Federal lawmakers again try to ban arbitration

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By Kimberly Atkins
Dolan Media

Washington — Taking aim at a U.S. Supreme Court ruling they say strips workers and consumers of their right to redress against powerful corporations Tuesday, lawmakers in both houses reintroduced the Arbitration Fairness Act, which would bar pre-dispute mandatory arbitration clauses in consumer and employment contracts and in civil rights disputes.

Speaking to reporters, Sens. Al Franken, D-Minn., Richard Blumenthal, D-Conn., and Rep. Hank Johnson, D-Ga., said the Court’s recent decision in AT&T Mobility v. Concepcion, holding that state laws limiting companies’ ability to require bilateral arbitration of disputes are preempted by the Federal Arbitration Act.

The ruling essentially encourages all companies to include pre-dispute mandatory arbitration clauses in all consumer and employment contracts, the lawmakers said, taking away consumers’ and workers’ rights to have their claims heard in court.

“Alternative dispute resolution and arbitration may be a good thing in all kinds of [business-to-business] disputes,” Blumenthal said. “But where there are contracts, as the one in Concepcion, between a giant corporation and consumers, consumers should have their day in court. [The Supreme Court] barred the courtroom doors.”

The Concepcion ruling doesn’t just allow companies to place mandatory arbitration clauses baring civil court claims in the consumer contracts, Franken said. It essentially requires them to do so, he said.

“CEOs of companies have a duty to their stockholders to make as much money as they can,” Franken said. “It would almost be malfeasance to not put these clauses in now.”

The Arbitration Fairness Act has been re-introduced in both houses of Congress since 2007, but failed to gain enough momentum to get to a vote. It has faced resounding opposition from business groups including the U.S. Chamber of Commerce, which has criticized the measure as an open invitation for filing frivolous lawsuits against companies.

But the Concepcion ruling has spurred Democratic lawmakers to renew their push for the measure. Deepak Gupta, the Public Citizen attorney who argued the case on behalf of consumers, said most Americans didn’t even know about the case, since it was decided during the busy news week that included the British royal wedding, tornadoes that ripped through the southern states and the killing of Osama bin Laden. But its effect will be widely felt, he said, resulting in everything from increased predatory lending practices to more hidden fees in cell phone and banking agreements.

“Concepcion will affect all of us,” Gupta said. “Most of us don’t know about forced arbitration contracts, but we face them every day.”

Franken blasted the Court, saying that its majority has consistently hurt consumers with rulings like Concepcion and Rent-A-Center West v. Jackson, the 2010 ruling in which the Court held that an arbitrator, not a court, must decide the enforceability of a contract containing a mandatory arbitration clause.

“That is a brilliant decision,” the “Saturday Night Live” alum deadpanned, drawing laughter from some in the small Senate meeting room. “When they decide that an arbitrator is the proper one to decide if an arbitrator should arbitrate a decision? Genius.”

When asked if he expected to have support from Republicans, Franken noted that he did get 10 Senate Republicans to vote for his amendment to the 2009 defense spending bill that barred defense contractors from enforcing pre-dispute mandatory arbitration clauses for claims of sexual assault or Title VII violations.

“We just introduced [the Arbitration Fairness Act] today, and we are starting to work on that [but] I am sure we will get bipartisan support. Quite sure. Confident,” Franken said, drawing a few more laughs. “I didn’t mean that sarcastically.”