Washington, DC – Today, Senator Sheldon Whitehouse (D-RI) introduced legislation to bar mandatory, pre-dispute arbitration in suits involving public health and safety, including environmental cases. Mandatory arbitration clauses in agreements can railroad Americans into closed-door negotiations with an arbitrator, denying the aggrieved their day in court. Because it is often combined with nondisclosure agreements, pre-dispute arbitration can hinder public awareness of serious hazards like environmental pollution. Cosponsoring the bill with Whitehouse are Senators Patrick Leahy (D-VT), Patty Murray (D-WA), Richard Durbin (D-IL), Jeff Merkley (D-OR), Mazie Hirono (D-HI), and Edward J. Markey (D-MA).
“Our Founding Fathers believed every American deserves their day in court, where citizens stand on equal footing with powerful interests and where the public can know the stakes. Mandatory arbitration clauses undermine that constitutional protection, making it harder to recognize serious threats to public health and safety,” said Whitehouse, a member of the Senate Judiciary, Environment and Public Works, and Health, Education, Labor, and Pensions Committees. “Unfortunately, we’ve seen environmental polluters use binding arbitration to flout the defenses our courts afford and hide the harm they do from the American people. This legislation will help to stop that.”
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.
Confidentiality agreements involving fracking have garnered particular attention in recent years as the natural gas industry has expanded the use of the technique. According to recently published research, fracking has been linked to numerous public health risks, including premature birth and high-risk pregnancies, asthma, and contaminated drinking water.
Pre-dispute arbitration clauses are found in myriad agreements across the economy. According to 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.
More than 100 cases against nursing homes for such claims as wrongful death and medical malpractice were decided by arbitration between 2010 and 2014, according to data compiled by The New York Times.
Today, at a press conference in the Capitol, Senate and House Democrats unveiled and discussed a range of bills aimed at limiting forced arbitration in a wide variety contexts.
###
