Sens. Franken, Blumenthal, Rep. Hank Johnson Introduce Legislation to Protect Legal Rights of Consumers

Bill Would Remedy Supreme Court Ruling, Restore Consumers’ Rights to Justice Through Courts

WASHINGTON, D.C. [05/17/11]—Today during a press conference, U.S. Sens. Al Franken (D-Minn.) and Richard Blumenthal (D-Conn.), and U.S. Rep. Hank Johnson (D-Ga.) announced the introduction of legislation that would restoreconsumers’ rights to seek justice through the courts. The Arbitration Fairness Act would eliminate forced arbitration clauses in employment, consumer, and civil rights cases, and would allow consumers and workers to choose arbitration after a dispute occurred.

“Workers and consumers should never be forced to give up their rights to get hired for a job, or to get a cell phone,” said Sen. Franken. “I’ve introduced the Arbitration Fairness Act to ensure that workers and consumers have the right to choose arbitration over litigation, instead of being forced into it by corporations.”

"Consumers fighting for fundamental rights against giant corporations deserve their day in court," said Sen. Blumenthal. "This new law would protect countless consumers in Connecticut and around the country from powerful companies that take advantage of them. When individuals have legitimate claims against big corporate interests, they have the right to a level playing field. "

“Forced arbitration clauses undermine our indelible Constitutional right to take our disputes to Court,” said Rep. Johnson. “They benefit powerful business interests at the expense of American consumers and workers. These bills are designed to defend our rights and to re-empower consumers.”

In AT&T v. Concepcion, consumers brought a claim against AT&T for false advertising. However, because the value of their case was only $30, their case was consolidated into a class action. AT&T sought to block the lawsuit by pointing to the mandatory arbitration clause in the service contract but lower courts applying state law rightly invalidated the arbitration clause because it banned class actions entirely.

In its 5-4 decision, the Supreme Court overturned these lower court decisions which sought to protect consumers. The majority of the Court held that theFederal Arbitration Act (FAA) barred state courts from protecting consumers from these arbitration clauses. However, the FAA was originally passed to ensure that the courts enforced commercial arbitration agreements between two companies, not between companies and consumers. The Supreme Court’s expanded interpretation of the FAA allows companies to insulate themselves from liability when they defraud a large number of customers of a relatively small amount of money.

What the Arbitration Fairness Act Does:

• Restores the original intent of the FAA by clarifying the scope of its application.
• Amends the FAA by adding a new chapter invalidating agreements that require the arbitration of employment, consumer, or civil rights disputes made before the dispute arises.
• Restores the rights of workers and consumers to seek justice in our courts.
• Ensures transparency in civil litigation.
• Protects the integrity of the Civil Rights Act, the Equal Pay Act, the Americans with Disabilities Act, and the Age Discrimination in Employment Act, among others.

A longtime advocate for consumers and workers in cases of forced arbitration, in 2009 Sen. Franken passed legislation with bipartisan support that restricts funding to defense contractors who commit employees to mandatory binding arbitration in the case of sexual assault and other civil rights violations. Rep. Johnson, a longtime champion of workers and consumer rights, first introduced the Arbitration Fairness Act in 2007.

At today’s press conference, Sens. Franken and Blumenthal and Rep. Johnson were joined by Deepak Gupta, an attorney with Public Citizen who argued on behalf of consumers in the AT&T v. Concepcion case before the Supreme Court,Hassan Zavareei, an attorney with Tycko & Zavareei LLP, and Nancy Zirkin, the Executive Vice President for Policy at the Leadership Conference on Civil and Human Rights.