Congress Considers Arbitration

This month, U.S. Senator Patrick Leahy introduced the Restoring Statutory Rights Act and Interests of the States Act of 2016. If it becomes law, it would exempt from the Federal Arbitration Act (FAA) claims brought by individuals or small businesses arising from violations of federal or state law, the U.S. Constitution or a state constitution. Accordingly, it would permit these claims to proceed in a court of law. Apparently, under the measure, arbitration is still an option if the parties voluntarily choose to arbitrate a dispute after it arises. The bill would also allow federal and state courts to apply their respective jurisdictional laws concerning contract interpretation to find arbitration provisions unconscionable or unenforceable, notwithstanding the FAA. Finally, courts, not arbitrators, would have the essential task of determining and enforcing arbitrability. Congress is also considering the Arbitration Fairness Act of 2015, introduced last year by Senator Al Franken, which would prohibit the use of forced arbitration in consumer and employment disputes. That bill is still in committee, as is a companion bill in the House of Representatives. These Members of Congress take issue with recent majority decisions by the U.S. Supreme Court upholding federal preemption under the FAA. Arbitration remains a worthy alternative to litigation and perhaps these efforts, which pertain mainly to consumer disputes, will stop the backlash that has seemingly taken place and given the whole process a bad name. See more on S. 2506 and S. 1133 here-- www.congress.gov

Join me 1/19 for Arbitration Backlash CLE webinar

This month, the U.S. Supreme Court issued its third decision in the last four years upholding private-party contracts to arbitrate rather than to litigate disputes. Arbitration, however, continues to be attacked by media and government despite being an effective ADR method to resolve disputes and control the rising cost of trying lawsuits. Federal law supports and governs the practice through the Federal Arbitration Act. To be enforceable, a clause must provide a meaningful opportunity for redress, and courts review contractual provisions for fundamental fairness. Because the litigation system has become so expensive, arbitration is often the preferred forum for disputes involving amounts in controversy for which litigation of claims is uneconomical. Next month, UWWM will feature this topic in its complimentary webinar entitled, Arbitration Backlash. Arbitrators Lawrence Kolin and Brandon Peters, along with our guest Phil Calandrino, will explore the backlash against arbitration and remind attendees of the origins and benefits of this dispute resolution process. This content is designed for trial lawyers who represent clients in arbitration and for attorneys who use arbitration clauses in contracts. Attending our complimentary Webinar will entitle you to 1 hour of General CLE credit, pending with The Florida Bar. After registering, you will receive a confirmation email containing information about joining us Tuesday, January 19, 2016 from 12:00 PM - 1:00 PM EST We look forward to your attendance! See registration information here-- https://attendee.gotowebinar.com/register/5506879070378935041

Arbitration Fairness Act of 2015

There is a new bill in Congress to amend Title 9 of the United States Code with respect to arbitration over which increasing debate on fairness as a pre-dispute agreement has intensified. The Arbitration Fairness Act of 2015 was introduced by Minnesota Senator Al Franken and Georgia Representative Hank Johnson to eliminate mandatory arbitration clauses in employment, consumer, civil rights and antitrust cases. Companies provide almost all consumer financial products and services under written contracts with such clauses. Arbitration agreements in those contracts often require that parties resolve any subsequent disputes through privately-appointed arbitrators, rather than through the court system. The use of arbitration clauses has increased with recent U.S. Supreme Court decisions supporting corporate enforcement efforts of those agreements. A Consumer Financial Protection Bureau (CFPB) report found that 75% of consumers surveyed did not know if they were subject to an arbitration clause in their credit card contract. Among consumers whose contract included an arbitration clause, fewer than ten percent recognized that they could not sue their credit card issuer in court. It is claimed so-called "forced arbitration" does not provide important procedural guarantees of fairness and due process that are the hallmarks of courts of law. According to Senator Franken’s office, the Arbitration Fairness Act would restore the intent of the original Federal Arbitration Act (FAA) passed by Congress in 1925. When the FAA was passed, it was intended to target commercial arbitration agreements between two companies of generally comparable bargaining power. Over the years, court decisions broadened the reach of the law to include consumer and employment disputes. Under the newly introduced Arbitration Fairness Act of 2015, agreements to arbitration of employment, consumer, civil rights and antitrust disputes could only be made after the dispute has arisen. The Act does not prohibit companies and consumers from going to arbitration to settle a dispute once the dispute has actually taken place. The Act reportedly seeks to ensure transparency in civil litigation by protecting the integrity of Civil Rights Act, the Equal Pay Act, the Americans with Disabilities Act, and the Age Discrimination in Employment Act, among others. The Act would continue to allow pre-dispute mandatory arbitration to continue in business-to-business agreements, and does not apply to collective bargaining agreements. The National Consumer Law Center and the National Association of Consumer Advocates support the new measure. Both proponents and critics of the new act take hard-line stances on the perceived ills or benefits of arbitration, rather than trying to address some criticisms while preserving its benefits. Under the Bill, the applicability of an agreement to arbitrate and the validity and enforceability of an agreement is to be determined by a court, rather than an arbitrator, irrespective of whether the party resisting arbitration challenges the arbitration agreement specifically or in conjunction with other terms of the contract containing such agreement. See proposed legislation here-- http://1.usa.gov/1GC7gEr and CFPB report to Congress here-- http://1.usa.gov/1EPG8nT

Consumer Reports Calls for Ban on Forced Arbitration

Calling arbitration an anti-consumer practice that’s becoming all too prevalent, Consumer Reports claims there isn't a single adult in the United States who is not subject to at least one binding mandatory arbitration clause. The magazine, through Consumers Union, its policy and advocacy arm, criticizes the take-it-or-leave-it way of settling disputes. Consumer Reports, which calls itself a public-service organization, says arbitration language is hidden in the fine print of an array of common consumer contracts, including cell phones and credit cards. The editors are disturbed that forced arbitration clauses are making their way into housing, employment, and nursing-home contracts. Their column states that proponents include corporations and the organizations representing arbitrators who frame arbitration as a benefit for consumers that offers a low cost, informal alternative to lawsuits. Forcing consumers to accept arbitration and give up their rights through legalese buried in the fine print raises red flags for consumer advocates, they say. Consumer Reports is backing the Arbitration Fairness Act, pending in Congress, that would ban the use of these forced-arbitration clauses in consumer and employment contracts. See editorial here- http://www.consumerreports.org/cro/news/2014/05/ban-the-use-of-these-forced-arbitration-clauses-in-consumer-and-employment-contracts/index.htm