WASHINGTON, June 16, 2013 – Legislation that would eliminate required arbitration for employee, consumer and civil rights disputes was proposed last month. It should be passed. Congress must act to restore fairness.
Big business and corporate money, along with a corporate friendly Supreme Court, have been enough in the past to defeat efforts to bring fairness back to the arena of routine consumer and employee rights. Unfortunately, the same thing is likely to happen again, and the Arbitration Fairness Act of 2013 that has been introduced in the House (and a similar bill in the Senate) will likely fail.
As the law exists now, you do not have the right to file a lawsuit for many consumer and employee and civil rights complaints. In these situations, the law requires you to submit to binding arbitration. Binding means no further review, no other options, no going to court.
If the arbitration process were neutral, independent and not connected to corporate purse strings, it might not be so bad. Unfortunately, in most consumer, employment and civil rights cases, the likelihood of the “little guy” prevailing is almost zero.
The existing law of our land, the Federal Arbitration Act, has been interpreted by the pro-big business Supreme Court and thus gives businesses a significant advantage in resolving disputes with us. We are forced into binding arbitration, and the Court says this is legal. Legislation is needed to turn back the clock and restore fairness.
Most contracts we sign with big business today include mandatory arbitration clauses. These include contracts for cell phones, credit cards, mom’s or dad’s nursing home, and even on-line user agreements. Thus, when presented with these contracts, where the arbitration clauses are in fine print and often in difficult-to-understand legalese, we routinely sign, and thus, we “voluntarily” give up the right to file a lawsuit if there are problems.
The same thing happens in routine employment civil rights matters. Most big business or large corporation employee handbooks state that the employee cannot sue their employers, and that they must submit to a binding arbitration process for almost any issue.
The arbitration process is usually secretive and it is far from independent. Hearings are closed, unlike what you see in courtrooms across America or even on television. There is no appeal or next level review.
Arbitration panels are overwhelmingly funded by big business. Thus, to assure they keep getting the work, arbitrators almost always rule in favor of the business. They understand that decisions against the business will result in their firms not being used again.
When we lose access to the courts, corporations are effectively given a license to steal. Our ability to seek justice in the courts, even when up against the most powerful corporate interests, is an essential part of our democracy.
Here are selected portions of the proposed legislation:
Section 2: Findings:
(3) Most consumers and employees have little or no meaningful choice whether to submit their claims to arbitration. Often, consumers and employees are not even aware that they have given up their rights.
(4) Mandatory arbitration undermines the development of public law because there is inadequate transparency and inadequate judicial review of arbitrators’ decisions.
Section 4: Definitions:
(2) civil rights dispute means a dispute—
(A) arising under—
(i) the Constitution of the United States or the constitution of a State; or (ii) a Federal
or State statute that prohibits discrimination on the basis of race, sex, disability,
religion, national origin…in education, employment, credit, housing, public
accommodations and facilities, [or] voting….
(3) consumer dispute means a dispute between an individual who seeks or acquires
real or personal property, services (including services relating to securities and other
investments), money, or credit for personal, family, or household purposes….
(4) employment dispute means a dispute between an employer and employee arising
out of the relationship….
Sec. 402. Validity and enforceability
(a) In General- Notwithstanding any other provision of this title, no pre-dispute arbitration agreement shall be valid or enforceable if it requires arbitration of an employment dispute, consumer dispute, antitrust dispute, or civil rights dispute.
This legislation broadly defines “employment dispute,” and in it “consumer dispute” is defined broadly enough to include a wide range of legal conflicts. If passed, this bill would eliminate arbitration as the required course of action for employee claims – as well as those brought by consumers – unless all parties agreed to arbitration once the dispute was identified.
U.S. Representative Hank Johnson (D-GA) and Senator Al Franken (D-MN) introduced this needed legislation. Johnson said in so doing that “forced arbitration clauses undermine our indelible Constitutional right to take our disputes to court.”
“Mandatory arbitration can be a huge disadvantage to consumers, often limiting their ability to have any meaningful legal recourse when they are wronged,” Sen. Franken said. “I’ve reintroduced the Arbitration Fairness Act to ensure that consumers maintain their right to their day in court when they are cheated.”
The Supreme Court, an ally of big business and corporate interests over the last several years, has helped those interests in several holdings and in so doing has further eroded consumers’ rights. In one case, Stolt-Nielsen v. Animal Feeds International, 2010, the Court upheld as valid required arbitration agreements for class action claims. In another, AT&T Mobility LLC v. Concepcion, 2011, the Court held that arbitration agreements may ban class actions even when such a ban was expressly prohibited by state law.
These holdings seriously harmed consumers’ rights and served to further protect corporations from accountability. Class actions were designed to allow many individuals with similar claims, too small in nature or dollars to prosecute by themselves, to join together to try to right a common and recurring wrong. By stripping the class from the right to file a unified lawsuit, requiring instead arbitration, the little guy is once again kept down and effectively never heard from.
The existing law, the Federal Arbitration Act (FAA), was originally passed to make sure that the courts enforced commercial arbitration agreements, that is, between companies, not between companies and consumers. The Supreme Court’s rulings allow big business and corporate America to insulate themselves from liability in small one-by-one cases and in attempted larger, what-would-have-been class action claims.
Because of the rulings by the Supreme Court that interpret the Act in an expansive anti-consumer fashion, Congress must act in order to restore fairness.
Representative Johnson and Senator Franken have been consistent advocates for the little guy. In 2009 Sen. Franken passed legislation with bipartisan support that restricted funding to defense contractors who committed employees to mandatory binding arbitration in cases of sexual assault and other civil rights violations. Rep. Johnson, a longtime advocate of workers’ and consumer rights, first introduced the Arbitration Fairness Act in 2007.
Their proposed legislation would change the FAA by:
1. Invalidating agreements that require arbitration in employment, consumer or civil rights disputes;
2. Restoring the rights of workers and consumers by allowing them to seek justice in the courts (and court process is open and transparent, so all of the world can see and decide if claims and defenses are legal, valid and reasonable);
3. Protecting the intent of the Civil Rights Act, the Equal Pay Act, the Americans with Disabilities Act, and the Age Discrimination in Employment Act, and more.
Let your elected officials know that the current state of the law in this country regarding mandatory arbitration needs significant change.
Paul A. Samakow is an attorney licensed in Maryland and Virginia, and has been practicing since 1980. He represents injury victims and routinely battles insurance companies and big businesses that will not accept full responsibility for the harms and losses they cause. He can be reached at any time by calling 1-866-SAMAKOW (1-866-726-2569), via email, or through his website. He is also available to speak to your group on numerous legal topics. Paul is the featured legal analyst on the Washington Times Radio, in Washington, D.C., on the Andy Parks show, the featured legal analyst for America’s Radio News Network, heard in 165 markets nationwide, and he is a columnist on the Washington Times Communities.
His book The 8 Critical Things Your Auto Accident Attorney Won’t Tell You is free to Maryland and Virginia residents and can be obtained by ordering it on his website; others can obtain it on Amazon.
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