[Congressional Record Volume 162, Number 57 (Thursday, April 14, 2016)]
[House]
[Pages H1720-H1728]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
{time} 1730
FORCED ARBITRATION
The SPEAKER pro tempore. Under the Speaker's announced policy of
January 6, 2015, the gentleman from Georgia (Mr. Johnson) is recognized
for 60 minutes as the designee of the minority leader.
General Leave
Mr. JOHNSON of Georgia. Mr. Speaker, I ask unanimous consent that
Members have 5 legislative days to revise and extend their remarks and
include extraneous materials related to the subject of this Special
Order, which is forced arbitration
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Georgia?
There was no objection.
Mr. JOHNSON of Georgia. Mr. Speaker, it has been very thought-
provoking to listen to the comments and observations of my good friend,
Steve King from Iowa, and my other good friend, Representative Ted Yoho
from Florida.
It is always good to hear the impressions of laypersons about the
law. I say that not in a condescending way because I know that my good
friend, Steve King, is a successful businessman, construction, and he
knows all about the business, and my friend, Ted Yoho, is an esteemed
doctor of veterinary medicine.
So being a lawyer myself by training, it is good for me to hear the
impressions and observations of laypersons. I
[[Page H1721]]
say that in a noncondescending way. So I thank the gentleman from Iowa,
Representative King, for holding it down for us for that last hour.
The preamble to the U.S. Constitution, which is the introductory
statement setting forth the general principles of our American
government, reads: ``We the people of the United States, in Order to
form a more perfect Union, establish Justice, insure domestic
Tranquility, provide for the common defence, promote the general
Welfare, and secure the Blessings of Liberty to ourselves and our
Posterity, do ordain and establish this Constitution for the United
States of America.''
I want to just put a bookmark right where it says ``establish
Justice.'' It says that right after it says ``in Order to form a more
perfect Union, establish Justice.''
So justice was something that was foremost in the minds of the
Framers of our Constitution who, I believe, just as Steve King said,
were divinely inspired in their deliberations and their decisionmaking
in terms of our Constitution.
They were focused on the delivery of justice. They realized that
justice was key. With that ideal, they established in Article III a
court system, the judicial power and the framework for the court
system. The judiciary, of course, is a coequal branch of government.
The courts, since the inception of this country, have served as a
check and a balance on the excesses of the other branches of government
while at the same time dispensing justice to individuals who are found
to have violated the law or who have been aggrieved by the misconduct
of someone else and, so, they come to court seeking justice. So justice
is the business of the court system, and the court system's business is
to render justice.
Now what is that word, justice? What does it mean? It is the
maintenance or administration of what is just by law, as by judicial or
other proceedings, in a court. Justice is the judgment of persons or
causes by a judicial process to administer justice in a community. That
is what justice is all about, and that is what courts do.
People bring to the court of justice their causes of action so that
they can receive justice in the courts. The courts are set up with a
set of procedures, rules, as to how you proceed in court. And then
there are substantive laws upon which the court looks to the precedent
that has been set and decides cases brought to it in accordance with
those precedents.
Sometimes it must make new precedent, it must make new law, and it is
done in accordance with the constitutional principles that have been
laid out by our Framers. So this legal system has worked well. This
legal system of trial by jury has worked very well.
In addition to maintaining order through the criminal laws, the civil
laws have enabled people to achieve justice when they have been
wronged, including wronged by corporations.
Companies don't like being brought to the bar of justice to be held
accountable for wrongdoing. We know that corporations are powerful
entities. They have more money than the average person. They are more
powerful.
So the way to equalize the power of just an individual against a
corporation that he or she has accused of wrongdoing--the equalizing
factor has always been the jury system, a jury of one's peers.
That is what people have relied upon to address grievances,
particularly with powers that are more powerful than they. They know
that a jury of their peers is a mechanism whereby the truth can be
found and that justice can be rendered.
So going to court and having a jury trial when a person is aggrieved
is a part of the fundamental fabric of this Nation. That is how we have
done business for so long.
It used to be before we had TV and radio that people would go down to
the town square where the courthouse was always located and they would
take the afternoon and they would go into the courtroom. They would
have a calendar. They would know what cases were being heard.
It was a published calendar, and everybody knew that a certain lawyer
would be in town to try a case. They would make their schedule such
that they could go down and see that proceeding. It would be an open
court. Nobody would be excluded. Everybody would know in advance what
was going to happen.
You could sit there and watch the adversary process take place. You
would see a judge seated, such as the Speaker is seated in this
Chamber. That would be the person who would decide what laws were
applicable. The jury would be to his or her left or right, and the
judge would instruct them on the law.
After they have heard all of the evidence from the attorneys in that
adversary process, the judge would instruct the jury on the law and
charge the jury to find the facts in its own wisdom and apply justice.
The plaintiff would either win or lose, and the people would be in
the courtroom watching the proceedings. And then, whatever happened
everyone would have to live with.
Sometimes the plaintiff won. Sometimes the defense won. That is the
way that it has always been in this country up until pretty recently.
Over the last 30 years or so, we have had an erosion of that process.
The rich and powerful corporations have conspired to find ways that
they can avoid being held accountable for the misdoings that they would
be charged with committing by a regular person.
Let's face it, ladies and gentlemen. Corporations are just like
people. People do wrong and, when they do wrong, you have to have some
way of making them do right, of making it right. That is what the
courts have always been for.
These corporations have gotten so powerful that they have come up
with a way of privatizing the justice system. They have come up with a
dispute resolution mechanism, which is not inherently bad, but it is
being forced on people. That is the dispute resolution process known as
arbitration.
Arbitration is a great alternative dispute resolution process when it
is decided upon by the parties after a dispute has arisen.
But to bind a party to have to resolve a dispute in the arbitration
setting as opposed to being able to exercise your Seventh
Constitutional Amendment right to a jury trial and binding yourself, to
have to go through an arbitration process, this is the scheme that has
been hatched by the corporate interests who don't want to be held
accountable in court.
So what they have done is inserted these forced arbitration clauses
into agreements that they have with consumers.
So any kind of consumer agreement, for the most part nowadays, has a
forced arbitration clause in it which requires that, in the event a
dispute arises, the parties will settle that dispute not in a court of
law, but in an arbitration proceeding.
Now, arbitration proceedings, unlike the courthouse, are done in
private. There is no calendar that is published, and the people are not
invited to come in. It is a secret proceeding.
It is a proceeding where, instead of having a judge trained in the
law, you have got the possibility of having a layperson deciding the
case. And that layperson may not be impartial.
That person may be making their living from getting referrals from
the corporations to decide the arbitration cases that come before them.
So it is an unfair process. It is a secret process.
The rules of procedure that are followed and required in a court are
not required in an arbitration process nor are the substantive laws
upon which cases are decided on precedent.
There is no requirement that the substantive law be used by the
arbitrator in making the decision. Of course, there is no jury trial.
There is no trial by a jury of one's peers.
So it is a very unfair setting, and it produces results that favor
the corporations. This is what we are here to talk about today, this
unfair, privatized secret system of justice that deprives people of
having their day in court.
It is unaccountable. It is unaccountable to anyone other than to the
corporate bosses that refer the cases to them. It is very unfair to the
consumer, to the little guy.
So having said all of that, I yield to the gentleman from the State
of Pennsylvania, Matt Cartwright, my friend, a distinguished trial
attorney himself and, also, a member of the Oversight and Government
Reform Committee in this Congress, the ranking member of the Health
Care, Benefits, and Administrative Rules Subcommittee and,
[[Page H1722]]
also, a member of the Committee on Natural Resources.
{time} 1745
Mr. CARTWRIGHT. Mr. Speaker, I thank the gentleman from Georgia for
yielding to me and for laying out the problem.
I rise proudly to remind my colleagues in this Chamber that what--as
Representative Ted Yoho of Florida just mentioned--what is in the
Constitution really, really matters. In fact, I credit Ted Yoho for
carrying the Constitution with him at all times. I know that he says
what is particularly dear to him in the Constitution is the Bill of
Rights--those first 10 Amendments to the Constitution.
And Representative Johnson alluded to it earlier, it is the Seventh
Amendment that we are talking about right now. If you are scoring at
home, the Seventh Amendment is the thing that gives you the right to a
jury trial in a civil case. And I'll quote it: ``In suits at common law
. . . the right of trial by jury shall be preserved . . .''
It is a short sentence, it is unambiguous, it is easy to understand,
and it is something that makes us Americans--that we can go to court
and have our disputes settled by a jury trial. It is one of the things
that has made this Nation great. It is one of the things that we went
to war over in the American War of Independence because the British
king was trying to take that right away from us. In suits of common
law, the right of trial by jury shall be preserved.
But I am here to say, Mr. Speaker, that there have been attacks on
the Seventh Amendment. As Mr. Johnson pointed out so deftly, it is in
the last 25 or 30 years that these attacks have come to a crescendo.
Even in the Supreme Court of the United States now, they are getting so
squishy on the Seventh Amendment that they think it is all right--it is
a case called Concepcion from about 5 years ago--it is all right for
corporations to have you enter into contracts that do away with your
Seventh Amendment right to a jury trial in the event of a dispute. This
is called a pre-dispute forced arbitration clause. It rears its ugly
head in all sorts of ways to hurt workers and consumers and homeowners
and Americans of every stripe.
Now, what is wrong with this?
What is wrong--and, again, Mr. Johnson of Georgia alluded to this.
The main problem is that it is a secret system of justice. It is not
out in the open. He is right. America has a tradition of open court
systems, trials that you can go watch, proceedings of justice that are
open and transparent and open to the sunlight so that sneaky things
don't happen, things that they would be embarrassed to tell you about
don't happen. That is the purifying aspect of sunlight overall, and
that is why we treasure our justice system here in the United States.
It is the opposite when you talk about forced arbitrations. You are
talking about arbitrators who have been selected by who knows who.
Certainly not elected, certainly not appointed by elected officials.
Accountable to no one. No one.
Is that really who you want deciding your case when you have a
dispute?
Absolutely not.
Mr. Speaker, there is something even more insidious about these
forced arbitration clauses, and that is this. It does away with any
possibility of a class action.
Now, why do we care about that?
The ordinary American consumer may never get into a class action or
know about one or care about one. But here is what happens.
If, for example, your credit card company--when you signed up for
your credit card, you signed a boilerplate agreement. There is no way
you read through that whole thing, but there was a forced arbitration
clause in there. It says, in any dispute between us and the consumer,
the dispute shall be decided by an arbitration.
What that means is that they can do anything they want to you. They
can say, this month, in honor of it being April, we are going to charge
everybody $45 for no reason. Forty-five dollars goes on your bill. If
you don't pay it, they start dunning you and hurting your credit
record. They can do that just for fun.
What are you going to do? Are you going to go to court over it?
No. You are going to join a class action because nobody can afford to
hire a lawyer where $45 is the amount in controversy. That is why we
have class actions, so the corporations don't get away with that monkey
business.
In forced arbitration clauses, that precludes any possibility of
going to court and, thereby, it precludes any possibility of a class
action. That means a lot of wrong can happen in this country at the
hands of unaccountable corporations. They can get away with it because
there is no chance of a class action.
Well, I am here to raise my voice in support of something Mr. Johnson
from Georgia has done. He has written something called the Arbitration
Fairness Act, which remedies much of what I am talking about.
I am also here to stand up and add my voice in support of things that
the administration has done: executive orders, either already done or
in the works, in the Department of Education to combat forced
arbitrations against for-profit universities; in the Department of
Defense to combat actions of predatory lenders against our armed
service men and women and our veterans; executive orders in the
Consumer Financial Protection Bureau to combat arbitration clauses such
as the one I discussed about a credit card company; executive orders by
the CMS, Center for Medicare Services, to combat abuses in arbitration
clauses in nursing homes so that you wouldn't be able to bring a court
case against a nursing home because you signed on the dotted line when
you put mom or dad in the home so no matter what they do to mom or dad,
you can't go to court, you have to go to arbitration. CMS is working on
an executive order to curb that abuse.
An executive order in the Department of Labor to enforce rules and
laws about safe work places and fair pay to prevent these forced
arbitration clauses from taking these cases out of the sunlight and
into the dark back rooms of the arbitrations where goodness knows what
is going to happen, and it is probably not justice.
We have a statue of Thomas Jefferson right outside these chambers,
Mr. Speaker. Thomas Jefferson said: ``I consider trial by jury as the
only anchor yet imagined by man, by which a government can be held to
the principles of its Constitution.''
We need to honor those words of Thomas Jefferson, we need to honor
the Seventh Amendment, we need to support Mr. Johnson in his
Arbitration Fairness Act, and we need to support the administration
with executive orders fighting these unfair and nontransparent
mandatory forced arbitration clauses.
Mr. JOHNSON of Georgia. Mr. Speaker, I thank Representative
Cartwright.
It is amazing that when you are standing across the yard with the
fence in between you and your neighbor and you are telling your
neighbor about that great day of fishing that you had and you are
telling him about this fish that was that long, you can do as much
lying about the length of that fish--sometimes you didn't even catch a
fish--and it is okay to lie to your neighbor.
But it is different when you go downtown and go to the courthouse
because at the courthouse you are going to testify, you are testifying
under oath, subject to being held accountable for perjury if you lie.
But it is amazing that in a forced arbitration proceeding, there is
absolutely no requirement that you be administered, or that a witness
be administered an oath before they are allowed to testify. So,
therefore, in an arbitration proceeding, the lever of perjury to force
someone to tell the truth is not there and it hurts the pursuit of
justice.
Mr. Speaker, I thank Mr. Cartwright for his testimony and his
statements today.
I would point out that last year, the New York Times published an
exhaustive and in-depth investigative series that pulled back the
curtain and catalogued the immense harms of forced arbitration. In part
1 of the series, which was entitled ``Arbitration Everywhere, Stacking
the Deck of Justice,'' the Times explored the rise and dramatic spread
of forced arbitration clauses, their impact on American workers,
consumers, and on patients. This investigation found that corporations
crippled the consumer challenges
[[Page H1723]]
across a wide swath of harmful practices simply by banning class action
litigation.
Furthermore, once corporations have blocked individuals from going to
court as a class, the investigation found that most people simply
dropped their claims entirely.
Why?
Because the amount in controversy was so small that it was not cost
effective to hire a lawyer to go to court to recover such a small
amount. The net result is that the corporate wrongdoers have escaped
being held accountable because of these forced arbitration clauses,
which equates to a ban on participating in class action litigation and,
in some of those clauses, they had the words in there about class
actions being bought.
Mr. Speaker, I yield to the gentlewoman from California (Linda T.
Sanchez), my friend, who serves on the Ways and Means Committee. She is
a former labor lawyer. She has had an interest in this issue of
arbitration, forced arbitration, for a couple of sessions of Congress.
She has introduced legislation that would outlaw forced arbitration
agreements in nursing home contracts--you know, where we go to take our
loved ones who have to be committed to a nursing home and we have no
choice but to sign the contract which has the arbitration clause in it
because all of the other nursing homes have the arbitration clause in
them as well. Representative Sanchez has filed legislation that would
get at that very unfair process.
Ms. LINDA T. SANCHEZ of California. Mr. Speaker, I thank Mr. Johnson.
I rise today to join Mr. Johnson and Mr. Cartwright in bringing
attention to the very unfair and deplorable practice of forcing people
into arbitration.
In practice, what this consists of is generally those with more
power, meaning very wealthy corporations, including confusing but
legally binding language buried in the fine print of contracts,
contracts that pretty much purveyed every aspect of our lives. This
creates this insidious process in which people, in order to get a
credit card or a cell phone or to put a loved one into a nursing home,
have to accept the terms of this contract without really knowing what
they are buying into.
I want to start by saying that the concept of arbitration is a great
one. I strongly support the principles of arbitration and the
arbitration process because arbitration can do many good things. It can
clear court dockets, it can help provide a more swift resolution to a
problem, and it can also reduce legal fees. Those are the benefits of a
fair arbitration process. In many ways arbitration can be a great
thing.
But--and this is the thing--people think that arbitration is this
wonderful process. But what they don't realize is that buried in that
fine print in forced arbitration, there can also be terms that limit
the evidence that you can introduce. If you are forced into
arbitration, there can be limits on the damages that you can claim. It
can exclude your ability to request a jury trial. And mandatory binding
arbitration has to be entered willingly by both parties, not just the
party with the greater economic power. But, in fact, they know that
they hold that leverage over the average consumer so they put this kind
of limiting language into these arbitration clauses all the time.
Many retailers, banks, and online services have forced arbitration
clauses written into their contracts. These arbitration agreements can
be forced on vulnerable parties who have little knowledge about what
they are signing or what it means to sign away those rights. Frankly,
most consumers have little or no choice in the matter because the
contracts are ``take it or leave it.''
{time} 1800
Why does this hit so close to home?
My father has Alzheimer's, and at a certain point, he could not care
for himself anymore, so we had to investigate nursing homes that could
provide the kind of around-the-clock care that was required for him
that my brothers and sisters and I simply could not.
Sadly, in the nursing home arena, this is where, oftentimes,
mandatory--forced--arbitration clauses are buried in these contracts
for the admission of your loved one. Loved ones who cannot care for
somebody who is physically ill or frail, again, have no real choice in
the matter. They need to find facilities to care for their loved ones
because they, simply, cannot do it on their own.
That is why, in Congresses past, I introduced the Fairness in Nursing
Home Arbitration Act. That legislation would make predispute mandatory
arbitration clauses in long-term care contracts unenforceable, and it
would restore residents and their families their full legal rights.
What the legislation would do is say that you cannot force arbitration
onto families who, in an emotional time and in a medical crisis, are
looking for care for their loved ones. You cannot force them to sign
something that they don't agree with or even understand. My bill would
have allowed families and residents to have maintained their peace of
mind as they looked for the best long-term care facilities for their
loved ones.
For desperate families who are unable to provide the adequate care at
home, the need for an immediate placement for their loved ones makes
these contracts, basically, take it or leave it, which gives them no
choice at all in the matter. Families who are in the midst of these
painful decisions to place a parent or a loved one in a nursing home
rarely have the time or the wherewithal to fully and thoughtfully
consider what it is they are signing when they sign a contract that
contains a mandatory arbitration clause. They are not in a position to
adequately determine what agreeing to such a clause will mean for their
loved ones should the unthinkable happen.
The Centers for Medicare & Medicaid Services, CMS, is slowly working
to include some of my bill's provisions through the regulatory process,
but much work still remains in this area. In September of last year,
Democrats sent a letter to CMS and called for a final rule that will
ensure that nursing home residents will only enter into arbitration
agreements on a voluntary and enforced basis after a dispute arises,
not before.
We need commonsense solutions to forced arbitration agreements,
solutions that would protect the average consumer, who is unfamiliar
with the concept of arbitration and is not trained in the law. Many
people may not even be aware of the rights they are signing away at a
time when they are least prepared to make important decisions. As
Members of Congress, we are called on to serve our constituents and to
protect them from flagrant violations of their rights. We should be
doing more to protect vulnerable families from these forced arbitration
policies.
I thank my colleague, Mr. Johnson, for being such a strong voice on
this issue.
Mr. JOHNSON of Georgia. I thank the gentlewoman from California.
Next, I yield to the gentlewoman from Texas, my good friend Sheila
Jackson Lee, a senior member of the Judiciary Committee and the ranking
member on the Crime Subcommittee. She is also a member of the Homeland
Security Committee. She is a lawyer and a former judge.
Ms. JACKSON LEE. I thank the gentleman from Georgia for his
leadership, along with Mr. Conyers, and for the introduction of a very
important initiative, H.R. 4899.
Mr. Speaker, many would think, particularly as we have watched the
mediation and arbitration process grow as a newly developed practice
amongst lawyers and one that businesses and others have seemed to
adopt, that that was, in fact, helping consumers by allowing the
concept of arbitration to be able to be utilized, thereby, allegedly,
lowering the costs of litigation.
In a 2010 survey, 27 percent of employers, covering over 36 million
employees--or one-third of the nonunion workforce--reported that they
required the forced arbitration of employment disputes. The practice of
forced arbitration is widespread and damaging. For example, the ability
to obtain key evidence that is necessary to prove one's case is often
restricted or eliminated in arbitration proceedings, and it can be
nearly impossible to appeal adverse decisions by arbitrators.
We know that, in the Bill of Rights in the Constitution, there is a
right to a trial by jury, a jury of one's peers. Therefore, it is a
sacred right. This new practice had been projected as helping
[[Page H1724]]
the victim: oh, it will be a low-cost procedure; you will get an
immediate decision; you won't have the stress of litigation; you might
not even have to hire a lawyer. But, as indicated, the ability to
obtain key evidence that is necessary to prove one's case is often
restricted or eliminated in arbitration proceedings, and it can be
nearly impossible to appeal adverse decisions by arbitrators.
I was one of the first Members to bring attention to this issue when
I prevailed upon the late Chairman Hyde to authorize the Judiciary
Subcommittee on Administrative and Commercial Law, when I was the
ranking member, to hold a hearing on that matter involving Carl Poston
and the NFL Players Association, with Gene Upshaw, then executive
director, in the LaVar Arrington case. You may recall the LaVar
Arrington case as being of the former Washington Redskins football
player who was forced into arbitration in order to resolve a contract
dispute.
Forced arbitration of State and Federal employment discrimination
laws is also harmful to women workers. In 2015, nearly 64,000
discrimination claims were filed with the Equal Employment Opportunity
Commission under title VII, and more than 41 percent of those charges
were for sex-based discrimination. Sex-based discrimination, including
sexual harassment, remains a persistent problem for women in the
workplace. Nearly 83 percent of sexual harassment charges that are
filed with the EEOC are filed by women. Just imagine that mandatory
arbitration of claims under State or Federal family and medical leave
laws could have a disproportionate impact on women as well.
I am pleased that this legislation was introduced, because it is a
legislative initiative to restore rights. The bill is rightly named the
Restoring Statutory Rights Act. It is also, I believe, the restoration
of constitutional rights. Let me quickly tell you of the case of
Stephanie Sutherland, which illustrates the difficulties of this forced
arbitration.
Stephanie was hired by her company to work as a staff assistant. Her
work involved relatively routine, low-level clerical work for which she
was paid a fixed salary of $55,000. She routinely worked 45 to 50 hours
per week, but because she was classified by her employer as exempt from
overtime, she did not receive any additional compensation. By the time
Ms. Sutherland was terminated in 2009, she had worked 151 hours of
overtime for which she should have been paid $1,867 had the Fair Labor
Standards Act and the New York State labor laws been observed. She
filed a class action lawsuit and sought to recover overtime for her
work in excess of 40 hours a week and for other current and
former nonlicensed staff--one or two staff employees of the firm--who
worked overtime.
When Ms. Sutherland was hired, she was given an offer letter that
also provided, if an employment-related dispute arises between you and
the firm, it will be subject to mandatory mediation. That was what the
company attempted to do--enforce mandatory mediation. In her lawsuit,
she attempted to enforce her rights because the Federal Fair Labor
Standards Act had a provision to expressly permit lawsuits for minimum
wage. To this end, the lower court was sympathetic to Ms. Sutherland's
arguments. However, the United States Court of Appeals reversed,
relying on the 2013 Supreme Court case.
Therefore, we do have a conflict in the issue of dealing with
arbitration that is forced. This is the core of why this legislation is
so very important. I believe that, if parties agree to engage in
mediation and arbitration, Mr. Speaker, so be it; but if you choose to
use the court system that is designed by the Constitution as one of the
three branches of government that all Americans should have access to,
I will make the argument that you should not be forced into arbitration
or mediation.
I believe Mr. Johnson--and I look forward to joining him on his
legislation--along with Mr. Conyers, is really lifting up the
Constitution to ensure that every citizen has access to the courts of
this land to help decide their issues of conflict and to choose the
forum which they desire to use. I thank the gentleman for yielding to
me, and I look forward to working with him on this very crucial
constitutional issue.
Mr. Speaker, I am pleased to join my colleagues of the Congressional
Progressive Caucus to discuss the critical importance of an impartial
and fair justice system, corporate accountability, consumer and
employee protection, as well as the importance of enforcing laws on the
books.
I would like to thank Congressman Hank Johnson (D-GA) for his
leadership in putting forth this Special Order.
The practice of forced arbitration is widespread and damaging.
In a 2010 survey, 27 percent of employers--covering over 36 million
employees, or one-third of the non-union workforce--reported that they
required forced arbitration of employment disputes.
Although arbitration can be a valid and effective method of dispute
resolution when both parties voluntarily agree to arbitrate, forced
arbitration clauses that limit an employee's legal rights in a non-
negotiable contract are abusive and erode employees' traditional legal
safeguards.
For example, the ability to obtain key evidence necessary to prove
one's case is often restricted or eliminated in arbitration
proceedings, and it can be nearly impossible to appeal adverse
decisions by arbitrators.
I was one of the first Members to bring attention to this issue when
I prevailed upon Chairman Hyde to authorize the Judiciary Subcommittee
on Administrative and Commercial Law to hold a hearing on that matter
involving Carl Poston and the NFL Players Association (Gene Uphsaw,
Executive Director) in the LeVar Arrington case.
You may recall LeVar Arrington as the former Washington Redskins
football player who was forced into arbitration in order to resolve a
contract dispute.
Forced arbitration of state and federal employment discrimination
laws is especially harmful to women workers.
In 2015, nearly 64,000 discrimination claims were filed with the
Equal Employment Opportunity Commission (EEOC) under Title VII, and
more than 41 percent of those charges were for sex-based
discrimination.
Sex-based discrimination, including sexual harassment, remains a
persistent problem for women in the workplace.
Nearly 83 percent of sexual harassment charges filed with the EEOC
are filed by women.
In a national survey by ABC News and the Washington Post, one in four
women reported experiencing sexual harassment, compared to one in ten
men.
Mandatory arbitration of claims under state or federal family and
medical leave laws could have a disproportionate impact on women as
well.
Nearly 56 percent of employees who took time away from work to deal
with a serious personal or family illness, or to care for a new child
under the FMLA in 2012 were women.
If my colleagues fail to take necessary action, mandatory arbitration
will continue to be a barrier to justice for workers.
I am pleased by the action of Mr. Conyers and Mr. Johnson for their
leadership on Tuesday, Equal Pay Day, for introducing a very important
piece of legislation that will address these inequities, (H.R. 4899)
the Restoring Statutory Rights Act, which I am pleased to be an
original cosponsor of.
The Restoring Statutory Rights Act would ensure that when Congress or
the states have established rights and protections for individuals,
including protection against wage discrimination, that they are able to
enforce these rights in court.
This bill amends the Federal Arbitration Act to prohibit mandatory
pre-dispute, commonly known as ``forced,'' arbitration agreements for
claims rising under federal or state statute, the U.S. Constitution, or
a state constitution.
The bill would further require that a court determines whether an
agreement is unconscionable, legally invalid, or otherwise
unenforceable as a matter of contract law or public policy.
Under current law, parties may resolve statutory claims, including
claims rising under anti-discrimination statutes, through forced
arbitration instead of the justice system.
This important legislation is a critical step in eliminating
longstanding and unacceptable discrimination and barriers imposed on
women and minority.
It should be noted that forced arbitration is a private system
controlled by corporations to prevent corporate accountability.
Buried in the fine print of countless employment, cell phone, credit
card, retirement, and nursing home contracts, forced arbitration
eliminates Americans' access to the courts, tipping the scales of
justice in favor of corporate wrongdoers.
When corporations force arbitration on individuals using
nonnegotiable and many times unnoticed contract terms, it becomes an
abusive weapon.
Forced arbitration means giving up the most fundamental legal
protection: the right to equal justice under the law.
[[Page H1725]]
For decades, we have fought hard for dozens of laws that protect
against discrimination based on age, sex, religion, race, disability,
and unequal pay for equal work, such as the Civil Rights Act and the
Equal Pay Act But these laws are meaningless if unenforceable in court.
It's time to close the arbitration loophole that gives employers and
businesses the right to ignore civil rights and consumer protection
laws.
Although states have tried to address this problem through their
consumer protection laws, the courts have interpreted the Federal
Arbitration Act (FAA) to trump state laws leaving consumers very little
recourse.
Arbitration can be a fair and effective method of dispute resolution
when parties voluntarily agree to arbitrate.
When the choice of arbitration is post-dispute--and therefore
understandable and voluntary--it is a fair process that parties choose
willingly.
I call upon my colleagues to come together and pass legislation that
would reinstate workers' ability to enforce their rights in a court of
law and protect the rights of women and minorities.
More than 20% of employees are covered by mandatory arbitration
clauses.
Tens of millions of consumers use consumer financial products or
services that are subject to pre-dispute arbitration clauses.
Federal court statistics show that 17,977 labor claims and 35,965
civil rights claims were filed in 2012.
National Arbitration Forum (NAF) arbitrators ruled in favor of
consumers in less than 0.2% of all cases (30 out of 18,075) heard.
These 30 victories only occurred in hearings where a consumer brought
claims against a business; when companies brought claims against
consumers, they were successful in hearings 100% of the time. The
employee win rate after arbitration was 21.4%, which is lower than
employee win rates reported in employment litigation trials (36.4% in
federal court and 43.8% in state court).
In cases won by employees, the median award amount was $36,500 and
the mean was $109,858, both of which are substantially lower than award
amounts reported in employment litigation ($384,223 for federal court
litigation and $595,594 in state court litigation.)
A 2015 study of federal court employment discrimination litigation by
Theodore Eisenberg found that the employee win rate has dipped in
recent years to an average of only 29.7 percent.
At the same time, another 2015 study found that the employee win rate
in employment arbitration had also dipped in recent years, to an
average of only 19.1%; similar dip in employee win rates has occurred
in state courts.
58% settlement rate in federal court employment-discrimination
litigation.
While recent research on mandatory arbitration found a 63% settlement
rate across all employment cases in that forum.
In court, summary judgment motions were filed in 77% of the court
cases, while summary judgment motions were raised in 48% of
arbitrations.
The win rate was 32% lower in mandatory arbitration than in
litigation.
Plaintiffs' overall economic outcomes are on average 6.1 times better
in federal court than in mandatory arbitration ($143,497 versus
$23,548) and 13.9 times better in state court than in mandatory
arbitration ($328,008 versus $23,548).
21.1% of employment cases in mandatory arbitration are brought by
employees without legal counsel.
Damages from arbitration are 16% of the average damages from federal
court litigation and a mere 7% of the average damages in state court--
thus lawyers are reluctant to take cases that are subject to mandatory
arbitration.
Whereas on average plaintiffs' attorneys accepted 15.8% of potential
cases involving employees who could go to litigation, they accepted
about half as many, 8.1% of the potential cases of employees covered by
mandatory arbitration.
The first time an employer appeared before an arbitrator, the
employee had a 17.9% chance of winning, but after the employer had four
cases before the same arbitrator the employee's chance of winning
dropped to 15.3%, and after 25 cases before the same arbitrator the
employee's chance of winning dropped to only 4.5%.
The study results provide strong evidence of a repeat employer effect
in which employee win rates and award amounts are significantly lower
where the employer is involved in multiple arbitration cases where the
same arbitrator is involved in more than one case with the same
employer, a finding supporting some of the fairness criticisms directed
at mandatory employment arbitration.
In the credit card market, larger bank issuers are more likely to
include arbitration clauses than smaller bank issuers and credit
unions. As a result, while less than 16% of issuers include such
clauses in their consumer credit card contracts, just over 50% of
credit card loans outstanding are subject to forced arbitration
clauses.
In the checking account market, which is less concentrated than the
credit card market, around 8% of banks, covering 44% of insured
deposits, include arbitration clauses in their checking account
contracts.
40% of the arbitration filings involved a dispute over the amount of
debt a consumer allegedly owed to a company, with no additional
affirmative claim by either party. In another 29% of the filings,
consumers disputed alleged debts, but also brought affirmative claims
against companies.
The average disputed debt amount was nearly $16,000. The median was
roughly $11,000. Across all six product markets, about eight cases a
year involved disputed debts of $1,000 or less.
Overall, consumers were represented by counsel in roughly 60% of the
cases, though there were some variations by product. Companies almost
always had counsel.
Of the 1,060 arbitration cases filed in 2010 and 2011, so far as we
could determine, arbitrators issued decisions in just under 33%.
In approximately 25%, the record reflects that the parties reached a
settlement. The remaining cases ended in an unknown manner or were
technically pending but dormant as of early 2013.
Mr. JOHNSON of Georgia. I thank the gentlewoman from Texas for her
tremendous, informative presentation, which is all based
constitutionally as the great lawyer that she is.
Next, Mr. Speaker, I yield to my friend, the gentleman from
Massachusetts, Joe Kennedy, who is an esteemed member of the Energy and
Commerce Committee.
Mr. KENNEDY. I thank Congressman Johnson. I am honored to be here
with the gentleman, and I thank him for his leadership on this
important issue.
I thank, of course, Ranking Member Conyers, who has for so long been
a guiding light in our party on issues of justice.
Congressman, you and Mr. Conyers together have been this Chamber's
champions on civil rights and equality in our justice system. You are,
once again, leading the fight as we call for reforms to an unjust and
unequal arbitration system. I am grateful, and I thank you for your
leadership.
Mr. Speaker, at the foundation of our democracy is one simple
promise: no matter who you are or where you come from or what you have
done, you will be seen as equal before the law.
Thomas Jefferson, himself, wrote centuries ago:
The most sacred duties of government is to do equal and
impartial justice to all citizens.
Forced arbitration, Mr. Speaker, is an affront to that duty--a
manipulation of the justice system that tips our scales in the
direction of influence, money, and power. It removes even the slightest
veneer of fair treatment in cases ranging from sexual harassment and
discrimination to loss of housing and shelter, to neglect and abuse
inside substance abuse treatment centers and retirement homes.
When a plaintiff sits at an arbitration table across from a powerful
corporation to challenge a fraudulent charge or to question its
practices, the protections that we have spent centuries instilling in
our justice system get washed away. There is no judge, no jury, no
avenue for appeal. There is no justice at that table.
At the very moment you need to access our courtrooms most, you find
yourself locked out, diverted to a room outside the scope of our
judicial system and beyond the bounds of our laws. Without your choice
or sometimes even knowledge, forced arbitration transforms a level
playing field into an uphill climb. At that point, most Americans turn
around; but for the few who muster the will or the resources to
continue their cases, there is no guarantee to counsel, forcing them to
face off against some of the most experienced legal minds in our
country completely on their own.
The Arbitration Fairness Act would help remedy this profound
shortcoming in our justice system and ensure that equal access to legal
protection doesn't come along with a price tag. Mr. Speaker, that is
one of the most fundamental promises we make in our country. I am
grateful to Mr. Johnson for his leadership on the issue.
Mr. JOHNSON of Georgia. I thank the gentleman from Massachusetts for
his wise words.
Mr. Speaker, at this time, I congratulate the writers of The New York
[[Page H1726]]
Times' expose, a three-part series on forced arbitration. The second
part of the series examined the secretive nature of forced arbitration,
and the third part of that series talked about the forced arbitration
in the context of binding persons to arbitrate secular claims in
religious tribunals, applying religious law.
{time} 1815
I would strongly encourage those who are interested in this subject
to look to The New York Times article because it gives you a good
understanding of where we are as far as forced arbitration is
concerned. I applaud the reporters for their groundbreaking work in
writing that series and producing it.
Jessica Silver-Greenberg, Michael Corkery, and Robert Gebeloff have
done yeoman's work. They have exposed a threat to the justice system
that shakes the tenets of our very democracy to its core. They deserve
the highest commendation that I can give them, and that is just simply
a shout-out from the well of the House.
I understand that the Pulitzer Prizes for journalism will be
announced this coming Monday. If I could nominate this series, I would
certainly do so. I certainly support their nomination for that award.
Next, Mr. Speaker, I yield to the gentleman from Rhode Island (Mr.
Cicilline), my good friend, the former mayor of Providence, Rhode
Island, a lawyer in his own right, a member of the Judiciary Committee
upon which I also serve and, also, a member of the Foreign Affairs
Committee.
Mr. CICILLINE. Mr. Speaker, I thank the gentleman for yielding. I
want to particularly thank the gentleman for his extraordinary
leadership on this very important issue of forced arbitration, which is
denying many, many Americans the right to have their grievances heard.
I want to thank both Mr. Johnson and Mr. Conyers for not only the
legislation, but for continuing to raise this issue.
As many of my colleagues have said, forced arbitration denies
individuals the most basic right to have their grievances heard fairly.
No court, no lawyer, no judicial proceedings, all the things that we
have over many centuries recognized as essential to the fair and
impartial resolution of disputes.
But there is an area that I want to speak about in particular where
forced arbitration, I think, is particularly damaging and particularly
unfair.
In the coming weeks, I will introduce legislation that will protect
the rights of our troops to pursue justice in our courts. My
legislation will simply clarify the original intent of the Uniformed
Services Employment Rights Act of 1994, also known as USERRA, and allow
veterans and servicemembers to have their claims heard in court.
This legislation was intended to protect the men and women of the
Armed Forces from losing their jobs as a result of their service to our
country. It specifically prohibits employment discrimination due to
military service and guarantees benefits and reemployment rights to
those who leave their civilian jobs to serve.
However, these rights have rapidly eroded in recent years. Employers
are requiring their employees to sign forced arbitration agreements
barring access to justice for servicemembers. As my colleagues have
discussed this evening, these agreements are often heavily tilted
toward the parties who insist upon them.
In mandatory arbitration, the employers can select the arbitrator and
the location of the forum, and the avenues for appeal are entirely
closed off. In many instances, these clauses are imposed by employers
without the knowledge or consent of their employees.
While USERRA explicitly prohibits any agreement that limits any right
or benefit provided under the statute, some Federal courts have
misinterpreted the law to exclude procedural rights.
As a result, many of the 1.3 million brave men and women who serve in
our military may return to civilian life without their jobs and without
the ability to fully assert their rights in the courts.
This includes servicemembers like Javier Rivera, an Army Reservist
who was deployed for 6 months only to learn that his job had been
filled in his absence. Despite 900 job openings, his former employer
claimed that he could not find a single open position for him upon his
return.
Under these circumstances, USERRA should have provided some relief.
At the bare minimum, it should have guaranteed him the opportunity to
have his claim heard in a fair, objective forum. However, because of a
forced arbitration clause in his contract, he had no access to the
courts at all.
Denying our servicemembers and veterans this essential right directly
conflicts with the intent of USERRA. By limiting their access to legal
recourse, it represents a direct affront to all who serve in our
military.
Our troops face many potential threats in service to our country. The
last thing they should be concerned about is whether they will be able
to keep their job.
A Nation that asks young men and women to defend this country with
their lives should protect them from losing their livelihoods when they
come home.
So I urge my colleagues to support this legislation to help preserve
access to justice for our servicemembers and veterans and to recognize
this is just one very powerful example of what the real damage and the
gross unfairness of forced arbitration clauses do to millions of
Americans.
I thank Mr. Johnson again for yielding, for his extraordinary
leadership on this issue, and for his fight to ensure that all
Americans have access to the courts and fair resolutions of their
grievances.
Mr. JOHNSON of Georgia. Mr. Speaker, as this Special Order has
powerfully documented, forced arbitration isn't open, isn't just, and
isn't fair. Simply put, forced arbitration clauses have become an
exculpatory mechanism to rig the justice system.
Arbitrators don't have to be lawyers. Their decisions are practically
irreversible. There is no record kept of the proceedings upon which you
could appeal. There isn't even a requirement that witness testimony be
given under oath.
As The New York Times investigative series illustrated, arbitration
can even take place in the offices of the party representing the
defendant.
There is also overwhelming evidence that forced arbitration creates
an unaccountable system of winners and losers through what is called a
repeat player advantage process that favors corporations over one-time
participants, such as individual workers and consumers.
An analysis of employment arbitrations found that workers' odds of
winning were significantly diminished in forced arbitration.
In 2012, the Center for Responsible Lending likewise reported that
companies with more cases before arbitrators get consistently better
results from these same arbitrators. Why? Because they are the ones who
refer cases to the arbitrators.
The arbitrators want to eat. They know that, if they rule against
whoever is referring the cases to them, then that is going to cut short
their ability to feed themselves.
And so they rule in favor of the hand that is feeding them, and that
is arbitrators, who are not even required to be lawyers and who have a
perverse incentive to favor the repeat business over the consumers or
the worker that they will never see again.
I am particularly alarmed by the growing number of companies that
hide forced arbitration clauses outside of the four corners of the
document.
For example, General Mills included a forced arbitration clause in
its privacy policy that bound any consumer who downloaded the company's
coupons or participated in its promotions.
Under its new terms, consumers also waived the right to a trial
simply by liking the company's page on Facebook or mentioning the
company on Twitter. Can you imagine giving up your Seventh Amendment
jury trial right on Facebook?
It has become an increasingly common practice to use gotcha tactics
to deceive consumers and employees by providing so-called notice of
binding arbitration in brochures, email and memoranda, job application
forms, signs outside of restaurants binding you--if you set foot in
there and consume, binding you to forced arbitration, in-store
application kiosks, employee training programs, contests and
[[Page H1727]]
games associated with company promotions. People have to watch out.
Even on the side of a cereal box you can waive your right to a jury
trial.
Just imagine a child finding glass in their cereal, but because the
company prohibited class action litigation through forced arbitration,
the child's parents would have to individually not go to court, but go
to an arbitrator to have their claim adjudicated.
What if it affected several thousand children? That same forced
arbitration clause would prevent class litigation to ensure that our
children's food is safe to eat.
These are actual cases where someone potentially lost their right to
hold a company accountable for unlawful conduct in a public courtroom.
In all of these cases, we are not even talking about an agreement with
a dotted line.
I am reminded of Justice Kagan's dissent in American Express v.
Italian Colors where she observed that the Federal Arbitration Act was
never meant to be a mechanism easily made to block the vindication of
meritorious Federal claims and insulate wrongdoers from liability.
The tides are turning. Americans are beginning to fight to restore
their right to a jury trial. Policymakers are using every tool
available to fix our laws so that corporations can no longer escape
public accountability.
I thank my colleagues for their participation in this Special Order.
Before I close, I want to also thank the Congressional Progressive
Caucus for their tireless work to advance a progressive agenda of
equality and opportunity for all.
I will close with this observation. The American people would fight
back if someone came into their home and said: We are going to take
away your Second Amendment right to bear firearms. They would fight.
But when corporations take away their Seventh Amendment right to a
jury trial, they remain mum, but not for much longer.
People are standing up. People are tired. They are desiring change.
They are angry and realize that they have been taken advantage of.
They want to level the playing field, and that is exactly what the
legislation that we have introduced in this Congress will accomplish.
Mr. Speaker, I yield back the balance of my time.
Mr. CONYERS. Mr. Speaker, during the congressional debates on
arbitration more than 90 years ago, witnesses testified about the
benefit of resolving disputes without judicial intervention. They
noted, for example, that when arbitration is properly used, it can help
parties avoid the uncertainty, delay, and costs of protracted
litigation. Their testimony ultimately led Congress to pass the Federal
Arbitration Act of 1925, which empowered courts to enforce arbitration
agreements.
As the use of pre-dispute forced arbitration agreements--especially
with respect to consumer transactions and employment agreements--has
proliferated in recent years, however, it is clear that arbitration is
not always beneficial to all parties and it may, in fact, eviscerate
the protection of critical federal consumer and civil rights statutes.
It is also apparent that the secrecy of arbitration awards can be used
to hide awareness of wrongdoing by businesses. And, there are serious
concerns about whether some arbitrators are indeed neutral.
The New York Times, in an excellent three-part series of
investigative articles on the use of forced arbitration agreements
published last year, reported that ``clauses buried in tens of millions
of contracts have deprived Americans of one of their most fundamental
constitutional rights: their day in court.'' Based on its exhaustive
investigation of court records and hundreds of interviews with lawyers,
judges, arbitrators, corporate executives, and plaintiffs, the Times
found that arbitration practices are often closed, fail to adhere to
rules of evidence or even substantive law, and are nearly impossible to
appeal. The arbitration provisions that prohibit class actions, as the
Times reports, are viewd by state judges as virtual `get out of jail
free' cards ``because it is nearly impossible for one individual to
take on a corporation with vast resources.'' By privatizing the justice
system, arbitration ``bears little resemblance to court'' and has
become an ``alternate system of justice'' for businesses precisely
because it tends to favor them, according to the Times.
Nothwithstanding these concerns, the use of pre-dispute forced
arbitration clauses has become virtually ubiquitous. They appear in
credit card agreements, car rental agreements, and employee handbooks.
They even appear in nursing home agreements when they are signed ``at
the time of admission only because the resident or family member does
not even notice or understand the arbitration clause, or sign[ed] . . .
out of fear that otherwise the admission will be jeopardized,''
according to the National Senior Citizens Law Center.
Pre-dispute mandatory arbitration agreements do not offer any option
to reject. Once signed, these agreements force consumers and employees
to irretrievably waive their right to judicial redress for harms they
have suffered, prevent them from availing themselves of any class
action remedy, and deny them the right to otherwise obtain justice
under applicable state and federal law.
As a result, millions of consumers and employees across our Nation
are legally bound by forced arbitration clauses in contracts with
little or no ability to negotiate them.
Accordingly, it is time for Congress to reconsider the value of pre-
dispute mandatory arbitration agreements. We must restore integrity to
the arbitration process and limit the enforceability of mandatory
arbitration clauses that provide no opportunity for consumers and
employees to opt-out.
Congress should not restrict the rights and options of consumers and
employees to resolve disputes Rather, arbitration should be one option
among many to resolve disputes. Legislation that protects consumers and
employees is a common-sense solution for all Americans.
For example, H.R. 2087, the ``Arbitration Fairness Act,'' is an
excellent measure that was introduced by my colleague, Representative
Henry C. ``Hank'' Johnson, Jr. This bill would make pre-dispute
arbitration agreements unenforceable in employee, consumer, civil
rights, and antitrust disputes. Importantly, H.R. 2087 would leave
arbitration in effect when it is truly voluntary: after a dispute
arises.
Similarly, H.R. 4899, the ``Restore Statutory Rights Act,'' which was
also introduced by Mr. Johnson earlier this week, would ensure that the
rights and protections established by Congress or the states are
enforceable in court.
These bills would help restore balance and fairness to contractual
agreements by allowing consumers, employees, franchisees, residents of
long-term care facilities, and others to opt for arbitration, rather
than have arbitration imposed on them as a pre-condition. Such measures
would help ensure a fairer arbitration process because the terms of
arbitration.
Congress must do more to protect the right of consumers and employees
to have access to the courts. Americans should not be forced to lose
this precious right as a result of one-sided, pre-dispute mandatory
arbitration agreements.
Mr. WASSERMAN SCHULTZ. Mr. Speaker, I rise today on behalf of
American consumers who are too often denied access to justice and
forced into arbitration by contracts they were unable to negotiate
fairly.
The Federal Arbitration Act was enacted to resolve disputes among
businesses of equal standing; not to restrict consumer access to our
courts. The horrific distortion of this law has allowed certain actors
to tip the scale in their favor and create an uneven playing field in
the pursuit of justice.
It is our responsibility to guarantee every American equal access to
justice and protect the public from unfair and pernicious business
practices. For this reason, I strongly support my colleague,
Representative Hank Johnson's bill, the Arbitration Fairness Act. This
bill would require that agreements to arbitrate employment, consumer,
civil rights or anti-trust disputes be made only after the dispute has
arisen. Consumers can only properly evaluate their options, and make a
truly voluntary choice, after a dispute has arisen. Arbitration
undeniably serves an important role in our legal system, but its use
must be a choice, and not a mandate resulting from a one-sided
contract.
Americans deserve to choose whether court, arbitration, mediation, or
any other method of dispute resolution works best for them. I urge my
colleagues to join me in guaranteeing all Americans this meaningful
choice by cosponsoring the Arbitration Fairness Act.
[[Page H1728]]
____________________