Restoring Statutory Rights and Interests of the States Act of 2016

Summary: Restoring Statutory Rights and Interests of the States Act of 2016 This bill amends the Federal Arbitration Act to invalidate arbitration agreements between parties in certain commercial contracts or transactions if they require arbitration of a claim for damages or injunctive relief brought by an individual or small business arising from the alleged violation of a federal or state statute, the U.S. Constitution, or a state constitution, unless the written agreement to arbitrate is entered into by both parties after the claim has arisen and pertains solely to an existing claim. The grounds upon which a contract with an arbitration agreement is revocable shall include federal or state statutes or court findings that prohibit an agreement to arbitrate if the agreement is unconscionable, invalid because there was no meeting of the minds, or otherwise unenforceable as a matter of contract law or public policy. A court, rather than an arbitrator, shall determine whether an arbitration agreement is enforceable.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Restoring Statutory Rights and 
Interests of the States Act of 2016''.

SEC. 2. FINDINGS AND INTENT.

    (a) Findings.--Congress finds the following:
            (1) Chapter 1 of title 9, United States Code (commonly 
        known as the ``Federal Arbitration Act''), represented an 
        exercise of legislative power that required courts to recognize 
        private voluntary agreements to arbitrate commercial disputes 
        at a time when the courts were refusing to do so on grounds 
        that arbitration represented a usurpation of the authority of 
        the courts to resolve legal disputes.
            (2) The Federal Arbitration Act did not, and should not 
        have been interpreted to, supplant or nullify the legislatively 
        created rights and remedies which Congress, exercising its 
        power under article I of the Constitution of the United States, 
        has granted to the people of the United States for resolving 
        disputes in State and Federal courts.
            (3) Recent court decisions, including AT&T Mobility v. 
        Concepcion, 563 U.S. 333 (2011) and American Express Co. v. 
        Italian Colors Restaurant, 133 S.Ct. 2304 (June 20, 2013), have 
        interpreted the Federal Arbitration Act to broadly preempt 
        rights and remedies established under substantive State and 
        Federal law. As a result, these decisions have enabled business 
        entities to avoid or nullify legal duties created by 
        congressional enactment, resulting in millions of people in the 
        United States being unable to vindicate their rights in State 
        and Federal courts.
            (4) States have a compelling interest in enacting rights 
        and remedies to protect the welfare of their citizens, and the 
        Federal Arbitration Act should not be, and should not have 
        been, interpreted to preempt State legislation that enacted 
        rights and remedies to protect the welfare of their citizens.
    (b) Intent of Congress.--In enacting this Act, it is the intent of 
Congress--
            (1) to restate and reinstitute the primacy of congressional 
        and State legislative bodies as the creators of the rights and 
        remedies available to all the people of the United States;
            (2) to clarify that congressionally established rights and 
        remedies may not be waived prior to the institution of a 
        dispute by the party intended to be protected by such statute; 
        and
            (3) to reinstate and reaffirm existing rights and remedies 
        of the people of the United States enacted since the enactment 
        of the Federal Arbitration Act regarding access to the courts 
        that have, or may have been, abrogated or diminished.

SEC. 3. ARBITRATION OF FEDERAL STATUTORY CAUSES OF ACTION.

    (a) Adjudication of Federal Statutory Rights of Action.--Section 2 
of title 9, United States Code, is amended--
            (1) by striking ``A written'' and inserting ``(a) In 
        General.--Except as provided in subsection (b), a written''; 
        and
            (2) by adding at the end the following:
    ``(b) Exception.--Subsection (a) shall not apply to a written 
provision that requires arbitration of a claim for damages or 
injunctive relief brought by an individual or small business concern 
(as defined in section 3 of the Small Business Act (15 U.S.C. 632)), in 
either an individual or representative capacity, arising from the 
alleged violation of a Federal or State statute, the Constitution of 
the United States, or a constitution of a State, unless the written 
agreement to arbitrate is entered into by both parties after the claim 
has arisen and pertains solely to an existing claim.
    ``(c) Interaction With State Law.--For purposes of subsection (a), 
the phrase `grounds as exist at law or in equity for the revocation of 
a contract' shall include a Federal or State statute, or the finding of 
a Federal or State court, that prohibits the agreement to arbitrate on 
grounds that the agreement is unconscionable, invalid because there was 
no meeting of the minds, or otherwise unenforceable as a matter of 
contract law or public policy.
    ``(d) Validity and Enforceability.--A determination as to whether 
this chapter applies to an agreement to arbitrate shall be made by a 
court, rather than an arbitrator, irrespective of whether the party 
resisting arbitration challenges the agreement to arbitrate 
specifically or in conjunction with other terms of the contract 
containing such agreement.''.

SEC. 4. VACATING AN AWARD MADE IN VIOLATION OF SECTION 2 OF TITLE 9, 
              UNITED STATES CODE.

    Section 10(a) of title 9, United States Code, is amended--
            (1) in paragraph (3), by striking ``or'' at the end;
            (2) in paragraph (4), by striking the period at the end and 
        inserting ``; or''; and
            (3) by adding at the end the following:
            ``(5) where the arbitration took place in violation of 
        section 2.''.

SEC. 5. EFFECTIVE DATE.

    This Act, and the amendments made by this Act, shall take effect on 
the date of enactment of this Act and shall apply with respect to any 
dispute or claim that arises on or after such date of enactment.