[Senate Hearing 118-567]
[From the U.S. Government Publishing Office]
S. Hrg. 118-567
SMALL PRINT, BIG IMPACT: EXAMINING THE
EFFECTS OF FORCED ARBITRATION
========================================================================
HEARING
before the
COMMITTEE ON THE JUDICIARY
UNITED STATES SENATE
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
APRIL 9, 2024
__________
Serial No. J-118-60
__________
Printed for the use of the Committee on the Judiciary
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
www.judiciary.senate.gov
www.govinfo.gov
------
U.S. GOVERNMENT PUBLISHING OFFICE
58-756 WASHINGTON : 2026
COMMITTEE ON THE JUDICIARY
RICHARD J. DURBIN, Illinois, Chair
SHELDON WHITEHOUSE, Rhode Island LINDSEY O. GRAHAM, South Carolina,
AMY KLOBUCHAR, Minnesota Ranking Member
CHRISTOPHER A. COONS, Delaware CHARLES E. GRASSLEY, Iowa
RICHARD BLUMENTHAL, Connecticut JOHN CORNYN, Texas
MAZIE K. HIRONO, Hawaii MICHAEL S. LEE, Utah
CORY A. BOOKER, New Jersey TED CRUZ, Texas
ALEX PADILLA, California JOSH HAWLEY, Missouri
JON OSSOFF, Georgia TOM COTTON, Arkansas
PETER WELCH, Vermont JOHN KENNEDY, Louisiana
LAPHONZA BUTLER, California THOM TILLIS, North Carolina
MARSHA BLACKBURN, Tennessee
Kolan Davis, Chief Counsel and Staff Director
Joe Zogby, Democratic Chief Counsel and Staff Director
C O N T E N T S
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OPENING STATEMENTS
Page
Durbin, Hon. Richard J........................................... 1
Graham, Hon. Lindsey O........................................... 2
WITNESSES
Carlson, Gretchen................................................ 4
Prepared statement........................................... 30
Gilles, Myriam................................................... 5
Prepared statement........................................... 34
Responses to written questions............................... 67
Grace, Joanne E.................................................. 8
Prepared statement........................................... 52
Schwartz, Victor E............................................... 7
Prepared statement........................................... 55
APPENDIX
Items submitted for the record................................... 29
SMALL PRINT, BIG IMPACT: EXAMINING THE
EFFECTS OF FORCED ARBITRATION
----------
TUESDAY, APRIL 9, 2024
United States Senate,
Committee on the Judiciary,
Washington, DC.
The Committee met, pursuant to notice at 10 a.m., in Room
G50, Dirksen Senate Office Building, Hon. Richard J. Durbin,
Chair of the Committee, presiding.
Present: Senators Durbin [presiding], Whitehouse,
Klobuchar, Hirono, Booker, Butler, Graham, Cotton, Tillis, and
Blackburn.
OPENING STATEMENT OF HON. RICHARD J. DURBIN,
A U.S. SENATOR FROM THE STATE OF ILLINOIS
Chair Durbin. This hearing, Small Print, Big Impact:
Examining the Effects of Forced Arbitration will come to order.
The Seventh Amendment to the Constitution guarantees the right
to a jury trial. However, for tens of millions of Americans,
this constitutional right is an empty promise. Instead of
having their day in court, people are forced into arbitration
by the fine print, buried deep in employment contracts, product
manuals, and terms of service.
I'd like to turn to a brief video featuring three
individuals who were denied their day in court as a result of
forced arbitration clauses that they didn't know very little,
if anything about. Please proceed.
[Video is shown.]
Chair Durbin. Forced arbitration is pervasive. It affects
more than 60 million workers. An estimated 825 million consumer
arbitration agreements were enforced in 2018, a number that
undoubtedly has gone up since then. If you've activated a cell
phone, signed up for a credit card, bought a mattress,
television, countless products, you likely agreed to arbitrate
any future disputes with the manufacturer or a service
provider.
Don't be embarrassed if you're just learning that you
likely waived your constitutional right to bring a claim in
court. You're part of the 90 percent of American consumers who
use popular products and had no idea they'd signed up for
forced arbitration. All of us ``agree'' to forced arbitration,
when we click that button or check that box accepting terms of
service. We may have no idea we're agreeing to this process
when we sign up.
The rules governing arbitration often limit the information
victims can get from corporations making it even more difficult
to prove their claims. The process is overseen by arbitrators
who can be biased in favor of one side or the other, usually
corporations, because they want to ensure a steady pipeline of
future work.
Those arbitrators aren't bound by precedent and their
decisions are only subject to limited judicial review. The
problems are compounded by the secretive nature of this
process. Nowhere was this troubling combination more
pronounced, than in cases of sexual assault and sexual
harassment. For years, predators like Roger Ailes preyed upon
women without fear because their employers would hide behind
confidential arbitration proceedings to sweep abuse under the
rug.
Thankfully, that's no longer the case. Brave survivors like
Gretchen Carlson with us today--thank you for joining us--step
forward to break this cycle of abuse. As a result of her
unrelenting advocacy and this Committee's determination to do
something on a bipartisan basis, the Ending Forced Arbitration
of Sexual Assault and Sexual Harassment was signed into law by
President Biden in March of 2022.
As the name suggests, this law prohibits forced arbitration
in cases of sexual assault or sexual harassment. While this
marked a significant achievement, there's more to be done.
We'll hear from witness Joanne Grace, how forced arbitration is
used to cover up illegal age discrimination, an issue of great
interest to the Senator from South Carolina.
The same is true of racial discrimination, abuse in nursing
care and countless other harms. Joanne and others like her
deserve their day in court. That's what the Constitution
promises, that's what the Congress should provide.
I want to thank Ranking Member Graham and his staff for
working with us on this bipartisan basis to select today's
witnesses. And before I turn the microphone over to Senator
Graham, I want to congratulate South Carolina and Iowa for
their terrific basketball experience over the last 2 weeks.
Senator Graham.
OPENING STATEMENT OF HON. LINDSEY O. GRAHAM,
A U.S. SENATOR FROM THE STATE OF SOUTH CAROLINA
Senator Graham. Well, thank you. It was a heck of a ball
game. Caitlyn Clark was a phenomenal college athlete.
Personally, I'm glad she's going to the pros. She beat us last
year, but we came back so it was a great game.
So what are we trying to do here? We're trying to level the
playing field. I co-sponsored the bill with Senator Gillibrand
about sexual harassment and sexual assault in employment
contracts. When you go to work for somebody, you sign an
employment contract, pretty much take it or leave it. And most
of these employment contracts require mandatory arbitration,
binding arbitration. It's, not really a level playing field. We
learned that.
In the areas of sexual harassment and sexual assault, I
think most Americans believe that you shouldn't sign away your
rights to have your day in court. That's just too personally
important and we passed the law to say you cannot require
through binding arbitration in employment contract, you cannot
deny the employee their day in court. And Ms. Carlson was
instrumental in that.
So now we have the Protecting Older Americans Act. What's
that all about? A lot of people are discriminated in the
workplace in my view because of their age because it's just so
much cheaper to have a younger employee. We've seen that, you
know there's articles about CVS and other companies that
routinely engage in these kinds of practices where an older
employee is under a lot of scrutiny and a lot of harassment,
and the next thing you know they're terminated.
So what I want do is to make sure that if you feel like
you've been discriminated based on your age, that you can have
your day in court. It's still the burden on you to prove you
were, the company or the individual involved will have plenty
of defenses. But I just think forced arbitration and that
situation doesn't serve the public interest. And I hope after
this hearing we can have a vote on Protecting Old Americans Act
that would do away with binding arbitration in employment
contracts.
And finally, arbitration is okay if you're seeking advice,
you're in the investment business trying to, you know, go get
some advice for investment. It's a business relationship. Two
companies want to agree to arbitration, there's a level playing
field. That's not my problem.
There is plenty of space in the American economy for
arbitration, but what we've seen is these employment contracts
pretty much are written to the advantage of the employer and in
areas like sexual harassment, age discrimination, and a few
other areas, it's gotten out of hand, and I want to level the
playing field. So thank you for having this hearing.
Chair Durbin. Thanks, Senator Graham. We both agreed on the
four witnesses who I'll now introduce.
Gretchen Carlson, no stranger to the Committee and welcome
back. Former CBS News and Fox News journalist and vocal
advocate for women's rights, curbing the abuse of forced
arbitration and non-disclosure agreements. Her 2016 sexual
harassment lawsuit against Roger Ailes was one of the first
high profile cases of the #MeToo movement.
In 2019, she co-founded Lift Our Voices a nonprofit
organization to advocate for a ban on NDAs and forced
arbitration in employment contracts.
Myriam Gilles, I hope I pronounced it correctly. Did I get
it right? Law professor at Benjamin Cardozo School of Law.
Professor Gilles specializes in class actions and aggregate
litigation and has written extensively on arbitration,
previously testified before our Committee. Welcome back.
Victor Schwartz, co-chair of the Public Policy Group at
Shook, Hardy, & Bacon. Mr. Schwartz served as law professor and
dean of the University of Cincinnati College of Law before his
current position. He's previously testified before the
Committee and we welcome him.
Joanne Grace of Columbiana, Ohio has served her community
in a variety of nursing homes since 1976, including as a floor
nurse, supervisor, manager, and the director of nursing
services. Thanks for joining us today.
I'm going to swear in the witnesses and each will have 5
minutes for an opening statement, then the question periods 5-
minute rounds for each senator. I'd ask the witnesses to please
rise. Raise your right hand.
[Witnesses are sworn in.]
Chair Durbin. Thank you. Ms. Carlson, you're first.
STATEMENT OF GRETCHEN CARLSON, JOURNALIST AND CO-FOUNDER,
LIFT OUR VOICES, GREENWICH, CONNECTICUT
Ms. Carlson. Thank you so much, Chairman Durbin, Ranking
Member Graham, and distinguished Members of the Committee.
Thank you for the opportunity to testify about my experience
with forced arbitration and the work I'm doing to make
workplaces safer in America.
In 2016, I found the courage to sue one of the most
powerful men in the world, former Fox News chair and CEO Roger
Ailes for sexual harassment. Toughest decision of my life. But
after they fired me, I said to myself, ``If I don't do it, who
will?'' My story certainly made headlines, but it could have
easily been swept under the rug like countless others because
of that forced arbitration clause in my contract.
No one starts a new job expecting harassment. I know I
didn't. And few people can walk away from a job because of the
fine print. I don't care who you are, most people have no idea
what forced arbitration means. In my case, it showed up in my
last contract with Fox. I was told not to worry because it was,
``Becoming the way of the world.'' I could not have imagined
how true that would prove to be.
Employees have no idea that signing on the dotted line
accepting a forced arbitration clause can strip them of their
rights for future justice. Back then, I could have never known
that my story would help propel Congress to start examining
forced arbitration in a meaningful way. Thanks to other
courageous women, to the Members of this Committee, and to
other champions in Congress hailing from both sides of the
aisle, survivors of sexual misconduct can now seek justice.
Witnessing the President sign the Ending Forced Arbitration
of Sexual Assault and Sexual Harassment Act 2 years ago, was
one of the proudest moments of my life. Courage is contagious
and this new law is already having significant impact.
Kirsten Tiger, a bartender at a country club who alleged
she was sexually harassed by multiple members, was able to
bring a harassment lawsuit against her employer last year. And
even though her employer tried to still silence her by filing a
motion to compel arbitration, the request was denied because of
the new law.
A judge in Texas also declined to grant Blaze Media's
motion to dismiss last year after employee Sydney Watson,
alleged harassment in the workplace. Watson's case can also
continue in court thanks to the new law.
While I feel endless gratitude toward this Committee for
restoring the rights of sexual misconduct survivors like these,
I'm now more sure than ever before that all Americans deserve
this right. It's why I am a champion of the new bipartisan
forced arbitration bill, the Protecting Older Americans Act,
co-sponsored by Senators Graham and Gillibrand with
endorsements by Chair Durbin and Senator Grassley too. Thank
you.
And thank you Senator Booker for leading the effort to
introduce the Ending Forced Arbitration of Race Discrimination
Act. These bills give Americans a choice about whether or how
to seek accountability, a choice that should not be made by
companies or the Government.
You're going to hear from Joanne about age discrimination
in a moment, but let me tell you about two former Tesla
employees, Jasmine Wilson and Kabiru Alowonle. They reported
racist behavior at their California Tesla's plant, graffiti
that read KKK, and the N word, but no action was taken when
they went to HR and they were forced into arbitration.
Stephanie Weaver's grandmother went missing at a nursing
home after being left unattended, and when the home called her
to come look for her grandmother, she found her grandmother's
dismembered body had been eaten by an alligator in a nearby
pond. Stephanie fought all the way to the South Carolina Court
of Appeals after the home tried to force her into arbitration.
If your grandmother can be eaten by an alligator because she
wasn't properly cared for, and a major employer like Tesla can
be accused of rampant race discrimination, and in both cases,
forced arbitration eliminates justice, something must be
terribly wrong with our system.
For the naysayers out there, the U.S. Chamber claimed all
hell would break loose if you let women file their assault and
harassment cases in court, there'd be a slew of new cases and
companies would go out of business. But none of that has
happened. Instead, survivors are simply being empowered with a
choice.
After my story at Fox News, a close friend said to me,
``Gretchen, something good is going to come of this.'' At the
time I couldn't see it, but something great has come of all of
this. Thank you for holding this hearing and I hope when you
consider the horrible stories currently being allowed to
flourish within the secrecy of forced arbitration, you will
agree that all Americans deserve this choice. Thank you.
[The prepared statement of Ms. Carlson appears as a
submission for the record.]
Chair Durbin. And thank you for stepping up. America's
better because you had the courage to step up and say things
which were painful. Thank you again.
Ms. Carlson. Thank you, Chairman.
Chair Durbin. Professor Gilles.
STATEMENT OF MYRIAM GILLES, PROFESSOR OF LAW, BENJAMIN N.
CARDOZO SCHOOL OF LAW, YESHIVA UNIVERSITY, NEW YORK, NEW YORK
Professor Gilles. Chairman Durbin, Ranking Member Graham,
distinguished Members of the Senate Judiciary Committee, thank
you for inviting me to speak today about the harmful effects of
forced arbitration clauses that are imposed on all of us in
take it or leave it contracts, that shunt cases out of our
public courts and into secret one-on-one arbitrations.
And I say all of us, because as we sit here today in this
room, everybody in this room is subject to a forced arbitration
clause. Everybody in this country is subject to a forced
arbitration clause in some aspect of their lives.
As Senator Durbin noted, to use a credit card, to apply for
a job, to open a checking account, to use a cell phone, to put
your mom in a nursing home, you effectively have to sign away
your freedom to decide for yourself how to exercise your
rights.
Forced arbitration takes that power, that agency, away from
each of us and hands it over to powerful corporations. What
this means is that when there's a forced arbitration clause in
effect, Americans often have no way of getting justice under
Federal laws that would otherwise be enforced in court, whether
they be consumer protection, antitrust privacy, or
discrimination laws. Because forced arbitration essentially
replaces the laws that this body enacts, with private
legislation written by corporations into the fine print of
contracts that nobody reads and nobody can negotiate.
One way of grasping the enormity of the problem we've come
to talk to you about today, is to consider some recent cases
where there was no forced arbitration clause in effect, and to
think about the injustices that would still be happening if
those cases have been blocked by forced arbitration.
I think we've all heard about the massive antitrust case
brought against the real estate industry, which recently
resulted in a jury verdict in favor of home purchasers and a
settlement that promises to change the way Americans buy homes
by reducing commissions and opening up competition among
agents. It's total happenstance, Senators, that most real
estate brokers simply didn't impose arbitration on their
clients, because if they had this historic and industry
changing settlement would never have come about.
And since we've been talking about the Protecting Older
Americans Act, I want to tell you about another case. In 2016,
a group of Hewlett Packard employees sued alleging the company
violated the ADA by terminating them because of their age. Now
about 140 of the laid off workers signed releases that included
forced arbitration clauses, while another 320 refused to sign
those arb free workers were allowed to continue in court, where
last week, the judge agreed to a settlement for $18 million,
the highest per plaintiff settlement ever recovered in an age
discrimination suit, while the workers who had the misfortune
of signing releases with forced arbitration clauses, are out of
luck. That makes no sense.
I could go on and on. There are many examples like this,
but the point is simply this, Congress enacts laws to protect
Americans. Many of those laws rely for their enforcement, on
courageous individuals bringing lawsuits, challenging harmful,
and sometimes longstanding policies and practices. Forced
arbitration denies victims the right to bring such challenges,
and it denies all of us the ability to know what's going on in
the marketplace and in the workplace.
And for what? Why has this unjust regime of forced
arbitration developed? Well, it's not because as the Chamber
would tell us, that it's because forced arbitration is cheaper,
faster, or easier. That's not it. If it were, companies
wouldn't have to force us to do it, right? We'd want to do it.
Instead, companies impose forced arbitration to squelch cases
and to immunize themselves from public accountability.
And I think the evidence of this true motivation is now
glaringly obvious in the recent phenomenon of mass arbitration,
in which victims simultaneously file thousands of individual
arbitrations, basically forcing corporations to actually face
claims of wrongdoing and make good on their contractual
promises to pay the cost of arbitrating large numbers of single
file claims.
No surprise, I think, that just about every company hit
with a mass arbitration has gone running to court seeking
relief from their own contracts. Also, no surprise that the
Chamber of Commerce characterizes mass arbitration as
extortion. Meanwhile, Federal judges faced with these cases
have called it poetic justice.
Here's the point. However you--whatever you think about
mass arb, the resistance that these companies have to
individually arbitrating these cases after unilaterally forcing
these provisions on their workers and consumers, makes clear
that forced arbitration was never about fairness or efficiency,
but about suppressing worker and consumer cases. Thank you so
much.
[The prepared statement of Professor Gilles appears as a
submission for the record.]
Chair Durbin. Thank you, Professor. Professor Schwartz.
STATEMENT OF VICTOR E. SCHWARTZ, CO-CHAIR, PUBLIC
POLICY PRACTICE GROUP, SHOOK, HARDY & BACON LLP, WASHINGTON, DC
Professor Schwartz. Thank you. Yay. Today is April 9th, and
I'll just mention one personal note. It was my dad's birthday.
He died when I was 10, so I don't want to goof up too much
today in case he's----
Chair Durbin. Sure you won't.
Professor Schwartz [continuing]. Hanging around somewhere.
There's a lot of myths and truths about arbitration. But a
couple of things that I wanted to mention, because I had a
minister named Albert Sikkelee and he taught me, something not
in context is pretext. And you have to put arbitration in
context with litigation, which I know about. I've lived it for
50 years. And I do write a case book that a lot of people have
seen, ``Prosser, Wade and Schwartz.''
The cost of arbitration is far less than litigation. We
have data that showed that it is much cheaper. There is in
litigation a lot of delay. I mean, real delay. It may take a
year, more than a year to get cases heard. Where with
arbitration, you get heard right away. And that's an important,
an important thing.
Claimants benefit because it's simpler. You cannot have to
go to court. Learned Hand said, ``After disease, nothing is
worse than being in litigation.'' And I know what it is on both
sides. You don't have to go to court, you don't have to disrupt
your family. And that is a definite benefit because you work on
your own time.
We'll submit data to show that the amount you receive in
litigation is not less than you would in arbitration or the
reverse. Not at all. And I mentioned the disruption that occurs
with your life in litigation. It's just not good.
And then getting an attorney. Employment cases, it's almost
impossible to get a plaintiff's attorney today unless the
contingency fee is very, very substantial. A $200,000 case,
you're not going to get a plaintiff's attorney, unless he or
she wants to volunteer not on the contingency fee system and
it's proper.
They end up getting 100 dollars an hour and they don't want
that. So you can't get an attorney. And all you've got, is
arbitration itself. There are a lot of things said about
predispute arbitration. There can be debates about it, but this
is just this little fellow's point of view.
They, in most instances, it's really not forced. If you
want to buy a phone, a lot of the phone companies require you
to sign an arbitration agreement. Not all. There often is an
alternative. Or you can say, ``Hey, I don't want to do it at
all.''
Sometimes it's small print in a big long contract, but if
it's too buried and it can't be seen, courts will deem that
unconscionable. They have the power to undo it and they do it.
So if the agreement has things that are just improper, State
courts hold them improper under unconscionability.
About confidence. You can tell any public official about
your agreement, you can tell them the result. Gag orders are
strictly shrunken down by courts. And since this Committee has
held hearings, it's been helpful because more State courts are
doing that. And that is a important thing.
Some people say, we'll do it post arbitration--I mean, post
dispute, that doesn't work. Because each side tries to rig it
in its own way. And businesses don't prevail at a greater risk
at a greater length with arbitration versus litigation.
And I'd be very happy to take your questions. I see the
orange light, and for 50 years I have never gone beyond the
orange light. So I've kept it up. Thank you.
[The prepared statement of Professor Schwartz appears as a
submission for the record.]
Chair Durbin. Well, you're the first witness that can say
that. I thank you very much, Professor. At this point, Ms.
Grace.
STATEMENT OF JOANNE E. GRACE,
REGISTERED NURSE, COLUMBIANA, OHIO
Ms. Grace. Chairman Durbin, Ranking Member Graham, and
distinguished Committee Members, it is truly an honor to be
here. Thank you for giving me the opportunity to tell my story
on how I was wrongfully terminated because of my age and how my
former employer is using forced arbitration to steal my rights,
my voice, and even my dignity.
I started my career as a registered nurse in 1976. I've
dedicated my whole life to others. After working hard for
almost 50 years as a floor nurse, a supervisor, a manager, and
a director, my healthcare system was acquired by Steward Health
System. Shortly thereafter, I became a patient advocate.
I loved being a patient advocate, because it allowed me to
speak up when a patient wasn't being heard. This is the same
purpose for which I am here today to speak for those who are
being silenced with forced arbitration.
When Steward hired a new director of nursing in 2020, the
overt ageism started. What was a second home to me, became a
hostile work environment. Older employees were being replaced
by younger employees. At least once a week, this director of
nursing would say something to me like, ``Why do you want to
keep working at your age?'' Or, ``Why aren't you retiring?''
She openly talked about my age and even a medical condition in
meetings just to embarrass me.
HR dismissed my discrimination. You know what HR told me?
They called me an old warrior. ``Joanne, you're an old
warrior.'' Old. Old. Why would an HR representative feel so
brazen and so shameless as to outright call me old to my face?
When I was out of work with COVID-19 Steward posted a new
supervisor job online. The job description made it very clear
to me that it was my position, just with a different title. Two
days after I returned to work, one position was ``reduced.''
One position. It was mine. Because my position legally needed
to be filled, the hospital hired for that supervisor position,
someone in their twenties who did not even meet the minimum
experience requirements for a supervisor.
My reduction was a lie to force me out. I was devastated.
In getting rid of more experienced nurses like myself, the
hospital was putting patient safety at risk. I hired an
attorney to sue Steward for age discrimination. It is not about
the money. I love being a nurse. I want to protect other nurses
and keep patients safe. I hope that my lawsuit can effectuate
that change.
Steward moved to higher my lawsuit by forcing us into an
arbitration agreement. Even though I had never signed any
forced arbitration agreement, they, my employer, pointed to my
name on an Excel list as having attended a training about
arbitration. I didn't even attend that training. They said that
by continuing to work after that training session, I lost my
right to hold them accountable in court.
The wickedness did not stop there. This so-called forced
arbitration agreement further rigs this process by allowing me
only to call one witness from Steward and limits me to calling
on and asking for 25 documents. In court, I could depose the
director of nursing, the HR representative, those
decisionmakers, and all the witnesses that witnessed my age
discrimination.
In a forced binding arbitration, I can only call one
witness. They claim this agreement allows the employer to pick
the pool of potential arbitrators, which is mainly defense
oriented attorneys. This means that a defense-oriented attorney
is going to decide my case. If I somehow make it through this
rigged process and win, no one will know, and no change can
ever happen.
As long as Congress allows companies to sweep
accountability under the rug, they will continue to do just
that. I hope you now understand why an HR representative felt
so brazen and shameless to call me old. The ability to use
forced arbitration empowers companies to violate the law while
hurting nurses and patients. As more older Americans remain in
the workforce, our rights need to be protected. Older workers
should not be forced into retirement, nor into forced
arbitration.
Chair Durbin, Ranking Member Lindsey Graham, Committee
Members, thank you for listening to how allowing forced
arbitration really has destroyed my dignity. Legislation is
needed to end this practice, and I'm happy to answer any
questions that you may have.
[The prepared statement of Ms. Grace appears as a
submission for the record.]
Chair Durbin. Ms. Grace, thank you for being here. On
behalf of an institution filled with seasoned warriors, we
stand shoulder to shoulder with you in this effort. And thank
you for telling your story for all of the country to hear. It's
very important.
I take it from what you said, you never signed, checked a
box, or in any way indicated that you were part of any forced
arbitration agreement?
Ms. Grace. No, I did not. And in fact, I as part of
management at the director level through part of Steward Health
acquisition, I saw other people go who were older. They signed
the arbitration paperwork. At the end when they were
terminated, in return for some kind of monetary agreement that
they can receive, it was not--I never signed that, and I would
never advocate for anybody to sign that.
Chair Durbin. Professor Schwartz, this is a legendary
moment in my life. Now I have discovered a man who is the
author of ``Prosser on Torts.'' One textbook which I purchased
in law school at Georgetown, quite a few years ago. I was
impressed not only with the contents, but by the weight of that
book. I carried it around all year trying to learn from it, and
I salute you for being the co-author of one of the most famous
legal textbooks in America. I'm glad to learn you did this.
May I ask you, following up on the question with Ms. Grace.
Recently----
Professor Schwartz. Oh, I just want to thank you, sir. I
can tell you one thing about that book you may not know. If you
put it on the floor in your kitchen, you can reach the top
shelf. A lot of people do not know that.
[Laughter.]
Chair Durbin. That's good practical advice. Recently, a
company called Roku, which is a streaming service, updated its
dispute resolution terms. I pulled out the contract which they
offer to people who wanted their services.
Despite not providing a description of what terms changed,
the company wouldn't allow you to continue using a Roku device
to stream your favorite shows unless you agreed to the terms on
this contract. Assuming a user took time to read them, and
they're pretty simple, they say, ``Any disputes between us,
meaning the consumer, and the company, will be settled by
binding arbitration ``meaning we both give up the right to go
to court.''
Let's walk through what it takes to opt out of that
provision in their contract. ``You cannot opt out by email.
Instead, you have 30 days to mail a letter to Roku's general
counsel. The letter must include the name of each person opting
out, their contact information, the specific Roku product,
models owned, the software and the product, the software in the
product, the services at issue, the email address you used to
set up your Roku account, and if applicable, a copy of your
purchase receipt. Opt out notices submitted in any other way,
including email, are considered ineffective.''
When you hear Ms. Grace's experience where they're trying
to impute or infer that she's signed up for arbitration, and
you see the rigamarole you have to go through at Roku to get
out of it, Professor Schwartz, do you think that this is a
contract that should be honored?
Professor Schwartz. I'm sorry, sir. Could you repeat the
question, please?
Chair Durbin. It's a long question.
Professor Schwartz. Right.
Chair Durbin. I'm asking about the Roku company that has a
forced arbitration agreement, and to opt out of it, you need to
send an elaborate number of communications specified in a
manner that they accept. And you've heard Ms. Grace sitting
next to you talk about what she went through, where it was
inferred that she had signed this agreement. Can you comment on
that aspect of forced arbitration?
Professor Schwartz. I think that forced--some people call
it forced--but in that situation with age there should be an
opt out. Age situations are different than your regular
purchase of a product. And I think that it's an area where
carefully drawn rules should regulate such contracts.
And in fact, in general, I would say to you, Senator, that
this is an area where it's hard to find rules in the abstract.
Having Federal regulation of these arbitration agreements, I
think is a sound step to do, rather than leave it to the whim
of State courts. Because some of the agreements may be unfair.
They may be unfair with Ms. Grace, but it's very hard to do
that in the abstract without specific knowledge of the specific
contract.
So I'm suggesting a consideration of having regulation at
the Federal level of these agreements, especially in areas of
controversy like age, military, children, nursing homes.
Chair Durbin. Thank you. Senator Graham.
Senator Graham. That idea of, you know, some kind of
regulatory scheme, we'll see where that takes us. I think it's
a good suggestion to the Committee.
Ms. Grace, did you find it more of a common practice that
the older you got, the more scrutiny you were under in terms of
your employer?
Ms. Grace. I did, sir. In the prior hospital system that I
was at before it was bought----
Senator Graham. What's the difference between your salary
and the person that they hired to take your job?
Ms. Grace. Much less. Because they hire by experience. And
my salary was as a patient advocate, $38 an hour, which is good
money for a nurse. That supervisor probably who took on my job
probably was making $25.
Senator Graham. Okay. Professor Gilles, in the age
discrimination area, is it one of the common themes here that
replacing an older employee with a younger employee saves
money?
Ms. Grace. Yes, because they believe it's been a long time
belief in healthcare that----
Senator Graham. No, I'm talking to Professor Gilles. I'm
sorry.
Ms. Grace. Pardon.
Senator Graham. I'm directing this question to Professor.
Ms. Grace. Oh, I'm sorry.
Senator Graham. Sorry. Yes, my bad.
Professor Gilles. Excuse me. But I'm going to continue with
what Joanne has just told us. Yes. I mean, the idea is that
younger workers can come in more cheaply. Seniority, you know,
as many of us know, each promotion gets you more and more
money.
So if you can get rid of those expensive, older,
experienced workers and call it sort of a worker reshuffle and
hire younger workers with less experience, you can do some more
cheaply.
Senator Graham. The idea of going to court and the burden
is still on the plaintiff, right?
Professor Gilles. Oh my gosh, yes. I mean, let's not
pretend here that getting rid of forced arbitration means that
everybody's going to walk into court and get a check, you know,
once they walk into court. The Federal judicial system has
tremendous amounts of tools for Federal judges to use to make
sure that the cases before them are valid, are meritorious, and
they use them on a daily basis.
Senator Graham. I think Rule 11 is one of those tools,
right?
Professor Gilles. Well, that's one of those tools when we
think that something has gone awry. But I would say that Rule
8, that tells us that, you know, you have to be able to plead
your case in a way that shows that there's an actual there,
there. That's a meaningful rule.
Rule 12(b)(6), which gives the victor the opportunity to
represent his clients by seeking to dismiss claims that they
think lack legal merit. So, a ton of stuff that lawyers and
judges do to ensure that the system of laws operates the way
that we want it to.
But forced arbitration basically says, let's just forget
all that and forget all those cases and shunt them into a
private system. So I think that that's the real problem here.
Senator Graham. Ms. Grace indicated that she could only
call one witness in the arbitration setting. Is that common?
Professor Gilles. Oh, I'm sorry. I'm sorry. You were still
asking me?
Senator Graham. Yes.
Professor Gilles. Yes. So the arbitral providers really
limit discovery. That is one of the ways in which they can
promise to their repeat clients that they will not have to
spend very much money and not have many of their corporate
executives have to sit down for depositions. So, yes, my
understanding is the very tight limits on discovery.
Senator Graham. Well, thank you.
Mr. Chairman, I think the Protecting Older Americans Act, I
hope the Committee will take it up and we can pass it. And to
Professor Schwartz, I think your idea about some Federal
guidelines in this area makes some sense to me, and I'd like to
continue this discussion.
There is a place for arbitration. I'm not against
arbitration as a general concept. I just think the idea of
leveling the playing field and the kind of services you seek
matter. The more sophisticated the service, you know, the more
level the playing field would be in my view.
So, at the end of the day, basic consumer engagements, we
need to make sure that people are not left out to dry. When it
comes to sexual harassment, age discrimination, and other areas
of our lives, that people have a chance to have their day in
court. But generally speaking, having arbitration is a good
thing.
I think it, it is cheaper, it is more efficient, but there
are circumstances where it really doesn't render justice. And
that's what I'm looking for is try to find that balance. Thank
you.
Chair Durbin. Thanks, Senator Graham. Senator Whitehouse.
Senator Whitehouse. Thanks very much. And thank you all for
being here and for supporting this, I think, important cause.
The Chairman mentioned the important role of the Seventh
Amendment just as part of our Constitution, but you can go well
back before the Seventh Amendment to Blackstone's commentaries,
speaking about how the jury, the glory of the English legal
system, which we inherited, had the benefit of being a bastion
against the influence of the powerful and more wealthy--he used
the word citizens. Now, I would say forces because our most
powerful and wealthy influences right now tend to be corporate.
And so you can see the reason why corporate America would
like to get out from the jury system. It's the place where you
can't fix things. You can come to Congress and you can shower
money around and send lobbyists all over the place. You can
help presidents get elected and get favored treatment in the
Oval Office.
But you try to pull stunts with a jury and you go to jail
for jury tampering. And we've seen over and over again cases in
which an honest courtroom has been the solution to lies and to
bullying that were protected in the political space. So there's
a lot going on when the Supreme Court tries to disable
Americans' right to trial by jury and allow corporations to
seize it and shunt them to binding arbitration.
Professor Gilles, this has had particular impact in the
area of the high-volume, low-dollar frauds that are really only
economically answerable by class actions. Could you talk a
little bit about how the power to take away jury rights and
force citizens into mandatory arbitration has impacted the
ability of corporations to get away with low-dollar high-volume
fraud?
Professor Gilles. Sure. I mean, and this is the very reason
we're here, right? Because as the CFPB found in its 2015 study
of forced arbitration, most arbitration provisions combine a
class action ban, right? So the idea is, we would prefer these
companies say not to be responsible or accountable for, as you
describe it, Senator small per plaintiff injury.
So we can sort of spread the pain around lots and lots of
individual Americans, and most of them are never going to
individually arbitrate those claims because it's simply not
worth it to do so, right? If you and I were----
Senator Whitehouse. Let's say you add a fake $15 fee onto
all of your customer's bills, you might get some calls
complaining, in which case you reverse it. But for the others
you just bill them, but nobody will stop you because it's not
worth anybody to go and hire a lawyer and litigate over a $15
fee for them. But if you have 2 million customers, that's $30
million that just robbed from the public.
Professor Gilles. Exactly, yes. And this is why the
adopters of Rule 23 in 1966 decided that there needed to be a
procedural pathway to allow small dollar claims into the court
system, otherwise, corporations could run roughshod over all of
our rights. And as you say, most of us would never even notice
the $15 overcharge.
And so it's really important to see that right now
companies could be doing so many things, so many illegal things
along the edges that are simply falling through the legal
cracks, because class actions are impossible to bring, where a
forced arbitration clause is in effect.
Senator Whitehouse. And compared to the elaborate and well-
developed procedural and substantive provisions that make sure
a courtroom is fair, how has it worked out in arbitration
chambers?
Professor Gilles. Well, that's a complicated question, but
I'll give you a few bullet points. First off, and I just want
to disagree with my esteemed colleague Victor Schwartz.
Arbitration fees are dramatically higher than court fees.
They're just higher. Arbitrators are paid a daily rate of
somewhere between $1,000 and $2,000 an hour. Individuals do not
have to pay judges to hear their cases.
The arbital provider is picked by the very company that the
worker or the consumer is complaining about. So I just want you
to think, most of you in this room are lawyers, imagine if you
could just pick your judge, right? So the repeat player bias
there should not surprise us.
Third, as you mentioned, Senator Whitehouse, the
arbitration clauses that we're seeing prohibit all forms of
collective action, right? So, any form of collectivization,
which means that for most people, that's, it's simply not
viable.
We've talked about this with Ms. Grace, the rules of the
arbitral bodies limit discovery and other attempts to obtain
evidence. They do not employ the evidentiary rules and have
very limited appellate rights, as in, almost zero appellate
rights.
So for all of these reasons, we're talking about systems
that were created by companies and look exactly like what a
company would create. A system that protects them and doesn't
protect the rest of us.
Senator Whitehouse. Mr. Chairman, I'd just add that, back
when I was Attorney General, one of my attorney general
colleagues brought an action against one of these arbitration
offices and caused them to shut down because they had been so
crooked in their manipulation of the outcomes against the
individuals and in favor of, in effect their corporate clients.
So there's a long record here, and I appreciate your attention
to this matter.
Chair Durbin. Thank you, Senator. Senator Cotton.
Senator Cotton. Thank you all for appearing today. Mr.
Schwartz, I have a series of questions I want to ask you just
to establish some baseline facts about arbitration. But since
the professor just mentioned you by name for disagreement,
would you like to respond----
Professor Schwartz. Yes.
Senator Cotton [continuing]. On the disagreement with you
that arbitration, I think she said, arbitration fees are higher
than court fees.
Professor Schwartz. I'll submit the rules of the American
Arbitration Association. The payment is not more than $300, and
there's one way fee sharing. If you win the arbitration, your,
all your fees are reimbursed. I will submit the rules to the
Committee, and I'd be happy to send a copy to the professor so
she can look at the rules of the American Arbitration
Association.
Senator Cotton. You said $300. Is that $300 a day?
Professor Schwartz. No, it's an immediate fee. That's it.
And I will submit the rules to the Committee. The rules don't
lie, but people can speculate about them. Take a look at them,
Senator.
Senator Cotton. Okay. Thank you. Now, I want to go through
these questions that I have just to establish some baseline
facts. The point of having a court system, Professor Schwartz,
is so that people who have been wronged can have a fair and
efficient system here and decide their claims, correct?
Professor Schwartz. That's right.
Senator Cotton. Are State and Federal courts backlogged and
overburdened----
Professor Schwartz. Yes, they are.
Senator Cotton [continuing]. A matter of cases right now?
Professor Schwartz. Before COVID, they were backed up. Now
it's about 18 months until you can have your case heard.
Meanwhile, you have medical expenses, you have other situations
where you can't work, where arbitration can be heard much more
quickly, sir.
Senator Cotton. Okay. Is it true that arbitration is
typically faster at resolving those claims than taking some of
those claims through the court system?
Professor Schwartz. We can submit information to you and
it's much, much faster. The courts are delayed in jury picking,
and I want to mention something about class actions because
this Committee should look into how class actions are used. In
many situations, the lawyers end up with quite a bit of money,
and the members of the class don't. And I see this every year
where they're willing to settle, and frankly, sometimes defense
lawyers settle because they want to get rid of the case. And
the ones who get the benefit are the lawyers and not the
victims who are supposed to be helped in the class.
So this Committee looks at different things. Class actions
should have their original purpose of Rule 23 and not be
abused.
Senator Cotton. Plaintiffs in arbitration can recover the
same kinds and amounts of damages that they would get in a
court?
Professor Schwartz. We'll submit information that that is
true. Stanford study shows the amount of damages don't vary
between arbitration and court.
Senator Cotton. So academic studies show that the amount of
recovery does not vary, it's not materially different between a
court and an arbitration?
Professor Schwartz. Stanford study, which is respectable,
shows that.
Senator Cotton. Is it true that arbitration is more
flexible than the court system, for example, that arbitration
can occur at anytime and anywhere that's convenient for both
parties, rather than a courtroom on the judge's schedule?
Professor Schwartz. For people with regular jobs, it is
much better with people, with families. Dragged into court is
no fun. This can be done at a nearby place where people live at
a time that's convenient for their job. And so I appreciate
that question.
Senator Cotton. And, and claimants in arbitration, they can
have a lawyer, they can get discovery, they can get relevant
materials necessary to prove their claim?
Professor Schwartz. Yes. Discovery is lengthy, costly, and
disruptive of one's life. That's for sure. Because I've been
involved in that for years, and I don't want to be the on the
wrong side of that one.
Senator Cotton. There's also been a lot of talk about NDAs,
non-disclosure agreements, or secrecy agreements. Just to be
clear, that arbitration agreements and non-disclosure
agreements are not the same thing, correct?
Professor Schwartz. That's correct. Non-disclosure
agreements are a separate piece, and they're used in
litigation. When you settle a case, you sign NDAs, but you
can't muzzle somebody from giving the results of arbitration or
complaining about it.
Senator Cotton. Okay my time is almost up, but it sounds
like from your testimony, you believe that arbitration is less
expensive and faster than Federal courts. That claimants tend
to do just as well as they do in court. They can make their own
decision whether to publicize or talk about their claims, and
that in general, they're going to do better, based on your
earlier testimony too, relative to what they would in court
versus what the lawyer can take of their cut. Is all that
correct?
Professor Schwartz. From a practical reason, and it is
important to remember that with many of these disputes today,
you can't get a lawyer. So an employee who has a case that's
$100,000, lots of luck from them getting a lawyer, because the
contingency fee system doesn't provide an adequate reward for
the plaintiff's lawyer.
It's either arbitration or nothing. It's not comparing it
to the court. I have made that point in my testimony, but I
think it's important that it be in the record, sir.
Senator Cotton. And this is why, as the Supreme Court has
acknowledged, that Federal law and policy has generally been
favorable toward arbitration, going back almost a hundred years
now to the passing of the Federal Arbitration Act.
Professor Schwartz. Surprisingly, it's an area where the
court's been in agreement. You know, they fight each other
quite a bit, but in this area they've respected the Federal
Arbitration Act.
Senator Cotton. Thank you.
Chair Durbin. Senator Klobuchar.
Senator Klobuchar. Thank you very much Senator Durbin, and
thank you to the witnesses today. I'm going to focus--I welcome
Gretchen Carlson from the Great State of Minnesota. And I'm
going to focus my questions today on antitrust.
And Professor Schwartz, I wrote a book on this that also
can help you step on it to get to the top shelf. I'm going to
ask Professor Gilles questions on this front because I think
it's important thing that hasn't been touched on yet. And I'm
Chair of that Subcommittee, work with Senator Lee on this
extensively, as well as Senator Grassley.
And I'm concerned that some of the forced arbitrations are
frustrating the purpose of our antitrust laws. Like I noted
during one of the hearings on the topic in 2019, I was and
still am disappointed to see that the Supreme Court allowed
American Express to force arbitration, even though doing so
would make it difficult to enforce the law.
In her dissent in the case, Justice Kagan wrote that the
forced arbitration provision in the employee's contract with
American Express violated the Sherman Antitrust Act by
depriving parties of a chance to challenge alleged monopolistic
conduct. Meanwhile, large companies were able to negotiate
better fees or arbitration clauses than smaller companies who
are still forced into arbitration clauses.
You testified, thank you, both in 2019 and in your
testimony today, that forced arbitration interferes with
antitrust and other laws. Could you elaborate on that?
Professor Gilles. Thank you, Senator. I'm happy to. At that
hearing, you might remember Alan Carlson the chef owner of
Italian Colors restaurant, the named plaintiff in American
Express v. Italian Colors, testified, I think--I mean, it was a
striking piece of testimony. He told us that other companies,
Walgreens, CVS, Safeway, were able to take American Express to
trial because of course, they have a tremendous amount of
market power.
So American Express could not bind those large companies to
forced arbitration clauses, whereas it did so for all small
businesses, including his restaurant, which meant that he could
not actually hold American Express responsible for these
antitrust--for the alleged antitrust violations.
And I think that, you know, when we think about small
businesses as you all do all the time, small businesses do a
tremendous amount for this country. And one of the things they
do is they enforce laws, just like consumers and workers do.
And they are often at the front lines of enforcing antitrust
laws because they are often victims of antitrust violations, of
anti-competitive behavior, which is what that case was all
about.
Senator Klobuchar. Exactly. And as we're seeing more
consolidation in such a big way, and we're seeing issues as we
all know with the tech companies, unfortunately, we've been
stagnant here about changing those antitrust laws. We've gotten
a number of bills through Committee, and I appreciate the
Chairman's leadership on that.
They're all bipartisan every single one of them, but
they're sitting there, and we had one victory at the end of
2022 to get more funding for the agencies given these huge
cases, especially involving Facebook and Apple and Amazon and
Google. And we got that done.
Senator Grassley and I did a change to the merger fees
which was estimated for this year about 50 million more
dollars, less merger fees for small mergers, bigger ones for
big mergers. And then like poof we passed it 88-to-8 in an
amendment, and then the money disappeared under some rock in
the Federal Government.
And for the first time in 25 years, did not go to the
antitrust division of the Department of Justice, after an
attempt was made to delay them from getting the fees. What is
this whole story about? It's a pretty outrageous story, which
I've said, and I've been promised this is going to change in
the future, but it's also about the importance of private
enforcement of the antitrust laws. And I just want to make a
case for that.
But I do want to end with Ms. Carlson who I've known for
quite a while. And just asking about what you said in your
testimony that the law we passed, and I thank my colleagues for
their leadership, about ending forced arbitration of sexual
assault and sexual harassment becoming law in December 2022.
You stated this law is already making a significant impact in
the lives of countless survivors. Can you describe in more
detail the positive effects of this law?
Ms. Carlson. Yes. Thank you so much, Senator Klobuchar, and
always great to see you from our great State of Minnesota. I
mentioned Kirsten Tiger. She was a bartender at a prestigious
country club who was harassed by multiple members, allegedly,
as well as by a security guard there allegedly.
And still employers are trying to force victims of sexual
misconduct into arbitration because the onus is upon the
employee to understand that this law has passed and that they
do not have to go to arbitration. So I have not specifically
spoken personally to Kirsten, but I speak to women every single
day who say, ``My company's still trying to force me into
arbitration.'' And I say, ``They can't do that anymore.''
So Kirsten's is a case of that they went to a judge, her
company filed a motion to compel arbitration, and the judge
denied it specifically because of this groundbreaking law that
had passed. A judge in Texas recently, Blaze Media tried to get
a motion to dismiss against one of their employees, Sydney
Watson, who alleged harassment allegedly by her co-anchor over
a span of time. And that was also denied because of the law.
So what I have found over the last 2 years is that the
biggest and the most important thing after passing this law is
to educate people about it, because companies probably are not
going to willingly tell you that you no longer have to be
forced into arbitration for sexual misconduct.
And this is why it's so important for me to, to pass the
Protecting Older Americans Act as well. Because it's my goal to
be able to protect all human rights violations that happen at
work, including Senator Booker's bill with regard to race
discrimination and forced arbitration and any other protected
class.
After my experience at Fox News and what I had to go
through, and respectfully Professor Schwartz, nobody would've
ever known about my story if I had been forced into
arbitration. Nobody. And we arguably would not be in the #MeToo
movement right now if that had happened to me. And so if that's
not a compelling story enough to understand what happens with
the secrecy of forced arbitration, I don't know what is. But
it's time to do it for other people who are having their human
rights violated at work and being shoved into secrecy.
Senator Klobuchar. Thank you.
Chair Durbin. Senator Blackburn.
Senator Blackburn. Thank you, Mr. Chairman. And thank you
to each of you for being here today and for this hearing. And
Mr. Chairman, I'm so pleased that you mentioned the Ending
Forced Arbitration of Sexual Assault and Sexual Harassment Act.
That is something that Senator Gillibrand and I put a good bit
of time into. It was a strong bipartisan effort, and it is
something that was needed.
Now, I fully appreciate what it's like to be a female in a
man's world. And I had great experiences, whether it was the
Southwestern Company, the Castner Knott Company, or people that
I did contract work for, and I know not everybody has that. And
so, making certain that women were not going to be isolated and
did have the ability to tell their story and to achieve what
they feel like is justice, is something that is important.
And of course, Ms. Carlson, we just thank you for the work
you did on that bill, and also, the Speak Out Act, the fact
that those efforts have been invaluable. And I do think,
though, as I sit here and I'll look at this issue, I agree with
Senator Cotton, that there is a place and a role for
arbitration.
And as he went through his questioning with you all, I know
that it has been used as a beneficial tool, to be certain that
you don't get trapped into lengthy and costly litigation. So I
am appreciative of that. And I have to say, as we look very
carefully at this, I am not in favor of expanding this
prohibition on arbitration beyond that unique context that we
found with sexual assault and harassment.
So while I'm glad that we prohibited forced arbitration
agreements in those limited circumstances, I think we have to
be very careful as we look at something that would expand these
prohibitions. And I am so pleased that we have had the
opportunity to hear from you all and to have this discussion
today.
And Ms. Carlson, I agree with you that education to women
when it comes to sexual harassment education, to employees on
that prohibition and the opportunity that they have for that
self-protection, is something that's important. So thank you
all for being here. Mr. Chairman, thank you.
Chair Durbin. Thank you. Senator Hirono.
Senator Hirono. Thank You, Mr. Chairman, for having this
hearing. After the Supreme Court's decisions that pretty much
said arbitration clauses are okay, and that the 1925 Federal
Arbitration Act would have basically the force of law, which it
was.
But I'd like to ask, is it Professor Gilles? Is that how
your name is pronounced? Yes.
Professor Gilles. Yes, it is.
Senator Hirono. So isn't it practically legal malpractice
not to counsel your corporate clients to have arbitration
clauses in their employment contracts to cover just about every
dispute that could arise?
Professor Gilles. I think so. I tell my students that. I
tell them, ``If you go out into practice and you're working in
big law, you should make sure you put in a forced arbitration
clause.'' Obviously, that's a statement against interest, but I
do believe that at this point, it's probably the best way for
corporations to immunize themselves from all legal liabilities.
Senator Hirono. And this is why we in Congress find
ourselves describing certain kinds of complaints and
allegations that should be treated differently and not have
forced arbitration applicable to them. Which I think is, maybe
not quite the way to go, because there are--yes, in the case of
sexual assault, these are instances where it is very difficult,
as we have heard from Ms. Carlson. And thank you, Ms. Carlson,
for your advocacy and leadership to bring to light how
difficult it is for people who experience sexual harassment,
sexual assault in the workplace to come forward.
And there are many other instances where it is very
difficult for people to come forward to lodge their complaints.
So Professor Gilles, do you or any of the other people on the
panel--thank you all for testifying--do you have other
instances where you think that forced arbitration clauses make
it very difficult for complainants to even come forward?
For example, in the instance of hate crimes within the
workplace, if there's forced arbitration, there could be
retaliation. There are various things that could happen. I led
our effort to pass the COVID Hate Crimes Act 2 years ago,
realizing that hate incidents are very difficult to be
reported.
So anyone want to weigh in on other examples of behaviors
where forced arbitration should not be applied?
Ms. Carlson. I will, Senator. Thank you so much.
Senator Hirono. Go ahead.
Ms. Carlson. I think it that this boils down to the fact
that people don't have the right to decide for themselves
what's best for them. When you have forced arbitration, the
decision's already been made for you, and the operative word is
forced. If it's so great, why is it forced upon you?
Every study shows that the majority of Americans, when
they're explained, when they understand what arbitration is,
they disagree with it, because they want to be able to make the
choice for themselves, whether or not they choose to seek
accountability or not, they at least want to have that choice.
Senator Hirono. And generally, in the arbitration instance,
it's in the employment contract. Who selects the arbitrators or
the chair of the arbitration panel, or however? Who makes those
decisions? Anybody?
Professor Gilles. The company does, right? The company
writes the rules and they write the rules in a way that's most
beneficial to them, which of course is what we should expect.
Senator Hirono. What if in an arbitration situation that
the law requires that the parties involved get to select their
own arbitrators, and possibly the arbitrators selected then
select a chair? Would that make the process fairer?
Professor Gilles. No, I don't think it would, because the
truth is that companies like the American Association for
Arbitration jams, these are the big platforms that provide
arbitration services. They have a sort of a stable of ex-judges
and ex-defense lawyers. And these are people who even if I
could, even if right now I could, you could give me a list of
all of them, I wouldn't know who among them to choose.
If I have a strike list and I can strike people off that
list as an individual, I don't know who to choose. Whereas the
company as a repeat player knows exactly who the right
arbitrators are to choose. So the power imbalance continues,
even if you have a system where there's choice, if we're going
to call it that, among a group of basically corporate minded
potential arbitrators.
But I, I want to give you one example, Senator, if you
don't mind. Brian Flores, who is the NFL coach, who was fired
he tried to bring an arbitration along with a number of other
NFL coaches who are fired alleging race discrimination.
And get this, it's not surprising, the NFL's arbitration
clause says that the sole arbitrator is Roger Goodell, the
commissioner of the NFL. I can't imagine anyone who would be
less likely to find for Brian Flores or any of these Black
coaches than Roger Goodell. Not because--I'm saying nothing bad
about Roger Goodell, I've never met the man--but let's be
honest, he basically works for the teams. So how could he
possibly be unbiased in a case of race discrimination brought
by former coaches? And I think that's essentially what we're
seeing across the board.
Senator Hirono. Do you think it's time to revisit the 1925
Federal Arbitration Act?
Professor Gilles. Well, I think you did revisit it when you
amended, with Gretchen's help, amended the statute to add
EFASASHA, which showed by the way that a hundred-year-old
statute can withstand some congressional tinkering. So I
congratulate you for that.
I think you should. I think the Fair Act that Senator
Blumenthal has proposed, would essentially amend the statute to
say that it does not apply to predispute forced arbitration
provisions imposed upon consumers, workers, and small
businesses.
Senator Hirono. Yes. We've just been picking of different
parts of behaviors, so it's probably time to look at the whole
statute. Thank you, Mr. Chairman, for letting me go over.
Chair Durbin. Thanks, Senator. Senator Booker.
Senator Booker. Thank you, Mr. Chairman. And I'm just so
grateful for this panel and for the conversation that has been
had today. I have always had this reverence for the American
justice system, it's ideals and its values, and it's unique the
principles we put forward when you travel the world and see how
the rights and protections that our founders believed in, and
this simple ideal, that justice should be a place where it's
balanced, where justice is blind.
And what a lot of my career has been about living in a low
income Black and brown community, is seeing, I think what Brian
Stevenson once said, that unfortunately, the reality is you get
better justice in America if you are rich and guilty than if
you're poor and innocent.
And then comes the areas of employment law and seeing how
the power of corporations has grown so dramatically. I'm often
stunned at the levels of lobbyists that are down here
advocating and fighting for things that will protect corporate
power. But yet many of the people who are workers are losing a
lot of their access to a balanced and fair system.
The work that's been done in this space has been
extraordinary. And Ms. Carlson, you are heroic in my office.
But more than that, you and the work that colleagues of mine
have done for what now has been 2 years ending forced
arbitration for sexual assault, has transformed the culture of
our country.
And I think that's really important, this idea of what
actually changes cultures in workplaces, cultures that are
toxic, cultures that are demeaning, cultures that are breaking
laws, but more important, violating our values of human
decency. And now that you've opened that up and been able to
find ways, not just to get individual justice, but to expose
these cultures to the light, to the disinfectant power of light
is extraordinary.
And so what might be justice for one person in a
discrimination suit actually affects millions of people in
terms of what is a healthy culture. And all of the naysayers
and the doomsayers who said that this was going to result in
clogging up courts and, and exorbitant costs and dragging out
disputes, is just because it's not true.
Corporations will find it cheaper to create cultures that
are nourishing and nurturing, not just to their bottom line,
but to the employees that there, it's far cheaper to go that
direction and correcting those cultures and allowing them to
continue. And so, this, to me, has been really exciting to see
this change.
But Ms. Carlson, what has really made people in my office
feel such gratitude, including myself, is the fact that you've
said basically that you're not going to stop. ``I will not
stop,'' you said, ``until we achieve the same rights for
workers who have faced discrimination based on race, age,
disability, gender, and sexual orientation.''
In other words, forget all these lines, race, age, it's
just justice. It's a matter of having justice. And Professor
Gilles was talking about the examples of race discrimination
that are so similar to the stories of discrimination in other
areas, you know are stunning to me. And I could go through
them. You brought up the NFL example. The stories I've heard
from Tesla, for example, from Black workers, have been
shocking, should shock everybody who believes in basic virtues
and basic human decency.
And so, just Ms. Carlson, if you could just--why is this so
passionate for you having achieved such an incredible change to
still be in the trenches working to make sure it's affecting
all workers?
Ms. Carlson. Thank you so much, Senator Booker. I believe,
because I don't believe that forced arbitration was ever
supposed to be used to adjudicate human rights violations. You
know, it was for small business disputes, and it was to unclog
the court systems for, you know, if I knocked over my
neighbor's fence and we're talking about 300 bucks, that's, you
know, let's go to arbitration, right? Why should we clog the
courts?
But not when somebody's racially discriminated against, not
when somebody's sexually assaulted at work or let go, like
Joanne, because she happened to be seasoned, right? And you
brought up a really interesting point that I just also want to
echo, which is, part of my hope in passing such landmark
legislation was that it would actually change the culture as
well. And you know why that happens? Because the power pendulum
is like this, when you have forced arbitration, here's the
company and here's the employee.
But if you give this person voice, and this person knows
now, and so does this person, that you can't be forced into
silence with forced arbitration, the behavior may also stop.
And that, to me, is the most gratifying part of this whole
experience, is knowing that we might actually start to change
culture as well as changing laws.
And I've said this before, and it's a very profound
statement. Changing culture in the most hyper political time of
our generation is more difficult than passing bipartisan
legislation.
Senator Booker. And Ms. Grace, I want to end with a
question with you, but Ms. Carlson, just to say to you, the
stories of humiliation and real financial catastrophe that has
happened from people who've been discriminated against, is so
agonizing to know that there are thousands, hundreds of
thousands of Americans still dealing with this. And for us as a
Senate to parse out, well, this time we'll deal with age, this
time we'll deal with--as opposed to everything, is astonishing
to me.
But Ms. Grace, I was hoping you can just end for a second
and just say, what would it have meant to you to have the
choice to decide whether to go into arbitration or have your
day in court? And when she finishes, I will yield.
Ms. Grace. Well, first of all, I think that having worked
as long as I did in a particular field, you develop a real
trust.
Chair Durbin. Could you make sure your microphone is turned
on and in front of you? Thank you.
Ms. Grace. Okay, I'm sorry. I think if you work in a field
as long as I have in one field, you develop a trust in your
corporation, in your organization, that they will do right by
you because you've given your whole life to them. And when you
find out that that's not the case, then I think I want to have
a right to say to other older Americans, you got to watch your
own back. You got to make sure that they're not going to do the
same thing to you that they have done to me.
And that of just blinding me, of not allowing me to speak.
Because I think that that employees everywhere, older Americans
that deserve the right to vote, they deserve the right to make
their own--I'm sorry, to have their own representative or to
give their voice, can't do it because we're old, older, and we
can't--honestly, we just can't do it ourselves. We need to have
the help.
That's when they offer arbitration. And arbitration is just
a means not to change anything, but to hide everything. It's a
form of secrecy to me that shouldn't have to exist in our
country. Because if there's fairness on behalf of the
corporation and to the employee, as I've been faithful to them,
why would they do that to me? They wouldn't.
It would just be a more, as Gretchen said, it would be an
even play. But if we're down here and they just decide at their
whim, we're going to get rid of her for somebody younger, I can
understand that they might think it's more efficient to have
somebody that they can pay $25 to an hour instead of $38 an
hour. But particularly in fields like nursing, you get what you
pay for.
And the older person often has the wisdom, the knowledge,
that a younger person can't possibly have yet. It takes years
of experience to develop that. And what we know directly
reflects to our patients and their safety and their health. So
we affect a lot of things just as a nurse. And you're telling
me that, ``I'm just going to get rid of you because we have
somebody younger, somebody that we know that we want to slide
in here.'' And I don't have a voice to say, ``Wait a minute,
this isn't fair.''
And other people seem to know it's not fair. This is
America. My parents were both World War II veterans. They
taught me to work hard. They taught me everything about America
was wonderful. My mother was an immigrant from Russia, Poland.
So to say now that the justice system can just tie our hands
behind our back and our, we're not allowed to speak, and they
take our voice away, to me, that's not America anymore.
And I just want to see that come back. And if we can start,
as they started with sexual harassment, I think older
Americans, they've given their lives for this country, for
their community, for their corporations, and they deserve just
to have an even playing field back.
Chair Durbin. Thank you, Ms. Grace. Senator Tillis.
Senator Tillis. Thank you, Mr. Chairman. Ms. Carlson, it's
good to see you. When did you first come before this Committee?
Ms. Carlson. I don't know if I've ever testified actually
before this Committee. But I've talked to you about supporting
my legislation. I have testified before house judiciary before.
Senator Tillis. Okay. And how long ago was that?
Ms. Carlson. I believe I did it twice. I did it in person
before COVID, and I did it virtually during COVID.
Senator Tillis. I know it was some time. For some reason I
thought you came before Senate judiciary, but----
Ms. Carlson. Well, I've been here. I've been here waiting
and watching for the votes.
Senator Tillis. Maybe I've seen you here.
Ms. Carlson. Of course, yes.
Senator Tillis. I appreciate your tenacity, but it makes a
point. I mean, you're still trying to accomplish what you set
out to accomplish years ago, and there hasn't been any
progress.
So I'm wondering, Professor Schwartz, I was here for the
video, and I have to say that, you know, for people making
employment decisions, you need to know whether or not a firm
requires binding arbitration or not, let that be. You may have
a right to due process, you don't have a right to a certain
employment contract because the employer gets to set the terms.
I hate to make that in cold hard terms, but that's the reality
of it.
But there have been abuses, particularly and I think that
age and sexual misconduct are two good examples. So, Professor
Schwartz, how do we not just have this hearing 6 years from
now, but fall far short of getting rid of binding arbitration,
which I believe is a useful tool and should be still allowed.
So how do we bridge the gap versus have this discussion and
never quite have you know, so one side wins, the other side
loses. What are the experts thinking as a happy medium? And is
there one, or is there just a camel's nose under the tent? You
can't go that far.
How can we release some of the pressure to right some of
the obvious wrongs that have occurred under the current system,
but fall far short of what many of my colleagues on the other
side of the aisle want to achieve?
Professor Schwartz. Well, fortunately with regard to gag
orders, State courts and I think led by the Chairman of this
Committee have ruled gag orders unconscionable and not
enforceable. And the record should show that. And I think
that's important.
People should be able to discuss the results of their
arbitration if they disagree with them as a matter of just
basic free speech in our country. There's certain isolated
areas, and I suggested to the Chair and Ranking Member, that
this Committee consider regulatory matters to address the
specific areas where there's a problem, which has been so
carefully advocated by Ms. Carlson.
So that you don't--I hate to use the throw the baby out
with the bath water, but you don't get rid of----
Senator Tillis. You just did.
Professor Schwartz. Well, I think it's important in this
Committee to try to contradict yourself at least once.
[Laughter.]
Professor Schwartz. But so that's what I've always tried to
do. So the hearings are the hearings. Followup, so we don't
just have the same hearing over and over again. Consider
regulation of these agreements because for the most part,
they're helpful, they're cheaper, faster. And I know the
litigation system, sir, and believe me, you don't want to get
involved in it. It's delay, costly.
So in many cases, it's the only alternative for somebody is
arbitration, and it isn't cruel. But the Committee, by looking
carefully at the possibility of regulation, can avoid having
the same hearing every 3 years and address these issues.
Senator Tillis. Well, that's my point. Because I, you know,
I believe past this prologue, and unless there's some sort of a
sea change here, you're always going to have to have bipartisan
agreement on this. And that's why things are falling short,
which is why Ms. Carlson's having to spend more time up in DC.
Count me in as one of the people who actually want to get
to what I think is a fair treatment. I believe that there are a
lot of merits to arbitration, and to throw them out would be
throwing the baby out with the bath water. But there are also
some very--clearly, I mean, the one thing that I can say about
the Committee leadership, they bring forth very sympathetic
cases. And I get that. They're legit. How anyone could say that
that's an acceptable outcome, it's just--I mean, I guess
somebody could, I couldn't.
But I don't like--I've got few skills. One of them is a
good memory, and all we're doing is covering ground that we've
covered before. Thank you all for your preparation. I would
like to actually find some way that we make progress so that
Ms. Carlson can go do other things rather than have to spend
time up here, unless she wants to come up here and report on it
again.
So Professor Schwartz, we'll reach out to you, but I really
do want to be a part of a group that actually makes progress,
that provides, I think, some answer for the egregious examples
that have been exhibited here in the Committee prep materials.
But not this, just be a sea change in the way businesses use
arbitration appropriately, far more often than situations that
are being discussed today. So thank you all for being here.
Professor Schwartz. I'd be pleased to help. I said earlier,
lots of times when I'm here, it's a client money, but I'm not
testifying by any client, not being paid. And I'm in a stage in
life where I would like to be a little bit more helpful than I
can.
Senator Tillis. Well, we'd like to tap on your expertise.
As long as you're not going to bill me for it, we will.
Professor Schwartz. We wouldn't. Yes.
Senator Tillis. Thank you.
Professor Schwartz. That would be unfair at your salary.
Chair Durbin. Thank you, Senator Tillis. Senator Butler.
Senator Butler. Thank you, Mr. Chair. And thank you to all
of the witnesses here. There's been so much here that sort of
has--that really has grabbed my both imagination, source of
incredible frustration, but also tapped into a number of
experiences that I've had across my career.
Professor Gilles, it's such a pleasure to hear you use the
phrase collective action. As someone who spent 20 years in the
labor movement, another tool that we have to give voice to
workers is that of unionization. And in the space of
unionization, there also is an arbitration process. There's an
arbitration process that gives voice Ms. Carlson, to the point
that you made that equalizes the voices and power of employers
and employees through their chosen organizational
representative or union.
And, you know, every experience of union arbitration that
I've had, there was a jointly chosen panel, not an association
that gave you a set of names to consider. Every instance that a
worker's grievance or case went through to arbitration the
union and the employer had to agree on who was going to be the
arbitrator or panel of arbitrators. Everyone had strike ability
to eliminate a name from that mutually chosen list.
So I do believe that there is a framework here in terms of
how we can utilize and get the best benefits from arbitration
and we just have to look to some of the models that we have
created. I am not here to say that unionization is the only
answer, but we do have models of fairness that we can call
upon.
Ms. Carlson, it struck me in your written testimony, your
reference to Tesla workers who have been--and a number of my
colleagues have been working to support their unionization,
their choice that they are making to choose to form a union
there at Tesla. And we all know that there are certain
categories of workers that today our labor laws don't allow to
unionize.
So as I was listening and reading the testimony, one of the
things that I was curious about has been referenced here. You
have been relentless, you have committed that you are not going
to quit. There are the category of workers that have available
to them, the tool of unionization. There's the category of
workers who only by antiquated laws, are traditionally
excluded. What are some of the recommended evolved tools, new
tools, contemporary tools that you would suggest that this
Committee, this Senate really take up to advance the protection
of human rights that you're so dedicated to?
Ms. Carlson. Yes. So my strategy has been to try and take a
bite out of the apple for each protected class, because as
Senator Tillis mentioned, it has to be bipartisan and it should
be bipartisan because we're talking about human rights
violations. So that has been the strategy. It's why I'm now
moving forward with the Protecting Older Americans Act, and I
support Senator Booker's bill as well about race discrimination
and forced arbitration.
But for me, giving workers' choice and not being forced
into arbitration is what this is all about. You suddenly give
them the option of being able to have a voice. And trust me, a
lot of them will not choose to speak it, because I can tell you
from personal experience, it ain't fun to come forward. And as
the professor has also spoken about this morning, it is very
hard to prove your case.
And so most of these cases are extremely relevant and sound
if they actually get to court. And so that disproves the notion
that we were going to suddenly have a flurry of cases when the
Ending Forced Arbitration of Sexual Assault and Sexual
Harassment Act--I need to get the monogram or the acronym from
you. Yes. What do you call it?
[Laughter.]
Professor Gilles. EFASASHA.
Ms. Carlson. Okay. That's even harder.
[Laughter.]
Ms. Carlson. But anyway, it's a mouthful. So that's why I
keep coming back to, if you give workers choice and their own
liberty to make their own decisions, that to me is the fairest
way to do this, and if you want to make arbitration an option,
which it still is under the law then they can choose it. But I
wouldn't recommend it.
Senator Butler. Yes. One last question, Mr. Chair, if I
could. Professor Gilles, you talked a lot in your testimony
about how forced arbitration exacerbates economic inequality in
the country. Another gift of the labor movement and
unionization is greater pay equity.
But it seems that in this space of forced arbitration, we
continue to see those sort of--at least according to the data
that you may reference to--greater economic inequality in the
space. And so I'm curious. I just wanted to ask this question
out of curiosity. I'm curious, is there any further information
or greater detail that you can reveal for us about what the
data shows relative to forced arbitration, particularly on
women workers, and workers of color, just to try to pair the
two, the conversation or the response that Ms. Carlson just
gave?
Professor Gilles. Of course. And I appreciate the question.
Obviously more data's always better, so we should do more
studies. But the studies show us that women and minorities tend
to work in fields where forced arbitration is employed far more
often than other fields. So that's one good bit of evidence.
I think we also--to take a sort of historical view, and
there have been some studies that take kind of a historical
view--and the truth is that women and minorities are the least
likely to bring claims in court even before forced arbitration,
right? The fear of retaliation, the intimidation that comes
with being the person who's bringing the claim have often
silenced women and minorities.
And then I think we just have to be aware that, you know,
poor people in this country, they bump into the corners of our
law in all sorts of ways. And those are sharp corners, and they
don't necessarily know who to go to how to get representation,
how to get advice. And so many times they just end up lumping
it, right? They can't afford to quit the job and find something
else. And even if they did quit the job and find something
else, everybody's doing it, mom, right? Everybody's forcing you
into arbitration.
So I do think that, and I wrote this in my testimony. I
mean, you know, for those of us who are really concerned about
the rising levels of inequality, forced arbitration is just one
additional tool that enables that chasm to continue to grow.
Senator Butler. Thank you. Thank you, Mr. Chair.
Chair Durbin. Thank you, Senator.
I listened to the defense of forced arbitration, and what I
heard was, I wrote down the words, it's easier, cheaper, it's
faster, just as fair as a court. So if that's all true, why is
it forced? If the employee or the person who's aggrieved thinks
it's such a good idea, why don't you just make it an option?
Go ahead and pick arbitration if you like, but basically,
we're not going to take away your constitutional right under
the Seventh Amendment. It's your right as a citizen of the
United States. So the argument about arbitration being a much
better outcome, it may be in some cases, I don't know, but by
and large, that decision should be made by the aggrieved party,
by the worker, by the citizen. I think that's so fundamental
and so basic.
Gretchen Carlson, thanks for coming back in an official
capacity. Professor Gilles, Professor Schwartz, and especially
Ms. Grace, thanks for telling your story. You are going to
inspire us to have another hearing, maybe a markup pretty soon,
maybe even a Federal law. Maybe you'll join Ms. Carlson and be
able to point to something that changed America because you
took the time to speak up and stand up.
You might get some written questions from Members of the
Committee if you do, and please return them as quickly as you
can.
Chair Durbin. This meeting of the Senate Judiciary
Committee stands adjourned.
[Whereupon, at 11:41 a.m., the hearing was adjourned.]
[Additional material submitted for the record follows.]
A P P E N D I X
Submitted by Chair Durbin:
AARP, Forced Arbitration......................................... 75
Americas Credit Unions, Arbitration letter....................... 77
Critical Need for Rulemaking to Prohibit Forced Arbitration,
statement..................................................... 79
HR Policy Association, letter.................................... 90
Katz, Sheinkman, Maltby, St. Antoine, Degan, Sherwyn and Ceriale,
statement..................................................... 94
King, G. Roger, U.S. House of Representatives Committee on
Education and Labor, testimony................................ 97
National Association of Consumer Advocates (NACA)................ 124
Submitted by Senator Hirono:
Public Citizen 50 (PC), Forced Arbitration, statement............ 126
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