Congressional Hearing on Arbitration Fairness Act Tomorrow

by Deepak Gupta

We've blogged before about the proposed Arbitration Fairness Act, federal legislation that would end the scourge of pre-dispute mandatory binding arbitration clauses in consumer, employment, and franchise contracts.

Tomorrow, at 2pm, the U.S. House Judiciary Committee, Subcommittee on Commercial and Administrative Law,  will hold a hearing on the legislation.  The Committee is chaired by Rep. Linda Sanchez of California.

The witnesses tomorrow include Laura MacCleery, the director of Public Citizen's lobbying arm, Congress Watch, who will testify about the evils of mandatory binding arbitration in consumer disputes and the ways in which arbitral fora are used as assembly-line debt collection mills, thereby avoiding the protections that consumers would otherwise be afforded under federal law. As we've already mentioned here, Public Citizen recently released a report detailing how arbitration of disputes between consumers and credit card companies overwhelmingly favor the companies. The report, The Arbitration Trap: How Credit Card Companies Ensnare Consumers, is a detailed study of predatory practices in California, the only state that requires arbitration firms to publicly disclose information.

Tomorrow's lineup also includes:

• Richard Naimark, a VP at the American Arbitration Association, one of the big arbitration companies
• former Georgia Governor Roy Barnes, who now represents consumers as a trial lawyer
• Ken Conner, a conservative Republican trial lawyer who represents victims of nursing home abuse
• Cathy Ventrell-Monsees, representing the National Employment Lawyers Association
• Peter Rutledge, America's only pro-mandatory-binding-arbitration law professor.  (That's an exaggeration, of course.  But here's Rutledge's forthcoming law review article explaining why getting rid of mandatory arbitration would, in his view, actually harm consumers)
• Theodore Eppenstein, a lawyer who specializes in securities fraud cases

Comments

[Bob from Online Debt Collection Review]

This is interesting, as I've never really heard much about what happens with arbitration. It doesn't surprise me that they find in favor of the cc companies the majority of the time, but I didn't realize that they find in favor of the credit card companies over 90% of the time!

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[Brian]

Ted,

Public Citizen has taken its positions regarding arbitration because the organization believes that those positions are the right ones for consumers. Speaking for myself, I don't think it is meaningful, in most (but not all) circumstances, to call arbitration an "option" for consumers, and I thought that our report on arbitration was quite powerful in illustrating the problems associated with consumer arbitration. You are entitled to your contrary positions, and I'm happy for you to express them here. I disagree, however, with the tone of your comment. The one thing I am confident about, having worked at Public Citizen for more than 17 years, is that we don't take positions based on who else supports them. (The implication from your comment is that we are taking this position to support interests of a certain segment of the bar.) To take just one example, we have frequently opposed national class action settlements involving some of the most prominent members of the plaintiffs' bar, including vehemently opposing awards of attorney's fees that we believed were unjustified. If I thought that the reason we took any position was to support the interests of lawyers, I would be out the door in a heartbeat.

[Ted]

If Peter Rutledge were really America's only pro-mandatory-binding-arbitration law professor, that would speak very poorly for the academy. Fortunately, there are dozens of others who recognize that giving consumers the option of mandatory binding arbitration provisions benefits consumers ex ante. It's a shame that Public Citizen is taking the side of trial lawyers rather than consumers on this issue.