They’re Baaaack! Democrats Reintroduce Anti-PDAA Bills

This aritcle first appeared on the Securities Arbitration Alert (SAA) Blog, here.

As we confidently predicted, the Democrats have reintroduced several bills to curb use of mandatory predispute arbitration agreements (“PDAA”).

Bill texts for the most part have not yet been published, so we’ll save for another day an exhaustive analysis. For now, we offer these brief descriptions:

• R. 963 – Forced Arbitration Injustice Repeal (FAIR) Act: We assume this bill introduced on February 11 will be similar to the FAIR Act proposed in the last Congress, that passed the House but died in the Senate. That prior iteration would have amended the Federal Arbitration Act (“FAA”) to eliminate mandatory PDAAs for disputes involving consumer, investor, civil rights, employment, and antitrust matters. It also would have: covered brokers and investment advisers; barred class action/collective action waivers in or out of a PDAA; applied to “digital technology” disputes; reserved for court determination any arbitrability or delegation issues “irrespective of whether the agreement purported to delegate such determinations to an arbitrator;” and extended to sexual harassment claims.. The new bill already has 156 co-sponsors, all Democrat. Recall that only 218 votes are needed for passage.
• Not Yet Numbered – Protecting the Right to Organize (PRO) Act: Introduced February 4 in both houses of Congress, this omnibus bill has a small provision aimed at legislatively overruling Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018), where SCOTUS heldthat the FAA permits employers to use arbitration clauses containing class action waivers, notwithstanding the National Labor Relations Act’s (“NLRA”) protections of workers’ rights to act collectively. Specifically, the PRO Act would amend the NLRA to make it an unfair labor practice for any employer (not just those dealing with unions) to use class action waivers, “notwithstanding” the
• R. 1023: While not yet named, the bill’s purpose is to: “amend title 9 of the United States Code [the FAA] to prohibit predispute arbitration agreements that force arbitration of disputes arising from private education loans, and for other purposes.” It was introduced February 11 and there are already 12 co-sponsors, all Democrats.

The FAIR Act was announced  by Rep. Hank Johnson (D-GA), at a February 11 hearing, Justice Restored: Ending Forced Arbitration and Protecting Fundamental Rights, held by the House Judiciary Committee’s Subcommittee on Antitrust, Commercial and Administrative Law. For an excellent analysis of the FAIR Act developments, see House Reintroduces a Proposal to Restrict Arbitration at a ‘Justice Restored’ Hearing, CPR Blog (Feb. 12, 2021).

(ed: *We are sure there are more bills to come. There were over 100 arbitration-related bills introduced in the last Congress. **As for what might be coming down the Congressional road based on what was proposed in the 116^th Congress, see Friedman, George, Surprise! Some of the Anti-Arbitration Bills Introduced in Congress This Year May Actually Become Law (One Already Has), 2019:5 SAC 1 (Sep. 2019).)

George Friedman

George H. Friedman is the publisher and Editor-in-Chief of the Securities Arbitration Alert, a weekly online publication covering the latest developments in financial services arbitration and mediation. He is also the principal of George H. Friedman Consulting, LLC, providing expert advice on arbitration and mediation in general and the FINRA…