Forced Arbitration

Floor Speech

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Mr. JOHNSON of Georgia. Mr. Speaker, it has been very thought- provoking to listen to the comments and observations of my good friend, Steve King from Iowa, and my other good friend, Representative Ted Yoho from Florida.

It is always good to hear the impressions of laypersons about the law. I say that not in a condescending way because I know that my good friend, Steve King, is a successful businessman, construction, and he knows all about the business, and my friend, Ted Yoho, is an esteemed doctor of veterinary medicine.

So being a lawyer myself by training, it is good for me to hear the impressions and observations of laypersons. I say that in a noncondescending way. So I thank the gentleman from Iowa, Representative King, for holding it down for us for that last hour.

The preamble to the U.S. Constitution, which is the introductory statement setting forth the general principles of our American government, reads: ``We the people of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.''

I want to just put a bookmark right where it says ``establish Justice.'' It says that right after it says ``in Order to form a more perfect Union, establish Justice.''

So justice was something that was foremost in the minds of the Framers of our Constitution who, I believe, just as Steve King said, were divinely inspired in their deliberations and their decisionmaking in terms of our Constitution.

They were focused on the delivery of justice. They realized that justice was key. With that ideal, they established in Article III a court system, the judicial power and the framework for the court system. The judiciary, of course, is a coequal branch of government.

The courts, since the inception of this country, have served as a check and a balance on the excesses of the other branches of government while at the same time dispensing justice to individuals who are found to have violated the law or who have been aggrieved by the misconduct of someone else and, so, they come to court seeking justice. So justice is the business of the court system, and the court system's business is to render justice.

Now what is that word, justice? What does it mean? It is the maintenance or administration of what is just by law, as by judicial or other proceedings, in a court. Justice is the judgment of persons or causes by a judicial process to administer justice in a community. That is what justice is all about, and that is what courts do.

People bring to the court of justice their causes of action so that they can receive justice in the courts. The courts are set up with a set of procedures, rules, as to how you proceed in court. And then there are substantive laws upon which the court looks to the precedent that has been set and decides cases brought to it in accordance with those precedents.

Sometimes it must make new precedent, it must make new law, and it is done in accordance with the constitutional principles that have been laid out by our Framers. So this legal system has worked well. This legal system of trial by jury has worked very well.

In addition to maintaining order through the criminal laws, the civil laws have enabled people to achieve justice when they have been wronged, including wronged by corporations.

Companies don't like being brought to the bar of justice to be held accountable for wrongdoing. We know that corporations are powerful entities. They have more money than the average person. They are more powerful.

So the way to equalize the power of just an individual against a corporation that he or she has accused of wrongdoing--the equalizing factor has always been the jury system, a jury of one's peers.

That is what people have relied upon to address grievances, particularly with powers that are more powerful than they. They know that a jury of their peers is a mechanism whereby the truth can be found and that justice can be rendered.

So going to court and having a jury trial when a person is aggrieved is a part of the fundamental fabric of this Nation. That is how we have done business for so long.

It used to be before we had TV and radio that people would go down to the town square where the courthouse was always located and they would take the afternoon and they would go into the courtroom. They would have a calendar. They would know what cases were being heard.

It was a published calendar, and everybody knew that a certain lawyer would be in town to try a case. They would make their schedule such that they could go down and see that proceeding. It would be an open court. Nobody would be excluded. Everybody would know in advance what was going to happen.

You could sit there and watch the adversary process take place. You would see a judge seated, such as the Speaker is seated in this Chamber. That would be the person who would decide what laws were applicable. The jury would be to his or her left or right, and the judge would instruct them on the law.

After they have heard all of the evidence from the attorneys in that adversary process, the judge would instruct the jury on the law and charge the jury to find the facts in its own wisdom and apply justice.

The plaintiff would either win or lose, and the people would be in the courtroom watching the proceedings. And then, whatever happened everyone would have to live with.

Sometimes the plaintiff won. Sometimes the defense won. That is the way that it has always been in this country up until pretty recently.

Over the last 30 years or so, we have had an erosion of that process. The rich and powerful corporations have conspired to find ways that they can avoid being held accountable for the misdoings that they would be charged with committing by a regular person.

Let's face it, ladies and gentlemen. Corporations are just like people. People do wrong and, when they do wrong, you have to have some way of making them do right, of making it right. That is what the courts have always been for.

These corporations have gotten so powerful that they have come up with a way of privatizing the justice system. They have come up with a dispute resolution mechanism, which is not inherently bad, but it is being forced on people. That is the dispute resolution process known as arbitration.

Arbitration is a great alternative dispute resolution process when it is decided upon by the parties after a dispute has arisen.

But to bind a party to have to resolve a dispute in the arbitration setting as opposed to being able to exercise your Seventh Constitutional Amendment right to a jury trial and binding yourself, to have to go through an arbitration process, this is the scheme that has been hatched by the corporate interests who don't want to be held accountable in court.

So what they have done is inserted these forced arbitration clauses into agreements that they have with consumers.

So any kind of consumer agreement, for the most part nowadays, has a forced arbitration clause in it which requires that, in the event a dispute arises, the parties will settle that dispute not in a court of law, but in an arbitration proceeding.

Now, arbitration proceedings, unlike the courthouse, are done in private. There is no calendar that is published, and the people are not invited to come in. It is a secret proceeding.

It is a proceeding where, instead of having a judge trained in the law, you have got the possibility of having a layperson deciding the case. And that layperson may not be impartial.

That person may be making their living from getting referrals from the corporations to decide the arbitration cases that come before them. So it is an unfair process. It is a secret process.

The rules of procedure that are followed and required in a court are not required in an arbitration process nor are the substantive laws upon which cases are decided on precedent.

There is no requirement that the substantive law be used by the arbitrator in making the decision. Of course, there is no jury trial. There is no trial by a jury of one's peers.

So it is a very unfair setting, and it produces results that favor the corporations. This is what we are here to talk about today, this unfair, privatized secret system of justice that deprives people of having their day in court.

It is unaccountable. It is unaccountable to anyone other than to the corporate bosses that refer the cases to them. It is very unfair to the consumer, to the little guy.

So having said all of that, I yield to the gentleman from the State of Pennsylvania, Matt Cartwright, my friend, a distinguished trial attorney himself and, also, a member of the Oversight and Government Reform Committee in this Congress, the ranking member of the Health Care, Benefits, and Administrative Rules Subcommittee and, also, a member of the Committee on Natural Resources.

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Mr. JOHNSON of Georgia. Mr. Speaker, I thank Representative Cartwright.

It is amazing that when you are standing across the yard with the fence in between you and your neighbor and you are telling your neighbor about that great day of fishing that you had and you are telling him about this fish that was that long, you can do as much lying about the length of that fish--sometimes you didn't even catch a fish--and it is okay to lie to your neighbor.

But it is different when you go downtown and go to the courthouse because at the courthouse you are going to testify, you are testifying under oath, subject to being held accountable for perjury if you lie.

But it is amazing that in a forced arbitration proceeding, there is absolutely no requirement that you be administered, or that a witness be administered an oath before they are allowed to testify. So, therefore, in an arbitration proceeding, the lever of perjury to force someone to tell the truth is not there and it hurts the pursuit of justice.

Mr. Speaker, I thank Mr. Cartwright for his testimony and his statements today.

I would point out that last year, the New York Times published an exhaustive and in-depth investigative series that pulled back the curtain and catalogued the immense harms of forced arbitration. In part 1 of the series, which was entitled ``Arbitration Everywhere, Stacking the Deck of Justice,'' the Times explored the rise and dramatic spread of forced arbitration clauses, their impact on American workers, consumers, and on patients. This investigation found that corporations crippled the consumer challenges across a wide swath of harmful practices simply by banning class action litigation.

Furthermore, once corporations have blocked individuals from going to court as a class, the investigation found that most people simply dropped their claims entirely.

Why?

Because the amount in controversy was so small that it was not cost effective to hire a lawyer to go to court to recover such a small amount. The net result is that the corporate wrongdoers have escaped being held accountable because of these forced arbitration clauses, which equates to a ban on participating in class action litigation and, in some of those clauses, they had the words in there about class actions being bought.

Sanchez), my friend, who serves on the Ways and Means Committee. She is a former labor lawyer. She has had an interest in this issue of arbitration, forced arbitration, for a couple of sessions of Congress. She has introduced legislation that would outlaw forced arbitration agreements in nursing home contracts--you know, where we go to take our loved ones who have to be committed to a nursing home and we have no choice but to sign the contract which has the arbitration clause in it because all of the other nursing homes have the arbitration clause in them as well. Representative Sanchez has filed legislation that would get at that very unfair process.

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Mr. JOHNSON of Georgia. I thank the gentlewoman from California.

Next, I yield to the gentlewoman from Texas, my good friend Sheila Jackson Lee, a senior member of the Judiciary Committee and the ranking member on the Crime Subcommittee. She is also a member of the Homeland Security Committee. She is a lawyer and a former judge.

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Mr. JOHNSON of Georgia. I thank the gentlewoman from Texas for her tremendous, informative presentation, which is all based constitutionally as the great lawyer that she is.

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Mr. JOHNSON of Georgia. I thank the gentleman from Massachusetts for his wise words.

Mr. Speaker, at this time, I congratulate the writers of The New York Times' expose, a three-part series on forced arbitration. The second part of the series examined the secretive nature of forced arbitration, and the third part of that series talked about the forced arbitration in the context of binding persons to arbitrate secular claims in religious tribunals, applying religious law.

I would strongly encourage those who are interested in this subject to look to The New York Times article because it gives you a good understanding of where we are as far as forced arbitration is concerned. I applaud the reporters for their groundbreaking work in writing that series and producing it.

Jessica Silver-Greenberg, Michael Corkery, and Robert Gebeloff have done yeoman's work. They have exposed a threat to the justice system that shakes the tenets of our very democracy to its core. They deserve the highest commendation that I can give them, and that is just simply a shout-out from the well of the House.

I understand that the Pulitzer Prizes for journalism will be announced this coming Monday. If I could nominate this series, I would certainly do so. I certainly support their nomination for that award.

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Mr. JOHNSON of Georgia. Mr. Speaker, as this Special Order has powerfully documented, forced arbitration isn't open, isn't just, and isn't fair. Simply put, forced arbitration clauses have become an exculpatory mechanism to rig the justice system.

Arbitrators don't have to be lawyers. Their decisions are practically irreversible. There is no record kept of the proceedings upon which you could appeal. There isn't even a requirement that witness testimony be given under oath.

As The New York Times investigative series illustrated, arbitration can even take place in the offices of the party representing the defendant.

There is also overwhelming evidence that forced arbitration creates an unaccountable system of winners and losers through what is called a repeat player advantage process that favors corporations over one-time participants, such as individual workers and consumers.

An analysis of employment arbitrations found that workers' odds of winning were significantly diminished in forced arbitration.

In 2012, the Center for Responsible Lending likewise reported that companies with more cases before arbitrators get consistently better results from these same arbitrators. Why? Because they are the ones who refer cases to the arbitrators.

The arbitrators want to eat. They know that, if they rule against whoever is referring the cases to them, then that is going to cut short their ability to feed themselves.

And so they rule in favor of the hand that is feeding them, and that is arbitrators, who are not even required to be lawyers and who have a perverse incentive to favor the repeat business over the consumers or the worker that they will never see again.

I am particularly alarmed by the growing number of companies that hide forced arbitration clauses outside of the four corners of the document.

For example, General Mills included a forced arbitration clause in its privacy policy that bound any consumer who downloaded the company's coupons or participated in its promotions.

Under its new terms, consumers also waived the right to a trial simply by liking the company's page on Facebook or mentioning the company on Twitter. Can you imagine giving up your Seventh Amendment jury trial right on Facebook?

It has become an increasingly common practice to use gotcha tactics to deceive consumers and employees by providing so-called notice of binding arbitration in brochures, email and memoranda, job application forms, signs outside of restaurants binding you--if you set foot in there and consume, binding you to forced arbitration, in-store application kiosks, employee training programs, contests and games associated with company promotions. People have to watch out. Even on the side of a cereal box you can waive your right to a jury trial.

Just imagine a child finding glass in their cereal, but because the company prohibited class action litigation through forced arbitration, the child's parents would have to individually not go to court, but go to an arbitrator to have their claim adjudicated.

What if it affected several thousand children? That same forced arbitration clause would prevent class litigation to ensure that our children's food is safe to eat.

These are actual cases where someone potentially lost their right to hold a company accountable for unlawful conduct in a public courtroom. In all of these cases, we are not even talking about an agreement with a dotted line.

I am reminded of Justice Kagan's dissent in American Express v. Italian Colors where she observed that the Federal Arbitration Act was never meant to be a mechanism easily made to block the vindication of meritorious Federal claims and insulate wrongdoers from liability.

The tides are turning. Americans are beginning to fight to restore their right to a jury trial. Policymakers are using every tool available to fix our laws so that corporations can no longer escape public accountability.

I thank my colleagues for their participation in this Special Order. Before I close, I want to also thank the Congressional Progressive Caucus for their tireless work to advance a progressive agenda of equality and opportunity for all.

I will close with this observation. The American people would fight back if someone came into their home and said: We are going to take away your Second Amendment right to bear firearms. They would fight.

But when corporations take away their Seventh Amendment right to a jury trial, they remain mum, but not for much longer.

People are standing up. People are tired. They are desiring change. They are angry and realize that they have been taken advantage of.

They want to level the playing field, and that is exactly what the legislation that we have introduced in this Congress will accomplish.

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