April 02, 2019

MONTH-IN-BRIEF: Business Litigation & Dispute Resolution

Mac R. McCoy, Sara Bussiere

Business Litigation

Congress Proposes Legislation in An Attempt to Curtail Mandatory Arbitration Clauses

By Leslie A. Berkoff, Moritt Hock & Hamroff LLP

It is a commonplace for agreements governing, among other things, school loans, cell phone bills, and employment contracts, to contain mandatory arbitration clauses, which are intended to dictate the rules, venue and arbitrator for resolving a dispute. Oftentimes the goal can be to prevent consumer class actions. The Federal Arbitration Act explicitly recognizes these provisions as valid and enforceable absent independent grounds at law or equity that provide a basis to revoke the underlying agreement. While, historically, many states have attempted to legislate around these provisions, the Supreme Court has steadfastly upheld the validity of these clauses.

Recently, legislation has been proposed in Congress entitled the Forced Arbitration Injustice Repeal Act of 2019 (the “FAIR Act”), S. 635, H.R. 1423, which, if enacted, would amend title 9 of the United States Code and prospectively bar pre-dispute arbitration agreements and class-action waivers in consumer, employment, antitrust, and civil rights disputes. The FAIR Act would push issues of arbitrability to the courts as opposed to arbitrators and require courts to look to federal law to render determinations. This type of legislation has been attempted before including prior machinations entitled the “Arbitration Fairness Act” which Congress soundly defeated from 2007- 2018. In light of the breadth of decisions coming down from the Supreme Court this year, including the May 2018 Epic Systems decision, upholding the FAA provision, it is unlikely that this legislation will be successful. However, it is certainly worth paying attention to its progression through Congress.

Mac R. McCoy

United States Magistrate Judge, Middle District of Florida

Mac R. McCoy is a United States Magistrate Judge in the Fort Myers Division of the United States District Court for the Middle District of Florida.  Prior to his federal judicial appointment on July 1, 2015, Judge McCoy was a Shareholder in the National Trial and National Class Actions Practice Groups at Carlton Fields, P.A. in Tampa, Florida.

Sara Bussiere

Associate, Bayard

Sara E. Bussiere is an associate in Bayard’s Litigation Department. Sara concentrates her practice on corporate and commercial litigation in the Delaware Court of Chancery, Delaware Superior Court, and the United States District Court for the District of Delaware. Sara counsels clients concerning the General Corporation Law of the State of Delaware and Delaware’s alternative entity statutes. Sara has experience in a broad range of corporate matters, including fiduciary duty claims, corporate and alternative entity control disputes, advancement and indemnification claims, trade secret and noncompetition agreement disputes, and other breach of contract claims. Sara also has experience advising corporate entities in receivership or seeking dissolution.