Axne Applauds House Passage of Forced Arbitration Act

Statement

Today, U.S. Rep. Cindy Axne (IA-03) applauded House passage of the Forced Arbitration Injustice Repeal Act (the FAIR Act), legislation that prohibits the enforcement of mandatory, arbitration ("forced arbitration") provisions in contracts that force employees or customers to waive their right to sue. This legislation, which Rep. Axne is a co-sponsor of, would restore access to justice for thousands of Iowans who are currently locked out of the court system and are forced to settle their disputes against companies in a private system of arbitration that often favors the company over the individual.

"Forced arbitration clauses allow corporations to side step our judicial process in order to take advantage of hardworking Iowans," said Rep. Axne. "This secretive process strips away workers basic judicial rights and shields corporations from accountability when they harm or defraud people. These clauses -- which are often buried in contracts -- can quite literally give corporations the ability to play the role of the judge, the jury, and the law in resolving a dispute. This bill will end the legal nightmare of forced arbitration and restore access to justice for hardworking Iowans. "

"I'm pleased to see the House of Representatives act on this legislation. In February 2018, I joined a bipartisan group of 56 state and territorial attorneys general to urge Congress to oppose mandatory arbitration for sexual harassment claims," said Iowa Attorney General Tom Miller. "Access to the judicial system is a fundamental right of all Americans. These arbitration requirements often are buried in employment contracts. As a result, many employees will not even recognize that they are bound by them until they attempt to seek justice."

For millions of consumers and employees, the pre-condition -- whether or not they are aware -- of obtaining a basic service or product, such as a bank account, a cell phone, a credit card, or even a job, is that they must agree to resolve any disputes in private arbitration. These clauses are designed to favor corporations and disfavor workers and consumers. Private arbitration has been transformed from a voluntary forum for companies to resolve commercial disputes into a legal nightmare for millions of consumers who are denied basic judicial rights. Additionally, because the arbitration proceedings are secret, companies are able to hide misconduct from the public.

Over the last several years, companies' use of forced arbitration clauses has increased dramatically. An Economic Policy Institute study found that since the early 2000s, the share of workers subject to mandatory arbitration has more than doubled and now exceeds 55 percent. In 41 Iowa consumer cases claiming $1.8 million, only three consumers won anything: a total of $25,000, which equates to a meager 1.4%.

The FAIR Act would restore the private arbitration system to the original intent of the 1925 Federal Arbitration Act -- providing it as a voluntary, alternative process for resolving disputes, primarily for those with relatively equal bargaining power. The legislation does not preclude parties from agreeing to arbitrate a claim after a dispute arises, ensuring arbitration agreements will become truly voluntary and transparent.

"This bill would put an end to a rigged system that prevents Americans from seeking justice, a system that eliminates accountability for corporations if they rip you off. Under forced arbitration, if you have a dispute with a corporation, they pick the arbitrator, who decides the outcome of your case," Brad Lint, Executive Director, Iowa Association for Justice. "In supporting the FAIR Act, Rep. Axne voted to restore your rights. She sided with you."

"Having served as Iowa's chief regulator of nursing homes for nearly a decade, I learned first-hand the adverse consequences to Iowa's seniors of their having signed pre-dispute mandatory arbitration agreements before they moved into their new homes. Signing these agreements means that nursing home residents and family members give up their right to go to court over anything and everything, including neglect, abuse and fraud," Dean Lerner, former Iowa assistant attorney general and former director of the Iowa Department of Inspections & Appeals. "Perhaps worst of all, arbitrations are private proceedings, keeping critical information about harmful events from the public."

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