Recently, 37 Senators (36 Democrats, one Independent) and 84 members of the House of Representatives (all Democrats), led by Senator Richard Blumenthal of Connecticut and Congressman Hank Johnson of Georgia, reintroduced the Forced Arbitration Injustice Repeal Act (the “Fair Act”) which would amend the Federal Arbitration Act to prohibit the use of pre-dispute arbitration clauses and class action waivers in consumer, employment, civil rights and antitrust cases. It further provides that any dispute regarding whether the Act applies to an arbitration agreement shall be decided by a court, not an arbitrator, under federal law, even if the arbitration agreement delegates such issues to an arbitrator.
Essentially, the legislation would resurrect the CFPB’s arbitration rule, which was repealed by Congress, and extend its prohibition on predispute arbitration agreements with class action waivers on consumer contracts to the employment, civil rights, and antitrust arenas. It is also a de facto repudiation of numerous U.S. Supreme Court decisions over the past decades upholding the use of arbitration agreements and class action waivers to resolve disputes.
If ultimately enacted into law, the Fair Act would deprive consumer and businesses alike of the many benefits of arbitration. However, the Fair Act has been introduced each year since 2019 but has not been enacted by Congress. The House bill (H.R. 2953) has been referred to the House Judiciary Committee, while the Senate bill (S. 1376) has been referred to the Senate Judiciary Committee. No Republicans co-sponsored the bills. Without bipartisan support, this iteration of the Fair Act would appear to be doomed as were its predecessors.
We will continue to monitor the status of these bills for congressional developments, if any, that could affect consumer and employment arbitration agreements.