In Congress, More Efforts to Gut Arbitration, Raise Legal Costs

By May 6, 2009Briefly Legal

A refresher: Two types of arbitration are subject of policy discussions these days in Congress and on this blog.

  • Binding arbitration: As proposed in the Employee Free Choice Act, binding arbitration would impose the equivalent of a two-contract — work rules, salaries, benefits — on businesses and unions if negotiations over first contract negotiations continue past 120 days. These terms would be mandated by a government-appointed, outside arbitrator.
  • Pre-dispute arbitration: The common practice, including in many consumer contracts, that provide for non-judicial venues for resolving contract disputes. Business groups generally support this sort of arbitration, because it leads to quicker and less expensive outcomes by keeping the disputes out of the courtroom, away from attorneys whose seek to ring up billings, awards and settlements.

The American Association for Justice — the trial lawyers lobby — HATES pre-dispute arbitration, and has made killing it one of their lobbying priorities. Accordingly, Sen. Russell Feingold (D-WI) last week introduced S. 931, the Arbitration Fairness Act, a bill that bans predispute arbitration in business contracts with consumers. (Opening statement, text.) The legislation is the Senate companion to H.R. 1020 introduced by Rep. Hank Johnson (D-GA). (More rom the Green Bay Press-Gazette)

Just in time for the Senate bill, the American Association for Justice released a new opinion survey claiming that the public dislikes binding arbitration. The AAJ-led Fair Arbitration Now Coalition also held a news conference announcing the survey conducted by the Democratic polling outfit, Lake Research Partners, but it’s a laughable example of a survey that found what it set out to find. From the news release:

“The findings show clearly that Americans strongly oppose forced arbitration, and they see the Arbitration Fairness Act as a remedy. Not only is there real intensity to this view, but it traverses traditional partisan divides,” said Lake Research Partners President Celinda Lake. “Forced arbitration clauses – which are buried in the fine print of employment and consumer contracts – are another example of corporations taking advantage of ordinary Americans. The public supports the Arbitration Fairness Act because equal justice under the law is a core American value.”

Our emphasis.

Americans see the Arbitration Fairness Act as a remedy? No, no they don’t.  Americans have no idea that there is such a thing as the Arbitration Fairness Act,  S. 931 or H.R. 1020. Cripes.

Here’s the push question, from the polling memo(our emphasis):

Now I would like to read you a short description of legislation that has been introduced in Congress, called the “Arbitration Fairness Act.” The “Arbitration Fairness Act” would end the practice of forcing employees and consumers to sign away their rights to legal protections and access to the courts. It would make binding mandatory arbitration unenforceable in civil rights, employment, consumer, and franchise disputes. The Act would not eliminate voluntary arbitration agreed to after a dispute arises, nor would it affect collective bargaining agreements. Having heard that, would you favor or oppose the ‘Arbitration Fairness Act,’ or are you unsure?

Most Americans do oppose “signing away their rights,” but that’s an inflammatory, misleading description of arbitration clauses. Trade associations and lobbying outfits often wave public opinion surveys around, but usually they’re not so obvious rigging the questions.

The AAJ leads a group, the Fair Arbitration Now Coalition, along with Public Citizen, the National Association of Consumer Advocates, the National Employment Lawyers Association, the National Consumer Voice for Long-Term Care, Home Owners for Better Building and the Leadership Conference on Civil Rights. They’ve got quite a sophisticated, big-dollar web operation going on. Lots of money at stake for lawyers who can keep disputes in the courts.

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