Source: https://www.plaintiffmagazine.com/recent-issues/item/revisiting-binding-mandatory-pre-dispute-arbitration-clauses
Timestamp: 2019-04-23 00:02:31+00:00

Document:
On July 12, 2007, Senators Feingold and Durbin in the Senate (S.1782) and House members Johnson, Barrow, Lewis, Schakowsky, Braley, Cummings, Gonzalez, Cohen and Ellison (H.R.3010) introduced two bills to preclude the inclusion of binding mandatory pre-dispute arbitration clauses in agreements affecting consumers and employees.
For more than 15 years, corporations large and small have introduced into their agreements with consumers and employees binding mandatory arbitration clauses which not only eliminate access to a public judicial forum for the resolution of disputes, but also impose a cadre of provisions seeking to eliminate statutory rights and remedies available to consumers and employees who seek to resolve their disputes.
These add-on provisions include shifting costs to the consumer or employee; limiting or prohibiting certain types of damages including compensatory, emotional distress and punitive damages; provisions prohibiting classwide adjudication of disputes including modest damage disputes in which a class action for consumers or employees is the only viable alternative; stringent confidentiality, gag order-type provisions; and provisions that provide a public judicial forum to the corporate entity but only a private arbitral forum to the consumer or employee.
These courts all reasoned that the denial of class action adjudication in these circumstances was tantamount to the elimination of both the right to bring a claim and the right to obtain a remedy. “Courts have previously held that class actions are a critical piece of the enforcement of consumer protection law. The reason is clear. Without class actions many meritorious claims would never be brought.” Scott, 161 P.3d at 1006, citing Vasquez v. Superior Court (1971) 4 Cal.3d 800, 808; Discover Bank, 36 Cal.4th at 162-63 ([“‘a company which wrongfully extracts a dollar from each of millions of customers will reap a handsome profit; the class action is often the only effective way to halt and redress such exploitation’.”]).
It is time for Congress to amend the FAA by passing the Arbitration Fairness Acts of 2007 to ensure that in the absence of true voluntary consent, consumers and employees may not be subject to binding mandatory arbitration pre-dispute clauses.
The Federal Arbitration Act (FAA) was enacted 82 years ago for the primary purpose of permitting commercial entities of relatively equal bargaining strength to negotiate dispute resolution provisions in contracts between them. Snippets of legislative history have been pointed to by the United States Supreme Court to support the notion that Congress in 1925 sought to bind everyday consumers to the provisions of the FAA. See Allied-Bruce Terminix Companies, Inc. v. Dobson, 513 U.S. 265, 280 (1995), but, as these two pieces of legislation indicate, that plainly was not Congress’s intent.
Passage of the Arbitration Fairness Acts of 2007 is essential to ensure that millions of Americans are not denied access to public justice for the resolution of important disputes involving consumer protection and employee discrimination and harassment because they have no choice about obtaining a good or service or obtaining or keeping a job. It is time, again, for Congress to reaffirm the primacy of courts and juries for the resolution of disputes affecting significant rights and remedies for consumers and employees nationwide.
1 The term used in many cases — “waiver” — is a misnomer since it implies that consumers or employees have understood and consented or agreed to a provision that prevents the classwide adjudication of disputes. See, e.g., Discover Bank v. Superior Court (2005) 36 Cal.4th 148, 161-63. A waiver is the intentional relinquishment of a known right. Engalla v. Permanente Medical Group (1997) 15 Cal.4th 951, 983. There is no evidence in any of these cases that consumers or employees either knew or consented to such a provision.
2 See Scott v. Cingular Wireless (Wash. 2007) 161 P.3d 1000, 1006 (listing cases).
3 See also Ting v. AT&T, 319 F.3d 1126, 1150 (9th Cir. 2003), affd. in rel. part 182 F.Supp.2d 902 (N.D.Cal. 2002), cert. denied 124 S.Ct. 53 (2003).

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