In 1925, Congress enacted what they thought was a modest law enabling sophisticated businesses to agree to resolve their disputes through private arbitration. Decades later, the Supreme Court transformed it into something completely different — enabling corporations to force workers and consumers into signing away their right to appear in a real court, and shunting them into a privatized arbitration system where the arbitrator is often closely aligned with the corporation. In one case, a private arbitrator even ordered a woman to pay more than $11,000 that she did not owe because she has the same name as another woman who did owe money.
There are supposed to be safeguards against the most abusive forms of forced arbitration. Federal law provides that forced arbitration cannot be used against “workers engaged in foreign or interstate commerce,” for example. But, in Circuit City v. Adams, five conservative justices held that forced arbitration can be used against workers engaged in foreign or interstate commerce. Federal arbitration law does not even mention class actions — which are often the only way that plaintiffs with relatively small claims can vindicate their rights — yet the conservative justices used it to effectively immunize corporations from class action lawsuits. Under this Supreme Court, the 1925 Federal Arbitration Act has been transformed into a magic wand corporations can wave in order to make lawsuits against them go away.
Earlier this week, Rep. Hank Johnson (D-GA) and Sen. Al Franken (D-MN) introduced a bill to fix this. Under the Arbitration Fairness Act, “no predispute arbitration agreement shall be valid or enforceable if it requires arbitration of an employment dispute, consumer dispute, antitrust dispute, or civil rights dispute.” So your boss cannot illegally fire you and then force you into a corporate-owned court. Your cell phone company cannot overcharge you and then escape meaningful accountability. And your mother’s nursing home will no longer be able to abuse its charges and then shunt any lawsuits into a biased arbitration panel.
At least, that is, if this bill is signed into law. Until then, the Supreme Court’s decisions expanding federal arbitration law into areas expressly forbidden by the law’s text will remain in effect.