Washington, DC – U.S. Senator Sheldon Whitehouse (D-RI) today introduced legislation to bar mandatory, pre-dispute arbitration in suits involving public health and safety. Mandatory arbitration clauses in agreements push Americans into closed-door negotiations with an arbitrator, denying the aggrieved their day in court. Pre-dispute arbitration can hinder public awareness of health hazards like environmental pollution because arbitration is often combined with nondisclosure agreements. Senators Patrick Leahy (D-VT), Patty Murray (D-WA), Dick Durbin (D-IL), Jeff Merkley (D-OR), Mazie Hirono (D-HI), and Ed Markey (D-MA) have joined Whitehouse to cosponsor the bill.
“The spread of forced arbitration agreements has for too long allowed polluters and bad actors to flout the court system and cover up the health risks they’ve exposed Americans to,” said Whitehouse. “A fair and open trial is the only way to level the playing field between citizens and powerful wrongdoers, and to ensure the public is aware of potential harm.”
Whitehouse’s Safety Over Forced Arbitration Act would not ban arbitration outright. Instead, it would require all parties to suits implicating public health and safety to consent to the use of arbitration in writing. If all parties elect to enter arbitration, the bill requires the arbitrator to provide a written explanation of the factual and legal basis for any outcomes from the arbitration proceedings. Those documents may not be sealed, meaning the press and the public would be able to learn from the facts of the case and take steps to prevent further harm.
Over the past two decades, binding pre-dispute arbitration combined with court-approved confidentiality has, in instances, hidden serious public health and safety dangers from the public. Among other things, such cases have involved chemicals used in hydraulic fracturing (or “fracking”), asbestos, defective auto components, faulty medical devices, and adverse incidents from drugs.
Pre-dispute arbitration clauses are found in many types of contracts. According to a 2015 study by the Consumer Financial Protection Bureau:
- Issuers of credit cards that include arbitration clauses in their agreements represent over half the market;
- Arbitration clauses are found in 92 percent of prepaid credit card agreements;
- 88 percent of wireless providers that authorize third parties to charge customers for services include arbitration clauses, and those providers cover more than 99 percent of the wireless market; and
- 86 percent of lenders of private student loans include arbitration clauses in their agreements.
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