Hearing on “Justice Restored: Ending Forced Arbitration and Protecting Fundamental Rights”
Statement of the Honorable Henry C. “Hank” Johnson, Jr., Chair, Subcommittee on Courts, Intellectual Property, and the Internet
Hearing on “Justice Restored: Ending Forced Arbitration and Protecting Fundamental Rights” Before the Subcommittee on Antitrust, Commercial, and Administrative Law
Thursday, February 11, 2021 at 10:00 a.m. | 2141 Rayburn House Office Building
I want to thank the esteemed witnesses for agreeing to offer testimony in this important hearing today. I would also like to extend a sincere thanks to Chairman David Cicilline, for allowing me the honor of chairing this hearing in his absence, as he is disposed as an impeachment manager, now on trial in the Senate. This was to be Chairman Cicilline’s first Subcommittee hearing of this new Congress, and its subject happened to concern the issue of forced arbitration, which is an issue that I have championed since I first came to Congress back in 2007, so I am particularly honored to Chair this hearing in his absence.
Forced arbitration, is an underhanded maneuver that corporations use, to trick consumers, workers, and small businesses, out of their right to go to court and seek damages from a jury of their peers, when they get injured or cheated. From consumer purchases to nursing home contracts for the elderly, even when you accept a job offer, corporations use small print to put arbitration clauses into the paperwork you sign, and without ever knowing it, you have signed away your right to seek justice in court. Instead, you have been tricked into a secret, private for profit dispute resolution process known as binding arbitration. In forced arbitration, the deck is stacked against the little guy, and most often, the corporation comes out on top.
Consumers, workers, and small-business people shouldn’t need a law degree to be able to go about their daily lives without giving up their constitutional rights. But that’s exactly what’s happening in our society today. Every day, when you are trying to get a job, or you want to purchase a car, or even to buy a TV on line, you find yourself pitted against a multi-million-dollar corporate legal department, and their 10 page, small print contract, that forces you to choose between foregoing a necessity, or signing away your Seventh Amendment constitutional right to a trial by jury. The truth is, you really don’t have a choice, because everywhere you go to make a purchase or seek employment, you run right into a forced arbitration clause. It has gotten to the point where it’s a take-it-or-leave-it situation. You can’t get a cell phone or a credit card, or even a job nowadays, unless you sign away your rights, because that’s what every corporation requires. They force you into binding arbitration because it benefits them, and it’s at your expense. It’s not fair, and it’s not right.
And I’m also not just talking about traditional pen-and-paper contracts. Arbitration clauses are hidden in the terms and conditions when you download an app. They are hidden in employment paperwork when you get a new job, in packaging for all of your devices, and in software updates you don’t even realize you’re getting. Forced arbitration clauses have even been found enforceable when employees are forced to sign a non-negotiable contract update during their mid-year review.
If you’ve signed an arbitration clause, you no longer have a right to take your dispute to court for a trial. Instead, you’re forced into the secret, for profit forced arbitration setup, where the corporation that put you in the arbitration process, also chooses where your case will be handled, the judge to hear your case, and the law that the judge will apply. With a setup like that it’s no wonder that most of the time the corporation comes out on top.
If this sounds unfair, well, it is. Big businesses that already had all the power in the relationship between itself and someone like you or me, stacked the deck so that they can avoid the only thing out there that could hold them accountable—the United States justice system.
Accountability. Or the lack thereof. That is why this arbitration issue matters. Because without accountability—without access to the courthouse—the tragic stories of Americans harmed by corporations, can never become a force for good.
Class actions can stop banks from defrauding thousands of their customers. Public court cases can close nursing homes perpetrating widespread abuse. And federal judges can ensure that laws protecting the jobs of working people are obeyed. But this balancing of the scales of justice can never happen, if forced arbitration clauses continue to shield corporations from you, having your day, in court.
I have been proud to sponsor the Forced Arbitration Injustice Repeal Act, or the FAIR Act, which, if passed, would secure the accountability that is so lacking today, by banning the enforcement of forced arbitration clauses in consumer, antitrust, employment, and civil rights disputes.
Corporations have proven time and again, that when given power, they’ll take more. We need to lay down rules of the road to ensure that people going about their daily lives are not forced to give up their Constitutional rights.