Kagan Hearings Transcript: Franken Slams Mandatory Arbitration; the Nominee Talks Legislative History (July 7).

There was an arbitration moment last week at the Senate Judiciary Committee  hearings presenting President Obama’s nominee to fill the U.S. Supreme Court vacancy created by the retirement of Justice John Paul Stevens.

Sen. Al Franken, D. Minn., questioned Supreme Court nominee Solicitor General Elena Kagan on recent Court cases involving mandatory arbitration.   His criticism of the Court and its arbitration jurisprudence was pointed.

A vote is expected this summer, by the full Senate, on Kagan's confirmation. 

Franken criticized the holdings of Circuit City v. Adams, 532 U.S. 105 (2001)(available here) and the recent Rent-A-Center, West Inc. v. Jackson, No. 09-497 (June 21,2010)(CPR coverage with links to the opinion and other sources collected here).

These decisions, the senator said at the June 30 hearing, deny individuals their “precious day in court” because they back mandatory arbitration.

Franken’s setup question about arbitration flowed into a discussion on how justices should interpret congressional intent and legislative history.  The result was that the exchange was less focused on arbitration  specifically, and more on the Court’s use of legislative intent in its rulings.  See, e.g., “At Kagan Hearing, Arbitration Debate Sputters,” The BLT: The Blog of  Legal Times (June 20, 2010)(available here).

Still, the discussion addressed interpreting the Federal Arbitration Act.  Franken said that Circuit City author Justice Anthony M. Kennedy incorrectly ignored legislative history on an FAA provision when the Court ruled that the statute applies to individual employment contracts.  

Kagan responded indirectly, offering her philosophy of legislative history in judicial decisionmaking.   She stated that it is the “job of the courts to use whatever evidence” may be available, including legislative history.

Franken strongly criticized the Court’s Rent-A-Center opinion, too.  Kagan was not questioned on whether she believed that Rent-A-Center was decided correctly.  Franken said, “I know I probably can’t ask you about whether you think this case--well, I can ask you, but you won’t answer.   . . .”

Franken set up the arbitration segment of his allotted questioning  period by invoking a comment from the previous day, when Kagan told Senator Jon Kyl, R., Ariz., that “one of the glorious things about courts is they provide a level playing field in all circumstances.”    Franken noted that Rent-A-Center prevents individuals from getting a “fair shake.”

The section of the hearings' third-day transcript in which Sen. Franken and Solicitor General Kagan discussed arbitration is copied in its entirety below.  To see it in the context of the day’s discussion, go here.  

The Washington Post has the transcripts for the other hearing days, too.  Day One is here, and Day Two is here.

--Diana Gesualdi, CPR Intern

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SEN. AL FRANKEN:  . . . General Kagan, I really liked something you said yesterday in your conversation with Senator Kyl. You said that "one of the glorious things about courts is they provide a level playing field in all circumstances, and that we need to make sure that every single person gets the opportunity to come before the court and gets the opportunity to make his best case and gets a fair shake."

I want to discuss something that is denying more and more working Americans that precious day in court -- that fair shake, and that’s mandatory arbitration. Now, arbitration has its place. I’m talking about mandatory arbitration.

Chances are if you have a cell phone or a credit card or if you work, you’re likely to have signed a contract with a mandatory arbitration clause. These clauses basically say if we violate your fights, you can’t take us to court. You have to take it to an arbitrator. But then the fine print essentially says an arbitrator that we pay who depends on us for work and who makes decisions in secret.

So a lot of people are denying their opportunity to come before the court. Unfortunately, we’ve seen a series of decisions from the Supreme Court that have made it even harder for people to get that fair shake, as you put it.

In 2001, in a case called Circuit City, the court was asked to decide whether workers'  employment --employment contracts could be subject to mandatory arbitration. This really should have been a no-brainer because the Federal Arbitration Act of 1925, the law that says which arbitration agreements should be enforced, specifically exempts, quote, "contracts of employment of seamen, railroad employees or any other class of workers engaged in foreign or interstate commerce."

Organized labor had asked for this specific language to be included to make sure the act would not apply to workers’ employment contracts. In fact, then-Commerce Secretary Herbert Hoover said during a Senate hearing, quote, "If the objection appears to the inclusion of workers'  contracts in the law’s scheme, it might well be amended by stating that nothing herein contained shall apply to the contracts of employment of seamen, railroad employees or any other class of workers engaged in interstate commerce."

Secretary Hoover was saying that if Congress wanted to make clear that the Federal Arbitration Act did not apply to employment contracts, Congress should put this language in the statute. So Congress put the language in the statute. But when Justice Kennedy wrote the majority opinion in Circuit City, he ignored the history. He wrote, and I quote, "We need not assess the legislative history of the exclusion provision." Let me repeat that: "We need not assess the legislative history of the exclusion provision."

And based on a strained reading of the law, he decided that the exception only applied to workers in the transportation business, not any class of workers. This means that instead of all workers getting their day in court in Congress, like Congress clearly intended, only transportation workers would get it, and that excludes the vast majority of American workers.

General Kagan, I really disagree with this case and the way the court ignored Congress’ intent. That’s why I was glad to hear your response to one of Senator Schumer’s questions about how the court should interpret statutes. You said that among other things, quote, "I think a judge should look to the history of the statute in order to determine Congress’ will."

General Kagan, we spend a he lot of time in hearings and on the floor debating legislation. How much weight do you think a judge should give to the deliberations of Congress and the reasons why we passed a law in the first place?

NOMINEE ELENA KAGAN: Well, Senator Franken, the most important thing in interpreting any statute--in fact, the only thing that matters in interpreting any statute--is Congress’ intent. Congress gets to make the laws under Article One of the Constitution. And what the court should be doing in applying those laws is trying to figure out what Congress meant and how Congress wanted the laws to be applied. That is the only thing that the court should be doing.

Now, sometimes that can be a difficult task. New situations come up. The statutory language -- it’s not clear how the statutory language applies to those new situations, or sometimes Congress might simply not have thought of particular situations. Language is by necessity inexact. And so there are going to be cases which . . . 

FRANKEN: Do you agree with Justice Kennedy, we need not assess the legislative history of something?

KAGAN: Well, I would--I would say this. I would say where the text is clear, the court should go with the text. Where the text clearly covers some situation, the court should do that. The court should not rewrite the law.

FRANKEN: But shouldn’t the court assess that--make an assessment there?

KAGAN: Well, I think if the text is clear, Congress should not--the court should not rewrite the law. But where the text is ambiguous, which often happens . . .

FRANKEN: And wouldn’t you have to assess whether it’s ambiguous?

KAGAN: Yes. I mean, the first step is . . .  

FRANKEN: So what Justice Kennedy said doesn’t stand up to that, does it?

Let me --let me move on on that. We in Congress, we want to make sure, all of us, that our intentions are clear so that 75 years from now the Supreme Court doesn’t just ignore the purpose behind the laws we are passing. How can we do that? How do we do that? How do we do that? How do we make it clear to future justices?

KAGAN: Well, the courts surely would be helped if Congress spoke as precisely and exactly and as comprehensively as it could in all situations.

KAGAN:  You know, there--there are some instances where the--the court just has legitimate difficulty trying to figure out what Congress intended and where judges, all of whom agree that what they should be doing is doing what Congress intended, have difficulty determining that or disagree about what that means.

And--and certainly to the extent that Congress can make its intentions clear in legislation and can specifically spell out how it intends for the law to operate, Congress ought to do so. And, of course, you know, to the extent that the court gets something wrong with respect to a statute, and this has happened, you know, many times in--in recent years and in prior years, as well--to the--to the extent that the court gets something wrong, of course Congress can come back and change it, and make clear that the court got it wrong, and--and also use it as an opportunity even to make clear its intentions with respect to a general area of law.

FRANKEN: OK. It’s hard to do 78 years from now, but we’ll try.

Circuit City was a Rehnquist court decision. Just last week, the Roberts court did Circuit City one better in helping employers keep their workers out of court and into arbitration. It happened in a case called Rent-A-Center v. Jackson, which Senator Feingold noted yesterday.

Rent-A-Center had 21,000 workers and hundreds of millions of dollars in annual profits. It also forces its workers to sign a mandatory arbitration agreement as a condition of employment.
Antonio Jackson, an African-American account manager in Nevada, had been working for Rent-A-Center for years, but he was frustrated because he watched his company pass him over for promotions again and again. Instead, they promoted workers who had less experience and who weren’t black.

Although Jackson signed an employment contract agreeing to arbitrate all employment claims, this seemed blatantly unfair, and he sued Rent-A-Center. But the company argued that only the arbitrator could decide whether the arbitration clause was unfair. Let me repeat that: Rent-A-Center argued that only the arbitrator could decide whether the arbitration clause was unfair.

Last week, the Roberts court sided with Rent-A-Center. Talk about not getting your day in court. Now you can’t get your day in court to get your day in court.

Now, General Kagan, I know I probably can’t ask you about whether you think this case--well, I can ask you, but you won’t answer--whether this case was correctly decided, but I would like to ask, do you still agree with what you said yesterday to Senator Kyl, that one of the glorious things about courts is that they provide a level playing field in all circumstances and that we need to make sure that every single person gets the opportunity to come before the court and gets the opportunity to make his best case and gets a fair shake?

KAGAN: Well, [I] do agree with that very strongly, Senator Franken. And if I might, if I might just return to this question of statutory interpretation that you started off with, because I did want to make clear that, when a text is ambiguous, which, you know, frequently happens, . . .  then I think that the job of the courts is to use whatever evidence is at hand to understand Congress’s intent, and that includes exploration of Congress’s purpose by way of looking at the structure of the statute, by way of looking at the title of the statute, by way of looking at when the statute was enacted, and in what circumstances, and by way of looking at legislative history.
Now, I think courts have to be careful about looking at legislative history and make sure that what they’re looking to is--is reliable, but courts should not at all exclude signs of congressional intent and should--should--should really search hard for congressional intent when the text of the statute itself is unclear.

FRANKEN: Good. Then I think you and I agree that Justice Kennedy may have been in error when he said that--that the court doesn’t have to assess the legislative history.

KAGAN: Well, I suspect that --I--I don’t know the case very well. I suspect that Justice Kennedy may have meant that he thought that the text was clear and, therefore, the legislative history was not something that should appropriately be explored, but I’m just guessing on that.

FRANKEN: OK. I think you’re guessing wrong.

KAGAN: OK.

(LAUGHTER)

FRANKEN: General Kagan, you’ve--you’ve gotten a lot of questions about . . .

KAGAN: It’s not the first time in my life.

FRANKEN: And nor the last. We all guess wrong.

[END Transcript]