On Monday, the Supreme Court granted cert in the case of Stolt-Nielsen S.A. v. Animalfeeds International Corp. The court will determine whether class arbitration is consistent with the Federal Arbitration Act (FAA) when the arbitration agreement is silent on the issue. This case highlights the current legislative drive for the Arbitration Fairness Act, a proposal that would protect consumers and employees from binding mandatory pre-dispute arbitration agreements. The issue is particularly important to whistleblowers who often have no idea about the illegality they will confront at the time the employer requires them to sign such an agreement.
Rep. Hank Johnson (D-GA) recently introduced the Arbitration Fairness Act of 2009, which would amend the FAA to prevent the use of pre-dispute mandatory arbitration clauses in consumer, employment and franchise agreements. One of the top priorities of the Act is to ensure that the decision to arbitrate is truly voluntary, after an individual understands the nature of the claim to be arbitrated.
Consumer and workers rights advocates are pushing for this legislation to eliminate the power of corporations to impose mandatory pre-dispute arbitration clauses in non-negotiable contracts.
Arbitration is a private system without an impartial judge, jury, or meaningful appeal. Outside of California, there is no public disclosure of arbitration decisions to ensure that justice was carried out. The qualifications for arbitrators are minimal, and powerful organizations typically have the resources to know how a particular arbitrator will rule before that arbitrator is chosen. Arbitrators are necessarily mindful of which party will be employing more arbitrators in the future.
Public Citizen, a consumer advocate organization, released a report that examined the use of binding mandatory arbitration by credit card issuers in California. Looking at approximately 34,000 cases over eight months, Public Citizen found that consumers filed only 118 of the cases, while corporations chose the forum in 99.6 percent of the total cases. In terms of results, the report found that consumers lose to companies in arbitration proceedings between 96 and 99 percent of the time.
It is essential that consumers and employees, whistleblowers included, have the option to choose arbitration or not. Forced arbitration agreements strip individuals of their legal rights, and ultimately deprive them of equal justice under the law.
There are several steps you can take to support the Arbitration Fairness Act of 2009. You can use this link to contact your local representative:
Here is a link to sign the Fair Arbitration Now Coalitions’ petition:
The Stolt-Nielsen case is Case No. 08-1198 in the Supreme Court, and the Court’s docket sheet for the case is available.