A subject that many Americans don’t even know about — until it’s too late for them to do anything — is now shaping up to be a battleground between lawmakers in both the House and Senate, where two very different sets of legislation will go head to head to determine whether or not companies can strip their customers of their constitutional right to file a lawsuit in court — and their First Amendment right to speak freely.
Republicans got the head start on this legislative war, introducing a handful of bills in recent weeks that would further restrict consumers’ access to the legal system.
There’s H.R. 985, the Fairness in Class Action Litigation Act that Rep. Bob Goodlatte (VA) introduced in early February.
It would place a slew of new restrictions on class action lawsuits, like barring judges from certifying a class action where the lawyer representing the plaintiffs is in anyway related to anyone in that plaintiff class. Not just familial relations either; if the attorney has any sort of working relationship with a class member outside of that particular lawsuit, the case would be shut down.
Goodlatte also wants to make it more difficult for class actions to be certified, requiring that each the plaintiffs demonstrate that each proposed class member “suffered the same type and scope of injury as the named class representative or representatives.”
Critics, like Robert Weissman of Public Citizen, contend that the purpose of this law is to effectively “end class actions” and lock consumers out of the legal system.
Other bills introduced in recent weeks by GOP lawmakers seek to limit more specific types of legal claims. One piece of legislation could make it more difficult for victims of asbestos to collect their claim by imposing new paperwork requirements on the trusts administering these funds. Another bill would preempt state medical malpractice laws and cap non-financial damages at $250,000.
The Lawsuit Abuse Reduction Act (H.R. 720) from Rep. Lamar Smith of Texas, which would require that federal judges sanction lawyers believed to have filed frivolous lawsuits. Currently, this decision is left up to the judge’s discretion.
From The Other Side…
Today, Democrats in the House and Senate introduced a half-dozen pieces of legislation with the intention of expanding consumers’ access to the legal system.
The Arbitration Fairness Act, introduced by Sen. Al Franken (MN), would clarify the nearly century-old Federal Arbitration Act — a law that was never intended to apply to things like cellphone bills, personal checking accounts, or Snuggies — to prevent companies from forcing customers out of the legal system and into binding arbitration.
Customers could still choose to enter into arbitration, but under this law they would not be compelled into doing so.
In effect, said Franken at a Tuesday afternoon press event, this would take away the “permission slip for corporations to opt out of the civil justice system.”
The Restoring Statutory Rights Act [PDF] from Sen. Patrick Leahy (VT) seeks to give back to consumers and employees those protections that are afforded to them by state and federal laws, but which are increasingly being taken away through arbitration.
For example, Airbnb was recently able to compel arbitration in a lawsuit alleging violations of federal civil rights laws, and Wells Fargo is trying to sidestep a massive consumer fraud lawsuit by compelling the cases into arbitration.
“When Americans enter into agreements to obtain cellphone service, rent an apartment, or accept a new job, most are not made aware of the forced arbitration clauses that are tucked away in the legal fine print,” said Leahy. “But these dangerous provisions force us to abandon our Constitutional right to protect ourselves in court, and instead send hardworking Americans to face wealthy corporations behind closed-doors in private arbitration.”
In more issue-specific legislation, Sen. Dick Durbin is introducing a bill that would protect students against being forced into arbitration by their school.
A recent study found that arbitration clauses in educational agreements are exclusively used by the for-profit education industry, which Durbin says accounts for 40% of all student loan defaults while only representing 10% of college students.
“You’d think eventually those schools will have to answer for their conduct,” said the Senator. “Well, they don’t because of forced arbitration.”
Last summer, the Dept. of Education began the process of drafting a rule that would have stopped the use of arbitration clauses in enrollment agreements, but that will likely never see the light of day under new Education Secretary Betsy DeVos, a supporter of for-profit educators.
Another bill announced today, the Mandatory Arbitration Transparency Act, would put an end to non-disclosure requirements for arbitrations.
Former Fox News host Gretchen Carlson appeared at today’s press event in D.C., explaining why she feels it’s so important for people to not only have the right to sue, but to have the right to let the world know they brought a lawsuit.
She pointed to her own case — Carlson has accused former Fox News CEO Roger Ailes of sexual harassment — and the recent revelations about harassment and discrimination allegations at jewelry giant Sterling as examples of the need for people to be able to be transparent in legal matters.
“Arbitration silences millions of other survivors who might have come forward if they knew they weren’t alone,” said Carlson, who contends that this should not be a partisan issue: “Harassers come from all political parties.”
The Justice for Servicemembers Act would make sure that employers can not use arbitration to get out of legal disputes involving the Uniformed Services Employment and Reemployment Rights Act (USERRA). That law already prohibits employment discrimination against servicemembers and veterans, but Sen. Richard Blumenthal (CT) says companies are increasingly using arbitration to get around being held accountable under this law.
Another narrowly focused bill announced today is the Justice for Victims of Fraud Act from Sen. Sherrod Brown (OH) and Rep. Brad Sherman (CA). This bill targets the so-called “Wells Fargo loophole” by preventing banks from compelling arbitration of claims involving fraudulently opened checking and credit card accounts.
“If customers never authorized the opening of a phony credit card or checking account, there is no reason they should be bound by the arbitration agreement they were forced to sign when they set up a legitimate account,” argued Sherman.
Finally, Sen. Sheldon Whitehouse (RI) announced the Safety Over Forced Arbitration Act, which seeks to prevent forced arbitration in disputes involving matters of public health and safety.
Speaking at today’s event, Whitehouse may have done the best job of summing up the importance of keeping the courtroom open to all:
“Corporations exert their influence throughout Congress, throughout the regulatory agencies… throughout the executive branch of government. The one place they can’t touch is the jury,” said the Senator. “The jury is the place in the Constitution that was designed to equalize power between individuals who have very little of it, and individuals who have a lot of it, who have great power and wealth. So clearly, [corporations] don’t want to be in front of juries.”