[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]
JUSTICE RESTORED: ENDING FORCED
ARBITRATION AND PROTECTING
FUNDAMENTAL RIGHTS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ANTITRUST, COMMERCIAL, AND
ADMINISTRATIVE LAW
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
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THURSDAY, FEBRUARY 11, 2021
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Serial No. 117-2
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Printed for the use of the Committee on the Judiciary
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via: http://judiciary.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
47-471 PDF WASHINGTON : 2022
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COMMITTEE ON THE JUDICIARY
JERROLD NADLER, New York, Chair
MADELEINE DEAN, Pennsylvania, Vice-Chair
ZOE LOFGREN, California JIM JORDAN, Ohio, Ranking Member
SHEILA JACKSON LEE, Texas STEVE CHABOT, Ohio
STEVE COHEN, Tennessee LOUIE GOHMERT, Texas
HENRY C. ``HANK'' JOHNSON, Jr., DARREL ISSA, California
Georgia KEN BUCK, Colorado
THEODORE E. DEUTCH, Florida MATT GAETZ, Florida
KAREN BASS, California MIKE JOHNSON, Louisiana
HAKEEM S. JEFFRIES, New York ANDY BIGGS, Arizona
DAVID N. CICILLINE, Rhode Island TOM McCLINTOCK, California
ERIC SWALWELL, California W. GREGORY STEUBE, Florida
TED LIEU, California TOM TIFFANY, Wisconsin
JAMIE RASKIN, Maryland THOMAS MASSIE, Kentucky
PRAMILA JAYAPAL, Washington CHIP ROY, Texas
VAL BUTLER DEMINGS, Florida DAN BISHOP, North Carolina
J. LUIS CORREA, California MICHELLE FISCHBACH, Minnesota
MARY GAY SCANLON, Pennsylvania, VICTORIA SPARTZ, Indiana
SYLVIA R. GARCIA, Texas SCOTT FITZGERALD, Wisconsin
JOE NEGUSE, Colorado CLIFF BENTZ, Oregon
LUCY McBATH, Georgia BURGESS OWENS, Utah
GREG STANTON, Arizona
VERONICA ESCOBAR, Texas
MONDAIRE JONES, New York
DEBORAH ROSS, North Carolina
CORI BUSH, Missouri
PERRY APELBAUM, Majority Staff Director & Chief Counsel
CHRISTOPHER HIXON, Minority Staff Director
------
SUBCOMMITTEE ON ANTITRUST, COMMERCIAL,
AND ADMINISTRATIVE LAW
DAVID N. CICILLINE, Rhode Island, Chair
PRAMILIA JAYAPAL, Washington, Vice-Chair
JOE NEGUSE, Colorado KEN BUCK, Colorado, Ranking Member
ERIC SWALWELL, California DARREL ISSA, California
MONDAIRE JONES, New York MATT GAETZ, Florida
THEODORE E. DEUTCH, Florida MIKE JOHNSON, Louisiana
HAKEEM S. JEFFRIES, New York W. GREGORY STEUBE, Florida
JAMIE RASKIN, Maryland MICHELLE FISCHBACH, Minnesota
VAL BUTLER DEMINGS, Florida VICTORIA SPARTZ, Indiana
MARY GAY SCANLON, Pennsylvania SCOTT FITZGERALD, Wisconsin
LUCY McBATH, Georgia CLIFF BENTZ, Oregon
MADELINE DEAN, Pennsylvania BURGESS OWENS, Utah
HENRY C. ``HANK'' JOHNSON, Jr.,
Georgia
SLADE BOND, Chief Counsel
DOUG GEHO, Minority Counsel
C O N T E N T S
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Thursday, February 11, 2021
Page
OPENING STATEMENTS
The Honorable Henry ``Hank'' Johnson, Jr., a Member of the
Subcommittee on Antitrust, Commercial, and Administrative Law
from the State of Georgia...................................... 2
The Honorable Ken Buck, Ranking Member of the Subcommittee on
Antitrust, Commercial, and Administrative Law from the State of
Colorado....................................................... 3
The Honorable Jerrold Nadler, Chair of the Committee on the
Judiciary from the State of New York........................... 4
WITNESSES
Myriam Gilles, Paul R. Verkuil Chair in Public Law, Benjamin N.
Cardozo School of Law
Oral Testimony................................................. 18
Prepared Testimony............................................. 20
Gretchen Carlson, Journalist and Advocate
Oral Testimony................................................. 33
Prepared Testimony............................................. 35
Jacob Weiss, Founder and President, OJ Commerce
Oral Testimony................................................. 39
Prepared Testimony............................................. 41
G. Roger King, Senior Labor and Employment Counsel, The HR Policy
Association
Oral Testimony................................................. 46
Prepared Testimony............................................. 48
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Materials submitted by the Honorable Henry ``Hank'' Johnson, Jr.,
a Member of the Subcommittee on Antitrust, Commercial, and
Administrative Law from the State of Georgia for the record
Statement from the Honorable David N. Cicilline, Chair of the
Subcommittee on Antitrust, Commercial, and Administrative Law
from the State of Rhode Island............................... 10
Statement from the Honorable Joe Neguse, a Member of the
Subcommittee on Antitrust, Commercial, and Administrative Law 16
Statement from Valerie Haney, a former member of the Church of
Scientology.................................................. 278
Statement from Tanuja Gupta, Googlers for Ending Forced
Arbitration.................................................. 282
Statement from Remington A. Gregg, Counsel for Civil Justice
and Consumer Rights, Public Citizen.......................... 288
Statement from Wade Henderson, Interim President and CEO, and
LaShawn Warren, Executive Vice President for Government
Affairs, The Leadership Conference on Civil and Human Rights. 296
Statement from Heidi Silton, President, Committee to Support
the Antitrust Laws (COSAL)................................... 299
Statement from Chrissie Carnell-Bixler, former member of the
Church of Scientology........................................ 300
A letter from George P. Slover, Senior Policy Counsel, and Syed
Ejaz, Policy Analyst, Consumer Reports....................... 303
A Plantiff Brief in the case of Newton v. Hennessy Louis Vuitto
from George P. Slover, Senior Policy Counsel, and Syed Ejaz,
Policy Analyst............................................... 306
APPENDIX
Materials submitted by the Honorable David N. Cicilline, Chair of
the Subcommittee on Antitrust, Commercial, and Administrative
Law from the State of Rhode Island for the record
Statement from Laura M. Flegal, Legislative & Public Policy
Director, The Employee Rights Advocacy Institute for Law &
Policy....................................................... 366
Statement from Richard Hunt, President and CEO, Consumer
Bankers Association.......................................... 373
Statement from Eric P. Tuchmann, Senior Vice President, General
Counsel, and Corporate Secretary, American Arbitration
Association.................................................. 375
Statement from 83 consumer and civil rights organizations
supporting the FAIR Act...................................... 381
RESPONSES TO QUESTIONS FOR THE RECORD
Responses to questions by Myriam Gilles, Paul R. Verkuil Research
Chair in Public Law, Benjamin N. Cardozo School of Law, from
the Honorable Mary Gay Scanlon, a Member of the Subcommittee on
Antitrust, Commercial, and Administrative Law from the State of
Pennsylvania for the record.................................... 388
Responses to questions by Jacob Weiss, Founder and President, OJ
Commerce, from the Honorable Mary Gay Scanlon, a Member of the
Subcommittee on Antitrust, Commercial, and Administrative Law
from the State of Pennsylvania for the record.................. 390
JUSTICE RESTORED: ENDING FORCED
ARBITRATION AND PROTECTING
FUNDAMENTAL RIGHTS
----------
Thursday, February 11, 2021
House of Representatives
Subcommittee on Antitrust, Commercial, and
Administrative Law
Committee on the Judiciary
Washington, DC
The Subcommittee met, pursuant to call, at 10:00 a.m., in
Room 2141, Rayburn House Office Building, Hon. Henry ``Hank''
Johnson Jr. of Georgia presiding.
Present: Representatives Nadler, Neguse, Jones, Deutch,
Jeffries, Jayapal, Demings, Scanlon, McBath, Johnson of
Georgia, Buck, Issa, Johnson of Louisiana, Steube, Bishop,
Fischbach, Spartz, Fitzgerald, Bentz and Owens.
Staff Present: Madeline Strasser, Chief Clerk; John
Williams, Parliamentarian; Amanda Lewis, Counsel; Joseph Van
Wye, Professional Staff Member; Slade Bond, Chief Counsel;
Phillip Berenbroick, Counsel; Doublas Geho, Minority Chief
Counsel for Administrative Law; Kiley Bidelman, Minority Clerk.
Mr. Johnson of Georgia. The Subcommittee will come to
order.
Without objection, the Chair is authorized to declare
recesses of the Committee at any time.
Good morning, and welcome to today's hearing on the impact
of forced arbitration on the fundamental rights of hardworking
Americans and our system of laws. Before we begin, I would like
to remind the Members that we have established an email address
and distribution list dedicated to circulating exhibits,
motions, or other written materials that Members might want to
offer as a part of today's hearing. If you would like to submit
materials, please send them to the email address that has been
previously distributed to your offices, and we will circulate
the materials to the Members and staff as quickly as we can.
I would also remind all Members that guidance from the
Office of Attending Physician states that face coverings are
required for all meetings in an enclosed space, such as
Committee hearings. I expect all Members on both sides of the
aisle to wear a mask for the duration of today's hearing.
I now recognize myself for an opening statement. I want to
thank the esteemed Witnesses for agreeing to offer testimony at
this important hearing today.
I would also like to extend a sincere thanks to Chair David
Cicilline for allowing me the honor of chairing this hearing in
his absence, as he is disposed as an impeachment manager now in
trial in the Senate. This was to be Chair Cicilline's first
Subcommittee hearing of this new Congress, and its subject
happened to concern the issue of forced arbitration, which is
an issue that I have championed since I have first came to
Congress back in 2007. So, I am particularly honored to Chair
this hearing in his absence.
Forced arbitration is an underhanded maneuver that
corporations use to trick consumers, workers, and small
businesses out of their right to go to court and seek damages
from a jury of their peers when they get injured or cheated.
From consumer purchases to nursing home contracts for the
elderly, and even when you accept a job offer, corporations use
small print to put arbitration clauses into the paperwork that
you sign. Without ever knowing it, you have signed away your
right to seek justice in court. Instead, you have been tricked
into a secret, for-profit dispute resolution process known as
binding arbitration.
In forced arbitration, the deck is stacked against the
little guy, and most often the corporation comes out on top.
Consumers, workers, and small-business people shouldn't need a
law degree to be able to go about their daily lives without
giving up their constitutional rights. That is exactly what is
happening in our society today.
Every day when you are trying to get a job, or you want to
purchase a car, or even to buy a TV online, you find yourself
pitted against a multimillion-dollar corporate legal department
and their 10-page small print contract that forces you to
choose between foregoing a necessity or signing away your
Seventh amendment constitutional right to a trial by jury. The
truth is you really don't have a choice because everywhere you
go to make a purchase or seek employment, you run right into a
forced arbitration clause. It has gotten to a point where it is
a take-it-or-leave-it situation. You can't get a cell phone or
a credit card or even a job nowadays unless you sign away your
rights because that is what every corporation requires. They
force you into binding arbitration because it benefits them,
and it is at your expense. It is not fair, and it is not right.
I am also not just talking about traditional pen-and-paper
contracts. Arbitration clauses are hidden in the terms and
conditions when you download an app. They are hidden in
employment paperwork when you get a new job, in packaging for
all your devices, and in software updates you don't even
realize you are getting. Forced arbitration clauses have even
been found enforceable when employees are forced to sign a
nonnegotiable contract update during their midyear review. If
you signed an arbitration clause, you no longer have a right to
take your dispute to court for a trial. Instead, you are forced
into the secret, for-profit forced arbitration setup where the
corporation that puts you into the arbitration process also
chooses where your case will be handled, the judge to hear your
case, and the law the judge will apply. With a setup like that,
it is no wonder that most of the time the corporations come out
on top. If this sounds unfair, well, it is.
Big businesses that already had all the power in the
relationship between themselves and someone like you or me
stacked the deck so that they can avoid the only thing out
there that could hold them accountable, the United States
justice system. It is about accountability, or the lack
thereof. That is why this arbitration issue matters, because
without accountability, without access to the courthouse, the
tragic stories of Americans harmed by corporations can never
become a force for good.
Class actions can stop banks from defrauding thousands of
their customers. They can thwart corporations from having a
culture of sexual abuse of women. Public court cases can close
nursing homes, perpetrating widespread abuse. Federal judges
can ensure that laws protecting the jobs of working people are
obeyed. This balancing of the scales of justice can never
happen if forced arbitration clauses continue to shield
corporations from you having your day in court.
I have been a proud sponsor of the Forced Arbitration
Injustice Repeal Act, also known as the FAIR Act, which was
filed today with 155 cosponsors. If it passes, it would secure
the accountability that is so lacking today by banning the
enforcement of forced arbitration clauses in consumer,
antitrust employment, and civil rights disputes.
Corporations have proven time and again that when given the
power, they will take more. We need to lay down rules of the
road to ensure that people going about their daily lives are
not forced to give up their constitutional rights.
With that, I would like to welcome the new Members to the
Subcommittee.
I now recognize the distinguished gentleman from Colorado,
Ranking Member Buck, for his opening statement.
Mr. Buck. Thank you, Mr. Chair. I want to thank you and Mr.
Cicilline and Mr. Nadler for calling this important hearing.
There are a number of issues that I think are really
fascinating and need to be explored, and I am really looking
forward to hearing the testimony of the Witnesses today.
The idea that we will do away with arbitration clauses in
the contracts and not have a serious impact on our judicial
system is something that we need to explore and probably in a
separate hearing, since it doesn't appear that these Witnesses
are necessarily in a position to talk about the impact of that
kind of change to our judicial system.
There are some discrete areas, and sexual harassment is one
of them, that I think needs to really be explored to decide
whether we take that out of arbitration clauses or not. There
are so many, literally, millions of contracts that are entered
into every year that contain arbitration clauses. If we do away
with those, it would have a serious impact.
Arbitration is a fair system. It is a system that many,
many consumers, and others have benefited from the speed that
arbitration--that the process--how quickly the process occurs.
Oftentimes, the individuals that are involved, the plaintiffs,
in the arbitration clauses receive awards, and they don't have
to pay exorbitant attorney's fees with those awards.
So, I am particularly interested in hearing Ms. Carlson's
testimony today.
As a FOX News viewer and a FOX News participant or guest
sometimes, I have followed that organization somewhat closely.
I am really heartened by the fact that they have dealt with a
very serious problem. They have gotten rid of a number of
predators, people that I would consider predators in their
organization. They have tried to clean that organization up,
and I think have, to a certain extent, really moved forward on
those issues.
I am also very proud that I am a big fan of Ms. Carlson's
and she, with her courage, really changed, not just an
organization, but the way a number of people in this country
look at sexual harassment in the workplace.
So, I am particularly interested in hearing the testimony
of these Witnesses and how we can balance the needs of dealing
with certain areas.
I think one of the things when I read the testimony of the
Witnesses and some other materials last night, what struck me
was the difference between doing away with arbitration clauses
and doing away with the secrecy provisions in contracts.
Obviously, I think all of us or at least most of us would
agree, that if there is a predator in the workplace, there
should not be secrecy, that person should not be staying in the
workplace. The person should be outed, and people should be
warned about that kind of behavior for that employer and in
other areas. That doesn't mean that arbitration by itself is a
problem. So, I think that those are two issues that I want to
make sure we distinguish in the employment context of
arbitration clauses and are able to make a good judgment about
that.
I look forward to this testimony and the hearing, and I
thank the gentleman from Georgia for recognizing me.
Mr. Johnson of Georgia. I thank you Ranking Member Buck.
The Chair now recognizes the Chair of the Full Committee,
the gentleman from New York, Mr. Nadler, for his opening
statement.
Chair Nadler. Thank you, Mr. Chair, for holding today's
important hearing on forced arbitration. Nearly a century ago,
Congress enacted the Federal Arbitration Act to allow merchants
to resolve run-of-the-mill contract disputes through a system
of private arbitration that would be legally enforceable. The
system that Congress envisioned was to be used voluntarily and
only between merchants of equal bargaining power.
Thanks to a series of disastrous Supreme Court decisions,
however, this system has been turned entirely on its head.
Private arbitration has been transformed from a voluntary form
for companies to resolve commercial disputes into a legal
nightmare for millions of consumers, employees, and others who
are forced into arbitration and are unable to enforce
fundamental rights in court. Many companies used forced
arbitration as a tool to protect themselves from consumers and
workers who seek to hold them accountable for alleged
wrongdoing. By burying a forced arbitration clause deep within
the fine print of take-it-or-leave-it consumer and employment
contract, companies can effectively evade the court system
where plaintiffs have far greater legal protections and hide
behind a one-sided process that is tilted in their favor.
For example, arbitration generally limits discovery. It
does not adhere to Rules of Civil Procedure, can prohibit class
actions, may preclude the right of appeal and the proceedings
and often the results must they seek it. For millions of other
small businesses, consumers, and employees, the precondition of
obtaining a basic service or product, such as a bank account, a
cell phone, or even a job is that someone must agree to resolve
any disputes in private arbitration, whether they know it or
not. That means that their ability to enforce civil rights,
consumer, employment, and antitrust laws are subject to the
wins of a private arbitrator, who is not required to provide
plaintiffs with any of the fundamental protections guaranteed
in the courts.
We have bedrock principle in this country, and that is that
all Americans deserve a day in court. We make a mockery of this
principle, however, when we allow individuals to be stripped of
this right and to be forced into private arbitration
proceedings without the safeguards that our judicial system
affords. Yet, that is where we find ourselves today.
This problem began in earnest in the 1980s with a series of
Supreme Court decisions that misapplied the clear legislative
intent of Congress and dramatically expanded the ability of
companies to limit the rights of consumers and workers through
forced arbitration.
In 1984, the court granted corporations the right to
enforce arbitration clauses even when State law rendered them
null and void. Strikingly, in 1985, the court had allowed
arbitration proceedings to be used not just to settle contracts
but also to interpret laws enacted by Congress that implicate
fundamental rights.
Most recently, a conservative majority on the Supreme Court
reached new heights in misreading what Congress intended. In a
5-4 decision in the Epic Systems case, the court held that
employers can combine forced arbitration clauses with class
action bans to prevent workers from banning together to hold
lawbreaking employers accountable, despite clear authority for
workers to bring their claims under the National Labor
Relations Act.
That is why shortly I will be reintroducing the Restoring
Justice for Workers Act, legislation that would end forced
arbitration in employment contracts and would protect workers'
rights to pursue work-related claims in court.
Just as Ruth Bader Ginsburg stated in her dissent in Epic
Systems, ``a congressional correction is urgently in order.'' I
strongly agree.
I also strongly support the Forced Arbitration Injustice
Repeal Act, or FAIR Act, introduced by the gentleman from
Georgia, Mr. Johnson, which would prohibit forced arbitration
in consumer, employment, civil rights, and antitrust disputes.
This legislation passed with overwhelming support last Congress
by a bipartisan vote of 225-186.
I applaud Congressman Johnson for his leadership on this
legislation, and I look forward to passage of this legislation
again this Congress.
The widespread use of forced arbitration is serious threat
to our entire legal system and to the basic tenets of our
democracy. For many companies, arbitration has been a get-out-
of-jail-free card to circumvent the basic rights of consumers
and workers.
It is up to Congress to reverse this dangerous trend, and I
look forward to hearing from our distinguished panel of
Witnesses about how best to address this important issue. I
thank the Chair for holding today's hearing, and I yield back
the balance of my time.
Mr. Johnson of Georgia. I thank the gentleman from New
York.
With that, it is now my pleasure to introduce today's
Witnesses. Our first Witness is Professor Myriam Gilles, who
has been the Paul R. Verkuil Chair in Public Law at the
Benjamin N. Cardozo School of Law since 2003. Before being
appointed the Paul Verkuil Chair, Ms. Gilles served as an
associate professor and lecturer of law at the Benjamin N.
Cardozo School. Additionally, Ms. Gilles sits on the boards of
both the Justice Resource Center and Public Justice where she
is an executive Committee member of the Class Action
Preservation Project. She received her Bachelor of Arts at
Harvard College and her law degree at Yale Law School.
Welcome, Ms. Gilles.
Our second Witness is Gretchen Carlson, an acclaimed
journalist, best-selling author, filmmaker, and advocate. Ms.
Carlson hosted The Real Story and co-hosted Fox & Friends for
more than 7 years on Fox News. In 2016, Ms. Carlson was forced
out of Fox after her workplace harassment complaint became
public and has since focused her energy on advocating for
important legislative changes to protect sexual assault and
sexual harassment survivors. She has written two New York Times
bestsellers and has been recognized by the New York Women in
Communications, the National Organization for Women, and YWCA
Greater Los Angeles for her advocacy work. Ms. Carlson is the
former first Miss America to serve as chair of the
organization. She received her Bachelor of Arts at Stanford
University and serves as a national trustee for the March of
Dimes.
Welcome back, Ms. Carlson.
Today's third Witness is Jacob Weiss, the founder and
President of OJ Commerce. Mr. Weiss has a long career as a
successful business owner and entrepreneur. In 1998, he founded
Baby Age.com, a premier online pregnancy and juvenile product
marketplace that has often been featured on Internet Retailer
as one of the top 500 internet companies. Most recently, Mr.
Weiss founded OJ Commerce, a successful online retailer focused
on selling home and office goods. OJ Commerce does a great deal
of their business on other platforms, especially Amazon.com.
When Mr. Weiss had a dispute with Amazon regarding their
unfair market practices, he learned that buried in the small
print of his contract was a forced arbitration clause. Mr.
Weiss has spent years attempting to reach a settlement with
Amazon through arbitration.
Welcome, Mr. Weiss.
Our last Witness at today's hearing is G. Roger King, the
senior labor and employment counsel at the HR Policy
Association. He recently retired from the Jones Day law firm
where he was a partner. Previously, Mr. King served as
professional staff counsel with the United States Senate Labor
Committee. Mr. King has extensive experience with labor,
employment, healthcare contract, Administrative, and collective
bargaining law. He has represented dozens of clients over the
course of his career, including the United States Chamber of
Commerce, the National Manufacturers Association, Verizon,
General Motors, and Promedica. Mr. King received his
undergraduate degree from Miami University, and his J.D. from
Cornell University Law School.
Welcome, Mr. King.
We welcome all our distinguished Witnesses, and we thank
them for their participation. I want to remind our Witnesses
they have an obligation to provide truthful testimony today and
that making a false statement to Congress is potentially
punishable under section 1001 of title 18 of the United States
Code.
I will note at this time that I have opening statements
from Chair of the Subcommittee David Cicilline, along with a
Member of the Subcommittee Congressman Joe Neguse, who along
with David Cicilline are impeachment managers--or is an
impeachment manager--and they are working on trial before the
Senate right now. I have their statements for entry into the
record without objection.
Hearing none, the documents are admitted.
[The information follows:]
MR. JOHNSON OF GEORGIA FOR THE RECORD
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[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Johnson of Georgia. Please note, Witnesses, that your
written statements will be entered into the record in their
entirety.
Accordingly, I ask that you summarize your testimony in 5
minutes. To help you stay within that timeframe, there is a
timing light in WebEx. When the light switches from green to
yellow, you will have one minute to conclude your testimony.
When the light turns to red, it signals that your 5 minutes
have expired.
I would also note that Mr. Weiss' counsel is participating
in the WebEx platform today pursuant to section G of the House
Rules Committee's remote Committee proceedings regulations.
I now recognize Professor Gilles for 5 minutes.
STATEMENT OF MYRIAM GILLES
Ms. Gilles. Chair Nadler, Chair Johnson, Ranking Member
Buck, distinguished Members of the Subcommittee, thank you for
inviting me back to address this important issue. It is a
privilege to come before you. In my few minutes, I would like
to briefly explain how forced arbitration clauses strip us of
our legal rights.
Forced arbitration clauses are, as many of the opening
statements have already described, these are provisions buried
in the fine print of take-it-or-leave-it contracts that require
all disputes to be resolved in private one-on-one arbitrations.
What this really means is that if a company rips off its
customers or employees, those customers or employees are
essentially powerless to do anything about it. They can't go to
court. They can't ban together to bring a class action. They
can't even proceed as a group in arbitration. The only thing an
individual can do is take on all the costs and time of going
against the company one on one, which, let's be honest, most
rational people simply won't do. The data shows this quite
clearly.
For example, one study estimated that 98 percent of workers
who suffer harm in the workplace abandon their claims rather
than file individual arbitrations. What this reveals, I think,
is that forced arbitration clauses do not encourage workers to
bring claims but only serves squelch those claims.
As such, these provisions have allowed companies to
immunize themselves accepts from all forms of legal
accountability by simply adding some magic words to their
contracts, their standard form contracts, click wrap
agreements, envelope stuffers, all methods of conveyance
designed to obscure or minimize the immensity of the rights
that are being forfeited.
Not surprisingly, study after study has also shown that
workers, veterans, consumers, and small business owners often
have no idea they entered into contracts that deprive them of
the right to go to court before a jury of their peers.
Given this reality, it won't surprise you that over the
past decade, class-banning forced arbitration clauses have
become so commonplace that it is impossible to find a product,
a service, an amenity of modern life that doesn't require us to
first sign away our rights--rights under consumer, employment,
civil rights, antitrust statutes, rights that this Congress and
your State counterparts enacted to protect American citizens.
Now, to give you a sense of just how enthusiastically
companies have embraced forced arbitration in an employment,
over 60 million American workers are currently subject to
forced arbitration. That is more than half the nonunionized
workforce. Economists predicts that by 2024, 80 percent of
workers will be bound to these provisions.
I just want to stop there for a moment to really think
about this: Eighty percent of all workers will not have the
right to resolve claims for sexual harassment, racial
discrimination, wage theft, and wrongful termination. Eighty
percent of employers simply declining to be bound by Federal
and State workplace protection laws.
Worse yet, and I think this is also important, the costs of
forced arbitration are disproportionately born by low-wage
workers and those critical frontline jobs, such as education
and healthcare, that are largely comprised of women and African
Americans.
In consumer transactions, probably every single person on
this call, in this country is subject to a forced arbitration
clause in some aspect of their consumer lives. To use a credit
card, open a checking account, get a loan, join a gym, send
your kid to camp, put your mom in a nursing home, you have to
first sign away your rights to seek legal redress for
violations of privacy, product liability, data breaches, fraud,
illegal trading activity, and more.
Despite what the Chamber of Commerce, or Mr. King, the next
Witness, may tell you, forcing arbitration on an unknowing
public is not about achieving fair, expeditious, or cost-
effective resolutions. It is about suppressing legal claims all
together. Well, you don't have to take my word for it, you can
just look at the actions of companies like Chipotle, Uber, and
DoorDash, these companies impose class-banning forced
arbitration clauses on their workers.
When thousands of workers actually tried to bring single-
file individual arbitrations, these companies bulked at the
time and expense of honoring their own contracts. Then they
tried to do everything they could to escape arbitration,
including going to court to argue that worker claims should
actually be brought as a class action. This is the very thing,
of course, that air contracts prohibit. The hypocrisy here is
incredible--
Mr. Johnson of Georgia. Ms. Gilles, if you would wrap up.
You are beyond your 5 minutes.
Ms. Gilles. Oh, I am so sorry. I will just wrap up by
saying that it is abundantly clear the Federal legislation is
needed to halt this worsening situation. I am happy to answer
any questions I can. Thank you so much for your time.
[The statement of Ms. Gilles follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Johnson of Georgia. Thank you. Welcome back to the
Committee Ms. Gilles.
Next, we will hear from Ms. Carlson. Ms. Carlson, you may
begin. You are recognized for 5 minutes.
STATEMENT OF GRETCHEN CARLSON
Ms. Carlson. Chair Cicilline, Chair Johnson, Ranking Member
Buck, other distinguished Members of the Committee, thank you
so much for providing me the opportunity to be back in front of
this Committee to testify about my experience with forced
arbitration.
Four and a half years ago, on July 6th, 2016, I jumped off
the cliff all by myself, and I sued my boss, former FOX News
chairman and CEO Roger Ailes, for sexual harassment. It was the
biggest decision of my life. Once public, the story ran like
wildfire all around the world. Back then, I could have never
imagined my story would help ignite the #MeToo movement and
that I would become one of the prominent faces fighting against
forced arbitration in the workplace. Here is what I found out:
Courage is contagious, and the cultural revolution we are still
experiencing is long overdue.
The first step for me was telling the truth. The next step
was to passionately work to change the system for all women and
men across our country. So, I spent much of the last 4 years
walking the halls of Congress, encouraging legislators to take
real meaningful action to help workplace harassment victims, to
take the issue out of the shadows of secrecy. In December 2017,
I proudly joined legislators from both parties, Congresswoman
Bustos and Stefanik and Senators Gillibrand and Graham to
introduce the Ending Forced Arbitration of Sexual Harassment
Act. In February 2019, the bill was reintroduced in the House.
Here we are again with a new Congress, and here I am again
talking about my bill in forced arbitration because, quite
honestly, I truly believe that this legislation will change the
landscape of the American workplace, retaining women and people
of color while at the same time making it safer for everyone.
So, why is this bill so important to me? Because it is
actually not about me. This is about the thousands of women who
reached out to me after their story became public, making me
realize that almost every woman in our country has a story, and
that is shameful. So, many of these women have shared their
emotional stories of pain, but mostly about how they were
silenced because that is what forced arbitration does. It turns
out that silencing is the harasser's best friend because it
perpetuates the systemic problem of protecting predators and
pushing women out of the workforce.
Sadly, my story is not unique. Sexual harassment in the
workforce is not a new problem, neither is use of forced
arbitration to deal with it, to cover up the dirty laundry. You
have Dov Charney, the founder and former CEO of American
Apparel, sexually harassing people for years, but nobody ever
knew about it because of secret arbitration.
Another horrifying example is the more than 180 people who
reported sexually being assaulted by a massage therapist when
they simply went to get a massage at Massage Envy spas. These
women put their trust into a company and its employees only to
suffer the trauma of being forced back into secrecy.
One case, in particular, that really resonated with me was
Lilly Sibert from California because she says she was sexually
assaulted by her therapist, and then when she went to cancel
her Membership with Massage Envy, simply going to do that in
the app she agreed to forced arbitration. That doesn't seem to
be fair.
There is a story of Danny Masterson, the actor and well-
known Scientologist who allegedly raped several women, but
because there is a forced arbitration clause in the Scientology
contract, one of the women say they were coerced into signing,
these cases will probably never see the public eye.
It is impossible to know exactly how many women have faced
this kind of situation. You just heard from the other Witness,
60 million Americans have these clauses in their employment
contract. By 2024, 80 percent, 80 percent of the private sector
nonunion workers will be forced into arbitration.
That is why I aim to change this. My going public opened
the floodgates to shed a light on a pervasive epidemic--
Weinstein, Cosby, O'Reilly, Moonves, Matt Lauer, Charlie Rose,
Mark Halperin, and so many more.
Since my movement started, I helped States to pass these
eradicating arbitration laws as well, but here is what is
happening when those laws go to be tested at the State level.
The judges feel compelled to honor the Federal law, and so they
are still putting these cases back into arbitration.
I want to leave you with this and have you understood just
for a moment what it feels like to have the courage to come
forward because this could be your wife, your daughter, or your
granddaughter.
A woman decides to go to HR to complain. If she has an
arbitration clause, the reaction will be, phew, good, no one
will ever know about this. Her case is promptly thrown into the
secret chamber. The woman will likely be blacklisted, demoted,
and fired from her job. In arbitration, she gets no appeals.
So, the cycle continues. It is a repeat business thing. We have
lost millions of women in the workforce due to this and just in
the last year due to COVID--
Mr. Johnson of Georgia. Ms. Carlson, if you could wrap up,
please.
Ms. Carlson. Thank you to brave Members of Congress from
both sides for drawing the line in the sand because this is not
partisan; this is apolitical. It is my great hope that we can
get something done that is bipartisan to help women in this
country. Thank you.
[The statement of Ms. Carlson follows:]
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Mr. Johnson of Georgia. Thank you, Ms. Carlson. We have
seen and heard you walk in the halls of Congress for years, and
I thank you for your diligence.
With that, I would like to now recognize Mr. Weiss, who is
recognized for 5 minutes.
Mr. Weiss, unmute yourself.
STATEMENT OF JACOB WEISS
Mr. Weiss. Sorry. Good morning, Chair Johnson, Ranking
Member Buck, and the Subcommittee Members. My name is Jacob
Weiss, and I have been a business owner in e-commerce for the
last 20 years. In 2010, I started OJ Commerce, a business that
sells home goods to online marketplaces and on our own website.
We sell thousands of brands and over a half million items. A
significant part of our business is done through Amazon's
marketplace.
I am here today to share my experience trying to hold
Amazon accountable for the harm it has caused my business.
OJ Commerce has a team of hardworking employees who have
grown OJ Commerce into a successful business. Amazon's forced
arbitration clauses have made it impossible to get a fair
shake. The system is rigged against small and mid-sized
business owners.
Amazon controls so much of the online retail market that it
is impossible for an e-commerce company to succeed without
selling on its website. Before Amazon would let me sell on its
site, it forced me to sign an agreement. I couldn't negotiate
the terms of that agreement, and I couldn't sell on Amazon
without signing that agreement. Since no e-commerce company can
survive without Amazon, I had no choice but to sign that
agreement.
Amazon's agreement forbids lawsuits and forces arbitration
to resolve disputes. The agreement also forbids class actions,
which means businesses can't share the cost of arbitrating
against Amazon. This class action waiver alone has insulated
Amazon from even having to face justice, because justice is
cost-prohibitive. It simply makes no sense to risk tens of
thousands of dollars in arbitration, legal, and expert fees, to
recover a few thousand dollars. As a business owner, those few
thousand dollars can mean the difference for making payroll.
Forced arbitration puts businesses like OJ Commerce at a
severe disadvantage:
(1) The filing fees are thousands of dollars.
(2) You have to pay arbitrators hundreds of dollars an hour to
hear your case.
(3) Arbitration severely limits the scope of discovery which
makes obtaining the evidence you need to prove your case nearly
impossible.
(4) Amazon has mastered the art of driving up the cost of
arbitration through motions, objections, and hearings.
So, while proponents of arbitration tout its speed and
efficiency, my experience shows the process is slow, expensive,
and financially infeasible for many claims.
(5) Arbitration rulings are not published, which means we cannot
see what Amazon has done to other businesses or how those businesses
have fared in arbitration. We are left in the dark, but Amazon has all
the information.
(6) Parties can strike potential arbitrators and rank others,
which means arbitrators have a financial incentive to Rule in Amazon's
favor so as to keep the more likely repeat arbitration player happy and
be selected again.
For Amazon, this creates the perfect storm. Companies give
up before they even start, because they do not have the budget
for this expensive process. The proof is in the excellent
report the Subcommittee created on digital markets. Despite
millions of businesses on Amazon's website, despite internet
message boards teeming with thousands of complaints against
Amazon, over a 5-year period, only 163 arbitrations against
Amazon. That statistic is mind-blowing.
I have seen this firsthand through two forced arbitrations
against Amazon. The first arose when Amazon overcharged OJ
Commerce for shipping costs. Amazon fixed the problem when we
notified them of the error but refused to refund the
overcharged amounts. Left with no choice, we initiated forced
arbitration. Amazon took us all the way through a very
expensive arbitration proceeding where OJ Commerce eventually
prevailed on some of its claims, but the process cost us over
$50,000 in just arbitration fees, not even attorney's fees. OJ
Commerce had to pay those fees just to have its day in
arbitration court. After all those fees, I have recovered very
little of what I have lost.
The second arbitration against Amazon is ongoing. So, I
cannot go into detail, but I can tell you it has been 9 months
so far. So much for quick and efficient resolutions.
Small businesses are the lifeblood of the American economy.
Historically, companies like OJ Commerce used the antitrust
laws and court system to stop marketplace bullies like Amazon.
Forced arbitration--
Mr. Johnson of Georgia. Mr. Weiss, if you would wrap up,
please. You are beyond your 5 minutes.
Mr. Weiss. Yes, Mr. Chair.
Forced arbitration and class-action waivers have replaced
that with a system that allows Amazon to avoid facing justice.
I urge you to pass the Forced Arbitration Injustice Repeal
Act. It will restore balance to the marketplace and stop abuse
of an unworkable system. Businesses are not looking for
handouts. We are just looking for a fair system. Thank you.
[The statement of Mr. Weiss follows:]
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Mr. Johnson of Georgia. Thank you, Mr. Weiss.
Now, I recognize Attorney King for 5 minutes.
STATEMENT OF G. ROGER KING
Mr. King. Thank you, Mr. Chair and Mr. Nadler, thank you
also for joining us this morning. Ranking Member Buck, and
distinguished Members of the Subcommittee, thank you for also
accepting my written testimony and I would ask the appendices
to the testimony also be made part of the record.
Mr. Chair, I am the only practitioner testifying today. I
have spent 50 years, if you will, involved in arbitration. I
have drafted arbitration agreements. I have appeared in
arbitration hearings. I have followed the policy developments
regarding arbitration, and I believe I have a perspective that
would be helpful for the subcommittee.
First, I would like to level set the discussion. Proponents
of arbitration are not here to condone any type of sexual
harassment, hostility in the workplace, or the like.
Ms. Carlson, you have our support. We do not condone those
activities. I would note, I don't even think you ever went
through the arbitration process. You were able to get your
story out without any impediment, and indeed it made news and
news that was followed, and we concede that. That is not the
discussion.
Arbitration has many, many, positive attributes. It is
quicker, notwithstanding [inaudible]. It is undisputed that it
is much more expeditious than going to court. It is less
expensive.
Mr. Weiss, I don't know your case, but I would suggest to
you if you took your issues to court, you would be paying much
more than you have paid today, much, much more, and you would
still be in court, and you would still be waiting probably for
that first even discovery proceeding.
With respect to the direction of this testimony and this
hearing, I would submit to you we have it backwards. Every
suggestion I am hearing--and we have heard from proponents to
do away with arbitration is to put everybody in the court
system. I would call this the Forced Litigation Act, if you
will, pushing everybody, even those that can't afford it, into
somehow a judicial contentious relationship in a court. There I
would submit to you employers are going to have even more
advantages, and it is going to cost even more for the consumer
of the employee.
Let's break this down. Mr. Buck, you noted this in your
opening remarks. Our court systems today are overrun, totally
overrun. If any Member of this Committee would spend at least a
week in a courthouse in their district or in their State, they
would readily see the problems faced with our judicial system.
The solution is not to push everybody into the courts. The
courts can't handle it. The courts aren't equipped to do it.
So, the intelligent, thoughtful approach I would suggest here
is to look to the positive attributes of arbitration, which are
many.
Now, in the professor's testimony and other remarks today,
I note the criticism of the United States Supreme Court. Well,
let's step back here just for a moment. We have decision after
decision by various Members of the court from various
ideological approaches. These are not all 5-4 cases. Virtually,
every member of the United States Supreme Court has supported
at one time or another arbitration. There is good reason for
that, because the system works.
As I note in my written testimony, Justice Breyer has
stated the many positive attributes of arbitration. So, let's
not mislead people. There is consensus, even though the
harshest critics of arbitration may push back, that there are
positive attributes of arbitration. That is a given.
Second, let's also concede that our courts are not equipped
to handle whatever the multimillion-dollar figures that were
suggested. We cannot have a flood of people simply going into
courts. That won't work. Furthermore, most litigants, most
individuals find their court system is not friendly.
Next, I would like to really rebut the continuing
misinformation that there is secrecy attached to all
arbitration proceedings. That is not correct. The discussion
regarding nondisclosure agreements and confidentiality
agreements, as Mr. Buck stated, is a totally different
discussion. Those types of clauses are not in every arbitration
agreement, nor should they be.
Furthermore, the thoughtful way to go to is the way the
American Arbitration Association is going that permits anyone
involved in arbitration to disclose the issues that were
discussed and the resolutions of the same. Indeed, in
California, arbitration decisions are reported by State law.
So, there is not the equation of secrecy in arbitration.
That is just flat wrong. We can talk about NDAs and
confidentiality perhaps in another hearing.
Furthermore, it is incorrect to suggest that the slow legal
regress--it is wrong to suggest that the Equal Employment
Opportunity Commission, the National Labor Relations Board, et
cetera, do not have a role in vindicating employee rights. You
cannot foreclose individuals in arbitration from going to those
Federal agencies and State agencies, and many more. It is a
violation of law to do so.
Mr. Johnson of Georgia. Mr. King, if you could wrap up. You
are beyond your 5 minutes.
Mr. King. Sure. Thank you, Mr. Chair. There is absolutely
no way to prohibit that. That is against the law. Finally,
claimants do better in arbitration than they do in the courts.
That is established. So, I would be happy to carry on this
dialogue, Mr. Chair, as we proceed with this hearing. Thank
you.
[The statement of Mr. King follows:]
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Mr. Johnson of Georgia. Thank you, Mr. King.
It is now my pleasure to recognize the Chair from the Full
Committee of the Full Committee, Mr. Nadler, for questions, 5
minutes.
You are recognized, Mr. Nadler. You may want to unmute.
Chair Nadler. Okay. Am I unmuted now?
Mr. Johnson of Georgia. You are.
Chair Nadler. Can you hear me? Okay.
Thank you. Thank you, Mr. Chair.
Professor Gilles, forced arbitration has proliferated in
the workplace. According to the Economic Policy Institute, more
than half of working Americans are subject to forced
arbitration, up from just 7.6 percent of workers in 1995. As a
result, workers are often funneled into an arbitration trap
that is expensive, time-consuming, and secretive. How does
forced arbitration favor employers over workers?
Ms. Gilles. Thank you, Chair Nadler, for the question. I
think that there are a number of ways in which employers are
advantaged. For example, they pick the arbitral provider. Many
of you are lawyers. If you could pick the judge and the jury
without meaningful input from your adversary, that is a huge
advantage. So, right off the bat, the system is not to be
advantage of employees and to the advantage of repeat player
employers.
They also write the rules. So, while, Mr. King sadly
described this as misinformation, the truth is that employment
arbitration, each arbitration is itself secret, right? You are
not supposed to talk about the arbitration. That is why Mr.
Weiss is not talking about ongoing arbitration with Amazon.
That means that employees do not know when they have claims
that are common with other employees. They don't know about the
practices that might be firmwide, employerwide. That is
something we don't see in the court system.
I mean, there are lots of other aspects of arbitration that
don't benefit employees. I think you talked about them, Chair
Nadler, in your opening statement: No discovery, no rules of
evidence, no right of appeals, no class actions or collective
actions, and hugely expensive. There are tons of problems, and
that is why we see so few employees actually go into
arbitration.
Chair Nadler. Thank you. Now, forced arbitration is even
more common in low-wage workplaces and in industries that
include a disproportionate number of women and minority
workers. This has dramatically eroded the ability of these
workers to collectively hold their employers accountable for
systemic workplace violations, such as widespread harassment
and discrimination. How does forced arbitration suppress the
ability of workers to file claims?
Ms. Gilles. Well, I think you just sort of said it. The
truth is that for low-wage workers, especially low-wage workers
who are in frontline critical industries, healthcare,
education, workers we really need, these workers already face
tons of disadvantages in accessing justice. Forced arbitration
puts a barrier between them and the courthouse that is often
impenetrable. They can't get lawyers to represent them because
their claims are often not a significant enough value. They
can't brave class arbitrations because the employers have
barred those in the contractual provisions.
It can be very hard to try to prove claims that are by
their nature systemic, right? How do you prove workplace
harassment? That is a claim where you need evidence about the
entire workplace. So, for an individual employee, that is a
tough, tough row to hoe.
Chair Nadler. How would you say that forced arbitration
undermines the rights of women and minority workers as it
relates to access to counsel?
Ms. Gilles. Well, first off, I just want to step back and
say that women and minorities, low-wage workers, these
vulnerable groups already have massive underrepresentation
problems. I think even in the courthouse, getting to the
courthouse, it can be very hard to find a lawyer. So, we have
to deal with the justice gap, even once we get rid of forced
arbitration, knock on wood.
It is true that in arbitration, these issues are compounded
because, again, the employer is controlling the arbitral forum,
and often picking the arbitrators, they have a lot more access
to information about the arbitrator and about the arbitral
provider. So, they are going to pick providers and arbitrators
that benefit them. That is really hard for an employee who
knows very little about an arbitral regime to try to go up
against.
Mr. Johnson of Georgia. The gentleman's time has expired.
At this time, I will recognize the gentleman, the Ranking
Member, Mr. Buck, for 5 minutes.
Mr. Buck. Mr. Chair, with your permission, I would ask that
you move down the line to other Republicans, and I will ask
questions last, if that is okay?
Mr. Johnson of Georgia. That will be fine. I am doing the
same thing, Ranking Member Buck.
So, at this time, we shall recognize the gentleman from
California, Mr. Issa, for 5 minutes.
Mr. Issa. Thank you, Mr. Chair. The question I have for Mr.
King or a series of them, is there any prohibition on States
limiting secrecy and/or limiting what can be in other words
contract law regulated by the State? Are there are
implementations from the States? Do some States already have
provisions? I will just give the example of California, where a
race or sex discrimination, notwithstanding binding
arbitration, you still have a State remedy?
Mr. King. You are absolutely correct, Congressman. Not only
in California, but other States have outlawed or prohibited
nondisclosure agreements.
This is not a discussion about secrecy or confidentiality.
We should be talking about arbitration and its attributes or
criticisms if people have them. It is a total misnomer. It is a
red herring.
Mr. Issa. Now, this Committee and the Oversight Committee
have done extensive hearings over the years about the various
major league football, baseball, and so on. Don't they all on a
mutual basis choose binding arbitration? Isn't that a choice of
the very powerful players' union and the, if you will, the
billionaires and millionaires?
Mr. King. Absolutely. I mean, arbitration is so well-
accepted at so many different levels in our society, and it is
the only way to proceed. Our court systems are not equipped to
handle the millions of claims that are being suggested to be
thrown into court litigation.
Mr. Issa. So, let me see if we can get some consensus here
in 5 minutes. It seems like all the Witnesses, yourself
included, have serious concerns about forced secrecy in binding
arbitration. If we were to break out the FAIR Act, we were to
break out, if you will, a little bit of what everyone is
talking about, if we bifurcated, if you will, all of the these,
we will call them forced arbitration into damages and
restitution versus secrecy and require that any secrecy be a
separate consideration voluntarily entered into a not part of,
if you will, the first decision, the arbitrator, would that
improve the current law as to sex and race discrimination, but
as to a myriad of other violations?
Mr. King. Yeah, absolutely. That is a much more thoughtful
way to proceed. We can talk separately about confidentiality
and secrecy and talk about how that should or should not be
handled and talk about then how damages are pursued.
We have not mentioned yet in this hearing, Congressman,
ADRs, alternative dispute resolution procedures. That is what I
would really suggest this Committee look at. There are so many
ways that consumers, employees, and others can benefit by not
being in the courts and getting their issues resolved. That is
the direction we ought to be headed.
Mr. Issa. Can I also maybe get a second--I am hoping
everyone agrees on this part--can we also agree that if there
are a series of arbitrations and they are concluded and there
is no secrecy, that there is no prohibition on either Federal
or State laws being passed that would allow separate class
action for a pattern of behavior? Would that be correct? In
other words, rather than the individual who gets his
arbitrated, the group could still be allowed to form, but form
based on, if you will, the disclosure of a series of
wrongdoings in which, whether you win or lose in arbitration,
you would be able to make that case, specifically, that it was
a constant pattern. In other words, we could pass a separate
law for that kind of bad actor.
Mr. King. You certainly could. I would welcome that. I
think others on this side of discussion would welcome a very
thorough and thoughtful discussion about class actions. There
are a lot of misuses and abuses. We would like to have that
discussion on a bipartisan basis.
Let's not suggest that class actions are good for
consumers. The data goes on and on and on. They go on forever.
They are very expensive. At the end of the day, you get that
little notice in the mail that you are going to get $5.50 or
something, and most people just disregard it. That is such a
racket, if you will, Congressman, that has been portrayed as a
savior for the American consumer. Not true.
Mr. Issa. I have been the victim of class action--well, SEC
abuse, if you will, in the past. So, I am aware that there are
a lot of attorneys that make all the money in those cases. As
my time is expiring, on the first secrecy--
Mr. Johnson of Georgia. The gentleman's time has expired.
Mr. Issa. --is there anyone that would like to--that would
say anything different from the other Witnesses as to the
questioning related to secrecy?
Mr. Johnson of Georgia. The gentleman's time has expired.
Mr. Johnson of Georgia. I now recognize the gentleman from
New York, Congressman Jones, for 5 minutes.
Mr. Jones. Thank you, Mr. Chair. Professor Gilles, thank
you for your illuminating and, frankly, shocking testimony.
Before I ran for Congress, I was a lawyer for Westchester
County, in which capacity I was a legal adviser to the
Westchester County Human Rights Commission, which I hope Mr.
King would consider to be a practitioner.
In that capacity, I saw how the ability of Westchester
County residents to have their fundamental rights vindicated
was hampered by these forced arbitration agreements. My
experience as a practitioner and as a former law clerk in the
Southern District of New York, causes me to be shocked for that
reason by his inaccurate statement that these forced
arbitration clauses do not prevent people from getting their
rights vindicated by the EEOC or, in my case, by the
Westchester County Human Rights Commission.
In any event, I want to make sure my colleagues and the
American people appreciate how the situation became so bad in
the first place, and that is the far-right majority on the
United States Supreme Court.
Professor Gilles, hasn't the Roberts Court consistently
supported forced arbitration in a series of predominantly 5-4
decisions along ideological lines?
Ms. Gilles. Oh, that is an easy one. Thank you for the
softball.
Yes, of course, I don't actually even understand what Mr.
King is saying here. Since 2011 when the Supreme Court decided
AT&T v. Concepcion, the Court has decided by my count about 17
decisions enforcing arbitration clauses and the vast majority
of those cases have been 5-4, with the conservatives in the
majority. The dissents are growing ever more [inaudible] for
Congress to Act because, at some point, it becomes difficult
for lower court judges to do anything other than follow the
Supreme Court's law, even if they disagree. Many, many courts
have expressed that they disagree.
So, this is a real crisis in American law, and it is a
crisis brought on by what many scholars think is a
misinterpretation of the Federal Arbitration Act.
Mr. Jones. Thanks to that far right majority, can
corporations use arbitration to get away with discriminating
against seniors, for example, violating the Age Discrimination
in Employment Act?
Ms. Gilles. Sorry about that. Yes, they can. In fact,
corporations can violate all the statutes that Congress and the
State legislatures enact, and we might not ever know about it
because, again, despite what Mr. King has said, these cases are
shunted into hermetically sealed private arbitrations.
Those arbitrations are not made public. There is no
recording of those arbitrations. There is no court reporter.
There is no precedent from an arbitration decision. So,
violations of law are happening, and they are going undetected,
and so I think this is, again--I will just keep saying--a real
crisis in American law at this moment.
Mr. Jones. Thank you. This Congress, my colleagues and I,
on the Democratic side, are fighting to pass the Equality Act,
which is sponsored by Subcommittee Chair Cicilline. The
Equality Act is personal to me. One of the things it would do
is hold corporations accountable for discriminating against
LGBTQ plus people like me in housing credit and other areas of
public life.
Thanks to the Roberts Court, could corporations exploit
forced arbitration to keep discriminating against LGBTQ plus
folks with impunity?
Ms. Gilles. Thank you for the question. I think this is
really worrisome because as you and your colleagues seek to
enact protections--and I applaud you for doing so--those
protections, those laws mean nothing if they can't actually be
enforced. The way that most law in this country is enforced is
through private rights of action that you include in these
statutes that allow people who have been harmed by violations
of those statutes to bring claims.
When we instead require or when corporations instead
require that these people bring claims in arbitration, most
will not do so, and those violations are never heard about.
While it is true we have public agencies who can engage in
enforcement actions and investigations, you know as well as I
do, agencies are--it is impossible for agencies to monitor
every transaction--
Mr. Jones. Professor Gilles?
Ms. Gilles. Yes, sorry.
Mr. Jones. I just want to ask you another question. Now,
that we have a 6-3 far-right majority--
Mr. Johnson of Georgia. The gentleman's time has expired.
Mr. Jones. Thank you.
Ms. Gilles. Sorry about that.
Mr. Jones. It is all right.
Mr. Johnson of Georgia. I shall now recognize the gentleman
from Louisiana, Mr. Johnson, for 5 minutes.
Mr. Johnson of Louisiana. Thank you, Mr. Chair.
I just have to say at the outset here, your opening
statement this morning seemed to portray all American companies
somehow as the bad guy and that they have sinister motives
aimed at scamming consumers and eviscerating their
constitutional rights. Sometimes, it feels like that narrative
and that broad brush have really gotten old and tired. Then we
were just told a few moments ago that there is a far-right
Supreme Court that is creating a crisis in American law and
somehow abusing the Arbitration Act.
This is the first time, by the way, I have heard Chief
Justice Roberts referred to as a far-right jurist in quite some
time. Look, arbitration is a key part of the American judicial
system. It is advantageous to litigants on all sides, and we
would abandon it at our peril. I was a practitioner for 20
years before I got to Congress. I engaged in a lot of
arbitration, both on behalf of plaintiffs and defendants, and
it worked really well. That has been my experience.
As Mr. King pointed out this morning, he summarized:
Arbitration is quicker, less expensive. It keeps our court
system from being overwhelmed with vexatious litigation that
doesn't behoove anybody. Frankly, it is a system that works
pretty well.
Now, could there be some improvements in it? Yeah. Of
course, for example, in the area of sexual harassment claims,
such as the tragic ordeal that Gretchen Carlson experienced and
summarized a little bit this morning. We can reform those
things, and hopefully we can bypass the partisanship and reach
some consensus on those points.
Let me ask just a few questions of Mr. King.
Mr. King, I think your testimony has been mischaracterized
here the last couple moments, but can you just summarize
briefly for folks who may be following this at home, what are
just some of the pros and cons of the typical arbitration as
opposed to the typical lawsuit? You mentioned cost and
efficiency, but can you articulate that a little bit more.
Mr. King. Certainly, Congressman. You are going to get to a
hearing much quicker in arbitration than you will in our
courts. The court systems are bogged down in discovery and all
types of motion practice. Arbitration is more expeditious for
sure. As far as cost, I don't know where this information is
coming from, but there are very low filing fees, if any, in
arbitration. The Triple A, the American Arbitration
Association, has led the way. So, it is much easier to get into
this system of justice than it is in the courts. Furthermore,
to suggest that everybody is going to get a jury trial or have
a lengthy trial is really misleading the American public. Very
few cases go to trial. Very few cases even go to verdict in any
way, shape, or form if it comes from a judge.
So, you are going to get a decision from an arbitrator much
quicker, and I would submit just as fair if not fairer. It is
wrong to suggest that the employer picks the arbitrator. You
have been involved in arbitration. I have too. It is someone in
the middle. You go back and forth to pick a neutral. I wish I
had the opportunity just to pick who I wanted. Not true.
Absolutely not true.
Also, in arbitration, the claimants do better. The facts
are the facts. On the whole, they do better than class action
or in litigation. So, I don't know what the push back is here
other than perhaps the direction to push people into class
action litigation, and that is not an efficient way to do
business.
Mr. Johnson of Louisiana. In fact, in my experience, as you
pointed out, arbitrators who are fair and judicious earn that
reputation, and the American Arbitration Association, is the
group where they are Members of. When the litigants or the
parties go to choose their arbitrators, it was my experience
that we always tended to go to those who had a great reputation
for being fair to both sides.
So, they get more work. They get to be arbitrators on more
cases, and that helps overall the system. It is almost kind of
like a free-market analysis that people get to make when they
choose those. I am situated right now as we speak just a few
miles away from a very active State district court that I used
to practice in on occasion. I looked at the stats for 2019.
They literally had less than five jury trials in that entire
civil district court over the period of that year. Almost
everything is decided by a judge, and so I think there is just
a lot of misinformation.
Just really quick. I think I have got a couple seconds
left, but some plaintiff's attorneys, even those that are paid
on contingent fee structure, won't bring cases that seek low
volume damage amounts. Does arbitration help claimants in that
situation?
Mr. King. No, absolutely not. This so-called arbitration
reform movement that the professor talks about harms low-income
workers particularly because they don't have the wherewithal;
they don't have the money to get into court. They have
relatively low claims. They can't attract counsel. If they
don't have an ADR, if they don't have some type of arbitration
provision to take part in, they are left out in the cold.
This whole discussion was turned around. We are backwards.
We are pushing people into a system that is overcrowded, not
working, and not available.
Mr. Johnson of Georgia. If the gentleman would wrap up; 5
minutes is over.
Mr. Johnson of Louisiana. Thank you, Mr. Chair. Thank you,
Mr. King.
I yield back.
Mr. Johnson of Georgia. Thank you.
I will now recognize the gentleman from Florida, Mr.
Deutch, for 5 minutes.
Mr. Deutch. Thank you. Thanks, Mr. Chair.
Mr. Chair, I want to point out what we just heard one of
our colleagues talk about arguments being old and tired. I
would actually like to talk about the old and the tired. Real
people. Because in September of 2017, Hurricane Irma cut off
power across south Florida, and the outage turned the Hollywood
Hills Nursing Home in Broward County into a death trap. Without
air conditioning, the temperature climbed, and in the end, 12
residents died, dozens were injured in the sweltering heat.
Surviving family Members, Mr. Chair, went to court to seek
justice for their vulnerable loved ones who they thought would
be safe. Plaintiffs in one suit allege that it took 3 days
before anyone called 911, but the nursing home tried to keep
the case out of court using predispute arbitration clause. The
families of those whose hearts gave out in that oppressive heat
never got a day in court. They also didn't choose to have this
wonderful arbitration govern; it was forced upon them.
The overly broad and unfair arbitration clause that was
forced upon the residents and their families prevented them
from exercising their right to have their claims heard by a
judge.
So, Professor Gilles, if you could speak very specifically
in instances like this about the risk to nursing home residents
and their families, when they are presented with an arbitration
agreement when they first move into a nursing home or long-term
care facility, what does that exchange look like? What is the
discussion that takes place? What is offered to them at that
moment?
Ms. Gilles. Thank you for the question. So, I am not there
yet personally, although my parents are getting older, and they
live in your district. So, thank you for your representation,
but this is how I think it works: You are looking for a nursing
home for mom and dad, and you are thinking about a lot of
things. There is a lot going on in that decision, and when you
bring them in and you are filling out these admission forms,
the last thing you are thinking about is that this place that
you are entrusting with your parents is going to engage in
harmful or negligent behavior.
So, as with so many of these situations, arbitration is
forced upon us at the moment when we need the service or the
product or the job. We are not thinking that something terrible
is going to happen down the line that is going to require us to
go to court.
If I could just take a moment, I just feel like Mr. King
keeps saying that I am misrepresenting his views and I just
have to say I think he is misrepresenting the facts. There is
no argument that any serious economist believes that
arbitration is better, faster, cheaper for consumers and
employees as compared to class actions. Even the CFPB, as well
as lots of economists, have proven that, but this--talk about
old and tired, this old and tired Chamber of Commerce view
continues to infect this conversation despite just so much data
on the other side. I guess I just wish Mr. King would read the
real studies as opposed to the studies that the chamber gives
him.
Mr. Deutch. Professor Gilles, I just want to get back to
this moment when the family is making a decision about a long-
term care facility, the arbitration clause, is it a separate
document? Is it inside something else? There is an admission
packet obviously that has lots of paperwork, and this is a
difficult time for someone who needs nursing care and their
family, correct? How does that impact the fairness of agreeing
to keep disputes out of court?
Ms. Gilles. Right. Well, so we are not thinking about the
court at that moment, right; we are thinking about mom and dad.
So, these provisions, like all forced arbitration provisions,
are hidden in the fine print of really long documents that you
have to read, but none of us really read. So, I think even
lawyers don't really read these documents as carefully as we
should because we need to do this thing, this really traumatic
emotional thing of putting our parents in to what we hope is a
safe place.
So, again, I think it is a fraught situation, and I don't
think that most people know the rights that they are giving up
at that moment.
Mr. Deutch. Professor Gilles, I appreciate that. I thank
the Chair for shining a bright light on the abuse of
arbitration, the unfairness of these agreements that are forced
upon American consumers, and I thank Congressman Johnson for
introducing the FAIR Act to remedy this injustice.
I yield back the balance of my time.
Mr. Johnson of Georgia. The gentleman's time has expired.
I will now recognize the gentleman from Florida, Mr.
Steube, for 5 minutes. I am sorry.
Mr. Steube. That is fine. Thank you, Mr. Chair.
First, my questions are for Mr. King, but what I would kind
of like to address is something that I don't feel is accurate
that Ms. Gilles had stated that we are forcing an arbitration
clause on an unknowing person. We have freedom of contract in
this country. You are entering into a contract that has
arbitration clause, so the statement that the person is
unknowingly entering into these arbitration clauses is not
factually accurate.
Now, they may not read the clause in the contract that they
are signing, but that is not to say that they are unknowingly
entering into these agreements. So, first, Mr. King, I would
like to, if you could address those issues as it relates to--
these are parties on both sides of a contract that are entering
into an agreement pursuant to contract law where these
arbitration clauses are housed, so they are not unknowingly,
unwillingly entering into these agreements. So, if you could
address that first.
Mr. King. Well, I think you are absolutely right. People
enter into all kinds of agreements, and they do so on a willing
basis. You don't have to purchase X, Y, or Z. You can go to
another vendor. Congressman, if I might just one moment, I want
to rebut what was misinformation here about the United States
Supreme Court.
Mr. Steube. Absolutely.
Mr. King. The Kindred case was decided 7-1; DIRECTV, 6-3,
Justice Breyer; American Express, decided 5-3, Justice Kennedy
in the majority; the Nielsen case, 5-3, Kennedy in the
majority; the Gilmer case, 6-2. It is just inaccurate. We are
getting so much inaccurate information here. I will put my
stats up against anybody's. I am not relying on the U.S.
Chamber of Commerce, although I think they have done a great
job in this area.
Back to your question, let's not take away the freedom of
contract. People have a right to sit down and negotiate
agreements. They cannot negotiate illegal agreements, and they
cannot force people to give up rights. It is just inaccurate to
say that you don't have a right to take your case to the EEOC,
the NLRB. I dispute the Congressman's position that those
agencies don't care about people that file charges. They do.
They do a much better job in many cases than the courts,
frankly.
So, we need to preserve the ability of people to work out
disputes without being forced into a morass of discovery,
expensive litigation, and all the like.
Mr. Steube. Yeah. Here in Florida, we haven't had
litigation in trials due to COVID for over a year. They are
setting trial dates right now in my district that are in 2022
and 2023 because litigation has been suspended in court, and
trials have been suspended in court due to COVID. So, to say
that you can quickly get into court and litigate those cases,
especially with what is going on with COVID in our country
right now, is also not factually accurate.
Could you give us, Mr. King, a sense of the pros and cons
of a typical arbitration compared to a typical lawsuit from the
standpoint of the average American so they can understand the
differences?
Mr. King. Certainly. Lower filing fees if no filing fee to
file arbitration. Filing fees to get in court, expensive
retainer agreements even to retain counsel. So, just the entry
in the system is much higher in the judicial system. Second,
speed to get to trial. As you have noted, in my written
testimony on page 4, I note the overwhelming burden on our
Federal courts, let alone COVID-19, as you point out. So, you
get to a hearing much quicker. It is inaccurate, as the
professor noted, to say that there is no discovery. Just the
opposite. The American Arbitration Association rules permit
discovery, but you don't get bogged down in these motion
fights.
If you want to see a waste of time and money, look at some
of the discovery fights--and I am sure you are aware of this--
that go on in courts. So, you get through discovery quicker.
You get to a hearing quicker, and you get to the judgment
quicker, and you do better. The Consumer Benefit Protection
Board clearly showed that class actions are a sham, that the
average amount of recovery was minuscule, $32 in the 2015
report, and only 13 percent of class action participants even
got a payout.
In arbitration, as the other Congressman said in his
practice in this area, arbitrators tend to split the middle.
They are much more friendly, frankly, to the claimant. So, the
claimant does better, but by and large, it is a system they can
participate in. They don't need a lawyer. They don't need to
hire expensive counsel, and we ought to be talking about ADRs.
I am, again, surprised that none of the other Witnesses are
even recognizing the advances that are being made outside of
the judicial system to solve cases. So, the Supreme Court and
many, many other courts have recognized the attributes of
arbitration. Final point I would make on publicity and public
disclosure. California now requires all arbitration outcomes to
be filed. Other states are moving in that direction. There is
not secrecy here. There is efficiency, cost savings, and
certainty of getting a result.
Mr. Johnson of Georgia. The gentleman's time has expired.
I will now recognize the gentleman from New York, Mr.
Jeffries, for 5 minutes.
Mr. Jeffries. I thank the distinguished Chair for
recognizing me, as well as for your leadership in this very
important area.
Mr. King just made an observation about individual
litigants in an arbitration hearing not needing a lawyer. That
seems to me to be laughable. If you are up against a Fortune
500 company, a Fortune 1,000 company, a mega-corporation who
will be lawyered up to the T, how can an individual litigant in
an arbitration context even expect justice without an advocate
on their behalf?
Professor Gilles, is it fair to say that, in many
instances, these arbitration clauses, which are buried in take-
it-or-leave-it contracts, are akin to what we might refer to in
the law as contracts of adhesion?
Ms. Gilles. Yes, they are. This is forced arbitration. It
is tucked into the fine print. The last Congressman said, it is
a contract, but I think that is a fiction. Standard form
contracts are not consensual. When I need to get the newest
version of iTunes and I get a pop-up on my screen that says,
``Do you agree to these terms and conditions,'' and the terms
and conditions include an arbitration clause, it is really
complex. I click ``accept'' because I want that new version of
iTunes.
To call that consent, I think that is what is laughable,
frankly. That is a fiction. It is a convenient legal fiction
for big business, but when it harms consumers and employees, I
think we really have to step back and be clear that this is no
longer consent.
Mr. Jeffries. I think Mr. Weiss spoke to this in terms of
your experiences, and so, Mr. Weiss, do you feel as though you
had a choice in terms of your small business and the online
platform that you were utilizing as it relates to declining to
participate because of an objection that you had to being
compelled to resolve disputes in arbitration.
Mr. Weiss. Thank you, Congressman, for the question. No,
the answer is clearly not. I had no choice as I described in my
testimony. If I wanted to sell on Amazon, which any e-commerce
company has to be viable with the amount of control that Amazon
has over the e-commerce space, I only had one choice: To accept
or to go out of business.
I also wanted to speak for a moment in terms of what you
allude to in terms of going into an arbitration without an
attorney. I can tell you in my experience, Amazon came with
four--five very seasoned attorneys practicing 20 or 30 years,
senior partners at one of the largest law firms in Seattle.
There would have been absolutely no chance that I had if I had
been representing myself without an attorney.
Mr. Jeffries. I thank you.
Mr. King, I presume that you believe, as I believe you
indicated in your opening statement, that women have a right
not to be sexually harassed in the workplace, correct?
Mr. Johnson of Georgia. Mr. King, put your microphone on,
sir.
Mr. King. Pardon me, Mr. Chair. To even suggest that those
proponents of pre-dispute arbitration procedures condone any
type of that activity is repugnant to me. I certainly don't
condone that activity, period.
Mr. Jeffries. You may not have heard my question. I am not
sure if your audio was also not working. I said I presume you
believe that women have a right not to be harassed in the
workplace, and I also presume that you believe that people of
color have a right not to be discriminated against.
Part of the concern, as I understand it, Ms. Carlson, is
that these provisions actually foster a toxic culture where
this type of activity is buried underneath the sand as opposed
to being addressed in a more compelling, comprehensive, and
public way, which is why it does facilitate the continuation of
this type of aberrant behavior.
Ms. Carlson, can you speak to that particular concern that
I believe many advocates of this legislation have?
Ms. Carlson. Congressman, thank you so much for the
question. One hundred percent correct because other women don't
know that it is happening to other people because of the
secrecy. I would also just like to rebut what Mr. King said,
apparently, he knows personally about my particular arbitration
contract with FOX News, but I would like to read from that to
prove the point about confidentiality.
It says right in the agreement, such arbitration, all
filings, evidence of testimony connected with the arbitration
and all relevant allegations and events leading up to the
arbitration shall be held in strict confidence. It also says
that any papers filed will be filed under seal.
To that end, my story could not be public. So, I want to
make sure that I State that, and that is what thousands of
other people are facing as well--
Mr. Johnson of Georgia. The gentleman's time has expired,
but the gentlelady will be allowed to wrap up her answer.
Ms. Carlson. Thank you. Thank you, Congressman. I would
just say this comes down to choice, and you don't hear anyone
on the other side describing that. Why do we have to force
this? Why do we have to force this on people? Why don't we give
them a choice?
Mr. Jeffries. Thank you very much. I appreciate your
advocacy and your testimony and that of the other Witnesses.
Mr. Johnson of Georgia. The gentleman's time has expired.
I now recognize the gentleman from North Carolina, Mr.
Bishop, for 5 minutes.
Mr. Bishop. Thank you, Mr. Chair. I have listened with
interest to the hearing thus far, and I think one of the things
that seems to be at play is that this is a question that
requires some balance, and I think the panelists as a whole--I
am not sure we are getting all the perspectives that are at
hand. Let me explore just a little bit.
Mr. Weiss, I am going to pick on you just a little bit you,
sir. By the way, there is no love lost by me for your nemesis
Amazon. It is operated by one of the most generous far-left
donors in politics, but--and I celebrate, sir, your success in
creating a business. I pulled up your website, though, and you
have got terms and conditions there. They don't contain an
arbitration clause, but they do have provisions--there is a
provision that forum selection clause that would require
somebody using your site to bring their lawsuit in a
Massachusetts Federal or State court. There is a contractual
limitations period requiring them to bring their lawsuit within
a year. You got disclaimers of warranties to limit your
liability.
You are not trying to abuse consumers in having those sorts
of provisions in your terms and conditions, are you, sir?
Mr. Weiss. No, of course, not.
Mr. Bishop. I think, if you were susceptible to being sued
in State or Federal Court in 50 States, would that make it
harder for you to be able to survive as a startup business
building your enterprise?
Mr. Weiss. Look, I am not an attorney. So, I am not exactly
sure how it would play out. So, I don't exactly know how to
answer that question, but to your point, we are set up to do
business and try to service our consumers and try to offer the
best service, and hopefully we never have to be sued. We don't
have arbitration. We haven't been sued a lot. We have been
sued, not by consumers, primarily collections, partners stuff
like that. We are clearly in business to try to offer a service
and a product for our consumers.
Mr. Bishop. Mr. Weiss, obviously, you are building
something that people value. I have to pick on you because the
point is, many times if you are a consumer to Amazon, but you
are a seller to others. So, the utility of some of these things
can get lost where the people are focusing on highly emotional,
just on one side. So, as I said, sir, I don't mean to pick on
you because I do, I think we need to celebrate people who are
building businesses that service all.
I think it is important for us to reflect on the fact
that--take the nursing home example Mr. Deutch used. How many
people would be harmed if there were no nursing home because
the risk environment was such that the business couldn't exist?
So, there is great utility--arbitration agreements--I have been
litigating with arbitration agreements for 30 years, and I have
seen some situations in which I didn't think it was great, but
I think you have to proceed with great caution when you are
throwing all this to the wind. There is a risk of throwing the
baby out with the bath water. I wondered, Mr. King, just on
that perspective, I ask you if you have any comment on the
point I just made that you would like to offer in my time
remaining.
Mr. King. Absolutely. The disruption factor for millions of
individuals that do use arbitration, businesses that use them,
would be tremendous, particularly if the FAIR Act is construed
to be retroactive.
I just want to share a figure. As of September 30th, there
were more than 650,000 cases pending in our Federal district
courts. Now, the nursing home example brought up earlier. The
presumption is, if you took those cases to arbitration, the
claimants would be treated unfairly. How do you know that? You
don't know that. In fact, they may have received even more
money. See, that is the presumption we are dealing with here.
People presume that they are not going to get a fair deal
in arbitration, yet they have no experience with it, or they
make assumptions that are not supported by facts. Claimants do
better in arbitration. So, I would suggest to you in the
arbitration setting for nursing homes or other situations,
arbitration can and will work.
We can take secrecy out of it. I have already addressed
that. That is a misnomer. That is a red herring. Secrecy and
mandatory arbitration are not one in the same.
Ms. Carlson's situation is a perfect example. Yes, I know
of your clause. I read it carefully. I know a lot about your
case. The fact is you were able, notwithstanding that case, to
publicize your situation throughout the world.
In this day and age, we live in and the platform economy
and the ability to instantly communicate, people know if they
are being treated fairly or not. So, to suggest that you were
muzzled, of course, is incorrect. We know that is not the
facts.
We need to get people involved in litigating disputes in a
way that makes sense, is less costly, more efficient, and more
expeditious. Alternative dispute resolution procedures and
arbitration are the way to go.
Mr. Johnson of Georgia. The gentleman's time has expired.
The gentleman's time has expired.
For the record, the FAIR Act applies only to forced
predispute resolutions as opposed to after the dispute arises.
With that, I will now recognize the gentlelady from
Washington, Ms. Jayapal, for 5 minutes.
Ms. Jayapal. Thank you, Mr. Chair.
I just would like to remind everyone who may be listening
out there about what forced arbitration really is. When was the
last time you read the fine print of the paperwork required to
buy a cell phone, to rent a car, or to accept a job? For most
people, the answer is probably never, not because of negligence
or irresponsibility as Mr. Steube suggested, but because people
don't know that these forced arbitration clauses are there, and
it would take hundreds of hours for anyone to actually read and
understand these provisions on top of the fact that they are in
these agreements that people desperately need like job
agreements.
So, these provisions that powerful corporations have tucked
into the fine print have forced workers, consumers, and small
businesses to waive their constitutional right to seek justice
in a court of law and allowed for the stealing of $12.6 billion
from workers in 2019.
As Ms. Carlson has so powerfully pointed out, these forced
arbitration clauses allow women who face sexual harassment to
have few alternatives to fight back. Thank you, Ms. Carlson,
for your work. I was proud to be a lead cosponsor of the bill
in both of the last two Congresses.
Meanwhile, the regulatory agencies are so influenced by the
corporations they are supposed to regulate that they haven't
exercised their authority to fix the situation, contributing to
the worst levels of economic and political inequality in over a
century.
Mr. Weiss, in your testimony, you describe how your
business was forced to spend thousands of dollars, tens of
thousands of dollars in a costly and lengthy arbitration
proceeding after Amazon charged you significantly more for
shipping than your agreement with the company allowed. Forced
to go through arbitration, you recovered very little of what
you lost. How difficult is it for anyone, much less someone
with even less resources than you, to be successful in forced
arbitration against a giant company like Amazon?
Mr. Weiss. Thank you, Congresswoman.
The answer is it is probably almost impossible because it
was very difficult for us, with the limited resources that we
do have, to go up against a very large organization with a very
powerful group of lawyers that was very successful in being
very litigious at every stage of the game.
So, from the very beginning, arguing about at which table
we should we sit, everything caused a hearing. Should we sit in
Florida? Should we sit in Washington? Then--and it just
continued to go on and on and on in what was a very, very
simple dispute--we agreed to A, you charged me B, and you owe
me the difference.
It dragged out for over 16 months and tens of thousands of
dollars in costs, not even costs--when I said over $50,000,
that was just the arbitration cost. The Triple A charges you
based on a sliding scale of the value of your damage. So, if
your damage is 100,000, you pay a lot more than if your damage
is 50,000. It is almost like you have another partnership. The
arbitration is a partner in your claim. So, I can't even
imagine how somebody without the resources or a much lower
amount of resources than we have, how they can even begin the
process.
Ms. Jayapal. Thank you, Mr. Weiss.
Ms. Gilles, as one of the foremost experts on class action
litigation, how does Mr. Weiss's experience compare to what you
see across the country? How easy would you say it is for the
average employee or consumer or small business to file a
lawsuit by themselves against a powerful corporation when their
rights are infringed?
Ms. Gilles. I think Mr. Weiss is exactly right. It is
difficult. Even if we set aside forced arbitration, there are
problems with accessing justice in our ordinary civil justice
system. Maybe Mr. King and I can agree on this, that the court
system is not perfect, but it is our system that we have used
for a couple of centuries, so I am confused by why other
Members of Congress want to reform this other system called
private arbitration.
We should be fixing the system we have that taxpayers
actually subsidize and make it easier for people, ordinary
people, to access that system. I think there are lots of ways
we can do that, but I am not sure why we should put energy into
this big corporate arbitration procedure when we have a system
of our own that is public and available and reformable. We can
fix it.
Ms. Jayapal. Thank you. A 2020 study by the national
employment law project projects that by 2024, 80 percent of all
private sector nonunion employees will be subject to forced
arbitration requirements like the ones Mr. Weiss was subject
to.
Mr. Johnson of Georgia. The gentlelady's time is expired.
Ms. Jayapal. Thank you, Mr. Chair. I think this is a very
important issue that we are taking on.
I yield back.
Mr. Johnson of Georgia. I thank the gentlelady.
We will next hear from the gentleman from Indiana--excuse
me--the gentlelady from Indiana, Congresswoman Spartz, for 5
minutes.
Ms. Spartz. Thank you so much. Thank you, Mr. Chair. I
think it is interesting because I have a little bit different
explanation and definition of forced arbitration. I personally
CPA so I am not an attorney, but I have been a legislator for
some time, and I get very surprised to see when report
arbitration in our law that forced their stakeholders to go to
arbitration [inaudible] court system, and a great example is a
recent surprise bill in law where we forced arbitration on
stakeholders, and I do not like it, and I have seen it in our
State code. I generally look at arbitration as being
[inaudible] contract and a very important freedom if we want to
have a free society and have free markets, but I have to agree
with some people here that there is some monopoly power. I have
been involved in Fortune 500 laws, and I can tell, Amazons,
Googles, and Facebooks have a lot of power.
So, we need to make sure that the contracts are
transparent. So, I really feel that the court system generally
does not enforce on fair clauses, but is there assumption in
the law--and I would like to ask Mr. King since he is a
professional and a practioner--is there assumption in the
Federal Arbitration Act that needs to be improved to make sure
that unreasonable, unfair, and biased clauses are not
enforceable and make sure that we can improve transparency
versus eliminating arbitration because if we think that this
big monopoly, oligopolies have less power in the court system,
we are very naive because the same attorneys are going to be
there, and it is a complicated and expensive system. It is
going to hurt the little guy at the end, and someone like the
gentleman was talking dealing with Amazon, he will have even
less ability to deal with them, but as a small business owner,
it wouldn't to actually deal in the court system, too. So, is
there anything that could be improved in the act, Mr. King?
Mr. King. Good question. Right now, the law is quite clear,
I would submit. If you are forced into an agreement by
adhesion, coercion, subterfuge, deceit, fraud, those agreements
can be set aside and are set aside. I am not sure we need to
amend the law, but that is certainly something we can look at.
I also want to just build on your question. We keep hearing
about this fine print and people being subject to things they
have not read or don't understand. How many people in this
discussion we are having today could point to anyone that has
read the Federal Rules of Civil Procedures and all the
procedural rules at the State level and the courts?
You talk about legalese and difficulty in understanding the
complexity of arbitration agreements. There are far more in the
Federal courts and the State courts than you ever see in
arbitration agreements. I don't understand Mr. Weiss'
situation. Is he suggesting he would have been better off to go
with the court? Does he think, as you just mentioned, that the
company would not come with good legal talent to a court? Does
he think that somehow, he is going to be advantaged in a court?
I would suggest just the opposite. He is going to get a much
better situation with an arbitrator.
The final thing I would like to say about the Amazon case
just to make sure we have a level-set discussion here. I was
told early on in my legal career by one of my best law
professors: If you only hear one side of the case, you are not
doing justice to the discussion.
I am sure there is another side to this discussion that we
haven't heard, but let's not fool ourselves. You are absolutely
right. We need to look at alternatives, Congresswoman. We need
to look at ways of improving the system. Let's not eliminate
it. If we put 80 million people in our court systems to try to
have a day in court with jury trials or even judge trials, it
is not going to work. So, let's be realistic in this
discussion.
Ms. Spartz. Thank you. Maybe if, Professor Gilles, is there
something from your perspective you can say, to improve
transparency and so we don't have a distortion of--if you can
comment on that.
Ms. Gilles. I am sorry, Congresswoman. Can you repeat the
question? You were fading in and out.
Ms. Spartz. Sorry. I need to have bad internet connection.
I am just saying, do you believe in the Federal Arbitration
Act? Is there something need to be improved to make sure that
unfair clauses are not enforceable and there is no distortion
of power from large monopolies in this clause, or you think it
is addressed in that act?
Ms. Gilles. No. I think we can fix arbitration and the only
way I can see to do it to make it fair is to offer consumers
and employees the right to go to arbitration after a dispute
has arisen. Providing choice post-dispute is voluntary. At that
point, it is not forced upon us. We are reading the print, and
we can make an educated decision about whether to go into
arbitration--which, if Mr. King is right; it is awesome, and we
should go to an arbitration--or to go to court and be
represented in a class action. It might also provide
individuals with the ability to negotiate for better arbitral
procedures because they are choosing to go to arbitration.
Mr. Johnson of Georgia. The gentlelady's time has expired.
Ms. Gilles. Thank you.
Ms. Spartz. Thank you.
Mr. Johnson of Georgia. With that, I would like to now
recognize the gentlelady from Florida, Congresswoman Demings,
for 5 minutes.
Ms. Demings. Thank you so much, Mr. Chair. Let me say you
are doing an exceptional job.
As someone who has worked hard a large portion of my life
to take care of people and to protect people, I struggle when I
hear some of my colleagues push so hard to put the interests of
corporations over the interests of people who work hard to make
those corporations great, especially when we know, just
listening to this hearing but others as well, that many of
those corporations are not operating in good faith.
As a former police chief, I have participated in numerous
arbitrations, but the decision to go to arbitration was solely
that of the employees in consultation in that case with their
union representative. I think when decisions in arbitrations
are final and binding, it does make a difference when they are
voluntary.
Professor Gilles, thank you so much for your testimony
today, and I would just like to ask you, does a person forced
into arbitration have a right to appeal an arbitrator's
decision when it is incorrect as a matter of law or fact?
Ms. Gilles. There are very limited grounds for challenging
an arbitral decision under section 10 of the Federal
Arbitration Act, but you have to show that the arbitrator acted
in, quote, ``manifest disregard of the law.'' I am sure as you
can see from the way I describe it, that it is a really high
hurdle. Given that arbitrators don't even often tell us what
they are basing their decisions on, they don't write written
decisions, they are not paid to write, precedential decisions,
it can be almost impossible to meet that standard. So, I think
this is not a real appellate right.
Ms. Demings. Thank you so much, Dr. Gilles. It is
interesting that I heard earlier that many times in
arbitration, you get a fairer deal and so that just makes me
wonder why the arbitration has to be forced if you can 9 times
out of 10 get a fair deal.
Ms. Carlson, I want to thank you so much for your very
powerful testimony and thank you for being with us today. In
your view, would requiring that arbitration as truly voluntary
address some of the concerns that you have addressed with us
today?
Ms. Carlson. I do think that this comes down to, choice
Congresswoman, so thank you so much for the question. Let's
just be realistic. Companies don't want you to know their dirty
laundry so that is why they force arbitration on to women
especially with sexual harassment. So, if it was a choice, that
would be a totally different power balance, you know.
Here you have the person who is forcing arbitration and
here you have the woman down here without a voice. I would also
just like to respond to Mr. King, again, that, yes, I had the
platform and the resources to make my case public, but I wasn't
forced into arbitration, Mr. King, unless the courts wanted to
do something incredibly provocative 4 and a half years ago. It
is also interesting, Congresswoman Demings, that Mr. King does
not bring up the statistics with regard to sexual harassment
victims who go into arbitration, because, number one, we have
no way of knowing how many thousands of women have been forced
into arbitration and silenced for forever. We do know that the
stats show that employees only win less than 3 percent of the
time. That does not sound to me like it is fair.
Ms. Demings. Ms. Carlson, I know that this Committee, the
Full Committee, perhaps, does not want to hear this, but I want
to, and I think it is very important as a Nation we come so far
as it pertains to women's rights and fighting against
discriminatory practices, but we are nowhere near where we need
to be. Please tell us, again, so we can have a clear
understanding, how does the arbitration process silence sexual
assault and harassment survivors? I want to hear it, again.
Ms. Carlson. Congresswoman, thank you. The minute that you
go to HR, you have an arbitration clause, they go: Whew. No one
is going to know about this. Immediately they go into action.
They put you into the secret chamber, and you are all alone,
and you have no way of knowing that there is anyone else at
work going through what you are going through.
So, what ends up happening is, you get fired and the
perpetrator gets to stay on the job, and the woman never works
again. Especially during these times when we have lost a
million women to the workforce during COVID and we know that
retaining women increases the bottom line of companies, that is
why I am asking this Committee to take this seriously.
Ms. Demings. Ms. Carlson, thank you so much, and we know
that any company that would practice that is not operating in
good faith.
Mr. Chair, I yield back.
Thank you so much.
Mr. Johnson of Georgia. Thank you, gentlelady.
We will next hear from the gentleman from Oregon Mr. Bentz,
for 5 minutes.
Mr. Bentz. As a practicing lawyer up until just a couple of
months ago for well over 30 years, I can share with you the
many, many, many times I have sadly told prospective clients
that we could not take their case because the amount involved
was simply too little to justify the amount they would have to
spend. Over the 30-plus years that I have practiced, I watch
the cost of litigation go through the roof, and this is why we
see so few cases actually making their way into court, not to
mention the fact that the level of competence required to try
cases has dramatically increased, and you better know what you
are doing if you are going to go into court.
Having said that, we have heard a lot of really interesting
things today. I am much more knowledgeable now about
arbitration than I was before, even though, I served as an
arbitrator. I would like to turn the balance of my time over to
Mr. King to let him address issues that perhaps he thinks could
use a little more elaboration, and in particular, I would like
Mr. King to address this concept of why or why not we should
wait until after a dispute has arisen before making a choice to
arbitrate or not.
So, thank you, Mr. King, if you could take it away.
Mr. King. Thank you very much, Congressman.
Post-dispute arbitration doesn't work. It is a nonstarter.
I know at first glance, it may sound attractive, but once the
dispute has developed and once the parties are in adversarial
positions, trying to put the pieces back together again just
doesn't work. So, it sounds good, but it doesn't work. That has
been proven time and time, again.
You need to have some orderly way that is agreed upon
upfront. You can't change the game. You can't change the rules
as the dispute is evolving and going to some type of contested
action.
Second, filing fees. There is a lot of misinformation so
far being shared, unfortunately, with the Subcommittee.
The American Arbitration Association limits filing fees for
consumers and employees to $300 or $200 or even lower. Many
company arbitration systems pay for the filing fee all together
and, also, pay for the attorneys' fees if an attorney is needed
by the claimant. In fact, in the professor's testimony, on one
hand she criticizes companies and the cost of getting into
arbitration, but then she shows how the arbitration system can
work where there is a lot of arbitrations filed and companies
are having to pay these fees. You can't have it both ways.
So that is a misnomer. There is a very low entry level
financially to get into arbitration. As far as limited
opportunity for appeal, that is one area that I can agree with
the professor on, but it works both ways. If the employer
doesn't do well in arbitration, isn't pleased with results, it
also has very limited opportunity to appeal.
As you know as an arbitrator, the arbitrator has tremendous
authority to set an award that generally will not be set aside.
The win rate issue here really needs to go back into the
discussion. We don't have to have litigation. We don't have to
have jury trials. We don't have to have mandated arbitration
necessarily. Why not talk again--and nobody seems to want to
talk about this--about alternative dispute resolution. As a
former arbitrator, I am sure you probably also used mediation,
and there are other ways that consumers and employees can
successfully resolve issues including in the union environment
is a perfect example.
People can sit down and work out their differences, and
conflicts can be resolved. Putting everybody into the courts,
let alone a class action system, isn't going to work, and no
one seems to want to address that. I just shared a stat with
you. I can share stat after stat that are verifiable, that our
Nation's courts are overburdened. You know this from your
practice, I am sure.
Filing a complaint is the first step in a lengthy, perhaps
multiyear process. To suggest that there is any kind of swift
justice is just not accurate. As I say in my testimony, justice
delayed or justice not available is certainly justice denied.
Arbitration can work. It has worked, and it will work. To
paint it as some type of system that promotes discrimination
against women is absolutely dead wrong. I really take offense
at that. Somehow to suggest that employers in this country that
use mandated arbitration condone any type of sexual harassment,
hostile work environment situation, or unfair treatment of
consumers, is absolutely unfair. That is not where we are.
In this society we live in today, if an employer mistreats
an employee or a consumer, word gets out on the internet
instantly. Companies are concerned about their reputation. They
are doing what is right. We are very involved in diversity
initiatives, inclusion initiatives, so, let's not paint the
picture in an incorrect way here.
Mr. Johnson of Georgia. The gentleman's time has expired.
I will now recognize the gentlelady from Pennsylvania,
Congresswoman Scanlon, for 5 minutes.
Ms. Scanlon. Thank you, Representative Johnson, and thank
you for your introduction of the FAIR Act, a bill I have
cosponsored and enthusiastically support. I am really happy
that we are dealing with the subject of ending forced
arbitration because it is, particularly in this financial
climate, it is an important issue for my constituents.
Predispute arbitration agreements are now in all our lives,
and many of us don't even know of every instance in which we
have agreed to them. A 2015 study by the Consumer Financial
Protection Bureau found that 53 percent of credit card issuers,
88 percent of mobile wireless providers, and 99 percent of
payday lenders include forced arbitration in their contracts
with consumers.
American markets are so saturated with these unfair
contracting terms that, in many instances, consumers have
limited, if any, other options for fairly contracted products
or proper judicial recourse if something goes awry. In a world
built increasingly around mobile phones and credit, giving up
your fundamental right to trial by jury, is all but mandatory
to participate in our modern economy.
My colleague, Ms. Jayapal, highlighted the fact that many
of these contractual clauses are contained in fine print, but
what really is a problem to me is the fact that there is just
no choice. As a lawyer, we call it a contract of adhesion, but
in plain English, basically, the company has you over a barrel.
So, I am particularly concerned about the use of forced
arbitration agreements in private student loan contracts. That
same Consumer Finance Protection Bureau study that I mentioned
found that 86 percent of the largest student lenders in the
private student loan market employ the use of predispute
arbitration clauses in their contracting.
So, American borrowers have over $1.7 trillion in student
debt at this point. My home State, Pennsylvania, has one of the
highest per capita debt loads in the U.S., an average of
$36,000 of debt for our student borrowers. So, we are left with
a system in which students who need private loans are forced to
decide between waiving their rights or getting a degree.
Now, the Obama Administration and the CFPB issued a set of
rules banning the use of forced arbitration, including in
private student loan contracts, but the Trump Administration
and the then-Republican majority in Congress repealed those
protections in 2017.
Although I expect the Biden Administration to lead a shift
back towards protecting students, we need to legislate
permanent protections for those borrowers, and that is why this
morning I reintroduced our Justice for Student Borrowers Act,
which would codify the ban on predispute arbitration clauses
and predispute joint action waivers in private student loans. I
would like to thank my colleagues, many of whom are on this
Committee for joining me in introducing this legislation.
So, Ms. Gilles, you talked about the ubiquitous of forced
arbitration clauses in private student loans in your testimony.
While we know that many private student lenders are failing, if
not bilking, their borrowers, is it wise to allow those lenders
to shield liability with forced arbitration clauses?
Ms. Gilles. No, it is not, and I want to thank you for
reintroducing--or introducing the Justice for Student Borrowers
Act. This is incredibly important, in large part because it has
effects that are disproportionately felt among low-income and
minority communities who are trying to improve their lives by,
by getting these degrees, by moving up, and then saddled with
terms that are often unfair. When they try to dispute those
terms, try to get relief, they are shunted off into
arbitration.
I just want to spend a second going back to something Mr.
King said when asked about why post-dispute arbitration is not
workable. I think he sort of punted and said, ``Well, it just
doesn't work.'' Well, there is no reason to think it doesn't
work. If arbitration is as great as people like Mr. King say it
is, then maybe some employees, consumers, student borrowers
would choose it after a dispute arises. I don't think it is
fair to simply say that it won't work and the only way to make
arbitration work is to force it on an unknowing public.
I will just continue to say that we are indeed forcing,
companies are forcing these provisions on the public. So,
Congresswoman, thank you again for your leadership on this
issue. I think it is really important.
Mr. Johnson of Georgia. The gentlelady's time has expired.
With that, we will now hear from the gentlelady from
Minnesota, Ms. Fischbach, for 5 minutes.
Ms. Fischbach. Mr. Chair, thank you very much. I will yield
my time to Congressman Issa for as much time as he may use.
Mr. Issa. I thank the gentlelady. Having worked with Ms.
Carlson for so long and watching what happened, I think all of
us saw a terrible series of events that depicts a lot of what
goes on behind closed doors, not just at her employer, but
employers all over the country. Certainly, the so-called
casting couch in Hollywood is famous for sexual harassment that
went unreported for years.
So, Ms. Carlson, let me ask a couple of questions in light
of that. I am not trying to be harsh on you, but I just want to
frame your situation versus so many people that find themselves
in a similar situation. In your particular case, you had a
contract with your employer, correct?
Ms. Carlson. Yes, I did.
Mr. Issa. You had renewed that contract at least once,
right?
Ms. Carlson. Yes.
Mr. Issa. You were represented by attorneys when you
negotiated that contract?
Ms. Carlson. An agent, yes.
Mr. Issa. Okay. So, you were a sophisticated negotiator,
but you still found yourself with provisions that limited your
ability to seek remedies when you were sexually harassed?
Ms. Carlson. Exactly, and even with a Stanford and Oxford
education, I did not understand the ramifications of
arbitration when I signed the last contract when they put the
clause in there.
Mr. Issa. Well, having gone to Kent State, I am not going
to badmouth Stanford. I am just not going to do it here.
Let's go through a couple of things that are related to
your case, but I think it may be part of the solution that we
all need to look at in Congress.
In your particular case, you made a decision rather than to
sue your employer where you did have the nondisclosure and so
on, you sued the individual who harassed you and attempted to
get your day in court. Is that correct?
Ms. Carlson. Correct, because there happened to be a law in
the books in that particular State that allowed my attorneys to
do that. That law does not exist anywhere else.
Mr. Issa. So, to a great extent, since sexual harassment is
by definition primarily an Act of somebody to somebody else,
although it can include a company, if you will, culture, but
the individual acts or individuals, if Congress viewed that as
a right, a right to sue an individual that would not be and
could not be placed in your employment contract with a company,
that would have put you into a situation on a national basis
where you would have had rights to go after the individual for
their individual acts.
Ms. Carlson. Potentially.
Mr. Issa. So, as we are looking at remedies, is that a
remedy that you would be maybe think a little bit about and
opine on it at a later date? Because I would like your input
because I do think that there is such a difference between what
companies try to protect themselves from, which is often class
action suits, versus both the secrecy that they are not
entitled to and the individual acts that offer and protect. I
will note that it is often protected at EPA, at OSHA, at
government agencies because it's not just private corporations,
but our Federal government and State governments often have
rampant wrongdoing by individuals who are sheltered?
Ms. Carlson. Yes, but I would just want to point out that
this is pervasive across the board from every socio-economic
class in every profession, which I didn't even know about until
I filed my case. That is reason I didn't know about this is,
because it is all in secrecy. I mean, that is why you don't
know about it.
Mr. Issa. Again--
Ms. Carlson. I would also say that the companies have a
huge responsibility to make sure that they are not allowing you
this behavior to continue. As long as it can continue to go to
secrecy, they are allowing it to be systemic. So, it is much
more than just the individual.
Mr. Issa. I want to join you in trying to stop the secrecy.
I think we have certainly had hearings in the past on priests
in the Catholic Church. I certainly think if we are going to go
after individual priests, we need to go after individuals
wherever they are.
One last question for Mr. King, what is the, if you will,
the history or the quantity of people who do have a choice to
opt for arbitration, choosing to do so, both plaintiffs and
defendants, both employers and employees, when that is an
option? Is it chosen with a great deal of regularity and also
mediation? Would you opine on the good of those programs?
Mr. Johnson of Georgia. The gentleman's time has expired,
but I will allow Mr. King to give a short answer to that
question.
Mr. King. There is a very heavy use of arbitration,
mediation for represented employees. Under union contracts, it
is pervasive. The same is true for nonunion employee
situations. The usage factor has gone up considerably in the
consumer area.
Mr. Issa. Thank you. I thank the gentlelady from Minnesota
for yielding.
Mr. Johnson of Georgia. Thank you. I now recognize the
gentlelady from Georgia, Ms. McBath, for 5 minutes.
Ms. McBath. Thank you so much, Mr. Chair. Thank you to each
of you that are here today. I want to start by being really
crystal clear in what we are talking about today.
The FAIR Act is about ending forced arbitration. My office
is still being contacted by groups that are spreading so much
misinformation. I want all my constituents, if they are
listening today, the employees, the small business owners, and
consumers that I represent, I want you to know this. Passing
the FAIR Act is about making sure that you have a choice. It is
about making sure our courthouse doors remain open to all as a
place to seek justice.
So, nothing in the FAIR Act will prevent you from seeking
some other dispute resolution process, including arbitration,
if you so choose that. It is critical that no one is forced out
of court before their case, their claim, or their mistreatment
even arises.
So, now turning to you, Mr. Weiss, you built your business
from the ground up, as you told us. In your written testimony,
you said that before Amazon would let you sell anything on its
marketplace, it forced you to sign what it calls a business
seller agreement. You added that you had no ability to
negotiate the terms of that agreement and no ability to sell on
Amazon without signing that agreement. Can you explain--and you
did kind of touch on this a little bit earlier, that you felt
you were forced into signing the agreement, that you felt you
didn't have really any leverage to reject the forced
arbitration section of the contract. So, what do you think
would have happened if in your outcome, if you agreed to accept
all the terms in Amazon seller agreement, except for the forced
arbitration provision?
Mr. Weiss. Thank you, Congresswoman.
There wasn't even such an option. It is a take it all or
leave it all. So, I didn't even have an option to take any
portion of the agreement out to be able to sell on Amazon.
Ms. McBath. Thank you. Also, in your written testimony you
said that forced arbitration puts third-party sellers in a
lose-lose situation where they are left with a dismal choice of
doing nothing in response to Amazon's wrongful actions or being
subjected to the issues. How does it feel to be faced with a
choice of doing nothing or continuing to be subject to the
problems that you were facing? What effect does your inability
to obtain any meaningful relief have on your business and your
employees?
Mr. Weiss. Not a very good effect. As I also mentioned in
my testimony, there are many claims that we have experienced as
a seller and I have discussed with other sellers, we have
experienced very similar issues, but because of the financial
component, we just had to accept that outcome without even
having a way to rectify it because the cost of pursuing
arbitration to right that wrong was going to be so much more
expensive. It doesn't make financial sense. So, you just have
to drop it and just live with all the issues that you have to
deal with that are completely unfair and unjust.
Ms. McBath. I sense that grave unfairness that you are
speaking about. So, do you agree that the FAIR Act is necessary
to stop the dominant companies, like Amazon, from facilitating
and covering up any mistreatment of individuals in small
businesses who are dependent on these companies for their very
survival?
Mr. Weiss. Absolutely.
Ms. McBath. Well, thank you so much, and I yield back the
balance of my time.
Mr. Johnson of Georgia. The gentlelady yields back.
At this time, I will now recognize the gentleman from
Wisconsin, Mr. Fitzgerald, for 5 minutes.
Mr. Fitzgerald. Mr. Chair, I do not have any questions at
this time.
Mr. Johnson of Georgia. Thank you. At this time, I would
recognize the gentleman from Utah, Mr. Owens, for 5 minutes.
Mr. Owens? Going once? Going twice?
So, at this time, I will now yield to the distinguished
Ranking Member of the Subcommittee, Mr. Buck, for 5 minutes.
Mr. Buck. Thank you, Mr. Chair.
Ms. Carlson, I want to visit with you about something, and
I think that many of us agree that the area of sexual
harassment is absolutely disgusting in terms of the scope and
nature of it. Yet, I find this particular legislation to be
sort of a one-size-fits-all. It applies to a contract with a
credit card company, a contract with a wireless carrier. Yet,
we have some really serious situations like sexual harassment
that may be pulled out of--and I think the bill that you are
actually advocating for and the bill that Ms. Stefanik is
advocating for in the Republican Conference is a more limited
area of this particular arbitration issue that we are trying to
address.
I think many of us would--and I want to ask Mr. King next
to comment--but I think many of us are interested in finding
discrete areas that are so important that we should ban
arbitration clauses, do it in a fair way to the employer and
the employee, but at the same time not burden the courts and
create additional costs for corporations and businesses in
America that are sometimes unnecessary and would really
increase costs for cell phones and other things. Would you
agree with that generally?
Ms. Carlson. Well, Congressman Buck, I appreciate your
comments and being willing to have an open discussion about
this because, as I said earlier, this isn't a political issue.
When somebody decides to harass you, they don't ask you what
party you are in first, they just do it because it is really
about power. That is what I have been advocating so much to
bring the parties together to try and solve this issue.
I would just say that the day that I found out what my
arbitration clause meant was one of the darkest days of my life
because my lawyers told me you don't have a case anymore. That
was incredibly difficult to digest. I mean, if it hadn't been
for their strategy to at least make my case public, I wouldn't
be having this conversation right now. We arguably wouldn't be
having this moment right now.
So, I want to be clear that I would have still been forced
into arbitration. My case would have been not settled.
So, I really believe that we have no way of knowing how
many women this has affected and how many have been forced out
of the workplace. That is what is so concerning to me is that
all the thousands of women who reached out to me, they had one
common theme, which was they were silenced.
Mr. Buck. I don't mean to interrupt you, but I want to make
sure we talk about one other thing that I think is really
important here. I find that the secrecy component of your
testimony to be very disturbing. I think that when there is a
predator in the workplace, that person should be outed, the
company should be responsible and make sure that whatever line
of business it is, that doesn't happen again. Avoiding secrecy,
making sure that there is publicity one way of dealing with
predators.
The arbitration area is a little bit different than the
secrecy area. I just want to make sure you recognize and are
willing to tell people who are listening today that there is a
difference between the secrecy and the arbitration. The secrecy
is really what is so offensive to me. From your testimony--I am
pointing to you--the arbitration we have got to find ways of
dealing with. I think we can agree that there is no place for
secrecy agreements when it comes to very, very serious conduct,
like sexual harassment.
Ms. Carlson. Yes. Secrecy is the central element. However,
as I just read from my contract, that was part of the
arbitration. There are other women that I know of right now
that are in arbitration, which you never, ever hear--it is like
they become invisible because they are not allowed to tell
their story. That is how this problem continues.
Mr. Buck. I think they can be separated. I have run out of
time. Thank you very much for your testimony.
I yield back.
Ms. Carlson. Thank you.
Mr. Johnson of Georgia. The gentleman yields back. I
recognize myself for 5 minutes.
Ms. Carlson, with the forced arbitration clause being
buried in the fine print of your contract, would you have
signed that contract if you had known that you were signing
away your right to go to court for redress on your sexual
harassment claim?
Ms. Carlson. Never.
Mr. Johnson of Georgia. Mr. Weiss, you have testified that
you were forced into your agreement because there was no
alternative, no alternative platform, and it was a take-it-or-
leave-it situation for you and that is why you ended up in
arbitration. Is that correct? You need to unmute.
Mr. Weiss. Sorry about that. Yes, Congressman, that is
correct.
Mr. Johnson of Georgia. Thank you.
Mr. King, you stated in response to the 3\1/2\ minutes that
Mr. Bentz gave you, you stated that corporations pay for the
aggrieved person's lawyer if they need one. You also stated
that the corporation pays for the arbitrator. When the
corporation is paying for the arbitrator and the attorney for
the claimant, is that possibly why, in arbitration, only 3
percent of employees win their cases?
Mr. King. Well, there are many reasons for the outcome. In
court--
Mr. Johnson of Georgia. Well, could it be that there is a
setup, and the employer has paid for the result that they want,
and they get that result?
Mr. King. Absolutely not. Absolutely not, Congressman.
Mr. Johnson of Georgia. Well, tell me this, Mr. King. What
is so bad about allowing employees and consumers to choose
whichever form of alternative dispute resolution, be it
arbitration, be it mediation or litigation, why not leave it up
to the parties to decide that, once the dispute arises, as
opposed to burying the terms, a waiver of your constitutional
right to a jury trial, burying that in the terms of an
agreement on the front end? What is so wrong with giving people
the right to do things fairly with knowledge of what they are
doing?
Mr. King. On the surface, that is a very appealing
question. Mr. Chair, the fact of the matter is that they have
those options today. In discrimination cases, they can file--
Mr. Johnson of Georgia. So, when they have signed a
contract that waives their right to go to court and they are
bound to arbitration, how could they get out of that once they
have signed the contract?
Mr. King. Well, it depends on the fact pattern, Mr. Chair.
As I was starting to say, if there is a discrimination case,
individuals can file with a State or Federal agency such as the
EEOC. There is no gag order. There is no confidentiality clause
that would prohibit that. I mean, they have options today.
The problem I am having with this conversation is, what is
the alternative? Everybody on the panel, except for me, is
saying arbitration doesn't work. Well, what is your
alternative? Are you going to put everybody in the court
system? No, that doesn't work. What I would respectfully
suggest, is that perhaps we could have another hearing on
judicial reform issues.
Mr. Johnson of Georgia. Why doesn't it work?
Why doesn't it work to go to an article III court created
by the Framers of our Constitution as a means of protecting and
preserving justice in this country? Why not go to court? What
is wrong with that?
Mr. King. Because you can't get to court, Mr. Chair, or you
can't get there in an efficient way.
Mr. Johnson of Georgia. Well, I will tell you something,
Mr. King, it has been 30 years, 1990, since Congress expanded
the Federal court system and created new judgeships.
It has been 30 years, and you and I know that commerce has
exploded; the global economy has expanded. There are more
disputes, and the courts remain essentially with the same
numbers that they had 30 years ago. Aren't you in favor of
congressional action today that would expand the Federal
judiciary and create more judgeships?
Mr. King. Well, that is certainly an option--there are
other options.
Mr. Johnson of Georgia. Would you support that?
Mr. King. Alternative dispute resolution--
Mr. Johnson of Georgia. Would you support that, Mr. King?
Mr. King. It depends on what else is in the package. I
would want alternative dispute resolution procedures to be
endorsed by this Committee and explored. I also would want
Federal district court vacancies that are currently unfilled to
be filled. I also would like to see a reformation of the
discovery system that we have and the Rules of Civil Procedure.
There is a lot that can be done to reform our current judicial
system, Mr. Chair. I think we can reach consensus on that. So,
there are a number of areas. Te answer is not just to eliminate
predispute arbitration. You are going down the wrong path.
Mr. Johnson of Georgia. All right. Thank you, Mr. King.
I want to thank all our Witnesses for their appearances and
for their testimony today. I seek unanimous consent to add a
number of letters and statements into the record from
organizations in support of ending forced arbitration and
passing the FAIR Act. Statements for the record fromValerie
Haney;one from Tanuja Gupta;a statement from Remington Gregg,
counsel for Public Citizen;a letter for the record from
Leadership Conference on Civil and Human Rights;a statement for
the record from Heidi Silton, President, Committee to Support
Antitrust Laws;a statement for the record from Chrissie
Carnell-Bixler;a letter for the record from Consumer
Reports;and a plaintiff brief in the case of Newton v. Hennessy
Louis Vuitton.
For the record, without objection, it is so ordered.
[The information follows:]
MR. JOHNSON OF GEORGIA FOR THE RECORD
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Mr. Johnson of Georgia. So, ladies and gentlemen, this
concludes today's hearing. I want to thank you again for
appearing as Witnesses.
Without objection, all Members will have 5 legislative days
to submit additional written questions for the Witnesses or
additional materials for the record.
With that, the hearing is adjourned.
[Whereupon, at 12:42 p.m., the Subcommittee was adjourned.]
APPENDIX
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RESPONSES TO QUESTIONS FOR THE RECORD
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