It's Time to Rein In Mandatory Arbitration
The Forced Arbitration Injustice Repeal Act of 2019 would make mandatory arbitration agreements unenforceable in civil rights, employment, consumer and antitrust cases.
May 30, 2019 at 10:16 AM
3 minute read
The right to a jury trial, enshrined in the Seventh Amendment, is being assailed on many fronts. We have previously written about the way in which that right was being abridged by the proliferation of the statutory immunities. Now we address another affront: the proliferation of mandatory arbitration.
Unbeknownst to most Americans, they waive their Seventh Amendment right to a jury trial in an alarming number of internet applications, service agreements and employment contracts. Fifty-five percent of American workers (60 million) have given up their right to a jury trial just to have a job, because they have signed mandatory arbitration agreements.
These agreements, buried in legalese, force employees to arbitrate whatever claims they might have for wrongful termination or discrimination, eliminating government oversight and relegating such claims to private arbitration where empirical studies have shown that workers are less likely to win their cases, and when they do, they obtain much less money than they otherwise would in court.
Sixty-five percent of employees in the largest companies require their employees to forfeit their rights to our justice system with its public scrutiny. Women and black employees are impacted the most because they make up the largest share of workers in the industries that mandate arbitration the most: education and health care. Further, corporate authority to maintain a small bank of arbitrators selected by the parties—but certainly with higher regularity by the corporation than claimants—can undermine the neutrality of the arbitrator and the underlying justice in the system.
Consumers are also regularly saddled with mandatory arbitration clauses when they buy products such as cellphones, appliances and utilities. If the companies that sell these products or services are, on a classwide basis, unfair and deceptive, consumers are denied a remedy because they have agreed—most often unwittingly—to mandatory arbitration and have waived the right to bring a class action.
Our judicial system is being privatized. And Americans are irate. Eighty-three percent of Democrats and 87% of Republicans oppose mandatory arbitration. Americans are demanding their due process rights and public exposure with a jury trial. There is a revolt brewing.
That is why we strongly support the Forced Arbitration Injustice Repeal Act of 2019 (FAIR Act) which is before Congress in the House (H.R. 1423) and Senate (S.610). The act would make mandatory arbitration agreements unenforceable in civil rights, employment, consumer and antitrust cases. The FAIR Act would not eliminate arbitration as a dispute resolution option if the parties voluntarily select the process, but it would prevent arbitration from being a mandatory condition of employment or requirement when purchasing goods and services.
The Founding Fathers believed in the power of jury trials to reach just results, that the jury system was fundamental to democracy. Arbitration has its virtues. But as Aristotle has said, all virtues have a golden mean. The FAIR Act tilts arbitration toward that golden mean.
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