Senate Judiciary Committee: More from the Kagan Hearings on Mandatory Arbitration (July 9).

As we reported Wednesday, President Obama's U.S. Supreme Court nominee to fill the opening in the wake of Justice John Paul Stevens' retirement, Solicitor General Elena Kagan, fielded tough questions on mandatory arbitration by Sen. Al Franken D. Minn., during her Senate Judiciary Committee hearings last week.

But as Franken noted, his discussion on mandatory arbitration actually was a follow-up to comments a day earlier, during questioning by Sen. Russ Feingold, D. Wis.

Feingold is the Senate sponsor of the Arbitration Fairness Act of 2009,  which is pending before the committee, and could be subject to a vote before the fall elections. He has long opposed mandatory arbitration, and introduced the bill to ban predispute arbitration in consumer and employment matters.

On June 29, Day 2 of the hearings, Feingold made arbitration a significant confirmation process issue when he addressed Kagan. He said:

More and more powerful economic interests are forcing consumers and employees to bring their disputes not to the courts, but to a parallel legal system where the rule of law barely applies and where the outcome I think is stacked against them.

He questioned Kagan on why Supreme Court's decisions, like Rent-A-Center, West v. Jackson, No. 09-497, favor “powerful interests” while failing to protect consumers and employees from “laws written to protect the powerless from misconduct by the powerful.” (CPR's Rent-A-Center , West articles, the Court’s opinion, and resources linked here.)

Kagan did not address the specific Rent-A-Center facts in responding to Feingold. She said that in the case the Court “was interpreting a congressional statute. . . .,“ continuing, 

So to the extent Congress thinks the Court got it wrong in that case or in any other regarding arbitration, I think it's appropriate, and the Court would and should respect what Congress does.

Feingold’s full criticism of Rent-A-Center, and Kagan’s full response, is below. The hearing transcript from Day 2, where the discussion occurred, can be found here.

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In fact, criticism of Rent-A-Center, West began on the opening day of the hearings--teeing up the case for harsh Feingold and Franken criticisms on Days 2 and 3.

On June 28, committee member Sen. Sheldon Whitehouse, D., R.I., lined up Rent-A-Center with several other cases in a strong criticism of the Court’s pro-business orientation.

Whitehouse only mentioned the case in passing, but there was no mistaking what he thought of the Court's June 21 decision. He said that opinions like Rent-A-Center “degrade[] a core constitutional principle” by “running against the accountability of big corporations.”

Here is the context of Whitehouse’s remarks including Rent-A-Center, West, with citations we've added (the full day’s transcript containing Whitehouse's remarks also can be found on the Washington Post’s site, here):

Even more striking is the record of corporate interests before this Supreme Court. The Ledbetter case [Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007)]  allowed an employer to get away with wage discrimination as long as it hid it successfully from the employee. The Gross case [Gross V. FBL Financial Services Inc., 29 S.Ct. 2343 (2009)] made it far harder for a victim of age discrimination to prove his or her case. The Iqbal case [Ashcroft v. Iqbal,129 S.Ct. 1937 (2009)] erected new pleading hurdles protecting defendants, likely corporations, from injured plaintiffs.

Only last week, the Rent-A-Center decision concluded that an employee who challenges as unconscionable an arbitration demand must have that challenge decided by the arbitrator. And the Citizens United decision -- yet another 5-4 decision -- created a constitutional right for corporations to spend unlimited money in American elections, opening our democratic system to a massive new threat of corruption and corporate control. [See Citizens United v Federal Election Commission, 558 U.S. 50 (2010)]
There is an unmistakable pattern. For all the talk of umpires and balls and strikes at the Supreme Court, the strike zone for corporations gets better every day.

This tide of decisions running against the accountability of big corporations degrades a core constitutional principle.

--Diana Gesualdi, CPR Intern

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Here is the exchange between Sen. Feingold and Solicitor General Kagan on Day 2 of the hearings (link for full hearings is above):

FEINGOLD: All right. I want to talk with you now about the issue of forced arbitration, which I’ve been working on for about a decade. More and more powerful economic interests are forcing consumers and employees to bring their disputes not to the courts, but to a parallel legal system where the rule of law barely applies and where the outcome I think is stacked against them.
 

A century ago, Congress passed the Federal Arbitration Act to allow parties who wanted to take their disputes to arbitration to enforce the results of the arbitration in court. In the last several decades, however, the Supreme Court has twisted this law to allow banks and mortgage companies, health care providers, big agribusinesses and others to enforce so-called "take it or leave it" contracts that force people to use arbitration even if they don’t want to.

 

I think that’s wrong and Congress needs to change it. And just this past week in the Rent-A-Center case, the court held that in most cases where a claim is made that enforcement of an arbitration clause would be unconscionable, it would be the arbitrator--the arbitrator--who gets to rule on that issue.

 

Do you understand why the Supreme Court’s decisions in favor of powerful interests who want to force consumers and employees into arbitration against their will are so troubling to those who believe that our courts must continue to be available to enforce consumer protection, employment discrimination, and other laws written to protect the powerless from misconduct by the powerful?

KAGAN: Senator Feingold, I have not had an opportunity to read that case. It was not one that the solicitor general’s office participated in. And I don’t have a view of it or much knowledge about it.
I think that in this-in that case, the Supreme Court was interpreting a congressional statute, and this is another of the areas where Congress does indeed get to state the rules. So to the extent Congress thinks the court got it wrong in that case or in any other regarding arbitration, I think it’s appropriate, and the court would and should respect what Congress does.

 

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