Arbitration Scholars — What Do You Think? Biden Approach to Arbitration

I know many of us expected changes to arbitration in 2016 — well, those changes were delayed — will they happen now? Curious what our readers think about the following two prospects — feel free to comment below or e-mail me:

Elimination of mandatory pre-dispute arbitration.
Having regained control of the Senate, Congressional Democrats are expected to pass the Forced Arbitration Injustice Repeal Act, and Biden has indicated his support. The act, which has already passed the House, would invalidate pre-dispute arbitration agreements in the employment, civil rights, consumer, and antitrust contexts, and would require employers to litigate workplace disputes in court.

Elimination of class-action waivers.
In its 2018 decision in Epic Systems v. Lewis, the Supreme Court expressly upheld class and collective action waivers in the employment context. Employers utilizing such waivers can currently mandate the resolution of employment-related claims on an individual basis in an arbitration proceeding, thereby minimizing their exposure to potential class-wide liability. Notwithstanding Epic Systems, President-elect Biden has stated that he would sign legislation prohibiting employers from seeking such waivers.

4 thoughts on “Arbitration Scholars — What Do You Think? Biden Approach to Arbitration”

  1. We may hope for much needed reform of the FAA from the Congress, and presidential approval, but a wait-and-see approach is probably in order. Many in the Democratic Party are wary of crossing business interests favoring the status quo, as was shown in recent decades by gubernatorial vetoes of similar proposed reforms in California by Davis, Brown and Newsom, at least until a veto proof majority was secured a couple of years ago in the state legislature. Perhaps a narrow compromise can be secured, such as an opt-out option as a requirement, but, for more sweeping changes, I believe the best hope for reform would be if the Democrats secured at least a few more Senate seats in the 2022 mid-term elections.

  2. How would the FAIR Act or legislation eliminating class actions waivers pass in the Senate unless a Senate filibuster is overridden, which requires 60 votes for cloture? I do not see a realistic path to obtain the requisite votes.

    There is not unanimity in the Senate Democratic caucus to vote to eliminate the 60-vote supermajority for cloture. Senate Republicans will oppose eliminating the filibuster for obvious reasons. Moreover, it is very hard to see how the exception to the filibuster for budget reconciliation can be applied to that type of arbitration legislation. Appending that type of legislation to a “must pass” bill is a theoretical possibility. But that would require Senators to credibly threaten to block a “must pass” bill unless the arbitration-related provisions are included. Arbitration and class waivers are not the kind of subjects that usually attract that kind of insistence in those circumstances.

    More likely that Federal executive agencies might eliminate class action waivers by regulation within the areas of their competence. Anything more focused on restricting mandatory pre-dispute arbitration, however, would likely run afoul of Epic Systems.

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