Recent Developments
On February 11, 2021, the U.S. House of Representatives Subcommittee on Antitrust, Commercial, and Administrative Law of the Judiciary Committee held a hearing on “Justice Restored: Ending Forced Arbitration and Protecting Fundamental Rights.” A video of the hearing, statements from House Members, witness written testimony, and statements from interested parties can be found on the House Committee on Judiciary webpage.
This hearing was held in connection with the reintroduction of the FAIR Act. That proposed act, co-sponsored by 155 House members, would ban mandatory pre-dispute arbitration agreements in cases of employment, consumer, class antitrust, and civil rights disputes, as well as pre-dispute joint-action waivers for those disputes in any forum. In the last Congress, the FAIR Act passed the House by a vote of 225 to 186, with virtually all Democrats and a number of Republicans in support. However, the U.S. Senate, then controlled by the Republicans, did not take up the legislation. The FAIR Act thus died at the end of term in that Congress, to be revised as a proposal in the current Congress.
The hearing was chaired by Rep. Hank Johnson (D-Georgia), a leading sponsor of the FAIR Act. Rep. Johnson strongly supported prohibiting such pre-dispute arbitration agreements. In addition to employment, consumer, antitrust, and civil rights disputes, Rep. Johnson also criticized the impact of mandatory arbitration on small business disputes with large businesses. After Rep. Johnson’s opening statement, Ranking Minority Member Rep. Ken Buck (R-Colorado) made his own opening remarks. Rep. Buck opposed the FAIR Act’s general ban on pre-dispute arbitration clauses, arguing that arbitration is a fair system. It is very interesting to note that he did, however, offer support for reviewing coverage of sexual predation claims in arbitration and “doing away with the secrecy provisions in contracts” when workplace predatory conduct exists—“Those are two issues I want to make sure we distinguish in the employment context . . . .” He stated his particular interest in hearing the testimony from Ms. Gretchen Carlson, the former Fox News anchor who made public her story of sexual harassment and sued her boss at Fox News. Other Republican members raised the prospect of excluding “sex and race discrimination” from mandatory arbitration and for overriding class action waivers for a “pattern of behavior” by a “bad actor” rather than individual claims. That focus on employment discrimination/harassment claims and overriding related confidentiality provisions may signal a possible path for narrower bipartisan legislation. A narrower approach may arise if, as many anticipate, the broader approach of the FAIR Act fails again in the Senate for lack of the 60 cloture votes necessary to overcome a filibuster or a Senate decision to eliminate the filibuster.
Four witnesses testified at the hearing.
Ms. Gretchen Carlson
Journalist, Author, and Advocate
Prof. Myriam Gilles
Paul R. Verkuil Chair in Public Law, Benjamin N. Cardozo School of Law
Mr. G. Roger King
Senior Labor and Employment Counsel, The HR Policy Association
Mr. Jacob Weiss
Founder and President, OJ Commerce
Ms. Carlson spoke about the adverse impact of forced arbitration on her sexual harassment claims, as well as the barrier Federal arbitration law poses to implementation of local State laws seeking to move similar claims out of arbitration. Prof. Gilles spoke more broadly in opposition to mandatory arbitration in employment, consumer, antitrust, civil rights, and small business/big business disputes, areas of her scholarship for many years. Mr. Weiss spoke in criticism of Amazon’s arbitration policy in contracts with its small business counterparties. Notably, Mr. Weiss was discussing a category of business-to- business commercial claims where there is an imbalance of bargaining power, not claims involving individuals.
Mr. King testified in support of positive aspects of arbitration, the inclusion of due process rights for claimants based on procedures adopted by U.S. arbitral institutions and reform of class action procedures. Like Rep. Buck, he contended that concerns about confidentiality and non-disclosure agreements can be addressed separately from arbitration.
Readers should note that other legislation has also been introduced in the new Congress focusing among other matters on banning pre-dispute mandatory arbitration clauses in employment arrangements. The most notable legislation in that respect is the proposed Protecting the Right to Organize (PRO) Act. Among as many as 50 pro-employee proposals in the PRO Act, that act would inter alia prohibit employers from using mandatory arbitration agreements with employees.
Control of the Senate has shifted to the Democrats in this Congress, though by the narrowest of margins. We can therefore anticipate hearings and committee activity in both the House and the Senate for these legislative proposals. In each case, though, the fundamental political calculus in the U.S. Congress will be driven by the role of the filibuster in the Senate.
