[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 931 Introduced in Senate (IS)]
111th CONGRESS
1st Session
S. 931
To amend title 9 of the United States Code with respect to arbitration.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 29, 2009
Mr. Feingold (for himself, Mr. Durbin, Mr. Kerry, Mr. Whitehouse, Mr.
Wyden, Mr. Udall of New Mexico, Mr. Merkley, and Mr. Kennedy)
introduced the following bill; which was read twice and referred to the
Committee on the Judiciary
_______________________________________________________________________
A BILL
To amend title 9 of the 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 2009''.
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 forcing
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 public, written
decisions, arbitration often offers none of these features.
(7) Many corporations add to 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 erroneously upheld even egregiously unfair
mandatory arbitration clauses in deference to a supposed
Federal policy favoring arbitration over the constitutional
rights of individuals.
SEC. 3. ARBITRATION OF EMPLOYMENT, CONSUMER, FRANCHISE, AND CIVIL
RIGHTS DISPUTES.
(a) In General.--Title 9 of the United States Code is amended by
adding at the end the following:
``CHAPTER 4--ARBITRATION OF EMPLOYMENT, CONSUMER, FRANCHISE, AND CIVIL
RIGHTS DISPUTES
``Sec.
``401. Definitions.
``402. Validity and enforceability.
``Sec. 401. Definitions
``In this chapter--
``(1) the term `civil rights dispute' means a dispute--
``(A) arising under--
``(i) the Constitution of the United States
or the constitution of a State; or
``(ii) a Federal or State statute that
prohibits discrimination on the basis of race,
sex, disability, religion, national origin, or
any invidious basis in education, employment,
credit, housing, public accommodations and
facilities, voting, or program funded or
conducted by the Federal Government or State
government, including any statute enforced by
the Civil Rights Division of the Department of
Justice and any statute enumerated in section
62(e) of the Internal Revenue Code of 1986
(relating to unlawful discrimination); and
``(B) in which at least 1 party alleging a
violation of the Constitution of the United States, a
State constitution, or a statute prohibiting
discrimination is an individual;
``(2) the term `consumer dispute' means a dispute between a
person other than an organization who seeks or acquires real or
personal property, services (including services relating to
securities and other investments), money, or credit for
personal, family, or household purposes and the seller or
provider of such property, services, money, or credit;
``(3) the term `employment dispute' means a dispute between
an employer and employee arising out of the relationship of
employer and employee as defined in section 3 of the Fair Labor
Standards Act of 1938 (29 U.S.C. 203);
``(4) the term `franchise dispute' means a dispute between
a franchisee with a principal place of business in the United
States and a franchisor 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
``(5) the term `predispute arbitration agreement' means any
agreement to arbitrate a dispute that had not yet arisen at the
time of the making of the agreement.
``Sec. 402. Validity and enforceability
``(a) In General.--Notwithstanding any other provision of this
title, no predispute arbitration agreement shall be valid or
enforceable if it requires arbitration of an employment, consumer,
franchise, or civil rights dispute.
``(b) Applicability.--
``(1) In general.--An issue as to whether this chapter
applies to an arbitration agreement shall be determined under
Federal law. The applicability of this chapter to an agreement
to arbitrate and the validity and enforceability of an
agreement to which this chapter applies 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.
``(2) Collective bargaining agreements.--Nothing in this
chapter shall apply to any arbitration provision in a contract
between an employer and a labor organization or between labor
organizations, except that no such arbitration provision shall
have the effect of waiving the right of an employee to seek
judicial enforcement of a right arising under a provision of
the Constitution of the United States, a State constitution, or
a Federal or State statute, or public policy arising
therefrom.''.
(b) Technical and Conforming Amendments.--
(1) In general.--Title 9 of the United States Code is
amended--
(A) in section 1, by striking ``of seamen,'' and
all that follows through ``interstate commerce'';
(B) in section 2, by inserting ``or as otherwise
provided in chapter 4'' before the period at the end;
(C) in section 208--
(i) in the section heading, by striking
``Chapter 1; residual application'' and
inserting ``Application''; and
(ii) by adding at the end the following:
``This chapter applies to the extent that this
chapter is not in conflict with chapter 4.'';
and
(D) in section 307--
(i) in the section heading, by striking
``Chapter 1; residual application'' and
inserting ``Application''; and
(ii) by adding at the end the following:
``This chapter applies to the extent that this
chapter is not in conflict with chapter 4.''.
(2) Table of sections.--
(A) Chapter 2.--The table of sections for chapter 2
of title 9, United States Code, is amended by striking
the item relating to section 208 and inserting the
following:
``208. Application.''.
(B) Chapter 3.--The table of sections for chapter 3
of title 9, United States Code, is amended by striking
the item relating to section 307 and inserting the
following:
``307. Application.''.
(3) Table of chapters.--The table of chapters for title 9,
United States Code, is amended by adding at the end the
following:
``4. Arbitration of employment, consumer, franchise, and 401''.
civil rights disputes.
SEC. 4. EFFECTIVE DATE.
This Act, and the amendments made by this Act, shall take effect on
the date of 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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