U.S. Supreme Court building. (Photo credit: Wikipedia)
THIS NEEDS TO BE PASSED!
In recent years, a narrow majority of the U.S. Supreme Court has repeatedly sided against consumers’ access to the justice system, concluding that a 90-year-old law gives companies the authority to effectively skirt the legal system by preempting customers’ lawsuits. That’s why some legislators have decided it’s time to change that law.
Back in 1925, Congress passed the Federal Arbitration Act. That law says that, when both parties to a contract agree to settle their disputes in binding arbitration — as opposed to a court of law, neither party can later try to force the other into having that matter settled in the legal system.
A spate of Supreme Court decisions over the last 30 years have resulted in companies increasingly using arbitration, not to quickly settle legal disputes with other companies, but to prevent large numbers of customers from filing potentially damaging class action lawsuits.
Today, Sen. Patrick Leahy from Vermont and Sen. Al Franken from Minnesota announced the Restoring Statutory Rights Act [PDF], states that the 1925 Federal Arbitration Act “did not, and should not have been interpreted to, supplant or nullify the legislatively created rights and remedies which Congress… has granted to the people of the United States for resolving disputes in State and Federal courts.”
It would create an exception in the Arbitration Act for disputes involving individuals and small businesses. The only way individuals would enter into arbitration is if they agreed to do so after the dispute has been filed. That’s very different from the current process, which automatically shunts all customer disputes into binding arbitration. MORE