This past Friday, by a vote of 225-186, the House passed H.R. 1423, the “Forced Arbitration Injustice Repeal Act.” A Senate companion bill (S. 610) was introduced in February 2019 and referred to the Senate Judiciary Committee. No action has been taken on the Senate bill.
The House bill would amend the Federal Arbitration Act to provide that “no predispute arbitration agreement or predispute joint-action waiver shall be valid or enforceable with respect to an employment dispute, consumer dispute, or civil rights dispute.”
A “consumer dispute” is defined as “a dispute between (A) one or more individuals who seek or acquire real or personal property, services (including services related to digital technology), securities or other investments, money, or credit for personal, family, or household purposes including an individual or individuals who seek certification as a class under rule 23 of the Federal Rules of Civil Procedure or a comparable rule or provision of State law, and (B) (i) the seller or provider of such property, services, securities or other investments, money, or credit; or (ii) a third party involved in the selling, providing of, payment for, receipt or use of information about, or other relationship to any such property, services, securities or other investment, money, or credit.”
On September 17, before the House vote, the White House issued a Statement of Administration Policy that states “[t]he Administration strongly opposes passage of H.R. 1423.” It further states that, as written, the bill “disregards the benefits of resolving disputes through arbitration, including lower costs, faster resolution, and reduced burden on the judiciary” and that “[b]y limiting contractual options, the bill would hurt businesses and the very consumers and employees it seeks to protect.” It concludes by stating that “[i]f H.R. 1423 were presented to the President in its current form, his advisors would recommend that he veto the bill.”
The Senate Judiciary Committee currently has 22 members, consisting of 12 Republicans and 10 Democrats. However, two of the Republican committee members, Lindsey Graham, the Committee Chair, and John Kennedy, voted against the Congressional Review Act resolution to override the CFPB’s arbitration rule. As a result, it is not inconceivable that the FAIR Act could be passed by the Senate Judiciary Committee. The Senate currently consists of 51 Republicans, 47 Democrats, and 2 independents who caucus with the Democrats. Given that there are at least two Republican Senators who would likely support the FAIR Act (Senators Graham and Kennedy), there could be enough votes in the Senate to pass the FAIR Act. For that reason, it is comforting to know that President Trump would veto the FAIR Act. Should he do so, it is very doubtful that there would be enough votes in the Senate to override the veto.