Arbitration Issues

As a general proposition, Alternative Dispute Resolution (ADR) refers to any means of settling disputes outside of the courtroom. Two common forms of ADR include mediation and arbitration.

The New York Times recently published a three part series highlighting how arbitration clauses “have crept into nearly every corner of Americans’ lives.”

The Times series noted that arbitration clauses are now common in contracts involving employment, telephone service, and credit cards.

With this background in mind, a news release this week from Senator Patrick Leahy (D., Vt.) stated that, “[Sen. Leahy] introduced new legislation Thursday to restore the rights of Americans who too often are forced into mandatory arbitration in civil rights cases, employment disputes, and other lawsuits. Leahy was joined by Senator Al Franken (D-Minn.), who is the lead cosponsor of the legislation.

“‘When Americans sign cell phone agreements, rent an apartment, or accept a contract for a job, most of us focus on the service we are about to receive or that we are about to provide. What Americans do not realize—until it is too late—is that too often we are also signing away crucial legal rights,’ Leahy said.”

“The Restoring Statutory Rights Act would ensure that when Congress or the states have created rights and remedies for injured victims, victims are able to enforce those rights and remedies in court. It also makes clear that when states take action to address forced arbitration – as Vermont and other states have tried to do – federal law should not interfere.”

The news release added that, “‘When Americans’ rights are infringed, they deserve their day in court,’ Franken said. ‘Sadly, when big corporations insulate themselves from liability through ‘forced arbitration’ clauses—which are slipped into things like credit card agreements and employment agreements—they stack the deck against Americans who are trying to exercise that fundamental right.’”

An article in today’s New York Times pointed out that, “The bill introduced Thursday is likely to face intense opposition, in Congress and from the business lobby. Other bills, including one that aimed to protect exempt service members from arbitration, have met fierce resistance from banks and the U.S. Chamber of Commerce…[I]f enacted, the bill would make claims brought under laws like the Family Medical Leave Act and the Fair Labor Standards Act exempt from arbitration.”

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