Sarah Cole vs. (part of prior versions of) The Arbitration Fairness Act

Sarah Cole recently published On Babies and Bathwater: The Arbitration Fairness Act and the Supreme Court’s Recent Arbitration Jurisprudence, 48 Houston L. Rev. 457 (2011) (available here).

She writes,

“The AFA misses the mark primarily because it overstates the case against arbitration, rendering the legislation unpalatable to corporate and business interests, as well as many consumer and employee advocates.   Because corporate and other interests are likely to be successful in opposing the bill in its current form, the real changes needed in arbitration, i.e., changes to permit consumers with low value claims to have their cases heard in some forum, will not occur.”

“[T]he most pressing issue in consumer arbitration, in the wake of recent Supreme Court decisions, is the lack of a viable forum for consumers with low value claims. Wireless phone companies, banks, computer sellers, and cable companies routinely integrate arbitration agreements with class arbitration waivers in their boilerplate language in contracts with consumers. For most consumers, potential claims arising from such services involve relatively small amounts of money. Were class actions available,22 consumers with low value claims might be able to vindicate these kinds of complaints. The consumerís acceptance of an arbitration agreement, however, precludes recourse to those forums (in most cases).”

Sarah provides draft language specifically targeting consumer arbitration and the class action implications of recent Supreme Court decisions.  She proposes the following text:

Section 1: Short Title of Act

This Act shall be known as the ìConsumer Class Action and Class Arbitration Waiver Reform Act.î

Section 2: Definitions

(a) [C]ommerce includes all transactions arising out of interstate or international commerce;

(b) a consumer is any person who uses, purchases, acquires, attempts to purchase or acquire, or is offered or furnished any real or personal property, tangible or intangible goods, services, or credit for personal, family or household purposes, and includes passengers and shippers of goods on common carriers in commerce.

Section 3: Prohibition of Class Action and Class Action Arbitration Waivers in Consumer Arbitration Agreements

An arbitration agreement between a consumer and a provider of goods or services is invalid to the extent that it precludes the consumer from accessing the court or arbitral system to participate in a class action as defined by Federal Rule of Civil Procedure 23.

Sarah also has inexcusably awful taste in football teams.


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