Taliban to Camp David the week of 9/11. #PussyAssBitch He’s doctoring weather maps to try and prove he’s not an idiot. Has stayed at trump properties 293 days in 3 years, that’s our tax dollars going directly into his pocket. Took money from military daycares to pay for a wall that won’t work and no one wants. The Vice President and the Attorney General are both spending tax payer dollars on trump hotels, lining his pockets and currying his favor. Privately instructed aides to skirt laws and regulations to get the wall built faster — and told them he will pardon them if necessary. Pressuring a government agency to give a contract for his wall to a company whose chief executive is a donor to one of his top GOP allies in Congress. Took hundreds of millions from 127 different projects (FEMA being one of those) for his wall. Thinks nuking a hurricane is an idea. Pushing to host the next G-7 at one of his own resorts. Taunted Iran by tweeting a classified image of an Iranian rocket that had exploded, thereby potentially compromising U.S. intelligence capabilities. His own company would save millions from the low interest rates he is demanding. Was going to give you tax cuts through your paychecks but decided not to. Destroying the economy with HIS trade war. We will soon average a 1.2 trillion deficit. He is repeating NRA talking points on background checks so expect no action taken regardless of the fact there has been 27 arrested over threats to commit mass attacks since El Paso( NOT TOLEDO). Made fun of republicans being afraid of the NRA and then caved after a 30 minute phone conversation with them. Bragged about indefinite child detention because it brings families together. Refusing flue shots, that protect us all(google influenza pandemic), to immigrant children. Attacking fellow congresswomen in really disgusting ways and making anti-Semitic remarks about Jews calling them disloyal. Thinks he’s the chosen one based on a conspiracy theory web sight. Impeachment: Obstruction of Justice. Profiting from the Presidency. Collusion - They had a meeting & lied about it. Advocating political & police violence. Abuse of power. Engaging in reckless behavior. Persecuting political opponents. Attacking the free press. Violating immigrants Right to Due Process. Violating campaign finance laws. Racist: Speaks directly to and often tweeting straight from white supremacists. Calls them very fine people. Told fellow congresswomen to go back where they came from. Called them shit hole countries. Called them murderers and rapists. Calls her Pocahontas. Took out full page adds calling for the death of five innocent black kids in New York, 1989. Literally has said in an interview he has Hitlers speeches, My New Order in his nightstand. Our Money: Spent campaign finance money on hush payments to silence a porn star he had an affair with in order to hide it from the voters. Has spent over $100 million of our tax dollars playing golf at his own golf courses. Has never divested from companies and advertises and profits off the White House. Was going to cut Medicaid and Medicare funding to pay for the tax cuts he gave to the rich. Is actively destroying farmers lives with his trade wars that we all know only hurts our pockets not Chinas. Has made the lives of every truck driver across America as well as our own, more dangerous by removing safety regulations that only benefits the pockets of the CEOs of those companies. Has removed any and all protections we had in place from work safety, environment, women’s rights, LGBTQ rights and gives that power back to the CEOs, oil companies, men and old white men. Saudi funded lobbyist rented 500 rooms at a trump hotel he never divested from right after he became president. Wonder why? Sexual Predator: Accused by more than 20 women of molestation and rape. Bragged about said molestation on tape. Has cheated on all three wives (see above). Has made sexual remarks on camera about his daughter. Belittles and bully’s strong women. Not even sure he’s aware he has two daughters. Idiot: Has allowed North Korea to grow there nuclear weapons program. Took the side of Putin over America’s own security agencies on the national stage. Lacks the intelligence and facts needed to communicate on a global level much less national one. Makes policy decisions based on FOX media. Lies when speaks. Doesn’t believe in science and quite often displays his ignorance of it. Russia: Lied about meetings with Russians. Lied about a trump tower Moscow. Personal attorney Michael Cohen (same guy who broke campaign finance laws under trumps direction) had contacts with russian officials. National Security aide Flynn resigned over Russian contacts. Jeff Sessions recused himself because of Russian contacts. Manafort resigned because of Russian contacts. Campaign foreign policy adviser Papadopoulos met with Russians then bragged about it to Australians who then turned that info over to our FBI. Sixteen campaign officials had contacts with Russia and at least nine others new about it. Russian mobster lived in trump tower. trump casino was flagged 106 times for lax money laundering standards and same Russian frequently stayed at trump casino. Has been selling real estate to Russians for years. It really is surprising how many connections to Russians this man has. Rick Scott, Marco Rubio, Bill Posey You are my representatives. OLC policy: The indictment or criminal prosecution of a sitting President would unconstitutionally undermine the capacity of the executive branch to perform its constitutionally assigned functions. It’s time to do your job. You swore an oath to this country, it’s people and me to uphold the constitution. The president has never upheld that oath. How do you want to be remembered?
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    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!!
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    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.
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    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.
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    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.
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    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!
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    Why would labor unions be precluded from this law? That alone says there’s something seriously wrong with this law!
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    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)
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    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.
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    This is not the governments business.
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    When will the worker have rights over the employer? They are the ones doing the work.
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    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.
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    We should not be forced into arbitration.
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    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.
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