[Congressional Record Volume 146, Number 36 (Tuesday, March 28, 2000)]
[Senate]
[Page S1810]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  ARBITRATION BILLS S. 1020 AND S. 121

  Mr. SESSIONS. Mr. President, I would like to make a brief statement 
on two arbitration bills that are currently pending in the Subcommittee 
on Administrative Oversight and the Courts of the Committee on the 
Judiciary. These bills are S. 1020 and S. 121, both of which would 
create exceptions to the Federal Arbitration Act.
  In general, arbitration is fair, efficient, and cost-effective means 
of alternative dispute resolution compared to long and costly court 
proceedings. The two bills before the subcommittee today raise concerns 
about the fairness of allowing some parties to opt out of arbitration 
and the wisdom of exposing certain parties to the cost and uncertainty 
of trial proceedings.
  S. 1020, the Motor Vehicle Franchise Contract Arbitration Fairness 
Act would allow automobile dealers and manufacturers to opt out of 
binding arbitration clauses contained in their franchise contracts and 
pursue remedies in court. This is troubling because both parties are 
generally financially sophisticated and represented by attorneys when 
they enter into a franchise contract. S. 1020's enactment would allow 
these wealthy parties to opt out of arbitration, but would not allow 
customers of the dealers to opt out of arbitration. This position is 
difficult to justify. Indeed, in jurisdictions such as Alabama the 
allure of large jury verdicts serves as a powerful incentive for trial 
lawyers to use S. 1020 to argue against all arbitration. Jere Beasley, 
one of the Nation's most well-known trial lawyers, is making this exact 
argument in his firm's newsletter. While abandoning arbitration for 
dealers and manufacturers might increase attorneys fees, I have serious 
concerns as to whether such a selective abandonment for sophisticated 
dealers and manufacturers would increase the fairness of dispute 
resolution between these parties or would be fair to customers and 
employees of the dealers.
  S. 121, the Civil Rights Procedures Protection Act, would prevent the 
enforcement of binding arbitration agreements in employment 
discrimination suits. However, when employment discrimination law suits 
cost between $20,000 and $50,000 to file, many employees cannot afford 
to litigate their claim in court. Arbitration provides a much more 
cost-effective means of dispute resolution for employees. Indeed, 
several studies have shown that in nonunion employment arbitration 
employees prevail between 63 percent and 74 percent of their claims in 
arbitration, compared to 15 percent to 17 percent in court. Further, an 
American Bar Association study showed that consumers in general prevail 
in 80 percent of their claims in arbitration compared to 71 percent in 
court. Of course, if both employees and employers could avoid 
arbitration under S. 121. This would give employers the financial 
incentive to use the $20,000 to $50,000 cost of a trial as a barrier to 
employees suits. This does not appear to be good policy.
  I note that the Chamber of Commerce, the Alliance of Automobile 
Manufacturers, and the National Arbitration Forum support arbitration 
and have raised concerns concerning the bills pending before the 
subcommittee. Their concerns must be explored more fully.
  In sum, I believe that the arbitration process must be fair. When it 
is fairly applied, it can be an efficient, timely, and cost-effective 
means of dispute resolution. S. 1020 and S. 121 would create exceptions 
to arbitration that could expose businesses to large jury verdicts and 
effectively bar employees with small claims from any dispute 
resolution. We must examine these bills and the policies behind them 
more thoroughly before acting upon any legislation.

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