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. JohnsonFive takeaways as panel grills tech CEOs Lawmakers, public bid farewell to John Lewis Johnson presses Barr on reducing Roger Stone's recommended sentence 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 CollinsMatt Lieberman faces calls to drop out of Georgia Senate race over 'racist and discriminatory' tropes in 2018 book Sabato's Crystal Ball shifts Iowa Senate race to 'toss-up,' Georgia toward GOP Loeffler knocks WNBA players for wearing shirts backing Democratic challenger 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 set to endorse primary opponent of fellow Florida GOP lawmaker The Hill's Morning Report - Presented by the Air Line Pilots Association - Progress slow on coronavirus bill The Hill's Morning Report - Presented by the Air Line Pilots Association - Biden VP possible next week; Meadows says relief talks 'miles apart' MORE (Fla.) and Chris SmithChristopher (Chris) Henry SmithChina sanctions Cruz, Rubio, others over Xinjiang legislation New Jersey incumbents steamroll progressive challengers in primaries Republican Rep. Chris Smith easily wins primary in New Jersey MORE (N.J.). Reps. Henry Cuellar (Texas) and Collin PetersonCollin Clark PetersonHouse approves statehood for DC in 232-180 vote House to pass sweeping police reform legislation From farmers to grocery store clerks, thank you to all of our food system MORE (Minn.) were the only Democrats to vote "no."