[House Report 117-270]
[From the U.S. Government Publishing Office]


117th Congress     }                                  {      Report
                        HOUSE OF REPRESENTATIVES
 2d Session        }                                  {      117-270

======================================================================



 
            FORCED ARBITRATION INJUSTICE REPEAL ACT OF 2022

                                _______
                                

 March 11, 2022.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

           Mr. Nadler, from the Committee on the Judiciary, 
                        submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 963]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 963) to amend title 9 of the United States Code with 
respect to arbitration, having considered the same, reports 
favorably thereon with an amendment and recommends that the 
bill as amended do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     3
Background and Need for the Legislation..........................     4
Hearings.........................................................    13
Committee Consideration..........................................    14
Committee Votes..................................................    14
Committee Oversight Findings.....................................    22
Committee Estimate of Budgetary Effects..........................    22
New Budget Authority and Congressional Budget Office Cost 
  Estimate.......................................................    22
Duplication of Federal Programs..................................    22
Performance Goals and Objectives.................................    22
Advisory on Earmarks.............................................    22
Section-by-Section Analysis......................................    22
Changes in Existing Law Made by the Bill, as Reported............    24
Minority Views...................................................    27

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

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
                  ``(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         501''.
                            Civil Rights Disputes.

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.

                          Purpose and Summary

    H.R. 963, the ``Forced Arbitration Injustice Repeal Act of 
2022'' or the ``FAIR Act of 2022,'' would prohibit the 
enforcement of mandatory, pre-dispute arbitration (``forced 
arbitration'') provisions in contracts involving consumer, 
employment, antitrust, and civil rights disputes. This 
critically important measure 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 often favors 
the company over the individual. H.R. 963 is supported by a 
broad coalition of public interest and advocacy organizations, 
including Public Citizen, Consumer Reports, the American 
Association for Justice, and the Leadership Conference on Civil 
and Human Rights.\1\
---------------------------------------------------------------------------
    \1\Letter from Remington Gregg, Couns., Pub. Citizen, et al., to 
Hon. Jerrold Nadler, Chairman, H. Comm. on the Judiciary & Hon. Jim 
Jordan, Ranking Member, H. Comm. on the Judiciary (Oct. 27, 2021), 
https://docs.house.gov/meetings/JU/JU00/20211103/114212/HMKP-117-JU00-
20211103-SD004.pdf.
---------------------------------------------------------------------------

                Background and Need for the Legislation

    Over the past several decades, forced arbitration clauses 
have become virtually ubiquitous in everyday contracts.\2\ 
Often buried deep within the fine print of employment and 
consumer contracts, forced arbitration deprives millions of 
Americans of their day in court to enforce state and federal 
rights.\3\ Because arbitration lacks the transparency and 
precedential guidance of the justice system, there is no 
guarantee that the relevant law will be applied to these 
disputes or that fundamental notions of fairness and equity 
will be upheld in the process.\4\
---------------------------------------------------------------------------
    \2\Jessica Silver-Greenberg & Robert Gebeloff, Arbitration 
Everywhere, Stacking Deck of Justice, N.Y. Times (Nov. 1, 2015), 
https://nyti.ms/2k6cZ1z (``By inserting individual arbitration clauses 
into a soaring number of consumer and employment contracts, companies . 
. . devised a way to circumvent the courts and bar people from joining 
together in class-action lawsuits, realistically the only tool citizens 
have to fight illegal or deceitful business practices.'').
    \3\Consumer Fin. Prot. Bureau, Arbitration Study Rep. to Cong., 
pursuant to Dodd-Frank Wall Street Reform and Consumer Protection Act 
Sec. 1028(a) (2015), http://files.consumerfinance.gov/f/
201503_cfpb_arbitration-study-report-to-congress-2015.pdf.
    \4\See, e.g., Myriam Gilles, The Day Doctrine Died: Private 
Arbitration and the End of Law, 2016 U. Ill. L. Rev. 371 (2016).
---------------------------------------------------------------------------
    Unlike the judicial system--in which courts' decisions are 
generally public and, by building on precedent, cumulatively 
create a body of law--the results of arbitration disputes are 
often kept secret.\5\ For example, the arbitration protocols 
for the American Arbitration Association state that arbitrators 
of consumer disputes must ``maintain the privacy of the hearing 
to the extent permitted by applicable law.''\6\
---------------------------------------------------------------------------
    \5\Justice Denied: Forced Arbitration and the Erosion of our Legal 
System: Hearing on H.R. 963, H.R. 7109, and H.R. 2631 Before the 
Subcomm. on Antitrust, Commercial, and Admin. Law of the H. Comm on the 
Judiciary, 116th Cong. 3-4 (2019) (statement of Gretchen Carlson; 
statement of Professor Myriam Gilles, Paul R. Verkuil Chair in Pub. 
Law, Benjamin N. Cardozo Sch. of Law, at 10).
    \6\Consumer Due Process Protocol, Principle 12.2, Am. Arbitration 
Ass'n, https://www.adr.org/sites/default/files/document_repository/
Consumer&fxsp0%20Due&fxsp0%20Process&fxsp0%20 
Protocol&fxsp0%20(1).pdf.
---------------------------------------------------------------------------
    Forced arbitration also lacks many of the procedural 
safeguards of the justice system.\7\ For example, in forced 
arbitration, a company may increase the expense of bringing a 
claim,\8\ limit discovery,\9\ or eliminate protections related 
to the geographic proximity of the resolution forum,\10\ formal 
civil procedure rules, access to counsel,\11\ and the right to 
bring similar claims jointly.\12\ Additionally, the company 
imposing arbitration often selects the presiding arbitrator or 
arbitration provider,\13\ creating a conflict of interest in 
which the purportedly neutral arbitrator may be motivated by 
the prospect of obtaining repeat business from the company 
rather than focused on fairly assessing the claim.\14\
---------------------------------------------------------------------------
    \7\Id.
    \8\Arbitration clauses may impose high costs on consumers, such as 
requiring travel to a distant forum or selection of a high-fee 
arbitrator--possible expenses which a plaintiff filing in a local court 
would not have to incur. See Lisa B. Bingham, Control over Dispute-
System Design and Mandatory Commercial Arbitration, 67 Law & Contemp. 
Probs. 221, 234-35 (July 31, 2004).
    \9\See Katherine Palm, Note, Arbitration Clauses in Nursing Home 
Admission Agreements: Framing the Debate, 14 Elder L.J. 453, 478 n.172 
(2006).
    \10\See Ziva Branstetter, Nursing Home Policy Challenged, Tulsa 
World (Mar. 4, 2002), https://www.tulsaworld.com/archives/nursing-home-
policy-challenged/article_6131212f-481c-59c4-af51-
7c2a188&fxsp0e37f9.html (Oklahoma nursing home's arbitration clause 
requires residents to travel to New Mexico at their own expense for 
arbitration proceeding).
    \11\The lower probability of victory and legal fees may discourage 
some attorneys from representing individuals in arbitration 
proceedings. See Charles L. Knapp, Taking Contracts Private: The Quiet 
Revolution in Contract Law, 71 Fordham L. Rev. 761, 783-84 (2002).
    \12\See Jean R. Sternlight, As Mandatory Binding Arbitration Meets 
the Class Action, Will the Class Action Survive?, 42 Wm. & Mary L. Rev. 
1, 6 (2000).
    \13\The major arbitration providers include the American 
Arbitration Association and JAMS, which set their own procedures, 
contract with agencies and companies to arbitrate future disputes, and 
provide arbitrators and panels to hear disputes. Katherine V.W. Stone & 
Alexander J.S. Colvin, Econ. Policy Inst., The Arbitration Epidemic: 
Mandatory Arbitration Deprives Workers and Consumers of Their Rights 17 
(EPI Briefing Paper No. 414, 2015), https://www.epi.org/publication/
the-arbitration-epidemic/.
    \14\See Carrie Menkel-Meadow, Do the ``Haves'' Come Out Ahead in 
Alternative Judicial Systems?: Repeat Players in ADR, 15 Ohio St. J. on 
Disp. Resol. 19, 35-37 (1999).
---------------------------------------------------------------------------
    As a result of the decline of enforcement of state and 
federal statutory protections, forced arbitration makes it more 
likely that corporate harms and abuse will go unchallenged. As 
Professor Myriam Gilles testified last Congress, many 
companies' arbitration clauses specifically identify federal 
protections that arbitration make unenforceable in court, such 
as rights under the Civil Rights Act of 1964 and the Family 
Medical Leave Act.\15\ In this respect, as Professor Gilles 
observes, ``forced arbitration is not an alternative regime for 
resolving claims, it is a means of suppressing legal claims 
altogether.''\16\ Judge William G. Young, who was appointed by 
President Ronald Reagan, likewise stated that the proliferation 
of forced arbitration clauses means that ``business has a good 
chance of opting out of the legal system altogether and 
misbehaving without reproach.''\17\ Deepak Gupta, a leading 
public interest attorney, similarly testified that forced 
arbitration has undermined the enforcement of statutory 
rights.\18\ He explained:
---------------------------------------------------------------------------
    \15\Justice Denied: Forced Arbitration and the Erosion of our Legal 
System: Hearing on H.R. 963, H.R. 7109, and H.R. 2631 Before the 
Subcomm. on Antitrust, Commercial, and Admin. Law of the H. Comm on the 
Judiciary, 116th Cong. 7 (2019) (statement of Myriam Gilles, Paul R. 
Verkuil Chair in Pub. Law, Benjamin N. Cardozo Sch. of Law).
    \16\Arbitration in America: Hearing Before the S. Comm. on the 
Judiciary, 116th Cong. 1 (2019) (Responses to Questions for the Record 
of Professor Myriam Gilles, Paul R. Verkuil Chair in Pub. Law, Benjamin 
N. Cardozo Sch. of Law).
    \17\Jessica Silver-Greenberg & Robert Gebeloff, Arbitration 
Everywhere, Stacking Deck of Justice, N.Y. Times (Oct. 31, 2015), 
https://nyti.ms/2k6cZ1z (``By inserting individual arbitration clauses 
into a soaring number of consumer and employment contracts, companies . 
. . devised a way to circumvent the courts and bar people from joining 
together in class-action lawsuits, realistically the only tool citizens 
have to fight illegal or deceitful business practices.'').
    \18\Justice Denied: Forced Arbitration and the Erosion of our Legal 
System: Hearing on H.R. 963, H.R. 7109, and H.R. 2631 Before the 
Subcomm. on Antitrust, Commercial, and Admin. Law of the H. Comm on the 
Judiciary, 116th Cong. 2 (2019) (statement of Deepak Gupta, Founding 
Principal, Gupta Wessler PLLC).

          As the U.S. Supreme Court has itself acknowledged, 
        the presence of a forced arbitration clause often means 
        that Americans will have no effective method of 
        asserting their rights or getting justice under federal 
        laws that could otherwise have been enforced in a 
        court--consumer protection or antitrust laws, for 
        example, or prohibitions on sex or race discrimination. 
        If Congress passes laws that can't be enforced in the 
        real world, what good are those laws?\19\
---------------------------------------------------------------------------
    \19\Id.

    Although proponents claim that arbitration decreases 
litigation costs for consumers, consumers often do not receive 
any benefit of reduced costs through forced arbitration.\20\ 
Instead, arbitration clauses appear to dissuade consumers from 
adjudicating disputes altogether.\21\ Moreover, the lower 
probability of victory and the meager legal fees associated 
with forced arbitration may also discourage attorneys from 
representing individuals in arbitration proceedings.\22\ As 
Justice Stephen G. Breyer explained:
---------------------------------------------------------------------------
    \20\Consumer Fin. Prot. Bureau, Arbitration Study Rep. to Cong., 
pursuant to Dodd-Frank Wall Street Reform and Consumer Protection Act 
Sec.  1028(a), at Sec.  10 (2015), http://files.consumerfinance.gov/f/
201503_cfpb_arbitration-study-report-to-congress-2015.pdf (``Using two 
measures of credit offered, we did not find any statistically 
significant evidence that companies that eliminated arbitration 
provisions reduced the credit they offered.'').
    \21\Justice Denied: Forced Arbitration and the Erosion of our Legal 
System: Hearing on H.R. 963, H.R. 7109, and H.R. 2631 Before the 
Subcomm. on Antitrust, Commercial, and Admin. Law of the H. Comm on the 
Judiciary, 116th Cong. 3-4 (2019) (statement of Deepak Gupta, Founding 
Principal, Gupta Wessler PLLC).
    \22\See Charles L. Knapp, Taking Contracts Private: The Quiet 
Revolution in Contract Law, 71 Fordham L. Rev. 761, 783-84 (2002).

          What rational lawyer would have signed on to 
        represent the [plaintiffs] in litigation for the 
        possibility of fees stemming from a $30.22 claim . . . 
        ? The realistic alternative to a class action is not 17 
        million individual suits, but zero individual suits, as 
        only a lunatic or a fanatic sues for $30.\23\
---------------------------------------------------------------------------
    \23\AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 365 (2011) 
(Breyer, J. dissenting).

    Supporters of forced arbitration also argue that doing away 
with it would lead to more class action lawsuits, the costs of 
which would ultimately be passed onto consumers.\24\ For 
example, Alan Kaplinsky, a senior counsel and former Practice 
Leader of the Consumer Financial Services Group at Ballard 
Spahr LLP, who testified before the Senate Judiciary Committee 
on April 2, 2019,\25\ cited a Consumer Financial Protection 
Bureau (CFPB) study estimating that a proposed rule limiting 
arbitration clauses would cost financial services providers 
between $2.62 and $5.23 billion over a five-year period.\26\ 
Professor Gilles, however, rejected this concern, noting that 
large companies that do not use forced arbitration in their 
consumer contracts--such as Capital One and Bank of America--
have not experienced significant upticks in litigation.\27\ 
Furthermore, businesses concerned with additional liability 
risk could address this concern by adhering to state and 
federal law.
---------------------------------------------------------------------------
    \24\Alan S. Kaplinsky & Mark J. Levin, The CFPB's Final Arbitration 
Rule Run Amok, The Reg. Rev. (Sept. 11, 2017), https://
www.theregreview.org/2017/09/11/kaplinsky-levin-cfpb-arbitration-rule/.
    \25\Arbitration in America: Hearing Before the S. Comm on the 
Judiciary, 116th Cong. 6 (2019) (statement of Alan S. Kaplinsky, 
Partner, Ballard Spahr LLP).
    \26\Id. at 4.
    \27\Justice Denied: Forced Arbitration and the Erosion of our Legal 
System: Hearing on H.R. 963, H.R. 7109, and H.R. 2631 Before the 
Subcomm. on Antitrust, Commercial, and Admin. Law of the H. Comm on the 
Judiciary, 116th Cong. 11 n.59 (2019) (statement of Professor Myriam 
Gilles, Paul R. Verkuil Chair in Pub. Law, Benjamin N. Cardozo Sch. of 
Law).
---------------------------------------------------------------------------
    In sum, forced arbitration has transferred the rights of 
workers and consumers to a secretive, closed, and private 
system designed by corporate interests to evade oversight and 
accountability.\28\ Unsurprisingly, 84% of Americans across the 
political spectrum support ending forced arbitration in 
employment and consumer disputes.\29\
---------------------------------------------------------------------------
    \28\Jessica Silver-Greenberg & Robert Gebeloff, In Arbitration, A 
`Privatization of the Justice System,' N.Y. Times (Nov. 1, 2015), 
https://www.nytimes.com/2015/11/02/business/dealbook/in-arbitration-a-
privatization-of-the-justice-system.html.
    \29\See Guy Molyneux & Geoff Garin, National Survey on Required 
Arbitration, Hart Research Assocs. (Feb. 28, 2019), https://
www.justice.org/sites/default/files/2.28.19%20 
Hart%20poll&fxsp0%20memo.pdf. &fxsp0
---------------------------------------------------------------------------

   I. RECENT CASE LAW IGNORES THE LEGISLATIVE INTENT OF THE FEDERAL 
                            ARBITRATION ACT

    On February 12, 1925, Congress codified the use of 
arbitration through the Federal Arbitration Act (FAA).\30\ The 
FAA was adopted to put arbitration agreements on equal footing 
with other contracts in certain disputes.\31\ The legislative 
history of the FAA suggests that the law was intended to 
narrowly apply to disputes between merchants, not between a 
business and its consumers or workers.\32\ In 1967, the Supreme 
Court characterized the FAA as ``plainly designed'' to include 
protections against ``captive customers or employees.''\33\ The 
Court noted that it was clear from congressional debate on the 
Act that Congress did not intend for parties with unequal 
bargaining power to be forced to arbitrate claims on a ``take-
it-or-leave-it basis'':

    \30\Pub. L. No. 68-401, 43 Stat. 883 (1925) (codified at 9 U.S.C. 
Sec. Sec.  1-16 (2019).
    \31\H.R. Rep. No. 68-96, at 1 (1924) (``The purpose of this bill is 
to make valid and enforcible [sic] agreements for arbitration . . . in 
the Federal courts.'').
    \32\See, e.g., H.R. Rep No. 68-96, at 1 (1924); Christopher R. 
Leslie, The Arbitration Bootstrap, 94 Tex. L. Rev. 265, 305 (2015) 
(``The most important fact about the testimony, hearings, and reports 
leading up to congressional enactment of the FAA is that every witness, 
every Senator, and every Representative discussed one issue and one 
issue only: arbitration of contract disputes between merchants.'').
    \33\Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 
414 (1967).

          On several occasions [Members of Congress] expressed 
        opposition to a law which would enforce even a valid 
        arbitration provision contained in a contract between 
        parties of unequal bargaining power. Senator Walsh 
        cited insurance, employment, construction, and shipping 
        contracts as routinely containing arbitration clauses 
        and being offered on a take-it-or-leave-it basis to 
        captive customers or employees. He noted that such 
        contracts ``are really not voluntarily (sic) things at 
        all'' because ``there is nothing for the man to do 
        except to sign it; and then he surrenders his right to 
        have his case tried by the court.'' He was emphatically 
        assured by the supporters of the bill that it was not 
        their intention to cover such cases.\34\
---------------------------------------------------------------------------
    \34\Id. (quoting Sales and Contracts to Sell in Interstate and 
Foreign Commerce, and Federal Commercial Arbitration: Hearing on S. 
4213 and S. 4214 Before the Subcomm. of the S. Comm. on the Judiciary, 
67th Cong. 6 (1923) [hereinafter 1923 Hearing on S. 4213 and S. 4214] 
(statement of Senator Walsh)).

    Furthermore, the Court emphasized that not only was the Act 
intended to apply only to merchant disputes, but it was also 
intended to narrowly apply to ``simpler questions of law'' 
involving the routine performance of contracts, such as the 
passage of title or the existence of warranties.\35\ 
Arbitration would not resolve questions of statutory law, which 
would remain within the clear purview of courts.
---------------------------------------------------------------------------
    \35\Prima Paint Corp., 388 U.S. at 415 n.13 (quoting Julius Henry 
Cohen & Kenneth Dayton, The New Federal Arbitration Law, 12 Va. L. Rev. 
265, 281 (1926)).
---------------------------------------------------------------------------
    Indeed, the drafters of the FAA had made clear that 
arbitration was not appropriate for substantive questions of 
law. Julius Henry Cohen, the law's architect, emphasized that 
it was ``not the proper method for deciding points of law of 
major importance involving constitutional questions or policy 
in the application of statutes.''\36\ Arbitration was also 
rarely invoked in state courts because it was widely considered 
not to preempt state law.\37\ This consensus was supported by 
the FAA's legislative history. During hearings on the measure, 
Cohen testified that ``there is no disposition therefore by 
means of the Federal bludgeon to force an individual State into 
an unwilling submission to arbitration enforcement.''\38\
---------------------------------------------------------------------------
    \36\Andrea Cann Chandrasekher & David Horton, Arbitration Nation: 
Data from Four Providers, 107 Cal. L. Rev. 1, 11 n.67 (2019) (quoting 
Julius Henry Cohen & Kenneth Dayton, The New Federal Arbitration Law, 
12 Va. L. Rev. 265, 281 (1926)).
    \37\David Horton, The Federal Arbitration Act and Testamentary 
Instruments, 90 N.C. L. Rev. 1027, 1039 (2012).
    \38\Id. at 1039 n.55 (citing Arbitration of Interstate Commercial 
Disputes: Joint Hearings on S. 1005 and H.R. 646 Before the Subcomms. 
of the Comms. on the Judiciary, 68th Cong. 40 (1924)).
---------------------------------------------------------------------------
    In a series of decisions beginning in the 1980s,\39\ 
however, the Supreme Court drastically expanded the 
applicability of the FAA to arbitration clauses in everyday 
contracts, ``push[ing] arbitration into the mainstream.''\40\ 
The Court has upheld the enforcement of arbitration clauses 
even when doing so prevents an individual from vindicating a 
state or federal statutory right.\41\ Furthermore, by imposing 
arbitration on a ``take-it-or-leave-it'' basis, large companies 
have eviscerated the congressional intent of arbitration as a 
voluntary process agreed to between parties of equal bargaining 
power.\42\
---------------------------------------------------------------------------
    \39\See, e.g., Moses H. Cone Mem'l Hosp. v. Mercury Constr., 460 
U.S. 1 (1983); Justice Denied: Forced Arbitration and the Erosion of 
Our Legal System: Hearing on H.R. 963, H.R. 7109, and H.R. 2631 Before 
the Subcomm. on Antitrust, Commercial, and Admin. Law of the H. Comm. 
On the Judiciary, 116th Cong. 25-29 (2019) (statement of Deepak Gupta, 
Founding Principal, Gupta Wessler PLLC).
    \40\Andrea Cann Chandrasekher & David Horton, Arbitration Nation: 
Data from Four Providers, 107 Cal. L. Rev. 1, 12 (2019).
    \41\See, e.g., Preston v. Ferrer, 552 U.S. 346, 349 (2008) (``When 
parties agree to arbitrate all questions arising under a contract, the 
[Federal Arbitration Act] supersedes state laws . . . .''); Allied-
Bruce Terminix Cos. v. Dobson, 513 U.S. 265 (1995); Gilmer v. 
Interstate/Johnson Lane Corp., 500 U.S. 20 (1991).
    \42\During the passage of the Federal Arbitration Act, Congress did 
not even intend to allow binding arbitration agreements on individuals 
if the contracts were between parties of unequal bargaining power. 
Prima Paint Corp., 388 U.S. at 414 (1967) (Black, J., dissenting) 
(citing 1923 Hearing on S. 4213 and S. 4214).
---------------------------------------------------------------------------
    With respect to labor unions, the Supreme Court held in 
Epic Systems Corp. v. Lewis that the National Labor Relations 
Act (NLRA), which guarantees workers the right to organize 
unions and utilize collective bargaining, does not reflect a 
clearly expressed congressional intent to displace the FAA and 
to prohibit class and collective action waivers.\43\ The Court 
held that arbitration agreements must be enforced as written, 
and that ``[w]hile Congress is of course always free to amend 
this judgment, we see nothing suggesting it did so in the 
NLRA.''\44\ Justice Ginsburg, in a dissent joined by Justices 
Breyer, Sotomayor, and Kagan, said the majority was 
``egregiously wrong,'' and noted that the decision 
``subordinates employee-protective labor legislation to the 
Arbitration Act . . . . Congress, when it enacted the NLRA, 
likely meant to protect employees' joining together to engage 
in collective litigation.''\45\
---------------------------------------------------------------------------
    \43\Epic Sys. Corp. v. Lewis, 138 S.Ct. 1612, 1622-25 (2018).
    \44\Id. at 1632.
    \45\Id. at 1633, 1641 (Ginsburg, J., dissenting).
---------------------------------------------------------------------------

       II. FORCED ARBITRATION UNDERMINES THE RIGHTS OF CONSUMERS

    Forced arbitration is now widespread in consumer 
contracts.\46\ In many cases, consumers are unaware of forced 
arbitration clauses in the contracts of commonly used goods and 
services.\47\ These clauses are sometimes hidden inside of 
envelopes,\48\ delivery boxes,\49\ and privacy policies.\50\ 
Because nearly 90% of mobile phone services contain a forced 
arbitration clause, it is virtually impossible to avoid them 
and still use a mobile phone.\51\ This is also true for many 
financial services and products, such as student loans and 
credit cards.\52\ As a result, if the consumer wants to use the 
service or product, accepting the arbitration clause is 
mandatory.\53\
---------------------------------------------------------------------------
    \46\Justice Denied: Forced Arbitration and the Erosion of our Legal 
System: Hearing on H.R. 963, H.R. 7109, and H.R. 2631 Before the 
Subcomm. on Antitrust, Commercial, and Admin. Law of the H. Comm on the 
Judiciary, 116th Cong. 1-2 (2019) (statement of Deepak Gupta, Founding 
Principal, Gupta Wessler PLLC).
    \47\See Wash. Mut. Fin. Grp. v. Bailey, 364 F.3d 260, 264-66 (5th 
Cir. 2004) (holding that an arbitration agreement was enforceable 
against illiterate consumers, even though they had no knowledge of the 
arbitration requirement); Am. Gen. Fin. Servs., Inc. v. Griffin, 327 F. 
Supp. 2d 678, 683 (N.D. Miss. 2004) (upholding arbitration agreement 
even though blind consumer had no knowledge of agreement); Marsh v. 
First USA Bank, N.A., 103 F. Supp. 2d 909, 916-18 (N.D. Tex. 2000) 
(finding that inserting an arbitration clause in monthly billing 
statements constituted sufficient notice).
    \48\See Ting v. AT&T, 319 F.3d 1126, 1134 (9th Cir. 2003).
    \49\See Hill v. Gateway 2000, Inc., 105 F.3d 1147, 1148 (7th Cir. 
1997).
    \50\See Stephanie Strom, When `Liking' a Brand Online Voids the 
Right to Sue, N.Y. Times (Apr. 16, 2014), https://www.nytimes.com/2014/
04/17/business/when-liking-a-brand-online-voids-the-right-to-sue.html.
    \51\Brian Hardingham, The FCC Should Stop Cell Phone Giants from 
Using Forced Arbitration Clauses as a Get out of Jail Free Card, Pub. 
Justice: Blog (Jan. 13, 2017), https://www.publicjustice.net/fcc-stop-
cell-phone-giants-using-forced-arbitration-clauses-get-jail-free-card/.
    \52\Credit Card Practices: Fees, Interest Rates, and Grace Periods: 
Hearing Before the Permanent Subcomm. on Investigations of the S. Comm. 
on Homeland Sec. and Governmental Affairs, 110th Cong. (2007) 
(statement of Alys Cohen, Staff Att'y, Nat'l Consumer Law Ctr.).
    \53\Critics of arbitration label it ``mandatory,'' ``compelled,'' 
or even ``cram down'' arbitration. See, e.g., Carrie Menkel-Meadow, Do 
the ``Haves'' Come Out Ahead in Alternative Judicial Systems?: Repeat 
Players in ADR, 15 Ohio St. J. on Disp. Resol. 19, 39 (1999).; David S. 
Schwartz, Enforcing Small Print to Protect Big Business: Employee and 
Consumer Rights Claims in an Age of Compelled Arbitration, 1997 Wis. L. 
Rev. 33 (1997); Jean R. Sternlight, Panacea or Corporate Tool?: 
Debunking the Supreme Court's Preference for Binding Arbitration, 74 
Wash. U. L.Q. 637, 638 (1996).
---------------------------------------------------------------------------
    In 2015, the CFPB released a congressionally-mandated study 
on forced arbitration in financial products and services.\54\ 
The study, which is the most comprehensive empirical study of 
arbitration to date,\55\ found ``[n]o evidence of arbitration 
clauses leading to lower prices for consumers.''\56\ Instead, 
the CFPB found that arbitration has undermined the ability of 
consumers to seek redress for abusive, anti-consumer 
practices.\57\ Richard Cordray, then-Director of the CFPB, 
explained that based on this research, the CFPB had concluded 
that ``any prospect of meaningful relief for groups of 
consumers is effectively extinguished by forcing them to fight 
their legal disputes as lone individuals.''\58\ As he stated, 
in recent years ``many businesses have sought to use 
arbitration clauses not simply as an alternative means of 
resolving disputes, but effectively to insulate themselves from 
accountability by blocking group claims,'' exceeding the 
original purpose of the Federal Arbitration Act.\59\
---------------------------------------------------------------------------
    \54\Consumer Fin. Prot. Bureau, Arbitration Study Rep. to Cong., 
pursuant to Dodd-Frank Wall Street Reform and Consumer Protection Act 
Sec. 1028(a) (2015), http://files.consumerfinance.gov/f/
201503_cfpb_arbitration-study-report-to-congress-2015.pdf.
    \55\Justice Denied: Forced Arbitration and the Erosion of our Legal 
System: Hearing on H.R. 963, H.R. 7109, and H.R. 2631 Before the 
Subcomm. on Antitrust, Commercial, and Admin. Law of the H. Comm on the 
Judiciary, 116th Cong. 15 (2019) (statement of Deepak Gupta, Founding 
Principal, Gupta Wessler PLLC).
    \56\Consumer Fin. Prot. Bureau, Factsheet, Consumer Financial 
Protection Bureau Study Finds that Arbitration Agreements Limit Relief 
for Consumers 3 (Mar. 10, 2015), https://files.consumerfinance.gov/f/
201503_cfpb_factsheet_arbitration-study.pdf.
    \57\Id. at 2.
    \58\Richard Cordray, Dir., Consumer Fin. Prot. Bureau, Remarks at 
Field Hearing on Arbitration Clauses (May 5, 2016), https://
www.consumerfinance.gov/about-us/newsroom/prepared-remarks-cfpb-
director-richard-cordray-field-hearing-arbitration-clauses/.
    \59\Id.
---------------------------------------------------------------------------
    Heidi Shierholz, president of the Economic Policy 
Institute, notes that ``not only do companies win the 
overwhelming majority of claims when consumers are forced into 
arbitration--they win big.''\60\ Strikingly, in arbitration 
involving financial institutions, ``[b]ecause consumers win so 
rarely, the average consumer ends up paying financial 
institutions in arbitration--a whopping $7,725.''\61\
---------------------------------------------------------------------------
    \60\Heidi Shierholz, Econ. Policy Inst., Forced Arbitration is Bad 
for Consumers (2017), https://www.epi.org/publication/forced-
arbitration-is-bad-for-consumers/.
    \61\Id.
---------------------------------------------------------------------------

 III. FORCED ARBITRATION DEPRIVES EMPLOYEES OF FUNDAMENTAL PROTECTIONS

    According to a 2017 report by the Economic Policy 
Institute, 60.1 million workers--the majority of non-union 
employees in the private sector--have signed away their rights 
through forced arbitration clauses.\62\ As this report notes, 
this trend has ``weakened the position of workers whose rights 
are violated, barring access to the courts for all types of 
legal claims, including those based on Title VII of the Civil 
Rights Act, the Americans with Disabilities Act, the Family and 
Medical Leave Act, and the Fair Labor Standards Act.''\63\
---------------------------------------------------------------------------
    \62\Alexander J.S. Colvin, Econ. Policy Inst., The Growing Use of 
Mandatory Arbitration 2 (2017), https://www.epi.org/files/pdf/
135056.pdf.
    \63\Id. at 1.
---------------------------------------------------------------------------
    When employees work under forced arbitration clauses, they 
are less likely to win in disputes with their employers,\64\ or 
even to bring them at all.\65\ Workers that do enforce their 
rights in the workplace receive less in damages in arbitration 
than would have been available in court.\66\
---------------------------------------------------------------------------
    \64\Id. at 3.
    \65\Id. at 5-6.
    \66\Id.
---------------------------------------------------------------------------

    IV. FORCED ARBITRATION DEPRIVES AMERICANS OF THEIR CIVIL RIGHTS

    According to an analysis of corporate legal settlements of 
civil rights complaints, U.S. corporations have paid more than 
$2.7 billion since 2000,\67\ although the cases that reach 
settlement may only represent ``the tip of [the] iceberg of 
corporate abuses.''\68\ Many victims of civil rights violations 
are unable to pursue their claims in court due to forced 
arbitration provisions imposed on them as a condition of 
employment or for using everyday goods and services.\69\ The 
Leadership Conference on Civil and Human Rights, a coalition 
representing more than 200 civil rights groups,\70\ explains:
---------------------------------------------------------------------------
    \67\Michelle Chen, Corporations Have Paid Out at Least $2.7 Billion 
in Civil-Rights and Labor Lawsuits Since 2000, The Nation (Feb. 1, 
2019), https://www.thenation.com/article/corporations-lawsuits-civil-
rights/ (citing Philip Mattera, Good Jobs First, Big Business Bias: 
Employment Discrimination and Sexual Harassment at Large Corporations 
(2019), https://www.goodjobsfirst.org/sites/default/files/docs/pdfs/
BigBusinessBias.pdf).
    \68\Id.
    \69\Heidi Shierholz, Econ. Policy Inst, Forced Arbitration is Bad 
for Consumers (2017), https://www.epi.org/publication/forced-
arbitration-is-bad-for-consumers/.
    \70\Our Common Purpose, Leadership Conf. on Civil & Human Rights 
(last visited on Mar. 7, 2021), https://civilrights.org/about/the-
coalition/.

          Civil and human rights are especially vulnerable to 
        the dangerous impact of forced arbitration. Forced 
        arbitration clauses often preclude consumers and 
        employees joining together to form a class action to 
        enforce their civil rights, which results in claim 
        suppression. Moreover, forced arbitration does not 
        allow public scrutiny of alleged discrimination, nor 
        does it allow for the creation of judicial opinions 
        that help develop the law and provide further guidance 
        on emerging trends. As a result, landmark civil rights 
        laws such as those protecting employees from race, 
        gender, and age discrimination have been rendered 
        meaningless.\71\
---------------------------------------------------------------------------
    \71\Letter from Leadership Conf. on Civil & Human Rights to U.S. 
Senators (Feb. 3, 2016), http://civilrightsdocs.info/pdf/Arbitration-
Letter.pdf.

    In addition to precluding the enforcement of the civil 
rights laws, the opacity of forced arbitration prevents others 
from learning of widespread misconduct. As Terri Gerstein, the 
Director of the State and Local Enforcement Project at the 
Harvard Law School Labor and Worklife Program, noted, the 
secretive nature of arbitration ``has allowed outrageous 
violations, in some cases years of sexual harassment and 
predation, to remain hidden from view and therefore to 
continue.''\72\
---------------------------------------------------------------------------
    \72\Terri Gerstein, Forced Arbitration is Unjust and Deeply 
Unpopular. Can Congress End It?, Slate (Mar. 1, 2019), https://
slate.com/news-and-politics/2019/03/congress-forced-arbitration-fair-
act.html.
---------------------------------------------------------------------------

 V. FORCED ARBITRATION UNDERMINES THE ENFORCEMENT OF THE ANTITRUST LAWS

    Forced arbitration clauses have also undermined the 
enforcement of the antitrust laws.\73\ As Deepak Gupta noted 
during the ACAL Subcommittee's hearing on forced arbitration 
last Congress, ``[t]roublingly, firms that possess monopoly 
power can enact a sort of `double punch' by imposing 
arbitration terms that insulate their abuse of that same 
power.''\74\ In 2013, the Supreme Court dictated this result in 
American Express Co. v. Italian Colors Restaurant.\75\ In that 
case, a small but successful restaurant in Oakland, California 
banded with fellow merchants in a class-action lawsuit to 
challenge the alleged anticompetitive conduct of American 
Express, including its exorbitantly high and hidden fees--as 
much as 30% more than other card companies.\76\ The small 
businesses alleged that American Express' conduct violated 
Section 1 of the Sherman Act.\77\ In response, American Express 
moved to compel individual arbitration under the Federal 
Arbitration Act.\78\
---------------------------------------------------------------------------
    \73\Justice Denied: Forced Arbitration and the Erosion of our Legal 
System: Hearing on H.R. 963, H.R. 7109, and H.R. 2631 Before the 
Subcomm. on Antitrust, Commercial, and Admin. Law of the H. Comm on the 
Judiciary, 116th Cong. 21 (2019) (statement of Deepak Gupta, Founding 
Principal, Gupta Wessler PLLC).
    \74\Id. at 20.
    \75\Am. Express. Co. v. Italian Colors Rest., 570 U.S. 228, 231 
(2013) (holding that the Federal Arbitration Act compels the 
enforcement of a contractual waiver of a plaintiff's claim under a 
federal statute).
    \76\Luke Tsai, Supreme Court Rules Against Oakland Restaurant in 
AmEx Suit, East Bay Express (June 25, 2013), https://
www.eastbayexpress.com/WhatTheFork/archives/2013/06/25/supreme-court-
rules-against-oakland-restaurant-in-amex-suit.
    \77\Italian Colors Rest., 570 U.S. at 231.
    \78\Id.
---------------------------------------------------------------------------
    Notwithstanding the establishment of a private right of 
action in the Clayton Act, the Court held that the Federal 
Arbitration Act required the arbitration of claims under the 
antitrust laws.\79\ As the Court noted, the antitrust laws do 
not ```evince an intention to preclude a waiver' of class-
action procedure.''\80\ Justice Elena Kagan, in a dissent 
joined by Justices Ginsburg and Breyer, warned that the 
majority's interpretation of the FAA allows the monopolist ``to 
use its monopoly power to insist on a contract effectively 
depriving its victims of all legal recourse.''\81\ As she 
explained, the Court's decision would have sweeping 
ramifications for the vindication of rights established by 
statute:
---------------------------------------------------------------------------
    \79\Id. at 234.
    \80\Id. (quoting Mitsubishi Motors Corp. v. Soler Chrysler-
Plymouth, Inc., 473 U.S. 614, 628 (1985)).
    \81\Italian Colors Rest., 570 U.S. at 240 (Kagan, J., dissenting).

          In the hands of today's majority, arbitration 
        threatens to become . . . a mechanism easily made to 
        block the vindication of meritorious federal claims and 
        insulate wrongdoers from liability. The Court thus 
        undermines the FAA no less than it does the Sherman Act 
        and other federal statutes providing rights of 
        action.\82\
---------------------------------------------------------------------------
    \82\Id. at 253.

    Critics of the Italian Colors decision similarly note that 
it has ``created the possibility that an entity engaging in 
monopolistic behavior could encourage and strengthen such 
behavior'' by implementing forced arbitration clauses with 
merchants.\83\ Now that such clauses are enforceable, entities 
engaged in monopolistic behavior can insulate themselves from 
virtually any risk of antitrust liability.\84\ As Mr. Gupta 
explained at the ACAL Subcommittee's hearing on forced 
arbitration, this behavior has two consequences.\85\ First, 
antitrust enforcement suffers as a whole due to the decline of 
private enforcement.\86\ Second, this decline also results in a 
wealth transfer from low-income to high-income individuals in 
the absence of open and competitive markets.\87\
---------------------------------------------------------------------------
    \83\Robert Ward, Note, Divide & Conquer: How the Supreme Court Used 
the Fed. Arbitration Act to Threaten Statutory Rights & the Need to 
Codify the Effective Vindication Rule, 39 Seton Hall Legis. J. 149, 162 
(2015).
    \84\See id.
    \85\Justice Denied: Forced Arbitration and the Erosion of our Legal 
System: Hearing on H.R. 963, H.R. 7109, and H.R. 2631 Before the 
Subcomm. on Antitrust, Commercial, and Admin. Law of the H. Comm on the 
Judiciary, 116th Cong. 21 (2019) (statement of Deepak Gupta, Founding 
Principal, Gupta Wessler PLLC).
    \86\Id.
    \87\Id.
---------------------------------------------------------------------------
    Alan Carlson, the owner of the Italian Colors Restaurant 
and the lead plaintiff in the case, urged Congress in 2019 to 
``pass the FAIR Act to restore equal access to justice for 
small businesses and consumers.''\88\ As he observed, forced 
arbitration ``makes it impossible for businesses to hold large 
corporations publicly accountable.''\89\ The FAIR Act, he 
concluded, ``would give back to small businesses the right to 
go before a judge and jury against big corporations instead of 
being locked into a forced arbitration system that is too 
expensive to use.''\90\
---------------------------------------------------------------------------
    \88\Justice Denied: Forced Arbitration and the Erosion of our Legal 
System: Hearing on H.R. 963, H.R. 7109, and H.R. 2631 Before the 
Subcomm. on Antitrust, Commercial, and Admin. Law of the H. Comm on the 
Judiciary, 116th Cong. 6 (2019) (statement of Alan S. Carlson, Owner, 
Italian Colors Rest.).
    \89\Id. at 5.
    \90\Id. at 5-6.
---------------------------------------------------------------------------
    A coalition of antitrust law professors have similarly 
noted that the FAIR Act is essential to protecting consumers 
and small businesses by restoring the private enforcement of 
the antitrust laws. They explained:

          Billions of dollars are lost by U.S. consumers and 
        businesses to criminal antitrust conspirators, many of 
        which are foreign corporations . . . . While criminal 
        enforcement is important for punishing and deterring 
        antitrust conspiracies, private enforcement provides 
        virtually the only way to compensate businesses and 
        consumers that are victims of antitrust violations. . . 
        . The FAIR Act would protect consumers and small 
        businesses from being forced into individual, private 
        arbitration for antitrust disputes. It would help 
        preserve the strong private enforcement scheme that 
        Congress established to protect competition and allow 
        honest businesses to thrive.\91\
---------------------------------------------------------------------------
    \91\Letter from Robert H. Lande, Professor, University of Baltimore 
School of Law, et al., to Reps. Jerrold Nadler (D-NY), Chair, & Doug 
Collins (R-GA), Ranking Member, Comm. on the Judiciary (Sept. 5, 2019) 
(on file with Majority staff of the H. Comm. on the Judiciary).

    The American Antitrust Institute and a coalition of other 
public interest organizations added that in the absence of 
legislation to end forced arbitration, ``the proliferation of 
class action waivers in mandatory arbitration clauses will 
destroy a wide swath of the private antitrust rights afforded 
to the most vulnerable economic actors in the United 
States.''\92\
---------------------------------------------------------------------------
    \92\Letter from the American Antitrust Institute, et al., to Reps. 
Jerrold Nadler (D-NY), Chair, & Doug Collins (R-GA), Ranking Member, H. 
Comm. on the Judiciary (Sept. 6, 2019) (on file with Majority staff of 
the H. Comm. on the Judiciary).
---------------------------------------------------------------------------

                                Hearings

    For the purposes of clause 3(c)(6)(A) of House Rule XIII, 
the following hearing was used to consider H.R. 963:
    On February 11, 2021, the ACAL Subcommittee held an 
oversight hearing entitled ``Justice Restored: Ending Forced 
Arbitration and Protecting Fundamental Rights.'' The Majority 
witnesses at the hearing were: Myriam Gilles, Professor of Law, 
Paul R. Verkuil Chair in Public Law, Benjamin N. Cardozo School 
of Law; Gretchen Carlson, Journalist and Advocate; and Jacob 
Weiss, Founder and President, OJ Commerce. The Minority witness 
at the hearing was G. Roger King, Senior Labor and Employment 
Counsel, HR Policy Association. There, Ms. Carlson testified 
about the use of forced arbitration to silence victims of 
systemic sexual harassment.\93\ In her testimony, Professor 
Gilles similarly explained how forced arbitration ``perpetuates 
the exploitation of women in the workplace by shunting victims 
into a private system where each is unaware of the other and 
where the arbitration provider (who is chosen and paid by the 
employer) lacks authority to remedy systemic and recurring 
workplace abuse.''\94\ Several of the witnesses urged passage 
of the FAIR Act.
---------------------------------------------------------------------------
    \93\Justice Restored: Ending Forced Arbitration and Protecting 
Fundamental Rights Before the Subcomm. on Antitrust, Commercial, and 
Admin. Law of the H. Comm. on the Judiciary, 117th Cong. 1 (2021) 
(statement of Gretchen Carlson).
    \94\Id. at 9 (statement of Professor Myriam Gilles, Paul R. Verkuil 
Chair in Pub. L., Benjamin N. Cardozo Sch. of L.), https://
docs.house.gov/meetings/JU/JU05/2019&fxsp00516/109484/HHRG-116-JU05-
Wstate-GillesM-201&fxsp090516.pdf.
---------------------------------------------------------------------------
    In addition, the following related hearing was held: On 
November 16, 2021, the Committee on the Judiciary held a 
hearing entitled ``Silenced: How Forced Arbitration Keeps 
Victims of Sexual Violence and Sexual Harassment in the 
Shadows.'' The Majority witnesses at the hearing were: Eliza 
Dushku, Actor, Producer, and Graduate Student; Tatiana 
Spottiswoode, Law Student, Columbia Law School; Andowah Newton 
of New York, NY; Lora Henry of Canton, OH; and Professor Myriam 
Gilles, Professor of Law, Paul R. Verkuil Chair in Public Law, 
Cardozo School of Law. The Minority witnesses at the hearing 
were: Anna St. John, President and General Counsel, Hamilton 
Lincoln Law Institute; and Sarah Parshall Perry, Legal Fellow, 
Edwin Meese III Center for Legal and Judicial Studies, The 
Heritage Foundation. During the hearing, survivors of sexual 
harassment or sexual assault testified about how forced 
arbitration clauses blocked their ability to seek justice and 
hold wrongdoers accountable and shielded this misconduct from 
public scrutiny.\95\
---------------------------------------------------------------------------
    \95\Silenced: How Forced Arbitration Keeps Victims of Sexual 
Violence and Sexual Harassment in the Shadows Before the Subcomm. on 
Antitrust, Commercial, and Admin. Law of the H. Comm on the Judiciary, 
117th Cong. 1 (2021) (statement of Professor Myriam Gilles, Paul R. 
Verkuil Chair in Pub. L., Benjamin N. Cardozo Sch. of L.).
---------------------------------------------------------------------------

                        Committee Consideration

    On November 3, 2021, the Committee met in open session and 
ordered the bill, H.R. 963, favorably reported with an 
amendment, by a rollcall vote of 23 to 14, a quorum being 
present.

                            Committee Votes

    In compliance with clause 3(b) of House Rule XIII, the 
following rollcall votes occurred during the Committee's 
consideration of H.R. 963:
    1. An amendment by Mr. Bentz of Oregon to amend the bill's 
date of enactment failed by a rollcall vote of 15 to 20. The 
vote was as follows:


	[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    2. An amendment by Mr. Fitzgerald of Wisconsin to exclude 
from the bill a person in any industry affected by labor 
shortages or supply-chain disruptions failed by a rollcall vote 
of 16 to 22. The vote was as follows:


	[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
	

    3. An amendment by Mr. Fitzgerald of Wisconsin to expand 
the bill to include collective bargaining agreements failed by 
a rollcall vote of 15 to 21. The vote was as follows:


	[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    4. The motion to report H.R. 963, as amended, favorably was 
agreed to by a rollcall vote of 23 to 14. The vote was as 
follows:


	[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
	
	

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of House Rule XIII, the 
Committee advises that the findings and recommendations of the 
Committee, based on oversight activities under clause 2(b)(1) 
of House Rule X, are incorporated in the descriptive portions 
of this report.

                Committee Estimate of Budgetary Effects

    Pursuant to clause 3(d)(1) of House Rule XIII, the 
Committee adopts as its own the cost estimate prepared by the 
Director of the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974.

   New Budget Authority and Congressional Budget Office Cost Estimate

    Pursuant to clause 3(c)(2) of House Rule XIII and section 
308(a) of the Congressional Budget Act of 1974, and pursuant to 
clause (3)(c)(3) of House Rule XIII and section 402 of the 
Congressional Budget Act of 1974, the Committee has requested 
but not received from the Director of the Congressional Budget 
Office a budgetary analysis and a cost estimate of this bill.

                    Duplication of Federal Programs

    Pursuant to clause 3(c)(5) of House Rule XIII, no provision 
of H.R. 963 establishes or reauthorizes a program of the 
federal government known to be duplicative of another federal 
program.

                    Performance Goals and Objectives

    The Committee states that pursuant to clause 3(c)(4) of 
House Rule XIII, H.R. 963 improves access to justice for 
millions of Americans by allowing parties in employment, 
consumer, antitrust, or civil rights disputes to elect 
arbitration after a dispute has arisen.

                          Advisory on Earmarks

    In accordance with clause 9 of House Rule XXI, H.R. 963 
does not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits as defined in clause 9(d), 
9(e), or 9(f) of House Rule XXI.

                      Section-by-Section Analysis

    The following discussion describes the bill as reported by 
the Committee.
    Sec. 1. Short Title. Section 1 sets forth the short title 
of the bill as the ``Forced Arbitration Injustice Repeal Act of 
2022'' or the ``FAIR Act of 2022.''
    Sec. 2. Purposes. Section 2 states that the purposes of the 
FAIR Act are to: (1) prohibit pre-dispute arbitration 
agreements that force arbitration of future employment, 
consumer, antitrust, or civil rights disputes, and (2) prohibit 
practices that interfere with the right of individuals and 
small businesses to participate in 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. Section 3(a) amends Title 9 of the 
United States Code by adding at the end ``Chapter 5--
Arbitration of Employment, Consumer, Antitrust, and Civil 
Rights Disputes.''
    New Section 501 defines various terms used under new 
chapter 5. For example, it defines ``antitrust dispute'' as 
arising from an alleged violation of the antitrust laws, as 
defined in the first section the Clayton Act or State antitrust 
laws, and in which the plaintiffs seek certification under Rule 
23 of the Federal Rules of Civil Procedure or a comparable 
state law.
    The term ``civil rights dispute'' is defined as a dispute 
``arising from an alleged violation of the Constitution of the 
United States or the constitution of a State'' or 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, health care, 
or a program funded or conducted by the Federal Government or a 
State Government,'' in which at least one party is alleging a 
violation, including seeking class certification under Federal 
or State law.
    The term ``consumer dispute'' is defined as a dispute 
between one or more individuals who ``seek or acquire'' ``real 
or personal property, services .  .  . securities or other 
investments, money, or credit for personal, family, or 
household purposes,'' including individuals seeking class 
certification under Federal or State law, and a ``seller or 
provider'' of such listed services, or 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.''
    The term ``employment dispute'' means a dispute between one 
or more individuals and a person ``arising out of or related to 
the work relationship or prospective work relationship,'' 
regardless of ``whether the individual is or would be 
classified as an employee or an independent contractor with 
respect to such work.'' Section 501 concludes by defining 
``pre-dispute arbitration agreement'' as an agreement to 
arbitrate a dispute before the dispute has arisen, and ``pre-
dispute joint-action waiver'' as an agreement that would waive 
the right of one of the parties to participate in a joint, 
class or collective action.
    New section 502 first provides that no pre-dispute 
arbitration agreement or pre-dispute joint-action waiver shall 
be valid or enforceable relating to disputes described within 
the chapter. It further provides that a court, and not an 
arbitrator, shall determine whether this chapter applies to an 
agreement to arbitrate, and the enforceability of that 
agreement. Section 502 specifies that chapter 5 does not apply 
to any arbitration provision between an employee and a labor 
organization or between labor organizations.
    Section 3(b) makes a series of technical and conforming 
amendments.
    Sec. 4. Effective Date. Section 4 provides that the 
legislation applies to any dispute or claim that arises or 
accrues on or after the date of enactment of the legislation.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

                      TITLE 9, UNITED STATES CODE



Chap.                                                               Sec.
      General provisions...............................................1
     * * * * * * *
      Arbitration of Employment, Consumer, Antitrust, and Civil Rights .
501   Disputes........................................................

           *       *       *       *       *       *       *


CHAPTER 1--GENERAL PROVISIONS

           *       *       *       *       *       *       *



Sec. 1. ``Maritime transactions'' and ``Commerce'' defined; exceptions 
                    to operation of title

   ``Maritime transactions'', as herein defined, means charter 
parties, bills of lading of water carriers, agreements relating 
to wharfage, supplies furnished vessels or repairs to vessels, 
collisions, or any other matters in foreign commerce which, if 
the subject of controversy, would be embraced within admiralty 
jurisdiction; ``commerce'', as herein defined, means commerce 
among the several States or with foreign nations, or in any 
Territory of the United States or in the District of Columbia, 
or between any such Territory and another, or between any such 
Territory and any State or foreign nation, or between the 
District of Columbia and any State or Territory or foreign 
nation, but nothing herein contained shall apply to contracts 
of employment [of seamen, railroad employees, or any other 
class of workers engaged in foreign or interstate commerce] of 
individuals, regardless of whether such individuals are 
designated as employees or independent contractors for other 
purposes.

Sec. 2. Validity, irrevocability, and enforcement of agreements to 
                    arbitrate

  A written provision in any maritime transaction or a contract 
evidencing a transaction involving commerce to settle by 
arbitration a controversy thereafter arising out of such 
contract or transaction, or the refusal to perform the whole or 
any part thereof, or an agreement in writing to submit to 
arbitration an existing controversy arising out of such a 
contract, transaction, or refusal, shall be valid, irrevocable, 
and enforceable, save upon such grounds as exist at law or in 
equity for the revocation of any contract or as otherwise 
provided in chapter 4 or 5.

           *       *       *       *       *       *       *


  CHAPTER 2--CONVENTION ON THE RECOGNITION AND ENFORCEMENT OF FOREIGN 
ARBITRAL AWARDS

           *       *       *       *       *       *       *



Sec. 208. Application

  Chapter 1 applies to actions and proceedings brought under 
this chapter to the extent that chapter is not in conflict with 
this chapter or the Convention as ratified by the United 
States. This chapter applies to the extent that this chapter is 
not in conflict with chapter 4 or 5.

           *       *       *       *       *       *       *


   CHAPTER 3--INTER-AMERICAN CONVENTION ON INTERNATIONAL COMMERCIAL 
ARBITRATION

           *       *       *       *       *       *       *



Sec. 307. Application

  Chapter 1 applies to actions and proceedings brought under 
this chapter to the extent chapter 1 is not in conflict with 
this chapter or the Inter-American Convention as ratified by 
the United States. This chapter applies to the extent that this 
chapter is not in conflict with chapter 4 or 5.

           *       *       *       *       *       *       *


 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
                  (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.

                             Minority Views

    H.R. 963 is the Democrats' latest effort to gut arbitration 
agreements. It makes predispute arbitration agreements 
unenforceable in all sorts of contexts--in employment disputes, 
consumer disputes, antitrust disputes, and civil rights 
disputes. The bill invalidates millions of current--and 
completely legal--contracts that could save Americans time and 
money. By cutting off the option to resolve disputes in 
arbitration, the bill will push more people into the courts. 
More lawsuits, in turn, will ultimately mean higher prices and 
fewer jobs.
    The bill starts with misleading rhetoric. It claims to be 
targeting ``forced'' arbitration agreements, but forced or 
involuntary agreements are already illegal.\1\ In reality, 
predispute arbitration agreements are voluntary agreements 
between people who want to resolve their future disputes out of 
court. It is these voluntary agreements to use alternative 
dispute resolution that the bill actually voids. Representative 
Cliff Bentz warned during the Committee's consideration of H.R. 
963 that ``confusing contracts of adhesion . . . with 
negotiated agreements that this bill would prevent and also 
wipe out is simply not appropriate; [it] shouldn't be done.'' 
But the bill does exactly that.
---------------------------------------------------------------------------
    \1\See AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011) 
(explaining that ``agreements to arbitrate [may] be invalidated by 
`generally applicable contract defenses, such as fraud, duress, or 
unconscionability''' (citation omitted)); Shearson/Am. Exp., Inc. v. 
McMahon, 482 U.S. 220, 226 (1987) (noting that an arbitration agreement 
may be invalidated if it ``resulted from the sort of fraud or excessive 
economic power that `would provide grounds for the revocation of any 
contract''' (citation omitted)).
---------------------------------------------------------------------------
    There are many reasons why people might rather agree to 
resolve future disputes using arbitration. Arbitration is often 
less expensive and faster than litigation, and it offers more 
flexibility in terms of process and scheduling.\2\ It tends to 
be less adversarial, which allows parties to maintain ongoing 
and future relationships.\3\ The benefits are not limited to 
process and logistics, either. Studies have shown that 
plaintiffs in employment and consumer disputes win more often 
and recover more money in arbitration than they do in 
litigation.\4\
---------------------------------------------------------------------------
    \2\See H.R. REP. NO. 97-542, at 13 (1982).
    \3\See id.; Justice Denied: Forced Arbitration and the Erosion of 
our Legal System, Hearing Before the Subcomm. on Antitrust, Commercial, 
and Administrative Law of the H. Comm. on the Judiciary, 116th Cong. 
(2019) (Testimony of Mr. Phil Goldberg, at 4), https://docs.house.gov/
meetings/JU/JU05/20190516/109484/HHRG-116-JU05-Wstate-GoldbergP 
20190516.pdf.
    \4\Nam D. Pham & Mary Donovan, Fairer, Faster, Better: An Empirical 
Assessment of Employment Arbitration, NDP ANALYTICS 5 (May 2019), 
https://instituteforlegalreform.com/research/fairer-faster-better-an-
empirical-assessment-of-employment-arbitration/; Nam D. Pham & Mary 
Donovan, Fairer, Faster, Better II: An Empirical Assessment of Consumer 
Arbitration, NDP ANALYTICS 4 (Nov. 2020), https://
instituteforlegalreform.com/new-study-consumers-win-more-money-more-
often-and-more-quickly-in-arbitration-than-in-court/.
---------------------------------------------------------------------------
    Despite all of these benefits, the bill will effectively 
take the option to arbitrate off the table. In theory, people 
could agree after a dispute arises to resolve it in 
arbitration.\5\ In practice, though, that never happens. After 
there is a dispute, emotions are running high, and lawyers have 
a financial incentive to recommend litigation.\6\ Once an 
actual dispute arises, parties will develop a strategy to 
resolve that dispute, rather than looking for a resolution 
option that benefits both parties. When analyzing a specific 
dispute, one of the parties is more likely to see some 
strategic advantage in court.
---------------------------------------------------------------------------
    \5\See H.R. 963, 117th Cong. Sec.  5 (2021) (``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.'').
    \6\See Justice Denied: Forced Arbitration and the Erosion of our 
Legal System, Hearing Before the Subcomm. on Antitrust, Commercial, and 
Administrative Law of the H. Comm. on the Judiciary, 116th Cong. (2019) 
(Testimony of Mr. Andrew Pincus, at 9), https://docs.house.gov/
meetings/JU/JU05/20190516/109484/HHRG-116-JU05-Wstate-PincusA-
20190516.pdf.
---------------------------------------------------------------------------
    With no real option to arbitrate, the bill will either push 
more Americans into court--where they will pay more and 
possibly recover less--or prevent them from having their claims 
heard at all.\7\ American job creators will feel these effects, 
too. Lawsuits generally cost more than arbitration, and this 
bill will lead to more of them. Increased litigation will raise 
costs for employers, who are already dealing with through-the-
roof inflation and a supply-chain crisis. During the 
Committee's business meeting, Representative Scott Fitzgerald 
offered an amendment that would have carved out employers in 
industries affected by labor shortages or supply-chain 
disruptions. Democrats rejected the amendment and chose to pile 
yet another expense onto these employers. To deal with the 
higher litigation costs, employers will likely raise prices and 
hire fewer employees.
---------------------------------------------------------------------------
    \7\Id. at 6 (``A key obstacle to pursuing an individualized, small-
value claim in court is the cost of hiring counsel. Unrepresented 
parties have little hope of navigating the complex procedures that 
apply to litigation in court, yet a lawyer's hourly billing rate may 
itself exceed the amount at issue in many claims. Many lawyers, 
especially those working on a contingency basis, are unlikely to take 
cases when the prospective of a substantial payout is slim.'').
---------------------------------------------------------------------------
    Some plaintiffs will find that it is simply too expensive 
to pursue their claims in court, and others will find that 
class action lawsuits are their only option. But class actions 
are not always a good option for consumers. Even when class 
actions are successful, sometimes only a small percentage of 
the class members claim their relief,\8\ and those individual 
members who do claim their relief ``often . . . recover little 
or nothing of value.''\9\ Further, class actions are 
``expensive, raising costs to consumers in the long run . . . 
.''\10\
---------------------------------------------------------------------------
    \8\Alison Frankel, FTC's comprehensive study finds median consumer 
class action claims rate is 9%, REUTERS (Sept. 10, 2019) (``The Federal 
Trade Commission has just published a staff report on what it believes 
to be the most comprehensive study ever conducted on consumers'' 
response to class action settlements. Its marquee finding, after 
collating data on 149 consumer class actions from seven different 
claims administrators: The median claims rate in these cases is 9%. The 
weighted mean claims rate, which takes into account the number of class 
members who received settlement notifications, is 4%.''), https://
www.reuters.com/article/us-otc-claimsrate/ftcs-comprehensive-study-
finds-median-consumer-class-action-claims-rate-is-9-idUSKCN1VV2QU.
    \9\Ted Frank, Class Actions, Arbitration, and Consumer Rights: Why 
Concepcion Is a Pro-Consumer Decision, MANHATTAN INSTITUTE 4 (Feb. 19, 
2013), https://media4.manhattan-institute.org/pdf/lpr_16.pdf.
    \10\Id.
---------------------------------------------------------------------------
    A surge in lawsuits will not help everyday Americans or 
small businesses, but it will help the plaintiffs' lawyers.\11\ 
It is thus no surprise that Democrats have been pushing this 
attack on arbitration agreements for years.\12\ Notably, 
Democrats have consistently carved out certain agreements in 
union contracts. As Representative Fitzgerald explained during 
the Committee's business meeting, ``[i]nstead of setting one 
standard and having everyone play by the same rules, the 
Democrats have singled out unions for favorable treatment.'' 
When he offered an amendment to ``remove th[is] blatant 
inconsistency,'' the Democrats rejected it.
---------------------------------------------------------------------------
    \11\Regina Thomson, Commentary, Democrats' war on arbitration only 
benefits trial lawyers, FORTUNE (Dec. 1, 2021, 11:26 AM) (``[A] 
[Democrat] supporter of [another bill that would invalidate predispute 
arbitration agreements in certain contexts] . . . admitted during the 
recent markup of this bill that [it] `is important to the trial 
bar.'''), https://fortune.com/2021/12/01/democrats-workplace-
arbitration-trial-lawyers-reconciliation-bill/.
    \12\See, e.g., H.R. 1423, 116th Cong. (2019); H.R. 1374, 115th 
Cong. (2017); H.R. 2087, 114th Cong. (2015).
---------------------------------------------------------------------------
    The bill's defects are not limited to the host of issues to 
come--it also creates a big problem right now. The bill 
immediately voids existing contracts. Every Member should be 
alarmed when the Federal government sets out to intervene in 
private contracts and rewrites private agreements to benefit 
political interests. Representative Bentz offered an amendment 
that would have fixed this problem, but Democrats, again, 
rejected it. In fact, Chairman Jerrold Nadler admitted that 
``the whole point of the bill is to invalidate all those 
[existing] arbitration agreements.'' Democrats want to 
undermine the rule of law by rewriting millions of private 
contracts by government fiat.
    This bill micromanages private relationships and puts the 
priorities of the plaintiffs' bar and union bosses above the 
interests of hardworking Americans and small businesses. It 
prevents private parties from agreeing to resolve disputes the 
way they want to, and it signals--loud and clear--that big 
government knows best. The Committee should instead focus on 
legislation that protects freedom and gives Americans more, not 
less, power to make their own decisions.
                                                Jim Jordan,
                                                    Ranking Member.

                                  [all]