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House approves Democrat-backed bill ending mandatory arbitration

House approves Democrat-backed bill ending mandatory arbitration
© Greg Nash

The House passed legislation Friday aimed at preventing mandatory arbitration in consumer and employment contracts in a 225-186 vote that generally fell along party lines.  

The Forced Arbitration Injustice Repeal Act of 2019, or FAIR Act — spearheaded by Rep. Hank JohnsonHenry (Hank) C. JohnsonDemocratic senators unveil bill to ban discrimination in financial services industry Five takeaways as panel grills tech CEOs Lawmakers, public bid farewell to John Lewis MORE (D-Ga.) — would also ban limits on class action lawsuits. 

Democrats backing the bill argue it places more power in the hands of consumers and is a critical step in holding businesses accountable for their actions, products and services.

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“The FAIR Act would restore justice to millions of Americans," Johnson said during the floor debate.

"We're a country of justice and fair play. When people cheat, we take pride in holding them accountable before a jury in a court of law, but forced arbitration clauses hidden in the fine print deprive victims of their day in court before a jury of their peers,” he said.

He said forced arbitration allows corporations to use "secret proceedings" that put their opponents at a disadvantage.

"Predictably, the end result is the corporation wins and the victim is deprived of justice," Johnson said. "Because the proceeding is secret, the public never learns what happened.” 

Critics of the bill said the legislation would fail to prevent abuse, arguing arbitration provides consumers with a “simpler, cheaper, faster path” than the judicial system in settling consumer and employment disputes. 

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“Even the Consumer Financial Protection Bureau’s 2015 study of arbitration highlighted problems consumers would face if they had no access to arbitration, but instead had to rely on flawed judicial class actions," Rep. Doug CollinsDouglas (Doug) Allen CollinsGroups seek to get Black vote out for Democrats in Georgia runoffs Majority say they want GOP in control of Senate: poll The Hill's Morning Report - Presented by the UAE Embassy in Washington, DC - Trump, Biden clash over transition holdup, pandemic plans MORE (Ga.), the ranking Republican on the House Judiciary Committee, said during the debate.

"The study showed the rise of pre-dispute, mandatory binding arbitration agreements in consumer settings did not come out of nowhere. It stems directly from the repeated abuses of class actions that have plagued the judicial system in recent decades,” he said. “That is not to say the arbitration system is perfect, but the arbitration system is generally good and should be preserved.” 

The bill is likely to see little movement in the Republican-controlled Senate. 

Just two Republicans in the House backed the bill: Reps. Matt GaetzMatthew (Matt) GaetzGaetz: Trump 'should pardon everyone' including himself to quash liberal 'bloodlust' Florida passes 850k coronavirus cases Florida GOP Rep. Mike Waltz tests positive for COVID-19 MORE (Fla.) and Chris SmithChristopher (Chris) Henry SmithWoman tased, arrested for trespassing for not wearing mask at Ohio football game China sanctioning Rubio, Cruz in retaliatory move over Hong Kong China sanctions Cruz, Rubio, others over Xinjiang legislation MORE (N.J.). Reps. Henry Cuellar (Texas) and Collin PetersonCollin Clark PetersonA louder voice for women everywhere Former Minnesota Democratic leader quits party GOP sees path to House majority in 2022 MORE (Minn.) were the only Democrats to vote "no."