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Congress Considering Bills to Ban Mandatory Arbitration Clauses

Congress Considering Bills to Ban Mandatory Arbitration Clauses

A bill that would prohibit the enforcement of mandatory arbitration clauses against employees and consumers has been introduced in the US Congress.

Senator Al Franken, D-Minn., reintroduced the Arbitration Fairness Act of 2013 (S. 878). It provides that “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.”

The act would amend the Federal Arbitration Act (FAA) and undo a string of decisions from the U.S. Supreme Court which culminated in its ruling in AT&T Mobility v. Concepcion.  This business-friendly ruling holds that the FAA preempted a state law ensuring the availability of class-wide consumer arbitration.

In a press release, Franken noted that mandatory arbitration can be a major disadvantage to consumers, workers and small businesses because it limits their ability to have meaningful legal recourse when they are wronged.

Convinced that there is urgent need to pass the Arbitration Fairness Act, U.S. Rep. Hank Johnson, D-Ga., introduced a companion bill in the US House of Representatives (H. R. 1844). In a press release, Johnson argues that mandatory arbitration clauses undermine our constitutional right to take disputes to court, and that they benefit powerful business interests at the expense of American consumers and workers.

In a statement, the National Employment Lawyers Association (NELA) announced its support for the Franken bill. The NELA says passage of the Arbitration Fairness Act is necessary to end the practice of employers requiring vulnerable workers to give up their rights in order to get or keep their jobs.

Several public interest groups voiced their support for the Arbitration Fairness Act, in an open letter to the Senate Judiciary Committee. The organizations include the National Association of Shareholder and Consumer Attorneys, AFL-CIO, American Association for Justice, ACLU, Consumer Federation of America, Consumers Union, NAACP, National Association of Consumer Advocates and U.S. Public Interest Research Group.

Similar measures introduced in 2009 and 2011 failed to gain steam. As in the past, strong opposition is expected from business groups led by the U.S. Chamber of Commerce. But advocates for the rights of consumers, workers and small businesses, including the class action attorneys at Starr Austen & Miller LLP hope that this time, the Arbitration Fairness Act will become law.