The U.S. Chamber of Commerce and allies are gearing up for a significant fight over the “Arbitration Fairness Act,” legislation pending in both houses of Congress that would strike mandatory arbitration agreements from consumer and employment contracts. Disgruntled contract holders would therefore have the right to sue but not necessarily the option of mediation unless the business agreed to it.
The battle lines are clear: The U.S. Chamber, which represents business interests, is fighting to keep a wave of consumer suits against its members out of court. The American Association for Justice, which represents plaintiffs attorneys, wants to ensure consumers retain their right to pursue claims in the higher-stakes arena of the courts.
At a Chamber Institute for Legal Reform press conference today, the business group made its case in triplicate. First came anecdotal evidence in the form of a Michigan woman who took Sears to arbitration over a $288 boiler repair bill and won (she believed strongly in pre-dispute arbitration agreements).
Next came the focus group results suggesting that consumers don’t support an end to mandatory arbitration. Compiled by the bipartisan polling team of Public Opinion Strategies and the Benenson Strategy Group, the study finds that consumers are averse to lawsuits “and, if given the choice, would prefer arbitration” in the words of presenter Bill McInturff of Public Opinion Strategies. (A few of the questions seemed slightly leading to an untrained eye for example, the survey defined an arbitrator as a “neutral 3rd party,” a definition that public interest groups challenge with their contention that arbitrators frequently align with the companies that choose them.)
Finally, Catholic University professor Peter Rutledge made the academic and legal case against the legislation. Dropping mandatory arbitration, he said, “unravels the quilt of dispute resolution.” Citing numerous categories of arbitration in which consumers already win a majority of cases, Rutledge suggested that allowing lawsuits would kill the incentive for businesses to respond to smaller claims. Lastly, he noted, the prohibition of pre-dispute resolution agreements would lead to a greater burden on judges’ dockets by smoothing the path for class actions.
But where would reporters in attendance find an opposing viewpoint? The American Association for Justice, the trade association for trial attorneys, had that taken care of: The association sent a representative to the press conference who poached reporters’ names for follow-up calls.
Julia Duncan, an AAJ counsel for legislative affairs, says her association’s goal is to prevent corporations from “setting the rules of the game … and being able bury a clause in a contract when the consumer doesn’t realize what effect it will have until later.”
Mandatory arbitration, which sometimes dictates a specific arbitrator in a specific state, is inherently skewed toward corporate clients, she argues, because they’re an arbitrator’s regular customers.
Duncan wouldn’t predict whether the arbitration legislation will move in the coming days or weeks, but she’s hopeful.
“I would note the big bill has 86 cosponsors, and it is bipartisan,” she says.