Delighted to post from friend of the blog, Jean Sternlight:
Those of us who have been around the block a few times are quite familiar with ye olde battle to defeat “mandatory” or “forced” or “cram down” arbitration in consumer, employment and other contexts. I aimed my first shot at the practice in an article now more than twenty years old, “Panacea or Corporate Tool?: Debunking the Supreme Court’s Preference for Binding Arbitration.” This is old news.
What is new is that Congressional legislators have just introduced bills in the House and Senate to (again) try to eradicate mandatory arbitration. Niftily titled the “Forced Arbitration Injustice Repeal Act” (FAIR) the legislation (H.R. 1423, S. 610) would amend the Federal Arbitration Act to:
(1) prohibit validity or enforceability of any predispute arbitration agreement with respect to employment, consumer, antitrust, or civil rights disputes;
(2) prohibit predispute joint-action waivers (think class actions or collective actions or joint actions) with respect to employment, consumer, antitrust, or civil rights disputes; and
(3) assign interpretation of this new law to courts, rather than arbitrators, even if the arbitration agreement purports to delegate such interpretation to an arbitrator.
Thus, the legislation is seeking to counter various Supreme Court decisions that are unpopular with opponents of forced arbitration including: Circuit City v. Adams (allowing forced employment arbitration notwithstanding FAA Section 1); AT&T Mobility v. Concepcion (allowing companies to use arbitration to prohibit consumers’ use of class action in fraud case); American Express Co. v. Italian Colors Restaurant (allowing companies to use arbitration to protect themselves from antitrust class actions); and Rent-A-Center West v. Jackson (allowing companies to use arbitration to delegate decisions over validity of arbitration clauses to the arbitrator). Yes, this bill is fairly similar to the Arbitration Fairness Act, which was introduced and reintroduced quite a few times between 2007 and 2015.
Policy debates will now continue over whether the proposed FAIR legislation is a good idea. But, we can likely all agree that given the current political environment, FAIR is not likely to be signed into law in the near future. While demonstrations by tech employees and the @MeToo movement have brought renewed energy to the issue of mandatory arbitration, it is hard to imagine the forces opposing mandatory arbitration could muster enough votes to defeat a likely presidential veto. Some of us think this is unfortunate.