Clip length/Date:(25:25min - 02/20/09)

Summary (scroll down for the IDN player, at the bottom):

In this week’s International Dispute Negotiation podcast, the American Arbitration Association’s general counsel, Eric Tuchmann, returns for his second visit, analyzing the Congressional push to ban mandatory consumer, employment and franchise arbitration. Initiatives to change arbitration practice were reintroduced last week.

IDN host Mike McIlwrath, of GE Oil & Gas in Florence, Italy, sat down with Eric before the bills were reintroduced, and brings listeners up to date. Eric presciently predicts that certain language in the Arbitration Fairness Act won’t survive—and indeed, one provision he found troubling in the earlier version of the bill was stricken in the new version that debuted last week.

Find out what that change was, and what else may be altered before the Arbitration Fairness Act of 2009 comes up for votes.

Here is language of the new version of the Arbitration Fairness Act, which Mike and Eric discuss, as well as a related bill that will figure in any final proposal that gets to the president’s desk, the Consumer Fairness Act of 1009:

Arbitration Fairness Act of 2009

HR 1020 IH
111th CONGRESS
1st Session

To amend chapter 1 of title 9 of United States Code with respect to arbitration.
IN THE HOUSE OF REPRESENTATIVES
February 12, 2009
A BILL
To amend chapter 1 of title 9 of United States Code with respect to arbitration.

Be it enacted by the Senate and House of Representatives of the United States of
America in Congress assembled,

SECTION 1. SHORT TITLE.
This Act may be cited as the `Arbitration Fairness Act of 2009'.

SEC. 2. FINDINGS.
The Congress finds the following:
(1) The Federal Arbitration Act (now enacted as chapter 1 of title 9 of the United
States Code) was intended to apply to disputes between commercial entities of
generally similar sophistication and bargaining power.
(2) A series of United States Supreme Court decisions have changed the meaning of the Act so that it now extends to disputes between parties of greatly disparate
economic power, such as consumer disputes and employment disputes. As a result, a large and rapidly growing number of corporations are requiring millions of
consumers and employees to give up their right to have disputes resolved by a
judge or jury, and instead submit their claims to binding arbitration.
(3) Most consumers and employees have little or no meaningful option whether to
submit their claims to arbitration. Few people realize, or understand the mportance of the deliberately fine print that strips them of rights; and because entire industries are adopting these clauses, people increasingly have no choice but to accept them. They must often give up their rights as a condition of having a job, getting necessary medical care, buying a car, opening a bank account, getting a credit card, and the like. Often times, they are not even aware that they have given up their rights.
(4) Private arbitration companies are sometimes under great pressure to devise
systems that favor the corporate repeat players who decide whether those companies will receive their lucrative business.
(5) Mandatory arbitration undermines the development of public law for civil rights
and consumer rights, because there is no meaningful judicial review of arbitrators'
decisions. With the knowledge that their rulings will not be seriously examined by a court applying current law, arbitrators enjoy near complete freedom to ignore the
law and even their own rules.
(6) Mandatory arbitration is a poor system for protecting civil rights and consumer
rights because it is not transparent. While the American civil justice system features
publicly accountable decision makers who generally issue written decisions that are
widely available to the public, arbitration offers none of these features.
(7) Many corporations add to their arbitration clauses unfair provisions that
deliberately tilt the systems against individuals, including provisions that strip
individuals of substantive statutory rights, ban class actions, and force people to
arbitrate their claims hundreds of miles from their homes. While some courts have been protective of individuals, too many courts have upheld even egregiously unfair mandatory arbitration clauses in deference to a supposed Federal policy favoring arbitration over the constitutional rights of individuals.

SEC. 3. DEFINITIONS.
Section 1 of title 9, United States Code, is amended--
(1) by amending the heading to read as follows:
`Sec. 1. Definitions';
(2) by inserting before `Maritime' the following:
`As used in this chapter--';
(3) by striking `Maritime transactions' and inserting the following:
`(1) `maritime transactions';';
(4) by striking `commerce' and inserting the following:
`(2) `commerce';
(5) by striking `, but nothing' and all that follows through the period at the end,
and inserting a semicolon; and
(6) by adding at the end the following:
`(3) `employment dispute', as herein defined, means a dispute between an
employer and employee arising out of the relationship of employer and employee as defined by the Fair Labor Standards Act;
`(4) `consumer dispute', as herein defined, means a dispute between a person
other than an organization who seeks or acquires real or personal property,
services, money, or credit for personal, family, or household purposes and the seller or provider of such property, services, money, or credit;
`(5) `franchise dispute', as herein defined, means a dispute between a franchisor
and franchisee arising out of or relating to contract or agreement by which--
`(A) a franchisee is granted the right to engage in the business of offering,
selling, or distributing goods or services under a marketing plan or system
prescribed in substantial part by a franchisor;
`(B) the operation of the franchisee's business pursuant to such plan or
system is substantially associated with the franchisor's trademark, service
mark, trade name, logotype, advertising, or other commercial symbol
designating the franchisor or its affiliate; and
`(C) the franchisee is required to pay, directly or indirectly, a franchise fee;
and
`(6) `pre-dispute arbitration agreement', as herein defined, means any agreement
to arbitrate disputes that had not yet arisen at the time of the making of the
agreement.'.

SEC. 4. VALIDITY AND ENFORCEABILITY.
Section 2 of title 9, United States Code, is amended--
(1) by amending the heading to read as follows:
`Sec. 2. Validity and enforceability',
(2) by inserting `(a)' before `A written';
(3) by striking `, save' and all that follows through `contract', and inserting `to the
same extent as contracts generally, except as otherwise provided in the title'; and
(4) by adding at the end the following:
`(b) No predispute arbitration agreement shall be valid or enforceable if it requires
arbitration of--
`(1) an employment, consumer, or franchise dispute; or
`(2) a dispute arising under any statute intended to protect civil rights.
`(c) An issue as to whether this chapter applies to an arbitration agreement shall be determined by Federal law. Except as otherwise provided in this chapter, the validity or enforceability of an agreement to arbitrate shall be determined by the court, rather than the 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.
`(d) Nothing in this chapter shall apply to any arbitration provision in a collective
bargaining agreement.'.

SEC. 5. EFFECTIVE DATE.
This Act, and the amendments made by this Act, shall take effect on the date of the
enactment of this Act and shall apply with respect to any dispute or claim that arises on or after such date.

-----------------------------------------------------------------------------------------------------------------

Consumer Fairness Act of 2009
HR 991 IH
111th CONGRESS
1st Session
To treat arbitration clauses which are unilaterally imposed on consumers as an unfair and deceptive trade practice and prohibit their use in consumer transactions, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES
February 11, 2009
Mr. GUTIERREZ introduced the following bill; which was referred to the Committee on Financial Services

Be it enacted by the Senate and House of Representatives of the United States of
America in Congress assembled,

SECTION 1. SHORT TITLE.
This Act may be cited as the `Consumer Fairness Act of 2009'.

SEC. 2. PROHIBITION ON ARBITRATION CLAUSES IMPOSED ON
CONSUMERS WITHOUT THEIR CONSENT.
(a) In General- The Consumer Credit Protection Act (15 U.S.C. 1601 et seq.) is amended by adding at the end the following new title:
`TITLE X--DISPUTE RESOLUTION
`SEC. 1001. SHORT TITLE; TABLE OF CONTENTS.
`(a) Short Title- This title may be cited as the `Consumer Fairness Act'.
`(b) Table of Contents- The table of contents for this title is as follows:
`TITLE X--DISPUTE RESOLUTION
`Sec. 1001. Short title; table of contents.
`Sec. 1002. Definitions.
`Sec. 1003. Prohibition on arbitration clauses imposed on consumers without their consent.
`SEC. 1002. DEFINITIONS.
`For purposes of this title, the following definitions shall apply:
`(1) CONSUMER- The term `consumer' means any individual.
`(2) CONSUMER TRANSACTION- The term `consumer transaction' means the sale or rental of goods, services, or real property, including an extension of credit or the provision of any other financial product or service, to an individual in a transaction entered into primarily for personal, family, or household purposes.
`(3) CONSUMER CONTRACT- The term `consumer contract' means any written,
standardized form contract between the parties to a consumer transaction.
`SEC. 1003. PROHIBITION ON ARBITRATION CLAUSES IMPOSED
ON CONSUMERS WITHOUT THEIR CONSENT.
`(a) In General- A written provision in any consumer transaction or consumer contract which requires binding arbitration (whether by the terms of such transaction or contract directly or at the request of any party to the transaction or contract) to resolve any controversy arising out of or related to the transaction or contract, or the failure to perform the whole or any part of the transaction or contract shall constitute a violation of this title, shall not be enforceable, and shall be treated as an unfair and deceptive trade act or practice under Federal or State law.
`(b) Post-Controversy Agreements- Subsection (a) shall not apply with respect to a
written agreement to determine by binding arbitration an existing controversy arising out of a consumer transaction or consumer contract if the written agreement has been entered into by the parties to the consumer transaction or consumer contract after the controversy has arisen.
`(c) Compliance- Compliance with the requirements of this title shall be enforced in the same manner as compliance with the requirements imposed under the preceding title are enforced under section 917 of such title.
`(d) Coordination With Other Law- No provision of this section shall be construed as annulling, altering, affecting, or superseding any Federal law, or the laws of any State, relating to arbitration in connection with consumer transactions or consumer contracts, except to the extent that those laws are inconsistent with the provisions of this section, and then only to the extent of the inconsistency.'.
(b) Applicability- The amendments made by this section shall apply to all consumer transactions and consumer contracts entered into on, or after the date of the enactment of this Act, amendments entered into on or after such date of enactment to any consumer transaction or consumer contract without regard to the date such transaction was consummated or such contract entered into, and to all controversies pending or filed on, or arising after, the date of such date of enactment.

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