House Votes to Rescind CFPB Arb Rules

A joint resolution of disapproval by Congress could nullify the “Arbitration Agreements” rule, 82 Fed. Reg. 33210 (July 19, 2017), just finalized by the Consumer Financial Protection Bureau (CFPB). The rules bar certain financial institutions from using contract clauses that provide for arbitration of disputes with customers to restrict participation in class-action lawsuits. The right of parties to avoid court and arbitrate contractual disputes comes from the Federal Arbitration Act of 1925. It provides that agreements to arbitrate disputes are enforceable. Decades after becoming a standard form of alternative dispute resolution, arbitration clauses were employed as a method to defeat class action lawsuits. The new rules by CFPB allow regular class-action lawsuits by consumers. The CFPB aims to prohibit financial companies from using mandatory arbitration clauses as a way to block class-action lawsuits. The new rules apply to most banks and nonbank lenders, payment processing companies, consumer reporting agencies, debt collection agencies and certain automotive finance companies. Pursuant to the Dodd-Frank Act, the arbitration rules will only apply to agreements entered into 180-days after the effective date and it will become fully effective on February 10, 2018. The Senate will take up the issue next via the Congressional Review Act, under which Congress may overturn a broad range of regulatory rules issued by federal agencies by enacting a joint resolution of disapproval within 60 days of the rules being announced. See more here-- http://bit.ly/2uCuiha and http://bit.ly/2uYGM4Q

Comments Invited Following MEAC Rule Change

The Supreme Court of Florida recently adopted its Alternative Dispute Resolution Rules and Policy Committee's proposed amendments to Rule 10.910 of the Florida Rules for Certified and Court-Appointed Mediators regarding composition of the Mediator Ethics Advisory Committee (MEAC). The Committee’s petition follows another recent opinion adopting changes, In re: amendments to the Florida Rules for Certified & Court-Appointed Mediators, 202 So. 3d 795 (Fla. 2016). New Rule 10.910(b) (Appointment) provides membership of MEAC shall be composed of nine members, two from each of the four divisions of the Mediator Qualifications and Discipline Review Board (MQDRB), and one member from any of the four divisions. Additionally, Rule 10.910(c) (Membership and Terms) now requires that the membership of MEAC shall include one county mediator, one family mediator, one circuit mediator, one dependency mediator, one appellate mediator, and four additional mediators who hold any type of Florida Supreme Court mediator certification. Finally, Rule 10.910(e) (Opinions) is amended to allow the Dispute Resolution Center greater latitude in publishing advisory opinions of MEAC. Because the amendments to Rules for Certified and Court-Appointed Mediators are effective immediately and were not published for comment prior to their adoption by the court, interested persons must now file any comments with the court on or before August 21, 2017, as well as a separate request for oral argument if the person filing the comment wishes to participate in oral argument, which may be scheduled in this case. The Committee Chair then has until September 11, 2017, to file a response to any comments filed with the court. See full opinion here-- http://www.floridasupremecourt.org/decisions/2017/sc17-935.pdf

CFPB Arbitration Rule Final

This week, new arbitration rules were finalized by the Consumer Financial Protection Bureau (CFPB). The right of parties to avoid court and arbitrate contractual disputes comes from the Federal Arbitration Act of 1925. It provides that agreements to arbitrate disputes are enforceable. Decades after becoming a standard form of alternative dispute resolution, arbitration clauses were employed as a method to defeat class action lawsuits. Where parties agreed to arbitrate disputes, claims could still be brought, but on an individual basis in arbitration. The new rules by CFPB allow class-action lawsuits by consumers. The CFPB aims to prohibit financial companies from using mandatory arbitration clauses as a way to block class-action lawsuits, in which a large number of plaintiffs with similar complaints band together. This could result in higher litigation costs for banks, which they may offset either by raising the costs of consumer loan products or reducing services. Arbitration clauses have become widespread in recent years, aided by a string of court rulings that have limited the ability of consumers to file lawsuits. The agency’s action is the first significant check on arbitration since recent U.S. Supreme Court decisions that affirmed its widespread use. The new rules restore the ability of groups of people to file or join group lawsuits. The rules apply to most banks and nonbank lenders, payment processing companies, consumer reporting agencies, debt collection agencies and certain automotive finance companies. If Congress soon passes legislation neutering or killing the CFPB via the Congressional Review Act, it won’t be the first reversal of financial regulation. Until then, August 10, 2017 is the effective date. Pursuant to the Dodd-Frank Act, the arbitration rules will only apply to agreements entered into 180-days after the effective date and it will become fully effective on February 10, 2018. See more here-- http://bit.ly/2u13Aks and http://bit.ly/2vjGWAJ and http://bit.ly/2ulrGpQ