02.04.16

Leahy Unveils Legislation To Restore The Rights Of Americans From Forced Arbitration

WASHINGTON (Thursday, February 4, 2016) – Senator Patrick Leahy (D-Vt.) introduced new legislation Thursday to restore the rights of Americans who too often are forced into mandatory arbitration in civil rights cases, employment disputes, and other lawsuits.  Leahy was joined by Senator Al Franken (D-Minn.), who is the lead cosponsor of the legislation.

When Americans sign cell phone agreements, rent an apartment, or accept a contract for a job, most of us focus on the service we are about to receive or that we are about to provide.  What Americans do not realize—until it is too late—is that too often we are also signing away crucial legal rights,” Leahy said.  “Legal fine print tips the scales against us.  It is forcing consumers into private arbitration, denying us of our Constitutional right to protect ourselves in court.”

The Restoring Statutory Rights Act would ensure that when Congress or the states have created rights and remedies for injured victims, victims are able to enforce those rights and remedies in court.  It also makes clear that when states take action to address forced arbitration – as Vermont and other states have tried to do – federal law should not interfere.  

A series of recent decisions by the Supreme Court has gutted these protections, and families and working women all over America are being harmed.  In one recent example, a woman was fired from her job after she suffered a miscarriage and was unable to report to work.   When she tried to vindicate her rights through the Family and Medical Leave Act and her state’s pregnancy discrimination laws, she was forced into private arbitration, where there is neither public accountability nor any way of knowing whether she obtained justice.  In another recent case, an hourly employee at a hospital who was not being paid for all of the time she worked was forced into private individual arbitration, losing the option to join together with other affected workers whose rights were similarly harmed. 

In a statement, Leahy noted the severe impact these decisions have on individuals’ ability to vindicate their rights and enforce the law, since the cost of bringing an individual case almost certainly outweighs the lost wages any worker would receive.

Leahy and Franken, who is also the leading Senate author of the Arbitration Fairness Act, have long focused on the problem of forced arbitration clauses that waive individuals’ rights to bring a claim in court or to join other litigants in a class action.  The two have highlighted the issue in hearings of the Senate Judiciary Committee in 2007, 2008, 2011, and 2013, and in letters supporting administrative efforts to stop forced arbitration clauses in consumer financial services contracts and long-term care facilities such as nursing homes. 

“When Americans’ rights are infringed, they deserve their day in court,” Franken said.  “Sadly, when big corporations insulate themselves from liability through ‘forced arbitration’ clauses—which are slipped into things like credit card agreements and employment agreements—they stack the deck against Americans who are trying to exercise that fundamental right.  For years, I’ve been fighting to re-open the courtroom doors to consumers and workers by ending forced arbitration.  Our legislation is commonsense reform that will help to restore Americans’ right to challenge unfair practices by corporations, and it needs to be passed into law.”

Following a three-part investigation series by the New York Times highlighting the impact on consumers and workers of forced arbitration clauses that prevent individuals from seeking justice in court, Leahy and Franken also joined together last year to press the leading providers of arbitration services to address concerns about the use of such agreements, and to urge the Obama Administration to use its resources in this area.

Additional cosponsors of the Restoring Statutory Rights Act include Senators Richard Blumenthal (D-Conn.), Dick Durbin (D-Ill.), and Sheldon Whitehouse (D-R.I.).  Text of the legislation is available online.

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