Date: 2016-04-14
Speaker: JACKSON LEE (democrat)
Chamber: H

I thank the gentleman from Georgia for his leadership. along with Mr. CONYERS. and for the introduction of a very important initiative. H.R. 4899. Mr. Speaker. many would think. particularly as we have watched the mediation and arbitration process grow as a newly developed practice amongst lawyers and one that businesses and others have seemed to adopt. that that was. in fact. helping consumers by allowing the concept of arbitration to be able to be utilized. thereby. allegedly. lowering the costs of litigation. In a 2010 survey. 27 percent of employers. covering over 36 million employeesor onethird of the nonunion workforcereported that they required the forced arbitration of employment disputes. The practice of forced arbitration is widespread and damaging. For example. the ability to obtain key evidence that is necessary to prove ones case is often restricted or eliminated in arbitration proceedings. and it can be nearly impossible to appeal adverse decisions by arbitrators. We know that. in the Bill of Rights in the Constitution. there is a right to a trial by jury. a jury of ones peers. Therefore. it is a sacred right. This new practice had been projected as helping the victim: oh. it will be a lowcost procedure. you will get an immediate decision. you wont have the stress of litigation. you might not even have to hire a lawyer. But. as indicated. the ability to obtain key evidence that is necessary to prove ones case is often restricted or eliminated in arbitration proceedings. and it can be nearly impossible to appeal adverse decisions by arbitrators. I was one of the first Members to bring attention to this issue when I prevailed upon the late Chairman Hyde to authorize the Judiciary Subcommittee on Administrative and Commercial Law. when I was the ranking member. to hold a hearing on that matter involving Carl Poston and the NFL Players Association. with Gene Upshaw. then executive director. in the LaVar Arrington case. You may recall the LaVar Arrington case as being of the former Washington Redskins football player who was forced into arbitration in order to resolve a contract dispute. Forced arbitration of State and Federal employment discrimination laws is also harmful to women workers. In 2015. nearly 64.000 discrimination claims were filed with the Equal Employment Opportunity Commission under title VII. and more than 41 percent of those charges were for sexbased discrimination. Sexbased discrimination. including sexual harassment. remains a persistent problem for women in the workplace. Nearly 83 percent of sexual harassment charges that are filed with the EEOC are filed by women. Just imagine that mandatory arbitration of claims under State or Federal family and medical leave laws could have a disproportionate impact on women as well. I am pleased that this legislation was introduced. because it is a legislative initiative to restore rights. The bill is rightly named the Restoring Statutory Rights Act. It is also. I believe. the restoration of constitutional rights. Let me quickly tell you of the case of Stephanie Sutherland. which illustrates the difficulties of this forced arbitration. Stephanie was hired by her company to work as a staff assistant. Her work involved relatively routine. lowlevel clerical work for which she was paid a fixed salary of $55.000. She routinely worked 45 to 50 hours per week. but because she was classified by her employer as exempt from overtime. she did not receive any additional compensation. By the time Ms. Sutherland was terminated in 2009. she had worked 151 hours of overtime for which she should have been paid $1.867 had the Fair Labor Standards Act and the New York State labor laws been observed. She filed a class action lawsuit and sought to recover overtime for her work in excess of 40 hours a week and for other current and former nonlicensed staffone or two staff employees of the firmwho worked overtime. When Ms. Sutherland was hired. she was given an offer letter that also provided. if an employmentrelated dispute arises between you and the firm. it will be subject to mandatory mediation. That was what the company attempted to doenforce mandatory mediation. In her lawsuit. she attempted to enforce her rights because the Federal Fair Labor Standards Act had a provision to expressly permit lawsuits for minimum wage. To this end. the lower court was sympathetic to Ms. Sutherlands arguments. However. the United States Court of Appeals reversed. relying on the 2013 Supreme Court case. Therefore. we do have a conflict in the issue of dealing with arbitration that is forced. This is the core of why this legislation is so very important. I believe that. if parties agree to engage in mediation and arbitration. Mr. Speaker. so be it. but if you choose to use the court system that is designed by the Constitution as one of the three branches of government that all Americans should have access to. I will make the argument that you should not be forced into arbitration or mediation. I believe Mr. JOHNSONand I look forward to joining him on his legislationalong with Mr. CONYERS. is really lifting up the Constitution to ensure that every citizen has access to the courts of this land to help decide their issues of conflict and to choose the forum which they desire to use. I thank the gentleman for yielding to me. and I look forward to working with him on this very crucial constitutional issue. Mr. Speaker. I am pleased to join my colleagues of the Congressional Progressive Caucus to discuss the critical importance of an impartial and fair justice system. corporate accountability. consumer and employee protection. as well as the importance of enforcing laws on the books. I would like to thank Congressman HANK JOHNSON (DGA) for his leadership in putting forth this Special Order. The practice of forced arbitration is widespread and damaging. In a 2010 survey. 27 percent of employerscovering over 36 million employees. or onethird of the nonunion workforcereported that they required forced arbitration of employment disputes. Although arbitration can be a valid and effective method of dispute resolution when both parties voluntarily agree to arbitrate. forced arbitration clauses that limit an employees legal rights in a nonnegotiable contract are abusive and erode employees traditional legal safeguards. For example. the ability to obtain key evidence necessary to prove ones case is often restricted or eliminated in arbitration proceedings. and it can be nearly impossible to appeal adverse decisions by arbitrators. I was one of the first Members to bring attention to this issue when I prevailed upon Chairman Hyde to authorize the Judiciary Subcommittee on Administrative and Commercial Law to hold a hearing on that matter involving Carl Poston and the NFL Players Association (Gene Uphsaw. Executive Director) in the LeVar Arrington case. You may recall LeVar Arrington as the former Washington Redskins football player who was forced into arbitration in order to resolve a contract dispute. Forced arbitration of state and federal employment discrimination laws is especially harmful to women workers. In 2015. nearly 64.000 discrimination claims were filed with the Equal Employment Opportunity Commission (EEOC) under Title VII. and more than 41 percent of those charges were for sexbased discrimination. Sexbased discrimination. including sexual harassment. remains a persistent problem for women in the workplace. Nearly 83 percent of sexual harassment charges filed with the EEOC are filed by women. In a national survey by ABC News and the Washington Post. one in four women reported experiencing sexual harassment. compared to one in ten men. Mandatory arbitration of claims under state or federal family and medical leave laws could have a disproportionate impact on women as well. Nearly 56 percent of employees who took time away from work to deal with a serious personal or family illness. or to care for a new child under the FMLA in 2012 were women. If my colleagues fail to take necessary action. mandatory arbitration will continue to be a barrier to justice for workers. I am pleased by the action of Mr. CONYERS and Mr. JOHNSON for their leadership on Tuesday. Equal Pay Day. for introducing a very important piece of legislation that will address these inequities. the Restoring Statutory Rights Act. which I am pleased to be an original cosponsor of. The Restoring Statutory Rights Act would ensure that when Congress or the states have established rights and protections for individuals. including protection against wage discrimination. that they are able to enforce these rights in court. This bill amends the Federal Arbitration Act to prohibit mandatory predispute. commonly known as "forced." arbitration agreements for claims rising under federal or state statute. the U.S. Constitution. or a state constitution. The bill would further require that a court determines whether an agreement is unconscionable. legally invalid. or otherwise unenforceable as a matter of contract law or public policy. Under current law. parties may resolve statutory claims. including claims rising under antidiscrimination statutes. through forced arbitration instead of the justice system. This important legislation is a critical step in eliminating longstanding and unacceptable discrimination and barriers imposed on women and minority. It should be noted that forced arbitration is a private system controlled by corporations to prevent corporate accountability. Buried in the fine print of countless employment. cell phone. credit card. retirement. and nursing home contracts. forced arbitration eliminates Americans access to the courts. tipping the scales of justice in favor of corporate wrongdoers. When corporations force arbitration on individuals using nonnegotiable and many times unnoticed contract terms. it becomes an abusive weapon. Forced arbitration means giving up the most fundamental legal protection: the right to equal justice under the law. For decades. we have fought hard for dozens of laws that protect against discrimination based on age. sex. religion. race. disability. and unequal pay for equal work. such as the Civil Rights Act and the Equal Pay Act But these laws are meaningless if unenforceable in court. Its time to close the arbitration loophole that gives employers and businesses the right to ignore civil rights and consumer protection laws. Although states have tried to address this problem through their consumer protection laws. the courts have interpreted the Federal Arbitration Act (FAA) to trump state laws leaving consumers very little recourse. Arbitration can be a fair and effective method of dispute resolution when parties voluntarily agree to arbitrate. When the choice of arbitration is postdisputeand therefore understandable and voluntaryit is a fair process that parties choose willingly. I call upon my colleagues to come together and pass legislation that would reinstate workers ability to enforce their rights in a court of law and protect the rights of women and minorities. More than 20% of employees are covered by mandatory arbitration clauses. Tens of millions of consumers use consumer financial products or services that are subject to predispute arbitration clauses. Federal court statistics show that 17.977 labor claims and 35.965 civil rights claims were filed in 2012. National Arbitration Forum (NAF) arbitrators ruled in favor of consumers in less than 0.2% of all cases (30 out of 18.075) heard. These 30 victories only occurred in hearings where a consumer brought claims against a business. when companies brought claims against consumers. they were successful in hearings 100% of the time. The employee win rate after arbitration was 21.4%. which is lower than employee win rates reported in employment litigation trials (36.4% in federal court and 43.8% in state court). In cases won by employees. the median award amount was $36.500 and the mean was $109.858. both of which are substantially lower than award amounts reported in employment litigation ($384.223 for federal court litigation and $595.594 in state court litigation.) A 2015 study of federal court employment discrimination litigation by Theodore Eisenberg found that the employee win rate has dipped in recent years to an average of only 29.7 percent. At the same time. another 2015 study found that the employee win rate in employment arbitration had also dipped in recent years. to an average of only 19.1%. similar dip in employee win rates has occurred in state courts. 58% settlement rate in federal court employmentdiscrimination litigation. While recent research on mandatory arbitration found a 63% settlement rate across all employment cases in that forum. In court. summary judgment motions were filed in 77% of the court cases. while summary judgment motions were raised in 48% of arbitrations. The win rate was 32% lower in mandatory arbitration than in litigation. Plaintiffs overall economic outcomes are on average 6.1 times better in federal court than in mandatory arbitration ($143.497 versus $23.548) and 13.9 times better in state court than in mandatory arbitration ($328.008 versus $23.548). 21.1% of employment cases in mandatory arbitration are brought by employees without legal counsel. Damages from arbitration are 16% of the average damages from federal court litigation and a mere 7% of the average damages in state courtthus lawyers are reluctant to take cases that are subject to mandatory arbitration. Whereas on average plaintiffs attorneys accepted 15.8% of potential cases involving employees who could go to litigation. they accepted about half as many. 8.1% of the potential cases of employees covered by mandatory arbitration. The first time an employer appeared before an arbitrator. the employee had a 17.9% chance of winning. but after the employer had four cases before the same arbitrator the employees chance of winning dropped to 15.3%. and after 25 cases before the same arbitrator the employees chance of winning dropped to only 4.5%. The study results provide strong evidence of a repeat employer effect in which employee win rates and award amounts are significantly lower where the employer is involved in multiple arbitration cases where the same arbitrator is involved in more than one case with the same employer. a finding supporting some of the fairness criticisms directed at mandatory employment arbitration. In the credit card market. larger bank issuers are more likely to include arbitration clauses than smaller bank issuers and credit unions. As a result. while less than 16% of issuers include such clauses in their consumer credit card contracts. just over 50% of credit card loans outstanding are subject to forced arbitration clauses. In the checking account market. which is less concentrated than the credit card market. around 8% of banks. covering 44% of insured deposits. include arbitration clauses in their checking account contracts. 40% of the arbitration filings involved a dispute over the amount of debt a consumer allegedly owed to a company. with no additional affirmative claim by either party. In another 29% of the filings. consumers disputed alleged debts. but also brought affirmative claims against companies. The average disputed debt amount was nearly $16.000. The median was roughly $11.000. Across all six product markets. about eight cases a year involved disputed debts of $1.000 or less. Overall. consumers were represented by counsel in roughly 60% of the cases. though there were some variations by product. Companies almost always had counsel. Of the 1.060 arbitration cases filed in 2010 and 2011. so far as we could determine. arbitrators issued decisions in just under 33%. In approximately 25%. the record reflects that the parties reached a settlement. The remaining cases ended in an unknown manner or were technically pending but dormant as of early 2013.