Congress Considers Prohibiting Certain Types of Mandatory Arbitration


We have discussed in some detail the problems with mandatory arbitration for Alabama consumers. Paul Bland of Public Justice alerted us to an article in the L.A. Times that we had missed dealing with movement in Congress to protect consumers from having to deal with mandatory arbitration.

Here are some excerpts of this well written and balanced article:

Critics of the provisions say they deny consumers and employees a basic American principle: the right to go to court.

“People from all walks of life — employees, investors, homeowners, those enrolled in HMOs, credit card holders and other consumers — often find themselves strong-armed into mandatory arbitration agreements,” said Sen. Russell D. Feingold (D-Wis.), who is sponsoring one of the measures aimed at making arbitration voluntary rather than mandatory.

One of the supporters is Congressman Johnson of Georgia. As the article notes:

The broadest and most controversial measure, introduced by Feingold in the Senate and Rep. Hank Johnson (D-Ga.) in the House, would make arbitration voluntary in consumer, employment, franchise and medical contracts.

Johnson’s measure, which has been the subject of congressional hearings but has not moved out of committee, has 53 co-sponsors in the House, including some Republicans.

Johnson said he introduced the measure after he considered building a home and found a mandatory arbitration clause in every home construction contract he was presented. Johnson, a lawyer, said parties in disputes should be free to turn to the courts, arguing that mandatory arbitration amounts to a “private judicial system” that “benefits the commercial interests at the expense of consumers and employees.”

At a hearing on Johnson’s bill, Deborah Williams, owner of a coffee franchise in Annapolis, Md., said an arbitration with the coffee company took place in Michigan, “500 miles from our home,” and cost more than $100,000, “hardly a cheaper alternative to litigating locally in Maryland.”

“We never knew how precious our constitutional rights were until they were stolen from us by a binding mandatory arbitration clause,” she said.

We will keep an eye out for further developments on this front. In the meantime, be very selective about signing arbitration agreements – sometimes you cannot avoid it but if you can find an alternative product or service that does not require arbitration – support that company with your business and your dollars.

Another resource for you is to join our Facebook Fan Page – Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.


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