Senate Hearing on Pre-Dispute Arbitration Clause: Arbitration Fairness Act

Arbitration Fairness Act

And, now a look into the debate about pre-dispute arbitration clauses found in consumer and employment contracts. Several witnesses testified about the problems with these clauses. Then, Senator Al Franken questioned a U of Georgia Law School professor, Peter B. Rutledge, who planned to support the clauses. Watch the video here.

From the Consumerist:

Earlier this week, the Senate Judiciary Committee held a hearing on mandatory binding arbitration clauses, those fun bits of contractual language that take away your right to sue a company and force you into a resolution process that is heavily weighted in the company’s favor. The hearing was chaired by Senator Al Franken of Minnesota, who earlier this year introduced the proposed Arbitration Fairness Act, and so he obviously has a thing or two to say on the topic.

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Starting at around the 1:55 mark in the above video, Franken cites the professor’s own previous statements that certain arbitrators can, by the decisions they make in resolving disputes, develop pro-business reputations with the goal of being used more frequently and earning more fees.

Overall, I am not in favor of these types of clauses in the consumer and employment context.  But, arbitration can be a viable option to "lumping it" even in these contexts.   Lumping it is often the only other option available if the parties cannot negotiate a satisfactory outcome to the dispute or afford full-blown litigation.

My colleague and former LL.M. law professor, Jean Sternlight, is well-known for her opposition to the clauses. For more on her point of view, see here.