[Congressional Record Volume 168, Number 48 (Thursday, March 17, 2022)]
[House]
[Pages H3788-H3798]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
{time} 1215
FORCED ARBITRATION INJUSTICE REPEAL ACT OF 2022
Mr. NADLER. Madam Speaker, pursuant to House Resolution 979, I call
up the bill (H.R. 963) to amend title 9 of the United States Code with
respect to arbitration, and ask for its immediate consideration in the
House.
The Clerk read the title of the bill.
The SPEAKER pro tempore. Pursuant to House Resolution 979, in lieu of
the amendment in the nature of a substitute recommended by the
Committee on the Judiciary printed in the bill, an amendment in the
nature of a substitute consisting of the text of Rules Committee Print
117-34 is adopted and the bill, as amended, is considered read.
The text of the bill, as amended, is as follows:
H.R. 963
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Forced Arbitration Injustice
Repeal Act of 2022'' or the ``FAIR Act of 2022''.
SEC. 2. PURPOSES.
The purposes of this Act are to--
(1) prohibit predispute arbitration agreements that force
arbitration of future employment, consumer, antitrust, or
civil rights disputes; and
(2) prohibit agreements and practices that interfere with
the right of individuals, workers, and small businesses to
participate in a joint, class, or collective action related
to an employment, consumer, antitrust, or civil rights
dispute.
SEC. 3. ARBITRATION OF EMPLOYMENT, CONSUMER, ANTITRUST, AND
CIVIL RIGHTS DISPUTES.
(a) In General.--Title 9 of the United States Code is
amended by adding at the end the following:
``CHAPTER 5--ARBITRATION OF EMPLOYMENT, CONSUMER, ANTITRUST, AND CIVIL
RIGHTS DISPUTES
``Sec.
``501. Definitions.
``502. No validity or enforceability.
``Sec. 501. Definitions
``In this chapter--
``(1) the term `antitrust dispute' means a dispute--
``(A) arising from an alleged violation of the antitrust
laws (as defined in subsection (a) of the first section of
the Clayton Act) or State antitrust laws; and
``(B) in which the plaintiffs seek certification as a class
under rule 23 of the Federal Rules of Civil Procedure or a
comparable rule or provision of State law;
``(2) the term `civil rights dispute' means a dispute--
``(A) arising from an alleged violation of--
``(i) the Constitution of the United States or the
constitution of a State;
``(ii) any Federal, State, or local law that prohibits
discrimination on the basis of race, sex, age, gender
identity, sexual orientation, disability, religion, national
origin, or any legally protected status in education,
employment, credit, housing, public accommodations and
facilities, voting, veterans or servicemembers, health care,
or a program funded or conducted by the Federal Government or
State government, including any law referred to or described
in section 62(e) of the Internal Revenue Code of 1986,
including parts of such law not explicitly referenced in such
section but that relate to protecting individuals on any such
basis; and
[[Page H3789]]
``(B) in which at least one party alleging a violation
described in subparagraph (A) is one or more individuals (or
their authorized representative), including one or more
individuals seeking certification as a class under rule 23 of
the Federal Rules of Civil Procedure or a comparable rule or
provision of State law;
``(3) the term `consumer dispute' means a dispute between--
``(A) one or more individuals who seek or acquire real or
personal property, services (including services related to
digital technology), securities or other investments, money,
or credit for personal, family, or household purposes
including an individual or individuals who seek certification
as a class under rule 23 of the Federal Rules of Civil
Procedure or a comparable rule or provision of State law; and
``(B)(i) the seller or provider of such property, services,
securities or other investments, money, or credit; or
``(ii) a third party involved in the selling, providing of,
payment for, receipt or use of information about, or other
relationship to any such property, services, securities or
other investments, money, or credit;
``(4) the term `employment dispute' means a dispute between
one or more individuals (or their authorized representative)
and a person arising out of or related to the work
relationship or prospective work relationship between them,
including a dispute regarding the terms of or payment for,
advertising of, recruiting for, referring of, arranging for,
or discipline or discharge in connection with, such work,
regardless of whether the individual is or would be
classified as an employee or an independent contractor with
respect to such work, and including a dispute arising under
any law referred to or described in section 62(e) of the
Internal Revenue Code of 1986, including parts of such law
not explicitly referenced in such section but that relate to
protecting individuals on any such basis, and including a
dispute in which an individual or individuals seek
certification as a class under rule 23 of the Federal Rules
of Civil Procedure or as a collective action under section
16(b) of the Fair Labor Standards Act, or a comparable rule
or provision of State law;
``(5) the term `predispute arbitration agreement' means an
agreement to arbitrate a dispute that has not yet arisen at
the time of the making of the agreement; and
``(6) the term `predispute joint-action waiver' means an
agreement, whether or not part of a predispute arbitration
agreement, that would prohibit, or waive the right of, one of
the parties to the agreement to participate in a joint,
class, or collective action in a judicial, arbitral,
administrative, or other forum, concerning a dispute that has
not yet arisen at the time of the making of the agreement.
``Sec. 502. No validity or enforceability
``(a) In General.--Notwithstanding any other provision of
this title, no predispute arbitration agreement or predispute
joint-action waiver shall be valid or enforceable with
respect to an employment dispute, consumer dispute, antitrust
dispute, or civil rights dispute.
``(b) Applicability.--
``(1) In general.--An issue as to whether this chapter
applies with respect to a dispute shall be determined under
Federal law. The applicability of this chapter to an
agreement to arbitrate and the validity and enforceability of
an agreement to which this chapter applies shall be
determined by a court, rather than an arbitrator,
irrespective of whether the party resisting arbitration
challenges the arbitration agreement specifically or in
conjunction with other terms of the contract containing such
agreement, and irrespective of whether the agreement purports
to delegate such determinations to an arbitrator.
``(2) Collective bargaining agreements.--Nothing in this
chapter shall apply to any arbitration provision in a
contract between an employer and a labor organization or
between labor organizations, except that no such arbitration
provision shall have the effect of waiving the right of a
worker to seek judicial enforcement of a right arising under
a provision of the Constitution of the United States, a State
constitution, or a Federal or State statute, or public policy
arising therefrom.''.
(b) Technical and Conforming Amendments.--
(1) In general.--Title 9 of the United States Code is
amended--
(A) in section 1 by striking ``of seamen,'' and all that
follows through ``interstate commerce'' and inserting in its
place ``of individuals, regardless of whether such
individuals are designated as employees or independent
contractors for other purposes'';
(B) in section 2 by striking ``chapter 4'' and inserting
``chapter 4 or 5'';
(C) in section 208 by striking ``chapter 4'' and inserting
``chapter 4 or 5''; and
(D) in section 307 by striking ``chapter 4'' and inserting
``chapter 4 or 5''.
(2) Table of chapters.--The table of chapters of title 9 of
the United States Code is amended by adding at the end the
following:
``5. Arbitration of Employment, Consumer, Antitrust, and Civil Rights
Disputes.................................................501''.....
SEC. 4. EFFECTIVE DATE.
This Act, and the amendments made by this act, shall take
effect on the date of enactment of this Act and shall apply
with respect to any dispute or claim that arises or accrues
on or after such date.
SEC. 5. RULE OF CONSTRUCTION.
Nothing in this Act, or the amendments made by this Act,
shall be construed to prohibit the use of arbitration on a
voluntary basis after the dispute arises.
The SPEAKER pro tempore. The bill, as amended, shall be debatable for
1 hour, equally divided and controlled by the chair and ranking
minority member of the Committee on the Judiciary or their respective
designees.
After 1 hour of debate, it shall be in order to consider the further
amendment printed in House Report 117-273, if offered by the Member
designated in the report, which shall be considered read, shall be
separately debatable for the same time specified in the report equally
divided and controlled by the proponent and an opponent, and shall not
be subject to a demand for a division of the question.
The gentleman from New York (Mr. Nadler) and the gentleman from North
Carolina (Mr. Bishop) each will control 30 minutes.
The Chair recognizes the gentleman from New York.
General Leave
Mr. NADLER. Madam Speaker, I ask unanimous consent that all Members
may have 5 legislative days in which to revise and extend their remarks
and insert extraneous material on H.R. 963.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from New York?
There was no objection.
Mr. NADLER. Madam Speaker, I yield myself such time as I may consume.
Madam Speaker, H.R. 963, the Forced Arbitration Injustice Repeal Act,
or the FAIR Act, is critical legislation that would restore access to
justice for millions of Americans who are currently locked out of the
court system and are forced to settle their disputes against companies
in a private system of arbitration that is often skewed in the
company's favor over the individual.
Private arbitration has been transformed, by 40 years of reckless
Supreme Court decisions, from a voluntary forum for companies to
resolve commercial disputes into a legal nightmare for millions of
consumers, employees, and others who are forced into arbitration and
are unable to enforce certain fundamental rights in court.
By burying a forced arbitration clause deep in the fine print of
take-it-or-leave-it consumer and employment contracts, companies can
evade the court system, where plaintiffs have far greater legal
protections, and hide wrongdoing behind a one-sided process that is
tilted in their favor.
For example, arbitration generally limits discovery; does not adhere
to the Federal Rules of Civil Procedure; can prohibit class actions,
which it almost always does; and deny the right of appeal. Worse yet,
arbitration allows the proceedings, and often even the results, to stay
secret, thereby permitting companies to avoid public scrutiny of
potential misconduct.
For millions of workers and consumers, the precondition, whether they
know it or not, of obtaining a basic service or product, such as a bank
account, a cell phone, a credit card, or even a job, is that they must
sign a nonnegotiable contract that includes a provision requiring all
disputes to be resolved in private arbitration.
These take-it-or-leave-it contracts, which were once clearly
disfavored under the law, now seem to have been blessed by the Supreme
Court as standard operating procedure in the corporate world.
That means for millions of people, the ability to enforce consumer,
labor, antitrust, and civil rights laws are subject to the whims of a
private arbitrator, often selected by the companies themselves.
These private arbitrators are not required to provide plaintiffs any
of the fundamental protections guaranteed in the courts, and their
further employment can depend on building a good reputation with the
companies that hire them. Unsurprisingly, arbitration has become a
virtual get-out-of-jail-free card many companies use to circumvent the
basic rights of consumers and workers.
The FAIR Act reverses this disastrous trend by prohibiting the
enforcement of forced arbitration clauses in consumer, labor,
antitrust, and civil rights disputes.
Importantly, this legislation does not preclude both parties from
agreeing to arbitrate a claim after a dispute arises. It does, however,
protect unsuspecting consumers and employees from being forced to give
up their right to seek justice in court.
[[Page H3790]]
Last month, Congress came together in a bipartisan fashion to
prohibit forced arbitration clauses in suits concerning sexual
harassment and sexual assault. Watching that legislation be signed into
law was a proud moment for many of us in this Chamber. This bill simply
extends the same basic fairness in that bill to other workers and
consumers.
That bipartisan bill, which gathered, as I recall, about 130
Republican votes, is exactly the same as this bill, only limited in its
application.
Every argument for that bill is an argument for this bill. This bill
simply extends the same basic fairness in that bill, as I said, to
other workers and consumers.
I thank the gentleman from Georgia (Mr. Johnson) for his leadership
on this bill.
Madam Speaker, I urge my colleagues to support this vital
legislation, and I reserve the balance of my time.
Mr. BISHOP of North Carolina. Madam Speaker, I yield myself such time
as I may consume.
I rise in opposition to H.R. 963. There is nothing fair about the
FAIR Act. The bill would undermine Americans' freedom to contract;
burden the judicial system, both Federal and in all States in the
country; and restrict access to justice.
This bill would ban arbitration agreements across nearly all
contracts. It outlaws arbitration agreements in employment disputes,
consumer disputes, antitrust disputes, and civil rights disputes. It
outlaws arbitration agreements with respect to not only big, huge
corporations but the most humble businesses and parties in the country,
those that I served in my law practice.
Democrats propose that arbitration is bad for Americans, but it has
been a fixture of our legal landscape for almost 100 years. They claim
that arbitration is forced. Both of their claims are wrong.
Arbitration has many benefits. It is more efficient and faster than
going to court. The rules are not nearly as arcane. Injured parties get
their relief sooner, and they spend less money along the way.
Plaintiffs in employment and consumer disputes, according to studies,
actually win more in arbitration than they do in court. They get more
money in arbitration. They win more often in arbitration.
Democrats know that arbitration has plenty of benefits. How do you
know this? Because in this very bill, Democrats have carved out their
union friends from the mandates of this bill.
In other words, if the bill becomes law, powerful unions, and no one
else, can still use these valuable agreements vis-a-vis individuals.
This carve-out also tells us that Democrats know there is no such
thing as forced arbitration. Agreements that are truly forced are
already illegal under existing law in every State in the country.
People are no more forced to agree to an arbitration provision than
they are to agree to any other provision of a contract. The bill,
instead, bans private parties from knowingly and willingly agreeing on
a process to resolve future disputes. It tells Americans, no matter how
informed or sophisticated they may be, that they can't be trusted to
manage their own relationships by agreeing in advance to the means of
resolution to be used in the event of a dispute.
Our Democrat colleagues seem to believe that Americans can't be
trusted to think for themselves. Big Government needs to tell them what
to do. Their freedom to contract should be restricted by the wisdom
from Washington.
Democrats argue that this bill is no big deal because parties can
still decide to use arbitration after a dispute arises, but that never
happens in practice for much the same reason that many disputes go to
court and are resolved outside of a jury. About 1 to 2 percent actually
go all the way.
The decision to get into a lawsuit is not always purely rational,
taken from all points of view, and is often affected by tempers that
are different once the dispute has arisen than when the parties are
considering a position of cool judgment in advance.
Their incentives change after a dispute has arisen, and people will
pick a strategy to resolve that dispute at that time. They won't
necessarily be looking for a process, then, that is good for both
parties for many reasons.
When you are immersed in a dispute, there is also a greater chance
that a lawyer that you may have retained would have an incentive to
direct you in the direction of litigation rather than arbitration, and
those incentives certainly won't necessarily be consistent with a
faster and cheaper alternative.
Rather than helping the little guy stand up to big companies, this
bill would take the option to arbitrate off the table for everybody and
put more money in the pockets of trial lawyers, most especially
plaintiffs' class action trial lawyers.
The bill would force more people into court. They will pay more and
possibly recover less. But it would also force some people out of the
justice system altogether.
Some people will be unable to pay for an expensive lawsuit, or they
may have a claim so small that it is only practicable for them to bring
it themselves, which arbitration facilitates.
Let's be clear, too. The surge in new lawsuits hurts employment. It
hurts businesses and keeps them from being able to afford to hire more
people. It will raise their costs at the worst possible time, when they
are already dealing with supply chain problems and record inflation
caused by failed Democrat policies, and not only by prohibiting the use
of arbitration going forward but by retroactively eliminating it,
rendering it null and void in millions of contracts already outstanding
right now, at this point in the life of our Nation, when we have 8
percent inflation, another constraint on the supply chain imposed by
Democrat policies.
Everyone should be sounding the alarm on this blatant overreach. At
the end of the day, this bill curries favor with the plaintiffs' bar
and union bosses, and it does so at the expense of hardworking
Americans and small businesses, especially.
For these reasons, I urge my colleagues to oppose H.R. 963, and I
reserve the balance of my time.
{time} 1230
Mr. NADLER. Madam Speaker, I yield myself such time as I may consume.
I want to correct something Mr. Bishop said. This bill does not ban
arbitration. It bans forced arbitration. It bans the practice or the
enforceability of the practice of having a provision in a contract that
you sign to buy anything or an employment contract where you are
forced, that is there and that if you try to change it, they won't sell
you the car, they won't sell you the cell phone, they won't hire you,
so you have no choice, and that forced arbitration removes the
constitutional right to a trial by jury.
Madam Speaker, I yield 2 minutes to the gentleman from Tennessee (Mr.
Cohen), a member of the Judiciary Committee.
Mr. COHEN. Madam Speaker, this morning I went to a breakfast where I
heard the thoughts of Miss Sheila Bair. Miss Bair is a Republican. She
describes herself as a Midwest Republican who worked on Senator Dole's
staff for 8 years. She is a former assistant secretary of the Treasury
and a former head of the FDIC under Republican Presidents.
She said specifically the problems with inflation in this country are
worldwide. They are the supply chain, which is worldwide, caused by the
pandemic in China and other problems. They are worldwide. So any more
of this rhetoric about Biden and his problems with the supply chain, it
is not Biden; it is a worldwide problem.
The same thing for the price of oil. Yesterday, in Judiciary
Committee we heard someone say it is Biden's fault that the price of
oil has gone up. The price of oil is a worldwide market. President
Biden's actions do not affect the worldwide market. It is supply and
demand. We need to not hear these canards.
And the same for this bill. This is, as Mr. Nadler said, forced
arbitration. Mr. Johnson has been working on this for years, and I
compliment him on his work and his success. This gives consumers a
chance to get their cases heard and to get a rightful judgment, not be
forced to take an arbitration that is almost always entirely pro-
business.
[[Page H3791]]
This is the difference between Republicans and Democrats. Democrats
look out for people, people who have had injustice done to them and
look for a way to correct it and give them equity. Republicans look to
business, who caused the harm, and try to defend them and keep their
pockets full.
I support the bill. All American consumers would support the bill. I
urge its passage.
Mr. BISHOP of North Carolina. Madam Speaker, I yield myself such time
as I may consume.
The distinguished chairman of the committee offered to correct me by
saying that the bill only prohibits forced arbitration, said that was a
correction, as if I misspoke as to facts.
Let me read from the language of the bill: ``Notwithstanding any
other provision of this title, no predispute arbitration agreement or
predispute joint-action waiver shall be valid or enforceable with
respect to an employment dispute, consumer dispute, antitrust dispute,
or civil rights dispute.''
The word ``forced'' was not in that language, Madam Speaker. It
prohibits all predispute arbitration agreements and post-joint action
waivers.
I yield 2 minutes to the gentleman from Florida (Mr. Gaetz).
Mr. GAETZ. Madam Speaker, I thank my gracious colleague for yielding,
though we do not hold the same position on this piece of legislation.
Madam Speaker, when our fellow Americans get a cell phone contract,
when they get cable, when they get internet, they are subject to forced
arbitration. Virtually every single American lives under a forced
arbitration provision today, and most do not know it.
Do we really think that people have the ability to go negotiate
against AT&T or Comcast or in many cases big businesses that employ a
great deal of Americans? Of course, they don't.
And so what that means is that we have a two-tier system of dispute
resolution. Regular folks get to show up at Article III courts the
taxpayers fund to resolve their disputes, and meanwhile oftentimes big
business gets a concierge lane to be able to resolve matters in their
favor and oftentimes to preclude the resolution of a matter at all.
Think about instances of wage theft where big businesses can take
just a little bit of money and not pay their employees. Well, an
individual employee would have a very hard time getting a lawyer and
making a case on that, and so they need the class action tool to be
able to get redress for their grievances. The forced arbitration
provisions that impair so many of our fellow Americans limit that class
action tool, and then people end up getting really screwed in the
process.
I support the legislation. I am proud to be the Republican lead, and
it is my belief that if Article III courts funded by the taxpayers are
good enough for the rest of us, they ought to be good enough for big
business. I thank the gentleman for his indulgence.
Mr. BISHOP of North Carolina. Madam Speaker, I yield myself such time
as I may consume.
I thank the gentleman from Florida, and as I suggested earlier, if
the bill were a matter only of big businesses, it would be a very
different bill, but just as there is no limitation to forced
arbitration agreements in the language of the bill, there is no
limitation to arbitration agreements entered into between little guys
and big companies.
The very first appeal I ever took in a 30-year law practice in 1992
was in a case called Bennish v. North Carolina Dance Theater, in which
I represented a fledgling, very-hard-pressed economically arts group in
my hometown that had an employment dispute with a dancer who wanted to
litigate. They had an arbitration agreement. It would have destroyed
that organization financially to have to engage in extended and
expensive litigation. This bill would have made the enforcement of that
arbitration agreement unlawful, and it has nothing to do with big
business.
Madam Speaker, I reserve the balance of my time.
Mr. NADLER. Madam Speaker, I yield 4 minutes to the gentleman from
Rhode Island (Mr. Cicilline), a member of the Judiciary Committee.
Mr. CICILLINE. Madam Speaker, I rise in strong support of H.R. 963,
the FAIR Act, which prohibits the enforcement of forced arbitration
clauses in consumer, employment, civil rights, and antitrust disputes.
Buried deep within the fine print of almost every contract consumers
sign are clauses that deprive hardworking Americans and small
businesses of their day in court when they attempt to hold corporations
accountable for breaking the law.
We heard from lots of small businesses in support of this bill. No
one claimed that they were required to have forced arbitration in order
to remain successful. Forced arbitration protects systemic wrongdoing.
Everyone is always allowed to have arbitration if they want to
voluntarily once a dispute arises.
This forces people to give up their right to have their claims heard,
and most Americans don't even know they have given up that right
because they are forced to sign contracts, where in the fine print is a
provision where you are waiving that right. When you get a phone, when
you get cable, when you have internet service. This outrageous
practice, as my colleague from Florida just described, is nothing short
of a corporate takeover of our Nation's system of justice, and it
affects almost every single American.
This private arbitration that is very expensive, that lasts a very
long time also lacks the procedural safeguards of our justice system.
It is not subject to oversight, it doesn't have a judge, doesn't have a
jury, it is not bound by laws even passed by Congress or the States in
which it occurs, but it has become a requirement of everyday life for
tens of millions of consumers and workers who have to surrender their
rights to hold wrongdoers accountable.
These provisions require people to give up the right to have their
claims heard in a court of law and to have that remedy that will
prevent the wrongdoer from continuing.
Think about someone bringing a family member or loved one into a
nursing home who doesn't have the opportunity to negotiate taking out
that provision because someone they love is in desperate need of care.
I will give you a real example: Someone who is defending our country;
the case of Lieutenant Commander Kevin Ziober, who testified in support
of the FAIR Act in the last Congress. He served in the U.S. Navy
Reserves since 2008. He was activated multiple times to serve in
Afghanistan and Iraq.
On the last day of his employment, they had a party for him. They had
a cake in the shape of a flag; they celebrated him; and moments later
he was fired. When he said to his employer, ``You can't fire me, there
is a Federal statute that protects me,'' they said, ``Sorry for you,
you agreed to forced arbitration. You waived away your rights in your
employment contract.'' And in the fine print, sure enough, there it
was.
He testified at the hearing in 2019 that his case was in arbitration
7 years later. Nothing fast about that. And sadly, he said, ``This
happens every day across America, not only to servicemembers and
veterans whose rights are violated, but also to working people and
consumers of all backgrounds.''
The FAIR Act will ensure that what happened to Lieutenant Ziober and
what happens to millions of other hardworking Americans never happens
again. Let's restore justice to our justice system by getting rid of
these pernicious, horrible, unfair provisions.
As I conclude, I thank Congressman Johnson for his extraordinary
leadership. He has been fighting to try to free the hardworking
Americans and consumers and people who fight for our country from the
bondage of forced arbitration clauses, and finally we can do that
today. Vote ``yes.'' Vote for the FAIR Act.
Mr. BISHOP of North Carolina. Madam Speaker, I yield myself such time
as I may consume.
We still haven't heard an explanation for why this legislation deems
it appropriate to eliminate arbitration for parties of all sizes. We
keep hearing about the little guy versus the massive corporation.
Even in that circumstance, of course, what we may be talking about is
like the case from 2011, AT&T Mobility v. Concepcion, where the issue
was people in California had bought cell phones, they had been offered
a free cell phone, but it wasn't made clear that they would have to pay
the sales tax. So
[[Page H3792]]
there was a $5 claim per purchaser, and wealthy plaintiffs' class-
action lawyers wanted to bring a big lawsuit. With tens of thousands of
them, they might get a $5 coupon, but the lawyers would buy a new jet.
That may be in some circumstances, even the dispute with the big guy.
But leave that aside. We still don't hear any explanation for why you
are wiping out arbitration as a means that parties choose, even if they
are on equal bargaining power.
Madam Speaker, I yield 2 minutes to the gentleman from Wisconsin (Mr.
Tiffany).
Mr. TIFFANY. Happy St. Patrick's Day, Madam Speaker. I just want to
gently correct my colleague from North Carolina when he cited 8 percent
inflation. On an annualized basis, we are seeing it being measured at
10 percent here. I can understand the Representative from Tennessee's
sensitivity toward Bidenflation.
Today, we are here because the Democrats want to pass legislation
that insults the intelligence of Americans. According to my colleagues
on the other side of the aisle, the only people sophisticated enough to
enter into arbitration agreements are unions, so they have exempted
them from this bill. Convenient.
This legislation prohibits predispute arbitration agreements, which
are a fair, efficient, and effective way for consumers, workers, and
businesses to settle disputes without costly and time-consuming
litigation that mainly benefits the trial bar. This bill will also
deprive Americans of an effective legal option, while costing them more
time and money.
Predispute arbitration agreements exist in many employment and
consumer contracts today and are enforced like any other kind of
contract. Arbitration is generally fair, often leads to better outcomes
for workers, and does not keep claimants from simultaneously alerting
the world to bad actors. Those agreements create a win-win situation
for parties to contract in advance on a process for resolving future
disputes.
Courts, accordingly, uphold and enforce lawful agreements to
arbitrate when disputes arise between parties, an approach consistent
with the fundamental principle that arbitration is a matter of
contract. This policy of individuals being free to contract has
arguably long been a feature of American law. Existing law also permits
courts to invalidate agreements under generally applicable contract
defenses, such as fraud or duress.
Some will argue that arbitration requires confidentiality. This is
not true. The parties to the agreement always have a right to disclose
details of the proceeding unless they have a separate confidentiality
agreement. Nor does current law typically preclude a party from
disclosing information obtained in the arbitration process or any
resulting award. Arbitration is usually less expensive and faster than
litigation.
The SPEAKER pro tempore (Ms. Williams of Georgia). The time of the
gentleman has expired.
Mr. BISHOP of North Carolina. Madam Speaker, I yield an additional 1
minute to the gentleman from Wisconsin.
Mr. TIFFANY. It normally minimizes hostility, is less disruptive of
ongoing and future business dealings, and is often more flexible. This
legislation does not favor the American consumer. The only ones favored
are the unions and the trial bar. This is not right for Americans, and
I urge my colleagues to vote ``no'' on this un-fair act.
Mr. NADLER. Madam Speaker, I yield 4 minutes to the distinguished
gentleman from Georgia (Mr. Johnson), a member of the Judiciary
Committee and a sponsor of this bill.
Mr. JOHNSON of Georgia. Madam Speaker, I thank the chairman for the
time today to speak on the FAIR Act, and I ask my fellow colleagues to
vote ``yes'' on this bill.
My colleagues and I on the other side of the aisle will disagree on
much, but on one thing we can all agree, and that is the Constitution
of the United States of America is a great document.
At the beginning of that document is the preamble, and the first 17
words of the preamble read as follows: ``We the people of the United
States, in order to form a more perfect Union, establish justice,'' and
then it goes on. But you can see at the very top, the ideal of the
Founders was to establish justice in this country.
{time} 1245
So they went about the Constitution by giving power to the
legislative branch in Article I, to the executive branch in Article
Number II, and to the judicial branch, the Court system, to establish
justice in Article III.
And then, in the Bill of Rights, the first 10 amendments to the
Constitution where the Bill of Rights for we, the people, gave us our
individual rights, with the exception of Amendment 10, which gives the
States all powers not reserved to the Federal Government.
So the Bill of Rights, in the Seventh Amendment to the Constitution,
it guarantees the right to a jury trial, a trial by a jury of one's
peers for any civil case where the amount in controversy exceeds $20 or
more. That is still the law in this country. That is our Constitution.
But the Supreme Court has seen fit to erode our freedoms insofar as a
right to a jury trial by allowing corporations, employers, to take away
that right from people. That is forced arbitration.
Gretchen Carlson, with FOX News, when she came forward with her
claims that she was fired because she resisted the demands of Roger
Ailes to have sex with him, and she filed a civil rights action, she
was met with the bar of a forced arbitration clause in the employment
agreement that she signed.
I was so happy, Madam Speaker, to attend a bill signing ceremony a
couple of weeks ago at the White House where my colleague, Cheri
Bustos' legislation, the Ending Forced Arbitration of Sexual Assault
and Sexual Harassment Act was signed into law.
We need to go further. We just heard, within the last couple of
weeks, of former coach Brian Flores of the Miami Dolphins, who filed a
lawsuit against the Miami Dolphins and a couple of other clubs, as well
as the NFL, alleging that he had been discriminated against racially.
He had been denied hiring opportunities and retention and compensation.
He filed a complaint.
He is met by the NFL with an arbitration clause. If it is good enough
for sexual assault and sexual harassment cases, constitutional rights,
those rights, that same ability needs to enure to those who have been
aggrieved by racial discrimination and other types of discrimination.
And consumers need to be allowed to assert their Seventh Amendment
right when it comes to a dispute with a shop owner or shopkeeper.
The SPEAKER pro tempore. The time of the gentleman has expired.
Mr. NADLER. Madam Speaker, I yield the gentleman an additional 1
minute.
Mr. JOHNSON of Georgia. And so, what we have seen with the U.S.
Supreme Court is they have allowed corporations to have rights under
our Constitution. Nowhere in it is there a section for corporations.
Let's restore freedom to the people of this country as guaranteed by
the Bill of Rights under the Constitution that we all live under. It is
a constitutional right that, when there is a dispute, a party should be
able to take that dispute to court and have a jury trial, and no forced
contract should deprive that person of that constitutional right.
That is what the FAIR Act will do. It will render unenforceable,
after the act is signed into law, unenforceable, any pre-dispute forced
arbitration clauses in consumer agreements and in employment
agreements, and also in civil rights cases, causes of action and also
antitrust actions.
Mr. BISHOP of North Carolina. Madam Speaker, I yield myself such time
as I may consume.
The distinguished gentleman from Georgia suggests that this bill is
about whether or not we are preserving the right to jury trial in the
Constitution. But I submit, that is not really what is at stake.
The question is whether you resolve a dispute through arbitration or
you go to the court system. If you go to the court system, there are
innumerable paths within the court system that lead to not having your
case decided by a jury.
In fact, only about 1 to 2 percent of cases end up proceeding to a
determination by a jury. That means 99 or 98
[[Page H3793]]
out of 100 cases do not. They might be dismissed on a motion for
summary judgment. They might be dismissed for failure to state a claim.
There may be settlement processes that come to fruition during the
course of the case.
But it is almost never true--think about that--that a case in court
goes to a jury. So this notion that this bill, by eliminating the
choice of arbitration, somehow preserves everybody's jury trial
magically is a false choice.
And more to that point, the gentleman from Georgia, and also the
chairman, in the inception, noted that we have just had a bill signing
of a bill that excepts from enforceable arbitration agreements the
category of sexual assault, sexual harassment. The majority of
Republicans supported that.
The majority of Republicans will not support this bill because it
represents the throwing out of the entire mechanism of arbitration,
which has been, as I indicated, a feature of the legal landscape used
with great utility and utilized throughout the last hundred years
almost, since 1925.
Madam Speaker, I yield 3 minutes to the gentleman from Oregon (Mr.
Bentz).
Mr. BENTZ. Madam Speaker, I move to recommit H.R. 936 and have my
amendment that strikes the retroactivity provision of this bill
included in the Record.
It is wrong, clearly not right, for Congress to step in and
retroactively invalidate parts of millions of existing contracts. The
parties to those contracts, in good faith, relied on those parts of
their contracts when they struck their bargain. But if this bill
becomes law, it will rewrite millions of existing contracts, which will
lead to waves of new litigation.
This litigation will place new costs on businesses, consumers, and
employees, who will be forced to pay more for lawyers, hundreds of
dollars per hour and may get stuck for years in long court battles
instead of having available the solution of arbitration.
Applying new laws retroactively undermines the rule of law and upends
the certainty that parties are trying to create when they negotiate and
enter into a contract.
My motion would make this bill apply only to agreements entered into
after this bill goes into effect. I offered this amendment at the
markup in the Judiciary Committee, but the Democrats there rejected it.
I offered this amendment to the Rules Committee, but the Democrats
there chose not to make it in order.
I offer this amendment for a third time here on the floor of this
House because this matter is critically important. Retroactively
voiding millions upon millions of existing contracts is truly bad
policy.
By making this bill apply only to future contracts, we can avoid the
inherent unfairness of having Congress directly interfere in millions
upon millions of existing agreements. I urge my colleagues to support
my motion to recommit.
Madam Speaker, if we adopt this motion to recommit, we will instruct
the Committee on the Judiciary to consider again my amendment to H.R.
963 to ensure that the Democrats' attempt to eviscerate arbitration
will not apply retroactively to the millions upon millions of
contractual agreements already in place.
Madam Speaker, I ask unanimous consent to insert the text of this
amendment in the Record immediately prior to the vote on the motion to
recommit.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Oregon?
There was no objection.
Mr. NADLER. Madam Speaker, I yield myself such time as I may consume.
I just want to point out that this bill does not ban arbitration. If
two parties have a dispute and prefer arbitration to going to court,
they can have arbitration. This bill bans forced arbitration, meaning
arbitration that is entered into contracts that people have no ability
to change. That is why it says pre-dispute arbitration agreements are
struck by this bill, not post-dispute arbitration agreements.
So this bill does not eliminate arbitration agreements if they want
to. It does eliminate forced arbitration agreements that the party,
usually the employee or the consumer had no knowledge of probably and
no ability to say no to. We used to call them contracts of adhesion,
but we don't do that anymore.
Madam Speaker, I yield 3 minutes to the gentlewoman from Texas (Ms.
Jackson Lee), a member of the Judiciary Committee.
Ms. JACKSON LEE. Madam Speaker, I thank my friends and colleagues,
Chairman Johnson and Chairman Nadler, for this long overdue legislation
that we voted on last year; and, as well, to acknowledge the forced
arbitration legislation that was signed by the White House dealing with
sexual assault.
Now we have come full circle, so let me try to reinforce, because our
friends on the other side of the aisle--and I call them friends--not
only have it wrong, they have it upside down. It is completely
misconstrued as to what this legislation does.
And if you go out on the street corner and talk to any American they
will say, of course I want the FAIR Act, because forced arbitration
says to them that, in essence, you are obligated, you are indentured to
the contract that you signed to get a job, to buy a phone, to get that
big TV, and that you are not able to pursue your due process rights.
Now, this is a constitutional issue. The Fifth Amendment completely
indicates that you cannot be deprived of life, liberty, or property
without due process of law, however you choose your due process of law.
We go on to the 14th Amendment; of course, part of the historic 13th,
14th and 15th Amendments, and it indicates that no State shall make or
enforce any law which shall abridge the privileges or immunities of
citizens of the United States under this Constitution, which includes
the right to a trial by jury, nor shall any State deprive any person of
life, liberty, or property without due process again; and that you
would guarantee equal process and justice under the law.
So let me factually say, though the signing of any contract or
document is voluntary, often large corporations make it impossible to
use their product or be employed without agreeing to a contract with a
forced arbitration, making signing of the contract or document anything
but voluntary; and clearly, it has constitutional implications.
Something that should alarm all American consumers is that according
to a study commissioned by University of California Davis Law Review,
81 companies in the Fortune 100, including subsidiaries or relating
affiliates, have used arbitration agreements in connection with
consumer transaction.
Now let me be very clear. When you have a dispute, we are perfectly
happy for you, as the individual, part of the contract, to say to the
corporation, I don't care about my rights. I am going to throw myself
on the mercy of arbitration. And in doing so, you may subject yourself
to a limited decision, as Brian Flores was finding out.
Madam Speaker, let me tell you that American economic supremacy does
not stem from the contributions of modern-day oligarchs, billionaires,
CEOs, or the wealthy. It comes from the middle class. It comes from
those 60 million workers and countless others who put in an honest 8-
hour day, five times a week, in the simple pursuit of trying to feed
their families and take care of their communities.
The SPEAKER pro tempore. The time of the gentlewoman has expired.
Mr. NADLER. Madam Speaker, I yield the gentlewoman an additional 30
seconds.
Ms. JACKSON LEE. Madam Speaker, I thank the gentleman for his
generosity.
I oppose the upcoming amendment that talks about not excluding
unions. Unions have agreements between individuals. Unions have the
power, through their persons they represent, to vote yea or nay for
that contract. So if they vote yea or nay on that contract, their eyes
open on the arbitration, it is the union that will be protecting that
individual. They will not be in that process alone.
In the instance of an individual and the contracts that are signed,
they will be alone. But they will not be alone if the FAIR Act is
passed and the Constitution is upheld. That is why I support
enthusiastically the FAIR Act and oppose the amendment to be
forthcoming.
[[Page H3794]]
Pass the FAIR Act because justice and the Constitution requires it.
Madam Speaker, I rise in strong support of H.R. 963, ``The FAIR Act''
which prohibits a predispute arbitration agreement from being valid or
enforceable in an employment, consumer, antitrust, or civil rights
dispute.
Action on this legislation is long overdue considering the long
history of the problems caused by forced arbitration. The FAIR Act was
passed by the House in the 116th Congress, so I hope we can pass it
again now and that the Senate will do the same this time so we can
finally resolve this problem.
Forced arbitration is typically due to a clause in a contract that
takes away employees' and consumers' rights to pursue litigation in the
case their legal rights are violated. 60 million American employees and
myriad consumers are unfairly, and usually unknowingly, subjected to
its limitation of their legal rights.
Though the signing of any contract or document is voluntary, often
large corporations make it impossible to use their product or be
employed without agreeing to a contract with a forced arbitration
clause, making signing of the contract or document anything but
voluntary.
Something that should alarm all American consumers is that, according
to a study commissioned by the University of California Davis Law
Review, 81 companies in the Fortune 100, including subsidiaries or
related affiliates, have used arbitration agreements in connection with
consumer transactions.
The study also found that possibly two-thirds of American households
are covered by consumer based forced arbitration agreements.
This means nearly 86 million American households have their
Constitutional right of access to the judicial system restricted.
For American employees, the numbers are also staggering. Similarly,
60 million American employees are subject to forced arbitration
agreements of which they are often unaware until a dispute arises for
which they seek judicial redress.
The extensive reach of arbitration clauses is only increasing, with
the Economic Policy Institute estimating 80 percent of private sector
nonunion workers being subject to forced arbitration clauses by 2024.
Madam Speaker, American economic supremacy does not stem from the
contributions of modern-day oligarchs, billionaires, CEOs, or the
wealthy; it comes from the middle class. It comes from those 60 million
workers and countless others who put in an honest 8-hour day 5 times a
week in the simple pursuit of trying to feed their families and take
care of their communities.
The fact that so many of these hard-working Americans are having
their legal rights taken away without them knowing it is morally
reprehensible and must be put to an end. The FAIR Act remedies that 1
problem.
In addition to being sound policy, the FAIR Act promotes racial
equity in our rapidly diversifying country and workforce.
Another study from the EPI found 59.1 percent of African American
workers (7.5 million workers) are subject to mandatory arbitration, as
are female workers (at 57.6 percent).
Unfortunately, this is not surprising considering African Americans
and women are two of the most historically discriminated against groups
in the United States.
Forced arbitration continues the struggles of African Americans in
the workplace, from slavery, sharecropping, and redlining to ongoing
segregation, discrimination, racism, and voter suppression. As these
statistics show, our struggle for equity in the workplace continues.
We are exhausted, yet we remain in the fight. We must continue to set
right historical wrongs, and the FAIR Act provides us an avenue to do
so.
Fairness in the workplace for women is also further remediated by
this legislation. In this country, we have a disgraceful wage gap
between men and women of 82 cents to the dollar, according to the
latest Bureau of Labor Statistics figures.
As a Member of the Women's Caucus, I have been fighting for pay
equity for American women since before I arrived here as a
Representative in 1995, and I believe that equal pay for equal work is
a simple matter of justice.
Wage disparities are not simply a result of women's education levels
or life choices. In fact, the pay gap between college educated men and
women starts as soon as they enter the workplace and expands shortly
thereafter. Women can have the same background, work in the same field,
and perform the same functional position, yet still be grossly
underpaid. Disproportionately subjecting women to forced arbitration is
yet another stain on this country's historical attitude towards women
in the workforce.
I have consistently been a proud sponsor and cosponsor of legislation
that expands legal rights, creates a more level playing field, and
erodes long standing social disparities.
The FAIR Act achieves these goals, and I therefore urge my colleagues
to support the FAIR Act.
Mr. BISHOP of North Carolina. Madam Speaker, I yield myself such time
as I may consume.
On the other side of the aisle, we hear repeated references to
defending the Constitution and the American way. I would remind the
Chamber that our economy, the American economy, is built on contracts;
which contracts, under the rule of law, are not forced, but enforced
when someone refuses to abide by his or her agreement. That is not
forced. That is where a contract is enforced.
We, our courts, our judicial system, and, yes, arbitration is the
means by which we call people to live by their bargains, and that has
been the key to the most successful economy in the history of the
world. It has certainly been the state of affairs, as I said, for
almost 100 years.
Throwing that out, dispensing with a major component of that on the
premise that you are pursuing the American system is contrary to fact.
It is, as Democrats often seek to do, it is transformational. It seeks
to transform America, not to reinforce and persist it.
Madam Speaker, I yield 3 minutes to the gentleman from California
(Mr. McClintock).
{time} 1300
Mr. McCLINTOCK. Madam Speaker, the gentleman is absolutely right. The
bill purports to assert a very important constitutional right, the
right to trial by jury in civil actions. But it does so by denying
everyone a very important other constitutional right, the freedom of
unimpaired contract, the right of two parties to agree to exchange
goods and services according to their own best judgment.
Now, because of the excesses and expenses and uncertainties that have
plagued our civil courts, many consumers and producers, and many
employees and employers, find it advantageous to waive their right to
civil jury trials in any disputes between them in favor of a simpler,
cheaper, and faster arbitration.
Now, proponents tell us it is an uneven playing field, and this
requirement is often imposed in nonnegotiable, take-it-or-leave-it
propositions. This isn't exactly true. Every employee and every
consumer, no matter how weak and vulnerable, has an absolute defense
against a bad agreement. It is the word ``no.'' No, the pay isn't good
enough. No, the price is too high. No, I don't like the binding
arbitration clause or any other terms, and I am taking my business
elsewhere.
Now, even when there aren't good alternatives, the fact is that every
provision in a contract is a take-it-or-leave-it proposition if one
side or the other insists on it. The question for each side is whether
the totality of the contract is beneficial to them or not. It is every
grownup's right to make that decision for themselves without somebody
in government making it for them.
Remember, the so-called forced arbitration provision forces the
company to accept arbitration as well. For example, I am not a lawyer.
I can't afford to hire one to take a big company to court. For me,
binding arbitration helps level the playing field by providing me with
an inexpensive alternative that the company must abide by. This bill
takes that protection away from me.
According to the U.S. Chamber of Commerce, through arbitration,
employees prevail three times more often, recover twice as much money,
and resolve their claims more quickly than they could through
litigation. And in most cases, the employer pays the entire cost of
arbitration.
According to one study, in claims between $10,000 and $75,000, the
consumer claimant was charged an average of $219. Now, you compare that
to the cost of hiring an attorney and taking on an entire corporate
legal department.
The net result of this bill will be higher prices for products and
lower wages for workers as companies factor the high cost of litigation
into their business models.
Madam Speaker, that is not fair.
Mr. NADLER. Madam Speaker, I reserve the balance of my time.
Mr. BISHOP of North Carolina. Madam Speaker, I thank the gentleman
from California for his remarks.
[[Page H3795]]
It causes me to remark, as the gentleman from Tennessee said a moment
ago, that it is Democrats who look out for the interests of the little
guy and look out for the interests of the people. I wonder why it is
that looking out for the interests of the people invariably involves
restricting their freedom in some way. What a remarkable notion.
Madam Speaker, I reserve the balance of my time.
Mr. NADLER. Madam Speaker, I yield 3 minutes to the distinguished
gentlewoman from Washington (Ms. Jayapal), a member of the Committee on
the Judiciary.
Ms. JAYAPAL. Madam Speaker, I thank the chairman for yielding.
Madam Speaker, I rise in strong support of the Forced Arbitration
Injustice Repeal Act.
Forced arbitration deprives workers of the choice to have their day
in court. When companies impose forced arbitration clauses, they choose
every aspect of the process. They choose the mediator; they choose the
location; and they choose the terms of the relief.
This is a lose-lose scenario, and it disproportionately harms
workers, particularly women and communities of color, but it imposes
enormous consequences for everyone.
You sign a contract for car repair, for car rental, for any consumer
transaction, and when you need that car rental, hidden in those
contracts is a prohibition from you taking any claim to court. No
choice, no notion, even, for the majority of people that this
fundamental right to that choice to sue an unscrupulous corporation is
being taken away from you when you sign that contract.
Madam Speaker, I think of this bill as a bill for the little guy or
the little woman. Women and people of color forced into arbitration
face mostly White male arbitrators in environments that heavily favor
corporate interests.
When musician Jay-Z entered arbitration without a single Black
arbitrator in the room, he asked for ``neutrals of color.'' But only
three suggested alternatives were Black, one of whom was a partner at
the law firm representing the opposing party.
Eliminating forced arbitration would open the courthouse doors for
women, for workers of color, for poor folks across this country,
advancing social equity and aiding the fight against discrimination.
But it is also the right thing for every single consumer to be able to
pursue this right to a day in court.
Just last week, President Biden signed into law my bill with
Representative Cheri Bustos to ban forced arbitration in cases of
sexual harassment and sexual assault. That will protect the right of 60
million workers to a fair day in court. And that is just the people who
are subject to employment contracts.
On top of that, it will apply, and it will apply retroactively, to
all the contracts around sexual assault and sexual harassment. That is
huge progress.
What is good enough in cases of sexual assault and sexual
harassment--and that bill passed in a bipartisan and bicameral way--is
good enough for all workers.
It is time to take the next step by passing this bill to extend these
protections to a fair day in court across the board.
Again, we emphasize that if somebody wants arbitration, it doesn't
stop that route, but it does say you can't be forced only into this and
into denying your day in court.
Now, let's also be clear that the FAIR Act is carefully crafted to
protect unions. It preserves essential union bargaining power while
creating freedoms for nonunionized workers. My colleagues on the other
side of the aisle have introduced an amendment that would undermine
that power. This cannot happen. We cannot allow our Republican
colleagues to undermine unions and the foundation of our middle class.
Madam Speaker, I urge my colleagues to pass the FAIR Act, and I thank
Congressman Hank Johnson for his leadership.
Mr. BISHOP of North Carolina. Madam Speaker, I yield myself such time
as I may consume.
Madam Speaker, one of the things that we have heard repeated a number
of times, as the gentleman from Rhode Island suggested and the
gentlewoman from Washington just said, is that if you go to
arbitration, the company picks the arbitrators, and that is it. That is
not, in fact, correct.
Courts police the fundamental fairness of the arbitration process. If
there is a process that is fundamentally unfair, the courts will modify
it until it is fair. So, that is a misconception.
Furthermore, it has also been suggested that it is by the whim of the
arbitrator what the result is. That is exactly what Mr. Cicilline, I
believe, said. That also is erroneous.
If an arbitrator writes a decision that manifests a disregard of the
governing law, like the soldier who had been in arbitration for 8 years
that he suggested, the courts will vacate, strike down, that
arbitration award.
It is important to know those premises before you decide what to do
on this bill.
Madam Speaker, I yield 2 minutes to the gentleman from Wisconsin (Mr.
Fitzgerald).
Mr. FITZGERALD. Madam Speaker, I rise in opposition to H.R. 963.
H.R. 963 undermines freedom of contract as well as consumer choice by
banning informed, consenting adults from freely entering into contracts
to arbitrate disputes.
Arbitration generally works well and is a fair and effective way to
resolve disputes. While civil litigation can be long, complex, and
costly, arbitration provides a cheaper and efficient process to resolve
disputes in a timely manner.
Banning predispute arbitration agreements would mean Americans spend
more time in court with no guarantee of better outcomes. Banning
arbitration agreements during a time of significant inflation and in
the middle of a supply chain crisis will effectively lower Americans'
income.
While larger companies may be able to deal with the expense of a slew
of new lawsuits, this change will cause harm to smaller businesses that
may not survive lengthy and costly litigation battles.
Because postdispute arbitrations are rare, banning arbitration
agreements will flood the court system. For one thing, some claims that
are addressed through arbitration now may be individualized, making
them unsuitable for class treatment.
Even where claims can't be combined, a plaintiff may still be worse
off as a class member than he would be with the claim in arbitration.
This is because the benefits of arbitration, particularly lower
litigation costs, coincide with lower revenue for others, such as trial
lawyers.
Banning certain predispute arbitration clauses and similar policy
will benefit trial lawyers, not necessarily consumers.
Madam Speaker, I urge my colleagues to oppose this legislation.
Mr. NADLER. Madam Speaker, I yield 4 minutes to the gentlewoman from
Pennsylvania (Ms. Wild).
Ms. WILD. Madam Speaker, I thank the chairman for yielding.
Madam Speaker, I rise as someone who in my past life defended
corporations and entities that often had mandatory arbitration clauses
in their contracts. As such, I am uniquely qualified to address the
myths that have been perpetuated about the FAIR Act. By the way,
``myths'' is a polite term for ``lies.''
One has to consider that if we believe these claims that forced
arbitration is cheaper, fairer, and faster, then surely workers and
consumers would voluntarily choose it. So, there is no harm in
restoring Americans' freedom to choose for themselves how to seek
justice.
First myth: The FAIR Act eliminates arbitration entirely, and no one
will choose arbitration if it is voluntary.
Fact: The FAIR Act doesn't eliminate arbitration, as has been said
over and over here today. It just prohibits forced arbitration and
allows both parties to choose arbitration voluntarily after a worker's
rights or a consumer's rights have been violated.
If forced arbitration were instead voluntary, the private market
would incentivize arbitration providers to treat both parties fairly
and equally so that both parties would choose that process because they
would feel like they are getting an equal opportunity at justice.
Second myth: Consumers and workers are more likely to win and get
higher awards in forced arbitration than in court.
[[Page H3796]]
Fact: This is a lie. That is the result of a misleading study, which
deliberately cherry-picked data by excluding all results for the most
common way consumers and workers file their cases in State courts and
through class actions.
The Chamber of Commerce only examined outcomes of individual cases
filed in Federal court because it knows that very few consumer and
worker cases are filed in Federal court. Americans are, in fact, more
likely to be struck by lightning than they are to win a monetary award
in a forced arbitration.
A study based on self-reported data from two of the leading private
arbitration providers revealed that, on average, only approximately 382
consumers won a monetary award each year, less than the number of
people struck by lightning every year in the United States. While an
estimated 60 million workers are subject to forced arbitration clauses,
only 82 prevailed in employment forced arbitration claims in 2020.
Third myth: Forced arbitration is faster and, as we have heard from
some people across the aisle, cheaper than litigation.
Another completely false claim is based on faulty data from a forced
arbitration database, which systematically deleted older cases,
completely skewing the average length of a case in forced arbitration--
simple data manipulation.
The idea that arbitration would provide consumers a cheaper way to
litigate their claims, perhaps suggesting that they would do that
without a lawyer, no major company will ever go to arbitration without
their highly paid company lawyers. And every individual, whether they
are in court or in arbitration, would need representation against a
corporation regardless of the forum that they are in.
Fourth myth: The court system is overbooked, so forced arbitration
provides more flexibility for scheduling.
While more powerful defendants have an incentive to drag out
resolution of a case, that incentive exists whether they are in court
or arbitration.
{time} 1315
It is in the best interest of the individual who is filing the claim
to seek the fastest possible resolution for his or her claim, and that
would be done regardless of which they choose.
By the way, corporations often choose courts over arbitration to
resolve disputes that they initiate, showing that they do so when it
benefits them.
The SPEAKER pro tempore. The time of the gentlewoman has expired.
Mr. NADLER. Madam Speaker, I yield an additional 1 minute to the
gentlewoman from Pennsylvania.
Ms. WILD. Madam Speaker, myth number 5, the FAIR Act violates the
freedom to contract. This is my favorite one. Whose freedom? That of
corporations or Americans? There was a comment that we are in the most
successful economy in the history of the world, but for whom? Not
necessarily for consumers or workers.
Don't Americans have the right to participate in the economy without
being forced to forego the rights and protections that are afforded to
them under the law? The United States Constitution's Seventh Amendment
guarantees the right to trial by jury for every American.
What if corporations inserted provisions into their contracts forcing
Americans to give up their First or Second Amendment rights to get or
keep a job? Would we still be talking about the freedom to contract?
Finally, the last myth. The FAIR Act is retroactive. It is not
retroactive. It only applies to cases filed on or after the date of
enactment. We need a level playing field between corporations and
industries and the people who find themselves aggrieved by them. The
arbitration process--make no mistake about it--is a private process.
People bringing their claims need to be able to fairly evaluate the
best forum for that claim to be adjudicated.
Mr. BISHOP of North Carolina. Madam Speaker, I reserve the balance of
my time.
Mr. NADLER. Madam Speaker, I yield 2 minutes to the gentlewoman from
Illinois (Ms. Schakowsky).
Ms. SCHAKOWSKY. Madam Speaker, I rise today in very strong support of
ending the use of forced arbitration and to restore the right of
millions of Americans to their day in court. I think my colleagues have
done a really good job on this side of the aisle in explaining why this
is so important for basic rights of all Americans.
Madam Speaker, I want to tell you a couple things that have happened
in Illinois. I deal a lot with older Americans in my district--as I am
sure many of you hear from senior citizens--and I have heard these
really horrific stories from families who discover that in nursing
homes that their loved ones have been neglected or abused or even
worse.
These families want to do something about it. They want to hold these
nursing homes accountable, and then they find out that they have quite
inadvertently, quite unknowingly have signed a forced arbitration
agreement.
Picture these moments. These are people who are often in very
emotional situations. They are bringing their loved ones to a nursing
home. This is never an easy situation. The last thing they are thinking
about, among all the paperwork that is put before them, that they have
signed away their rights. And then they find out that something has
happened to their loved one in a nursing home and they are left without
the recourse that they need.
We have too often seen corporations who are virtually immune from the
kind of accountability that they should be held to. I think the time is
up right now. If it is good enough for sexual harassment and abuse, it
is certainly good enough for people in nursing homes that have been
abused and that their families have their day in court.
Madam Speaker, I support the FAIR Act.
Mr. NADLER. Madam Speaker, I yield back the balance of my time.
Mr. BISHOP of North Carolina. Madam Speaker, I yield myself the
balance of my time.
Madam Speaker, I was intrigued by the situation we just had on the
floor, the gentlewoman from Pennsylvania, I think she said she
represented big corporations. Yet, she spoke to the fundamental
unfairness of arbitration. It is ironic perhaps.
I spent almost 30 years--29 years in the practice of law as a
litigator representing people in court and in arbitration equally. I
represented plaintiffs and defendants both, frequently individuals,
often businesses, always small to medium-sized businesses, and
occasionally a local government or two, never a big company.
I have had clients who didn't want to have arbitration agreements
enforced and sometimes I could defeat them or have them modified or
change the results of them because the arbitrator had manifested
disregard for the law. Sometimes I had clients who wanted to enforce
those agreements. It depends on the circumstances.
But I can tell you it is not a tool that is uniformly bad. Although I
have voted for accepting enforceable arbitration agreements,
arbitration clauses involving sexual harassment and sexual assault
cases, I don't believe that throwing the baby out with the bath water
is a good idea. It is a terrible idea.
Let me let America in on the inside scoop. Here is what this is
about. For the past, roughly, decade there have been a series of cases
in the United States Supreme Court in which, through various efforts
and methods, plaintiffs' class action lawyers, lawyers for big class
litigation where they make millions and millions in fees, have tried
various approaches to get the United States Supreme Court to allow
class actions to be pursued through arbitration, and they have failed.
That is why this bill is here.
The bill is to reverse the result of that decade of litigation in the
Supreme Court in order for class action lawyers to be able to have a
field day and to make a lot of money. This bill protects and seeks the
fortune of plaintiffs' class action lawyers, and of course, it protects
the patronage of big unions both at the same time. That is what the
bill is about.
Madam Speaker, for that reason, I urge my colleagues to oppose this
bill, and I yield back the balance of my time.
Ms. ESHOO. Madam Speaker, in today's economy, signing up for digital
services often requires us to agree to lengthy terms and conditions
that many users likely ignore and then
[[Page H3797]]
unknowingly sign away certain rights such as filing a lawsuit or
joining a class action. The Forced Arbitration Injustice Repeal (FAIR)
Act addresses this rampant abuse of our legal system by banning
mandatory pre-dispute arbitration clauses in employment, consumer, and
civil rights cases.
These forced arbitration clauses are increasingly found in consumer
contracts, requiring users to waive their right to sue in a court of
law and instead resolve any disputes through arbitration. Because
arbitration is secretive, lacks important due process protections, and
produces decisions that cannot be appealed, it too often shields bad
actors from accountability and prevents consumers from enforcing their
rights in our justice system.
Many consumer contracts that include forced arbitration clauses
empower companies to collect unseemly amounts of data from their users
and abuse that data for profit. The problem is acute in highly
concentrated industries where corporations wield significant market
power because consumers often have little or no alternative to these
anti-consumers contracts. This model of what's been labeled
``surveillance capitalism'' is bolstered by forced arbitration clauses
that ensure the most egregious abuses of consumer data cannot be
challenged in court. My legislation to protect consumer privacy, the
Online Privacy Act, bars the use of forced arbitration clauses in user
agreements about privacy for this reason.
No one should be required to sign away their right to access our
justice system when they sign up for a credit card, cell phone plan, or
social media account. The FAIR Act is critical legislation to protect
the rights of consumers, particularly regarding online privacy. I'm
proud to be a cosponsor of this important legislation, and l urge my
colleagues to vote for it.
The SPEAKER pro tempore. All time for debate on the bill has expired.
Amendment No. 1 Offered by Mr. Fitzgerald
The SPEAKER pro tempore. It is now in order to consider amendment No.
1 printed in House Report 117-273.
Mr. FITZGERALD. Madam Speaker, I have an amendment at the desk.
The SPEAKER pro tempore. The Clerk will designate the amendment.
The text of the amendment is as follows:
Page 6, strike lines 16 through 25.
The SPEAKER pro tempore. Pursuant to House Resolution 979, the
gentleman from Wisconsin (Mr. Fitzgerald) and a Member opposed each
will control 5 minutes.
The Chair recognizes the gentleman from Wisconsin.
Mr. FITZGERALD. Madam Speaker, I yield myself such time as I may
consume.
Madam Speaker, instead of setting one standard and having everyone
play by the same rules, the Democrats have singled out the unions for
favorable treatment.
This legislation bans predispute arbitration for nonunion employees
while preserving these benefits for union employees. This discrepancy
makes no sense and, unfortunately, smacks of political favoritism.
Arbitration offers a faster and cheaper path to resolution of a
dispute. Taking this path away from nonunion employees leaves these
workers to the mercy of--like we said earlier--the high-priced trial
lawyers, while union workers maintain the benefit of arbitration.
My amendment would remove this carve-out for union employees and
restore parity between union and nonunion workers.
My colleagues on the other side of the aisle already shut down my
amendment to limit attorneys' fees to a reasonable amount so that
consumers are protected. I am disappointed by that. They also rejected
my amendment to reduce the cost of this bill by exempting contracts for
critical supplies that have been affected by the Biden administration's
supply chain crisis.
Madam Speaker, I urge all my colleagues to support this commonsense
amendment to protect workers, and I reserve the balance of my time.
Mr. NADLER. Madam Speaker, I claim the time in opposition to the
amendment.
The SPEAKER pro tempore. The gentleman from New York is recognized
for 5 minutes.
Mr. NADLER. Madam Speaker, I yield myself such time as I may consume.
Madam Speaker, I rise in strong opposition to this amendment, which
would significantly weaken this legislation and damage the collective
bargaining process for tens of millions of working Americans.
We have said it over and over again today--this bill is not designed
to eliminate arbitration. While my Republican colleagues would like you
to believe that the FAIR Act will end arbitration entirely, that is
simply not true.
The FAIR Act would put an end to forced arbitration--arbitration that
is not willingly agreed to by both sides, which is a predatory one-
sided practice created by and for huge corporations to allow them to
get away with abusive conduct. It is a system that can exist only when
these companies can take advantage of a stark power imbalance between
themselves and workers, consumers, and small businesses.
Labor unions correct that power imbalance. The collective bargaining
process provides real protections that are unavailable to nonunion
workers by forcing big businesses to compromise with skilled
negotiators focused on improving terms for their workers.
Collective bargaining guarantees other important protections in the
arbitration process, such as truly neutral arbitrators, better
procedures, transparent decisionmaking, and the option to appeal
decisions. It creates a system that can actually resolve disputes
quickly, efficiently--and most important--fairly for all parties
involved.
That is not forced arbitration precisely because it is truly
voluntary. Arbitration only works when two parties of equal bargaining
power can negotiate terms that work for everyone involved, which is
exactly what happens when a labor union and a corporation establish a
collective bargaining agreement.
That is completely different than forced arbitration of nonunion
employment disputes where an employee is forced to accept an
arbitration clause that is buried deep inside the fine print of a stack
of confusing paperwork on a take-it-or-leave-it basis that they must
sign to get a job.
The big corporations love this system because it forces their
workers, it forces employees, it forces the purchasers of products to
go to forced arbitration, and that is an inherently skewed process.
That is why the employee loses 98 percent of the forced arbitrations.
The employer wins 98 percent of the forced arbitrations. That is not a
fair process.
Moreover, as my colleague, Congressman Perlmutter, made clear during
the Rules Committee meeting on this bill, nothing in the FAIR Act
prevents individual workers from deciding to vindicate their rights
before a jury.
As the plain language of the bill states, no collectively bargained
arbitration provision ``shall have the effect of waiving the right of a
worker to seek judicial enforcement of a right arising under a
provision of the Constitution of the United States, a State
constitution, or a Federal or State statute, or public policy arising
therefrom.''
In other words, this amendment is a solution in search of a problem
that could upend the rights of millions of workers today. Madam
Speaker, I urge my colleagues to oppose this amendment, to vote for the
bill, and I reserve the balance of my time.
Mr. FITZGERALD. Madam Speaker, I inform the gentleman from New York
that we have no further speakers, and I reserve the balance of my time.
Mr. NADLER. Madam Speaker, I yield 1 minute to the distinguished
gentlewoman from Texas (Mrs. Fletcher).
Mrs. FLETCHER. Madam Speaker, I rise today in support of the FAIR
Act. I have heard some of the debate in this Chamber today, and as a
litigator, I disagree.
The FAIR Act is about restoring justice for the American people. It
is for consumers, it for workers, it is for small business people, it
is for people whose civil rights have been violated, it is for millions
of Americans who are denied their right to seek justice and
accountability because of forced arbitration.
There is certainly a role for arbitration of disputes and other forms
of alternative dispute resolution in our system of justice. I know this
from my own experience representing individuals and organizations in
the courts and before arbitrators.
The FAIR Act is important because it recognizes the role arbitration
can play in resolving disputes between willing parties while it
recognizes the fundamental rights of the people who have
[[Page H3798]]
been subjected to arbitration agreements without their true consent.
The FAIR Act protects the freedom to contract, the freedom of choice,
and the freedom granted in our Constitution, including the Seventh
Amendment.
Madam Speaker, for these reasons, I urge my colleagues to vote
``yes.''
{time} 1330
Mr. NADLER. Madam Speaker, I reserve the balance of my time, and I am
prepared to close.
Mr. FITZGERALD. Madam Speaker, I would simply urge my colleagues to
support this amendment, and I yield back the balance of my time.
Mr. NADLER. Madam Speaker, I yield myself the balance of my time.
Madam Speaker, there are over 60 million workers--a majority of
nonunion private-sector employees--who are subject to forced
arbitration clauses. According to the Economic Policy Institute, that
number will be over 80 million by 2024. Those employees are told that
if they want to get a job or keep their current job they must sign away
their right to their day in court and submit to a forced arbitration
agreement. In most cases they do not have a choice.
When these workers seek to hold their employers to account for wage
theft, civil rights abuses, or racial discrimination, they are shoved
into a secretive arbitration process designed by corporations with
almost unlimited resources, and they lose 98 percent of the time. That
is what the FAIR Act will fix. This legislation will restore these
workers' access to our justice system and guarantee their
constitutional rights by ending forced arbitration.
This amendment would do nothing to protect workers while undermining
this important legislation.
Madam Speaker, I urge my colleagues to oppose this unnecessary and
harmful amendment, and I yield back the balance of my time.
The SPEAKER pro tempore. Pursuant to the rule, the previous question
is ordered on the bill and on the amendment offered by the gentleman
from Wisconsin (Mr. Fitzgerald).
The question is on the amendment.
The question was taken; and the Speaker pro tempore announced that
the noes appeared to have it.
Mr. FITZGERALD. Madam Speaker, on that I demand the yeas and nays.
The SPEAKER pro tempore. Pursuant to section 3(s) of House Resolution
8, the yeas and nays are ordered.
Pursuant to clause 8 of rule XX, further proceedings on this question
are postponed.
Pursuant to clause 1(c) of rule XIX, further consideration of H.R.
963 is postponed.
____________________