March 23, 2017, Trial News

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Members of Congress introduce bills to combat forced arbitration

Kate Halloran

photo of Capitol

At a March 7 press briefing, several members of Congress announced various bills intended to curb the use of forced arbitration against consumers, employees, students, and servicemembers. The legislators were joined by former Fox News anchor Gretchen Carlson, U.S. Navy reservist Kevin Ziober, and Wells Fargo customer Aaron Brodie, who shared their stories of how forced arbitration has affected their experiences with the civil justice system.
 

At a March 7 press briefing, several members of Congress announced various bills intended to curb the use of forced arbitration against consumers, employees, students, and servicemembers. The legislators were joined by former Fox News anchor Gretchen Carlson, U.S. Navy reservist Kevin Ziober, and Wells Fargo customer Aaron Brodie, who shared their stories of how forced arbitration has affected their experiences with the civil justice system. Senators Al Franken (D-Minn.), Patrick Leahy (D-Vt.), Dick Durbin (D-Ill.), Richard Blumenthal (D-Conn.), and Sheldon Whitehouse (D-R.I.); and Representatives Hank Johnson (D-Ga.), David Cicilline (D-R.I.), Brad Sherman (D-Calif.), and Donald McEachin (D-Va.) attended the briefing.

Sens. Franken and Leahy and Rep. Johnson introduced the Arbitration Fairness Act. The bill seeks to clarify the scope of the Federal Arbitration Act (FAA), which was enacted in 1925 and has been broadly interpreted by the U.S. Supreme Court. Its sponsors say the Arbitration Fairness Act “restores the original intent of the FAA by clarifying the scope of its application.” The bill prohibits pre-dispute forced arbitration clauses for employment, consumer, antitrust, and civil rights cases. It does not ban arbitration agreements, nor does it prevent parties from electing to enter into arbitration after a dispute arises.

Franken said the bill “would help restore everyday Americans’ right to challenge unfair practices in court and ensure meaningful legal recourse.” He explained that because forced arbitration clauses have become so widespread, “corporate America uses forced arbitration clauses to restrict Americans’ access to justice by stripping consumers and workers of their constitutional right to have their claims heard in a public court of law.”

Carlson echoed those sentiments. She confronted a forced arbitration clause in her employment contract after raising sexual harassment allegations against her boss and former Fox News CEO Roger Ailes. Carlson said that the secretive nature of the forced arbitration process means that victims of sexual harassment cannot obtain justice. “By forcing women to be silent about illegal and abusive behavior which causes them much pain, in many cases, the employer is able to leave the abusers in the workplace to harass again,” she said. “No one starts a job expecting to get into a dispute . . . . The argument that victims of harassment agree to give up their constitutional rights when they sign a contract is ridiculous. Employers are insisting that employees give up their rights to have that job.”

The attendees also spoke about how forced arbitration clauses have impacted students at for-profit schools, members of the U.S. military taking time away from their jobs to serve their country, and consumers defrauded by Wells Fargo opening accounts in their names without their permission, among others. Brodie spoke about the long-term consequences of a Wells Fargo employee opening a credit card for him without his consent and the company applying a forced arbitration clause from the card agreement that he did not sign. When the card accrued fees that Brodie had no knowledge of and refused to pay, Wells Fargo dinged his credit report. “This greatly hurt my credit score, lowering it by nearly 125 points,” he said. “This has impacted my life in many ways—I have to make larger down payments. I have to pay higher interest rates on car loans. I’m unable to qualify for a mortgage because of the fraud.”

Ziober, who was fired from his job on the same day his employer threw him a party before he shipped out to Afghanistan, said, “The shock of finding out I was being terminated from my job on the eve of deploying to a combat zone created an unimaginable amount of concern and anxiety about how I would earn a living when I returned home.” After filing a Uniformed Services Employment and Reemployment Act (USERRA) claim when he returned home, Ziober discovered that his employment agreement required him to arbitrate his claim. He appealed his case to the Ninth Circuit, which held that despite the protections offered by USERRA, Ziober would have to arbitrate his claim. He plans to file a petition for certiorari with the U.S. Supreme Court to hear his case. Ziober called USERRA “one of the strongest civil rights laws in both the substantive and procedural rights it gives to servicemembers,” including the right to file suit in any jurisdiction where their employer is located, not paying fees and costs, and no statute of limitations for filing a claim. “But arbitration agreements routinely take away these rights and silence the voices of veterans and servicemembers by forcing them to confidentiality litigate their cases behind closed doors,” he said. 

In addition to the Arbitration Fairness Act, five other bills intended to combat forced arbitration were introduced:

  • The Justice for Victims of Fraud Act prevents forced arbitration clauses from being used against consumers who had a checking or credit card account fraudulently opened in their name;
  • The Justice for Servicemembers Act prohibits forced arbitration clauses related to the claims made under USERRA, which provides employment protections for members of the military serving their country;
  • The Mandatory Arbitration Transparency Act invalidates confidentiality provisions in forced arbitration clauses;
  • The Court Legal Access and Student Support Act bars a school from receiving federal student aid funding if it requires students to arbitrate disputes; and
  • The Restoring Statutory Rights and Interests of the States Act prevents forced arbitration from preempting certain statutory causes of action such as civil rights claims.