[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 647 Introduced in Senate (IS)]

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115th CONGRESS
  1st Session
                                 S. 647

   To amend title 9, United States Code, with respect to arbitration.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 15, 2017

 Mr. Blumenthal (for himself, Mr. Brown, Mr. Markey, Mr. Franken, Mrs. 
Murray, Mr. Merkley, and Mr. Whitehouse) introduced the following bill; 
  which was read twice and referred to the Committee on the Judiciary

_______________________________________________________________________

                                 A BILL


 
   To amend title 9, 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 ``Mandatory Arbitration Transparency 
Act of 2017''.

SEC. 2. VALIDITY AND ENFORCEABILITY OF PREDISPUTE ARBITRATION 
              AGREEMENTS CONTAINING CONFIDENTIALITY CLAUSES.

    (a) In General.--Title 9, United States Code, is amended by adding 
at the end the following:

       ``CHAPTER 4--PREDISPUTE ARBITRATION AGREEMENTS CONTAINING 
                        CONFIDENTIALITY CLAUSES

``401. Definitions.
``402. Validity and enforceability.
``Sec. 401. Definitions
    ``(a) 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 any program funded or 
                        conducted by the Federal Government or a 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 
        an individual who seeks or acquires real or personal property, 
        services, securities or other investments, money, or credit for 
        personal, family, or household purposes and the seller or 
        provider of such property, services, securities or other 
        investments, money, or credit;
            ``(3) the term `covered confidentiality clause' means a 
        provision of a predispute arbitration agreement that, with 
        respect to an employment dispute, consumer dispute, or civil 
        rights dispute, purports to, or could be interpreted by a 
        reasonable person to, prohibit a party to the dispute from--
                    ``(A) making a communication in a manner such that 
                the prohibition would violate a State or Federal 
                whistleblower statute; or
                    ``(B) reporting or making a communication, 
                including to any relevant public official, elected 
                official, or other State or Federal authority, about--
                            ``(i) tortious conduct;
                            ``(ii) otherwise unlawful conduct; or
                            ``(iii) issues of public policy or public 
                        concern;
            ``(4) 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); 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.--
            ``(1) Prohibition on predispute arbitration agreements with 
        confidentiality clauses.--Notwithstanding any other provision 
        of this title, no predispute arbitration agreement shall be 
        valid or enforceable if the agreement contains a covered 
        confidentiality clause.
            ``(2) Exception.--Paragraph (1) shall not apply to a 
        predispute arbitration agreement if a party to the agreement 
        can demonstrate a confidentiality interest that significantly 
        outweighs the private and public interest in disclosure.
    ``(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 
        a court, rather than an 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 Amendment.--The table of chapters for 
title 9, United States Code, is amended by adding at the end the 
following:

``4. Predispute arbitration agreements containing                401''.
                            confidentiality clauses.

SEC. 3. UNFAIR OR DECEPTIVE ACT OR PRACTICE.

    (a) Definition.--In this section--
            (1) the term ``Commission'' means the Federal Trade 
        Commission; and
            (2) the terms ``covered confidentiality clause'' and 
        ``predispute arbitration agreement'' have the meanings given 
        those terms in section 401 of title 9, United States Code, as 
        added by section 2.
    (b) Prohibition.--
            (1) In general.--It shall be unlawful for a person to 
        knowingly offer to another person for ratification a predispute 
        arbitration agreement that contains a covered confidentiality 
        clause.
            (2) Exceptions.--
                    (A) Confidentiality interest.--Paragraph (1) shall 
                not apply to a person that offers a predispute 
                arbitration agreement with a covered confidentiality 
                clause if the person can demonstrate a confidentiality 
                interest that significantly outweighs the private and 
                public interest in disclosure.
                    (B) Collective bargaining agreements.--Paragraph 
                (1) shall not apply with respect to any arbitration 
                provision in a contract between an employer and a labor 
                organization or between labor organizations, if the 
                arbitration provision does not waive 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.
    (c) Enforcement by Federal Trade Commission.--
            (1) Treatment as unfair or deceptive act or practice.--A 
        violation of subsection (b) by a person with respect to which 
        the Commission is empowered under section 5(a)(2) of the 
        Federal Trade Commission Act (15 U.S.C. 45(a)(2)) shall be 
        treated as a violation of a rule defining an unfair or 
        deceptive act or practice prescribed under section 18(a)(1)(B) 
        of that Act (15 U.S.C. 57a(a)(1)(B)).
            (2) Powers of commission.--
                    (A) In general.--The Commission shall enforce this 
                section in the same manner, by the same means, and with 
                the same jurisdiction, powers, and duties as though all 
                applicable terms and provisions of the Federal Trade 
                Commission Act (15 U.S.C. 41 et seq.) were incorporated 
                into and made a part of this section.
                    (B) Privileges and immunities.--Any person who 
                violates subsection (b) shall be subject to the 
                penalties and entitled to the privileges and immunities 
                provided in the Federal Trade Commission Act (15 U.S.C. 
                41 et seq.).
            (3) Rulemaking.--The Commission shall promulgate standards 
        and rules to carry out this section in accordance with section 
        553 of title 5, United States Code.
    (d) Civil Action.--
            (1) Private right of action.--Any person aggrieved by a 
        violation of subsection (b) may bring a civil action in an 
        appropriate district court of the United States.
            (2) Remedies.--In an action under paragraph (1), the court 
        may award--
                    (A) actual damages, but not less than liquidated 
                damages in an amount equal to $1,000;
                    (B) punitive damages;
                    (C) reasonable attorney's fees and other litigation 
                costs reasonably incurred; and
                    (D) any other preliminary and equitable relief that 
                the court determines appropriate, including injunctive 
                relief.

SEC. 4. EFFECTIVE DATE.

    (a) In General.--This Act, and the amendments made by this Act, 
shall take effect on the date of enactment of this Act.
    (b) Applicability.--
            (1) Validity and enforceability.--Chapter 4 of title 9, 
        United States Code, as added by section 2, shall apply with 
        respect to any dispute or claim that arises on or after the 
        date of enactment of this Act.
            (2) Unfair or deceptive act or practice.--Section 3 shall 
        apply with respect to any predispute arbitration agreement 
        offered for ratification on or after the date of enactment of 
        this Act.
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