II

106TH CONGRESS

2D SESSION S. 3210

To amend chapter 1 of title 9, United States Code, to provide for greater

fairness in the arbitration process for consumers and employees.

IN THE SENATE OF THE UNITED STATES

OCTOBER 17 (legislative day, SEPTEMBER 22), 2000

Mr. SESSIONS introduced the following bill; which was read twice and referred

to the Committee on the Judiciary

A BILL

To amend chapter 1 of title 9, United States Code, to provide

for greater fairness in the arbitration process for consumers and employees.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Consumer and Em5 ployee Arbitration Bill of Rights’’.

6 SEC. 2. ELECTION OF ARBITRATION.

7 (a) CONSUMER AND EMPLOYMENT CONTRACTS.—

8 Chapter 1 of title 9, United States Code, is amended by

9 adding at the end the following:
2

•S 3210 IS

1 ‘‘§ 17. Consumer and employment contracts

2 ‘‘(a) DEFINITIONS.—In this section—

3 ‘‘(1) the term ‘consumer contract’ means any

4 written, standardized form contract between the par5 ties to a consumer transaction;

6 ‘‘(2) the term ‘consumer transaction’ means the

7 sale or rental of goods, services, or real property, in8 cluding an extension of credit or the provision of any

9 other financial product or service, to an individual in

10 a transaction entered into primarily for personal,

11 family, or household purposes; and

12 ‘‘(3) the term ‘employment contract’—

13 ‘‘(A) means a uniform, employer promul14 gated plan that covers all employees in a com15 pany, facility, or work grade, and that may

16 cover legally protected rights or statutory

17 rights; and

18 ‘‘(B) does not include any individually ne19 gotiated executive employment agreements.

20 ‘‘(b) FAIR DISCLOSURE.—In order to be binding on

21 the parties to a consumer contract or an employment con22 tract, an arbitration clause in such contract shall—

23 ‘‘(1) have a printed heading in bold, capital let24 ters entitled ‘ARBITRATION CLAUSE’, which heading

shall be printed in letters not smaller than 1 25 ⁄2 inch

26 in height;
3

•S 3210 IS

1 ‘‘(2) explicitly state whether participation with2 in the arbitration program is mandatory or optional;

3 ‘‘(3) identify a source that a consumer can con4 tact for additional information on costs and fees and

5 on all forms and procedures necessary for effective

6 participation in the arbitration program; and

7 ‘‘(4) provide notice that all parties retain the

8 right to resolve a dispute in a small claims court, if

9 such dispute falls within the jurisdiction of that

10 court and the claim is for less than $50,000 in total

11 damages.

12 ‘‘(c) PROCEDURAL RIGHTS.—If a consumer contract

13 or employment contract provides for the use of arbitration

14 to resolve a dispute arising out of or relating to the con15 tract, each party to the contract shall be afforded the fol16 lowing rights, in addition to any rights provided by the

17 contract:

18 ‘‘(1) COMPETENCE AND NEUTRALITY OF ARBI19 TRATOR AND ADMINISTRATIVE PROCESS.—

20 ‘‘(A) IN GENERAL.—Each party to the dis21 pute (referred to in this section as a ‘party’)

22 shall be entitled to a competent, neutral arbi23 trator and an independent, neutral administra24 tion of the dispute.
4

•S 3210 IS

1 ‘‘(B) ARBITRATOR.—Each party shall have

2 an equal voice in the selection of the arbitrator,

3 who—

4 ‘‘(i) shall comply with the Code of

5 Ethics for Arbitrators in Commercial Dis6 putes of the American Arbitration Associa7 tion and the State bar association of which

8 the arbitrator is a member;

9 ‘‘(ii) shall have no personal or finan10 cial interest in the results of the pro11 ceedings in which the arbitrator is ap12 pointed and shall have no relation to the

13 underlying dispute or to the parties or

14 their counsel that may create an appear15 ance of bias; and

16 ‘‘(iii) prior to accepting appointment,

17 shall disclose all information that might be

18 relevant to neutrality, including service as

19 an arbitrator or mediator in any past or

20 pending case involving any of the parties

21 or their representatives, or that may pre22 vent a prompt hearing.

23 ‘‘(C) ADMINISTRATION.—The arbitration

24 shall be administered by an independent, neu25 tral alternative dispute resolution organization
5

•S 3210 IS

1 to ensure fairness and neutrality and prevent ex

2 parte communication between parties and the

3 arbitrator.

4 ‘‘(2) APPLICABLE LAW.—In resolving a dispute,

5 the arbitrator—

6 ‘‘(A) shall be governed by the same sub7 stantive law that would apply under conflict of

8 laws principles applicable in a court of the

9 forum in which the consumer or employee re10 sided at the time the contract was entered into;

11 and

12 ‘‘(B) shall be empowered to grant whatever

13 relief would be available in court under law or

14 equity.

15 ‘‘(3) REPRESENTATION.—Each party shall have

16 the right to be represented by an attorney, or other

17 representative as permitted by State law, at the ex18 pense of that party.

19 ‘‘(4) HEARING.—

20 ‘‘(A) IN GENERAL.—Each party shall be

21 entitled to a fair arbitration hearing (referred

22 to in this section as a ‘hearing’) with adequate

23 notice and an opportunity to be heard.

24 ‘‘(B) ELECTRONIC OR TELEPHONIC

25 MEANS.—Subject to subparagraph (C), in order
6

•S 3210 IS

1 to reduce cost, the arbitrator may hold a hear2 ing by electronic or telephonic means or by a

3 submission of documents.

4 ‘‘(C) FACE-TO-FACE MEETING.—Each

5 party shall have the right to require a face-to6 face hearing, which hearing shall be held at a

7 location that is reasonably convenient for the

8 party who is the consumer or employee, unless

9 in the interest of fairness the arbitrator deter10 mines otherwise, in which case the arbitrator

11 shall use the process described in section 1391

12 of title 28 to determine the venue for the hear13 ing.

14 ‘‘(5) EVIDENCE.—With respect to any

15 hearing—

16 ‘‘(A) each party shall have the right to

17 present evidence at the hearing and, for this

18 purpose, each party shall grant access to all in19 formation reasonably relevant to the dispute to

20 the other parties, subject to any applicable

21 privilege or other limitation on discovery under

22 applicable State law;

23 ‘‘(B) consistent with the expedited nature

24 of arbitration, relevant and necessary pre-
7

•S 3210 IS

1 hearing depositions shall be available to each

2 party at the direction of the arbitrator; and

3 ‘‘(C) the arbitrator shall—

4 ‘‘(i) make reasonable efforts to main5 tain the privacy of the hearing to the ex6 tent permitted by applicable State law; and

7 ‘‘(ii) consider appropriate claims of

8 privilege and confidentiality in addressing

9 evidentiary issues.

10 ‘‘(6) CROSS EXAMINATION.—Each party shall

11 have the right to cross examine witnesses presented

12 by the other parties at a hearing.

13 ‘‘(7) RECORD OF PROCEEDING.—Any party

14 seeking a stenographic record of a hearing shall

15 make arrangements directly with a stenographer and

16 shall notify the other parties of these arrangements

17 not less than 3 days in advance of the hearing. The

18 requesting party or parties shall pay the costs of ob19 taining the record. If the transcript is agreed by the

20 parties, or determined by the arbitrator to be the of21 ficial record of the proceeding, it shall be provided

22 to the arbitrator and made available to the other

23 parties for inspection, at a date, time, and place de24 termined by the arbitrator.
8

•S 3210 IS

1 ‘‘(8) TIMELY RESOLUTION.—Upon submission

2 of a complaint by the claimant, the respondent shall

3 have 30 days to file an answer. Thereafter, the arbi4 trator shall direct each party to file documents and

5 to provide evidence in a timely manner so that the

6 hearing may be held not later than 90 days after the

7 filing of the answer. In extraordinary circumstances,

8 the arbitrator may grant a limited extension of these

9 time limits to a party, or the parties may agree to

10 an extension. The arbitrator shall file a decision with

11 each party not later than 30 days after the hearing.

12 ‘‘(9) WRITTEN DECISION.—The arbitrator shall

13 provide each party with a written explanation of the

14 factual and legal basis for the decision. This written

15 decision shall describe the application of an identi16 fied contract term, statute, or legal precedent. The

17 decision of the arbitrator shall be final and binding,

18 subject only to the review provisions in subsection

19 (d).

20 ‘‘(10) EXPENSES.—The arbitrator or inde21 pendent arbitration administration organization, as

22 applicable, shall have the authority to—

23 ‘‘(A) provide for reimbursement of arbitra24 tion fees to the claimant, in whole or in part,
9

•S 3210 IS

1 as part of the remedy in accordance with appli2 cable law or in the interests of justice; and

3 ‘‘(B) waive, defer, or reduce any fee or

4 charge due from the claimant in the event of

5 extreme hardship.

6 ‘‘(11) SMALL CLAIMS OPT OUT.—Each party

7 shall have the right to opt out of binding arbitration

8 and into the small claims court for the forum, if

9 such court has jurisdiction over the claim. For pur10 poses of this paragraph, no court with jurisdiction to

11 hear claims in excess of $50,000 shall be considered

12 to be a small claims court.

13 ‘‘(d) DENIAL OF RIGHTS.—

14 ‘‘(1) DENIAL OF RIGHTS BY PARTY MIS15 CONDUCT.—

16 ‘‘(A) IN GENERAL.—At any time during an

17 arbitration involving a consumer contract or

18 employment contract, any party may file a mo19 tion with the arbitrator asserting that the other

20 party has deprived the movant of 1 or more

21 rights granted by this section and seeking re22 lief.

23 ‘‘(B) AWARD BY ARBITRATOR.—If the ar24 bitrator determines that the movant has been

25 deprived of a right granted by this section by
10

•S 3210 IS

1 the other party, the arbitrator shall award the

2 movant a monetary amount, which shall not ex3 ceed the reasonable expenses incurred by the

4 movant in filing the motion, including attor5 neys’ fees, unless the arbitrator finds that—

6 ‘‘(i) the motion was filed without the

7 movant’s first making a good faith effort

8 to obtain discovery or the realization of an9 other right granted by this section;

10 ‘‘(ii) the opposing party’s nondisclo11 sure, failure to respond, response, or objec12 tion was substantially justified; or

13 ‘‘(iii) the circumstances otherwise

14 make an award of expenses unjust.

15 ‘‘(2) DENIAL OF RIGHTS BY ARBITRATOR.—A

16 losing party in an arbitration may file a petition in

17 the district court of the United States in the forum

18 in which the consumer or employee resided at the

19 time the contract was entered into to assert that the

20 arbitrator violated 1 or more of the rights granted

21 to the party by this section and to seek relief. In

22 order to grant the petition, the court must find clear

23 and convincing evidence that 1 or more actions or

24 omissions of the arbitrator resulted in a deprivation

25 of a right of the petitioner under this section that
11

•S 3210 IS

1 was not harmless. If such a finding is made, the

2 court shall order a rehearing before a new arbitrator

3 selected in the same manner as the original arbi4 trator as the exclusive judicial remedy provided by

5 this section.’’.

6 (b) TECHNICAL AND CONFORMING AMENDMENT.—

7 The table of sections for chapter 1 of title 9, United States

8 Code, is amended by adding at the end the following:

‘‘17. Consumer and employment contracts.’’.

9 (c) EFFECTIVE DATE.—The amendments made by

10 this section shall apply to any consumer contract or em11 ployment contract entered into after the date that is 6

12 months after the date of enactment of this Act.

13 SEC. 3. LIMITATION ON CLAIMS.

14 Except as otherwise expressly provided in this Act,

15 nothing in this Act may be construed to be the basis for

16 any claim in law or equity.

Æ