[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 1782 Introduced in Senate (IS)]
110th CONGRESS
1st Session
S. 1782
To amend chapter 1 of title 9 of United States Code with respect to
arbitration.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 12, 2007
Mr. Feingold (for himself and Mr. Durbin) introduced the following
bill; which was read twice and referred to the Committee on the
Judiciary
_______________________________________________________________________
A BILL
To amend chapter 1 of title 9 of United States Code with respect to
arbitration.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Arbitration Fairness Act of 2007''.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) The Federal Arbitration Act (now enacted as chapter 1
of title 9 of the United States Code) was intended to apply to
disputes between commercial entities of generally similar
sophistication and bargaining power.
(2) A series of United States Supreme Court decisions have
changed the meaning of the Act so that it now extends to
disputes between parties of greatly disparate economic power,
such as consumer disputes and employment disputes. As a result,
a large and rapidly growing number of corporations are
requiring millions of consumers and employees to give up their
right to have disputes resolved by a judge or jury, and instead
submit their claims to binding arbitration.
(3) Most consumers and employees have little or no
meaningful option whether to submit their claims to
arbitration. Few people realize, or understand the importance
of the deliberately fine print that strips them of rights; and
because entire industries are adopting these clauses, people
increasingly have no choice but to accept them. They must often
give up their rights as a condition of having a job, getting
necessary medical care, buying a car, opening a bank account,
getting a credit card, and the like. Often times, they are not
even aware that they have given up their rights.
(4) Private arbitration companies are sometimes under great
pressure to devise systems that favor the corporate repeat
players who decide whether those companies will receive their
lucrative business.
(5) Mandatory arbitration undermines the development of
public law for civil rights and consumer rights, because there
is no meaningful judicial review of arbitrators' decisions.
With the knowledge that their rulings will not be seriously
examined by a court applying current law, arbitrators enjoy
near complete freedom to ignore the law and even their own
rules.
(6) Mandatory arbitration is a poor system for protecting
civil rights and consumer rights because it is not transparent.
While the American civil justice system features publicly
accountable decision makers who generally issue written
decisions that are widely available to the public, arbitration
offers none of these features.
(7) Many corporations add to their arbitration clauses
unfair provisions that deliberately tilt the systems against
individuals, including provisions that strip individuals of
substantive statutory rights, ban class actions, and force
people to arbitrate their claims hundreds of miles from their
homes. While some courts have been protective of individuals,
too many courts have upheld even egregiously unfair mandatory
arbitration clauses in deference to a supposed Federal policy
favoring arbitration over the constitutional rights of
individuals.
SEC. 3. DEFINITIONS.
Section 1 of title 9, United States Code, is amended--
(1) by amending the heading to read as follows:
``Sec. 1. Definitions'';
(2) by inserting before ```Maritime''' the following:
``As used in this chapter--'';
(3) by striking ```Maritime transactions''' and inserting
the following:
``(1) `maritime transactions';'';
(4) by striking ``commerce'' and inserting the following:
``(2) `commerce''';
(5) by striking ``, but nothing'' and all that follows
through the period at the end, and inserting a semicolon; and
(6) by adding at the end the following:
``(3) `employment dispute', as herein defined, means a
dispute between an employer and employee arising out of the
relationship of employer and employee as defined by the Fair
Labor Standards Act;
``(4) `consumer dispute', as herein defined, means a
dispute between a person other than an organization who seeks
or acquires real or personal property, services, money, or
credit for personal, family, or household purposes and the
seller or provider of such property, services, money, or
credit;
``(5) `franchise dispute', as herein defined, means a
dispute between a franchisor and franchisee arising out of or
relating to contract or agreement by which--
``(A) a franchisee is granted the right to engage
in the business of offering, selling, or distributing
goods or services under a marketing plan or system
prescribed in substantial part by a franchisor;
``(B) the operation of the franchisee's business
pursuant to such plan or system is substantially
associated with the franchisor's trademark, service
mark, trade name, logotype, advertising, or other
commercial symbol designating the franchisor or its
affiliate; and
``(C) the franchisee is required to pay, directly
or indirectly, a franchise fee; and
``(6) `pre-dispute arbitration agreement', as herein
defined, means any agreement to arbitrate disputes that had not
yet arisen at the time of the making of the agreement.''.
SEC. 4. VALIDITY AND ENFORCEABILITY.
Section 2 of title 9, United States Code, is amended--
(1) by amending the heading to read as follows:
``Sec. 2. Validity and enforceability'',
(2) by inserting ``(a)'' before ``A written'';
(3) by striking ``, save'' and all that follows through
``contract'', and inserting ``to the same extent as contracts
generally, except as otherwise provided in this title''; and
(4) by adding at the end the following:
``(b) No predispute arbitration agreement shall be valid or
enforceable if it requires arbitration of--
``(1) an employment, consumer, or franchise dispute; or
``(2) a dispute arising under any statute intended to
protect civil rights or to regulate contracts or transactions
between parties of unequal bargaining power.
``(c) An issue as to whether this chapter applies to an arbitration
agreement shall be determined by Federal law. Except as otherwise
provided in this chapter, the validity or enforceability of an
agreement to arbitrate shall be determined by the court, rather than
the arbitrator, irrespective of whether the party resisting arbitration
challenges the arbitration agreement specifically or in conjunction
with other terms of the contract containing such agreement.
``(d) Nothing in this chapter shall apply to any arbitration
provision in a collective bargaining agreement.''.
SEC. 5. EFFECTIVE DATE.
This Act, and the amendments made by this Act, shall take effect on
the date of the enactment of this Act and shall apply with respect to
any dispute or claim that arises on or after such date.
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