A bill to amend title 9 of the United States Code with respect to arbitration.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Arbitration Fairness Act of 2009''.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) The Federal Arbitration Act (now enacted as chapter 1 
        of title 9 of the United States Code) was intended to apply to 
        disputes between commercial entities of generally similar 
        sophistication and bargaining power.
            (2) A series of United States Supreme Court decisions have 
        changed the meaning of the Act so that it now extends to 
        disputes between parties of greatly disparate economic power, 
        such as consumer disputes and employment disputes. As a result, 
        a large and rapidly growing number of corporations are forcing 
        millions of consumers and employees to give up their right to 
        have disputes resolved by a judge or jury, and instead submit 
        their claims to binding arbitration.
            (3) Most consumers and employees have little or no 
        meaningful option whether to submit their claims to 
        arbitration. Few people realize or understand the importance of 
        the deliberately fine print that strips them of rights, and 
        because entire industries are adopting these clauses, people 
        increasingly have no choice but to accept them. They must often 
        give up their rights as a condition of having a job, getting 
        necessary medical care, buying a car, opening a bank account, 
        getting a credit card, and the like. Often times, they are not 
        even aware that they have given up their rights.
            (4) Private arbitration companies are sometimes under great 
        pressure to devise systems that favor the corporate repeat 
        players who decide whether those companies will receive their 
        lucrative business.
            (5) Mandatory arbitration undermines the development of 
        public law for civil rights and consumer rights because there 
        is no meaningful judicial review of arbitrators' decisions. 
        With the knowledge that their rulings will not be seriously 
        examined by a court applying current law, arbitrators enjoy 
        near complete freedom to ignore the law and even their own 
        rules.
            (6) Mandatory arbitration is a poor system for protecting 
        civil rights and consumer rights because it is not transparent. 
        While the American civil justice system features publicly 
        accountable decision makers who generally issue public, written 
        decisions, arbitration often offers none of these features.
            (7) Many corporations add to arbitration clauses unfair 
        provisions that deliberately tilt the systems against 
        individuals, including provisions that strip individuals of 
        substantive statutory rights, ban class actions, and force 
        people to arbitrate their claims hundreds of miles from their 
        homes. While some courts have been protective of individuals, 
        too many courts have erroneously upheld even egregiously unfair 
        mandatory arbitration clauses in deference to a supposed 
        Federal policy favoring arbitration over the constitutional 
        rights of individuals.

SEC. 3. ARBITRATION OF EMPLOYMENT, CONSUMER, FRANCHISE, AND CIVIL 
              RIGHTS DISPUTES.

    (a) In General.--Title 9 of the United States Code is amended by 
adding at the end the following:

``CHAPTER 4--ARBITRATION OF EMPLOYMENT, CONSUMER, FRANCHISE, AND CIVIL 
                            RIGHTS DISPUTES

``Sec.
``401. Definitions.
``402. Validity and enforceability.
``Sec. 401. Definitions
    ``In this chapter--
            ``(1) the term `civil rights dispute' means a dispute--
                    ``(A) arising under--
                            ``(i) the Constitution of the United States 
                        or the constitution of a State; or
                            ``(ii) a Federal or State statute that 
                        prohibits discrimination on the basis of race, 
                        sex, disability, religion, national origin, or 
                        any invidious basis in education, employment, 
                        credit, housing, public accommodations and 
                        facilities, voting, or program funded or 
                        conducted by the Federal Government or State 
                        government, including any statute enforced by 
                        the Civil Rights Division of the Department of 
                        Justice and any statute enumerated in section 
                        62(e) of the Internal Revenue Code of 1986 
                        (relating to unlawful discrimination); and
                    ``(B) in which at least 1 party alleging a 
                violation of the Constitution of the United States, a 
                State constitution, or a statute prohibiting 
                discrimination is an individual;
            ``(2) the term `consumer dispute' means a dispute between a 
        person other than an organization who seeks or acquires real or 
        personal property, services (including services relating to 
        securities and other investments), money, or credit for 
        personal, family, or household purposes and the seller or 
        provider of such property, services, money, or credit;
            ``(3) the term `employment dispute' means a dispute between 
        an employer and employee arising out of the relationship of 
        employer and employee as defined in section 3 of the Fair Labor 
        Standards Act of 1938 (29 U.S.C. 203);
            ``(4) the term `franchise dispute' means a dispute between 
        a franchisee with a principal place of business in the United 
        States and a franchisor arising out of or relating to contract 
        or agreement by which--
                    ``(A) a franchisee is granted the right to engage 
                in the business of offering, selling, or distributing 
                goods or services under a marketing plan or system 
                prescribed in substantial part by a franchisor;
                    ``(B) the operation of the franchisee's business 
                pursuant to such plan or system is substantially 
                associated with the franchisor's trademark, service 
                mark, trade name, logotype, advertising, or other 
                commercial symbol designating the franchisor or its 
                affiliate; and
                    ``(C) the franchisee is required to pay, directly 
                or indirectly, a franchise fee; and
            ``(5) the term `predispute arbitration agreement' means any 
        agreement to arbitrate a dispute that had not yet arisen at the 
        time of the making of the agreement.
``Sec. 402. Validity and enforceability
    ``(a) In General.--Notwithstanding any other provision of this 
title, no predispute arbitration agreement shall be valid or 
enforceable if it requires arbitration of an employment, consumer, 
franchise, or civil rights dispute.
    ``(b) Applicability.--
            ``(1) In general.--An issue as to whether this chapter 
        applies to an arbitration agreement shall be determined under 
        Federal law. The applicability of this chapter to an agreement 
        to arbitrate and the validity and enforceability of an 
        agreement to which this chapter applies shall be determined by 
        the court, rather than the arbitrator, irrespective of whether 
        the party resisting arbitration challenges the arbitration 
        agreement specifically or in conjunction with other terms of 
        the contract containing such agreement.
            ``(2) Collective bargaining agreements.--Nothing in this 
        chapter shall apply to any arbitration provision in a contract 
        between an employer and a labor organization or between labor 
        organizations, except that no such arbitration provision shall 
        have the effect of waiving the right of an employee to seek 
        judicial enforcement of a right arising under a provision of 
        the Constitution of the United States, a State constitution, or 
        a Federal or State statute, or public policy arising 
        therefrom.''.
    (b) Technical and Conforming Amendments.--
            (1) In general.--Title 9 of the United States Code is 
        amended--
                    (A) in section 1, by striking ``of seamen,'' and 
                all that follows through ``interstate commerce'';
                    (B) in section 2, by inserting ``or as otherwise 
                provided in chapter 4'' before the period at the end;
                    (C) in section 208--
                            (i) in the section heading, by striking 
                        ``Chapter 1; residual application'' and 
                        inserting ``Application''; and
                            (ii) by adding at the end the following: 
                        ``This chapter applies to the extent that this 
                        chapter is not in conflict with chapter 4.''; 
                        and
                    (D) in section 307--
                            (i) in the section heading, by striking 
                        ``Chapter 1; residual application'' and 
                        inserting ``Application''; and
                            (ii) by adding at the end the following: 
                        ``This chapter applies to the extent that this 
                        chapter is not in conflict with chapter 4.''.
            (2) Table of sections.--
                    (A) Chapter 2.--The table of sections for chapter 2 
                of title 9, United States Code, is amended by striking 
                the item relating to section 208 and inserting the 
                following:

``208. Application.''.
                    (B) Chapter 3.--The table of sections for chapter 3 
                of title 9, United States Code, is amended by striking 
                the item relating to section 307 and inserting the 
                following:

``307. Application.''.
            (3) Table of chapters.--The table of chapters for title 9, 
        United States Code, is amended by adding at the end the 
        following:

``4. Arbitration of employment, consumer, franchise, and         401''.
                            civil rights disputes.

SEC. 4. 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.

Summary: Arbitration Fairness Act of 2009 - Declares that no predispute arbitration agreement shall be valid or enforceable if it requires arbitration of an employment, consumer, or franchise, or civil rights dispute.

Declares, further, that the validity or enforceability of an agreement to arbitrate shall be determined by a court, under federal law, rather than an arbitrator, irrespective of whether the party resisting arbitration challenges the arbitration agreement specifically or in conjunction with other terms of the contract containing such agreement.

Exempts from this Act arbitration provisions in a contract between an employer and a labor organization or between labor organizations. Denies to any such arbitration provision, however, the effect of waiving the right of an employee to seek judicial enforcement of a right arising under the Constitution of the United States, a state constitution, or a federal or state statute, or public policy arising therefrom.