Today the US House of Representatives passed a landmark piece of legislation aimed at helping consumers and employees get access to justice: the FAIR Act. The Forced Arbitration Injustice Repeal Act of 2019 partially repeals the Federal Arbitration Act in certain consumer and employment contracts. This is a HUGE deal. Why? Because forced arbitration has become the primary weapon that big corporations use to avoid the justice system when they’ve done wrong to their customers and employees.
The Federal Arbitration Act was passed back in the 1920s, and was initially just a procedural device for use in federal courts to help enforce agreements to arbitrate disputes. Indeed, Justice Clarence Thomas, a principled originalist, still holds that view. But unfortunately, since the 1980s, the Supreme Court’s conservative majority has steadily and grossly expanded the scope of the Federal Arbitration Act, so that nowadays pretty much every contractual dispute in America is subject to the FAA. Things like credit card agreements, cable or telephone service contracts, automobile sales, employment agreements, and just about every other contract the governs your dealings in life can now include arbitration provisions that prevent you from taking legitimate cases to real courts, and instead forces you into the secretive, private process of arbitration.
Arbitration really screws consumers for a few reasons. First, ordinary working people with claims against big business are just flat out less likely to win in arbitration, and when they do win they get less money than they typically would in real courts. Second, if you lose in arbitration, you can’t appeal, no matter how wrong the arbitrator’s decision was. And third, arbitration provisions can prohibit you from filing a class action lawsuit. This means that arbitration is often a get-out-of-jail free card for big corporations that rip off thousands of consumers. For instance, if a credit card company charges you an illegal $40 fee, what are you going to do about it? In real court, you’d file a class action and get those fees returned for yourself and the thousands or millions of other customers who’ve been similarly ripped off. But arbitration only allows you to file individual claims. And who’s going to hire a lawyer for a $40 case? You can’t! Which is exactly the point. Big business loves the free money they get from ordinary working people, so they LOVE arbitration. And, unfortunately, so do their mostly Republican allies in Congress.
Which is why today’s passage of the FAIR Act is a milestone. If it passes the Senate (which is a BIG “if,” given the fact that Republicans still control the Senate), and miraculously gets signed into law by the president, this law will be a massive win for ordinary working people. Let’s hope and pray that a few moderate Republicans in the Senate will stand up for the rights of working people and pass this bill.