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Posted in Consumer & Class Action Blog, General Blog

Arbitration Fairness Act of 2007

July 19th, 2007 by John Campbell

I have written in the past about the growing use of arbitration clauses in consumer and employment contracts.  Too often, these clauses are fine print additions to the contract that purport to prohibit the employee or consumer from resolving disputes in Court.

Senator Russ Feingold  and Representative Hank Johnson have both filed bills in Congress to restrict the use of arbitration clauses in certain types of contracts.   The proposed legislation is entitled the “Arbitration Fairness Act of 2007.”  The new law would amend the Federal Arbitration Act. 

Senator Feingold’s website describes his bill as making sure that Americans are not forced into signing agreements that mandate arbitration:

to resolve employment, consumer, franchise or civil rights disputes. The bicameral Arbitration Fairness Act of 2007 amends the Federal Arbitration Act to make pre-dispute agreements to arbitrate employment, consumer, franchise, or civil rights disputes unenforceable.

The proposed legislation does not prohibit arbitration, but limits it to situations where it is “knowingly and voluntarily” entered by both parties.   Limitations are focused on employment, consumer and franchise disputes, as well as “transactions between parties of unequal bargaining power.

The proposed legislation would also restrict bans on consumer class actions.
 
The bill seeks to ensure Americans are not forced into mandatory arbitration agreements in employment, consumer, franchise or civil rights disputes. Groups supporting the Act include the American Association for Justice (http://www.atla.org/ ), Center for Responsible Lending (http://www.responsiblelending.org/ ), Consumer Federation of America (http://www.consumerfed.org/) , Homeowners Against Deficient Dwellings (http://www.hadd.com/) , Home Owners for Better Building (http://www.hobb.org/) , National Association of Consumer Advocates (http://www.naca.net/) , National Consumer Law Center (http://www.consumerlaw.org/ ).

Binding mandatory arbitration is an issue that affects each citizen of each state.  Whether you are a waitress who is being asked to sign an arbitration agreement just to apply for your job, a payday borrower who is required to sign an arbitration agreement as part of the loan, or a franchisee who is required to arbitrate disputes with the franchisor, binding mandatory arbitration is a real problem that hurts real people.  Despite the fact that the United States Constitution provides for a trial by jury, and despite the fact that other countries admire the fact that in the U.S. everyone has access to courts, arbitration clauses threaten to eliminate juries and close the doors to our courts.

To stop binding mandatory arbitration we need your help.  It is not hard. You can click here to immediately send a letter to the appropriate representatives and senators. Please take the time to help fight for our right to open, accessible, and accountable justice. 
 
For the full text of the House version of the proposed legislation, go here. 

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