On July 12th, the Arbitration Fairness Act was introduced to the House and the Senate to amend the Federal Arbitration Act, which was passed in the 1920’s. The proposed bill would make clauses in contracts that mandate arbitration and prohibit joining class action lawsuits unenforceable. The bill aims to prevent mandatory arbitration in employment, consumer, franchise, or civil disputes.
Leo Bueno, a Florida debt and consumer attorney highlighted the downsides of such clauses by pointing out that the idea behind arbitration is sound, but that “the mandatory nature of it is offensive…because it takes out the right to sue.” Paul Bland, a staff attorney with a D.C. based public-interest law firm, adds that arbitrators who rule against companies too often get blackballed. Bland’s comments reveal a harsh reality for consumers, in that companies are typically repeat arbitration customers, and therefore pressure the private arbitration companies to rule in their favor.
Speaking in terms of arbitration legislation, Bland added that “this is, by far, the most comprehensive bill that has been introduced.” Proponents of the bill hope to protect Americans’ seventh amendment right to a trial by jury.