To the Members of the United States Congress:
The undersigned organizations strongly oppose numerous bills that have been introduced or proposed in the 119th Congress which attempt to prohibit arbitration and class action waiver provisions. Arbitration has been an important alternative dispute resolution mechanism since the enactment of the Federal Arbitration Act in 1925. Unfortunately, there continues to be an organized effort to dismantle the arbitration system in favor of bringing claims in the broken class action litigation system.
Individualized contract-based arbitration is an efficient, effective, and less expensive means of resolving disputes for consumers, employees, and businesses. Multiple empirical studies have shown that those bringing claims in arbitration do just as well as or, in many circumstances, better than in court.[1] By contrast, studies have also shown that class action settlements frequently provide only a pittance – or many times, nothing at all – to class members while millions of dollars are paid to their attorneys.[2]
Opponents of arbitration mischaracterize how arbitration works to paint its use as unfair. The reality is that arbitration providers and courts ensure that arbitration operates fairly and that arbitration agreements are enforced only if they meet basic guarantees of fairness and due process. For example, the American Arbitration Association (AAA), the country’s largest arbitration provider, developed fairness rules for employment and consumer arbitrations. It will not accept a case unless the arbitration agreement complies with those standards.
These rules require that arbitrators be neutral and disclose any conflict of interest and give both parties an equal say in selecting the arbitrator; limit the fees paid by employees and consumers to $350 and $225, respectively – equal to or less than the filing fee in federal court; empower the arbitrator to order any necessary discovery; and require that damages, punitive damages, and attorneys’ fees be awardable to the claimant to the same extent as in court. And the AAA rules require that consumers be given the option of resolving their dispute in small claims court. JAMS, another leading arbitration provider, requires similar protections—as do other arbitration providers.
The courts provide another layer of oversight. If an arbitration provision is unfair, courts can and do step in and declare those arbitration agreements unconscionable and unenforceable. Also, arbitration agreements cannot prevent consumers or employees from publicly discussing claims with government agencies nor can arbitrators’ decisions be kept secret. Courts have invalidated arbitration agreements that purported to impose a “gag order.” And courts consistently hold that either party may disclose the results of arbitration proceedings.
Despite a lack of evidence showing a systemic problem with arbitration, multiple bills and amendments have been introduced and proposed in the 119th Congress that attack the availability of arbitration and class action waivers in numerous contexts such as employment disputes, consumer contracts, data privacy, multiple types of discrimination claims, and antitrust disputes, among many others.[3]
If successful, these legislative efforts would declare unenforceable potentially millions of arbitration provisions that allow for the orderly and economical resolution of disputes. Opponents of pre-dispute arbitration fail to acknowledge that, if enacted, these provisions and bills will limit the realistic opportunity for consumers and employees to obtain a remedy if a dispute arises. The only real beneficiaries of these anti-arbitration provisions will be class action lawyers who would benefit from the possibility of bringing more class action lawsuits that enrich them while providing little benefit to class members.
These attacks on arbitration are inaccurate, unnecessary, and would undermine an important alternative to litigation that has benefited consumers, employees, and businesses for decades, and on which many of them now rely. Accordingly, we strongly urge you to oppose attempts to prohibit arbitration or class action waivers.
Sincerely,
National
ACA International
American Financial Services Association
American International Automobile Dealers Association
American Property Casualty Insurance Association
American Tort Reform Association
HR Policy Association
Littler Workplace Policy Institute
National Association of Home Builders
National Association of Manufacturers
National Association of Mutual Insurance Companies
National Retail Federation
Online Lenders Alliance
Real Estate Services Providers Council
Reinsurance Association of America
Retail Industry Leaders Association
Small Business & Entrepreneurship Council
U.S. Chamber of Commerce
Alabama
Elba Chamber of Commerce
Opelika Chamber of Commerce
Prattville Area Chamber of Commerce
Shoals Chamber of Commerce
Arizona
Apache Junction Area Chamber of Commerce
Arizona Chamber of Commerce & Industry
Buckeye Valley Chamber of Commerce
Chandler Chamber of Commerce
Greater Flagstaff Chamber of Commerce
Greater Phoenix Chamber
Green Valley Sahuarita Chamber of Commerce & Visitor Center
Mesa Chamber of Commerce
Nogales Santa Cruz County Chamber of Commerce & Visitor Center
Northwest Valley Chamber of Commerce
Peoria Chamber of Commerce
Scottsdale Area Chamber of Commerce
Sky Islands Regional Partnership
The Chamber of Southern Arizona
Arkansas
Arkansas State Chamber of Commerce
California
Brea Chamber of Commerce
California Chamber of Commerce
Carlsbad Chamber of Commerce
Chino Valley Chamber of Commerce
Civil Justice Association of California
Colusa County Chamber of Commerce
Dana Point Chamber of Commerce
El Dorado County Chamber of Commerce
Fountain Valley Chamber of Commerce
Fresno Chamber of Commerce
Gateway Chambers Alliance
Gilroy Chamber of Commerce
Greater Grass Valley Chamber of Commerce
Greater Irvine Chamber of Commerce
La Canada Flintridge Chamber of Commerce
Lake Forest Chamber of Commerce
Long Beach Area Chamber of Commerce
Los Angeles Area Chamber of Commerce
Newport Beach Chamber of Commerce
Northwest Valley Chamber
Norwalk Chamber of Commerce
Oceanside Chamber of Commerce
Orange County Business Council
Palm Desert Area Chamber of Commerce
Regional Hispanic Chamber of Commerce
San Juan Capistrano Chamber of Commerce
Santa Fed Springs Chamber of Commerce
Torrance Area Chamber of Commerce
West Ventura County Business Alliance
Yorba Linda Chamber of Commerce
Colorado
Vail Valley Partnership
Connecticut
CBIA
Florida
Daytona Regional Chamber of Commerce
Florida Chamber of Commerce
Georgia
Barrow County Chamber of Commerce
Georgia Chamber of Commerce
Gwinnett Chamber of Commerce
Metro Atlanta Chamber
Murray County Chamber of Commerce
Idaho
Pocatello-Chubbuck Chamber of Commerce
Illinois
Cahokia Heights Chamber of Commerce
Dixon Chamber of Commerce & Main Street, Inc.
Edwardsville/Glen Carbon Chamber of Commerce
Foodservice Equipment Distributors Association
GLMV Chamber of Commerce
Greater Oak Brook Chamber of Commerce
Greater Springfield Chamber of Commerce
Illinois Chamber of Commerce
Joliet Region Chamber of Commerce & Industry
McLean County Chamber of Commerce
Naperville Area Chamber of Commerce
RiverBend Growth Association
Winnetka-Northfield-Glencoe Chamber of Commerce
Indiana
Indiana Chamber of Commerce
South Bend Regional Chamber
Iowa
Iowa Association of Business and Industry
Kentucky
Commerce Lexington
Greater Louisville Inc.
Kentucky Chamber of Commerce
Northern Kentucky Chamber of Commerce
Louisiana
Louisiana Association of Business & Industry
Maryland
Salisbury Area Chamber of Commerce
Massachusetts
Metro South Chamber of Commerce
Michigan
Au Gres Area Chamber of Commerce
Barry County Chamber and Economic Development Alliance
Detroit Regional Chamber
Michigan Chamber of Commerce
Southeast Michigan Chamber of Commerce
Minnesota
Brainerd Lakes Chamber of Commerce
Hermantown Area Chamber of Commerce
Willmar Lakes Area Chamber
The Chamber Grand Forks / East Grand Forks
Mississippi
Mississippi Economic Council
Montana
Billings Chamber of Commerce
Kalispell Chamber of Commerce
Montana Chamber of Commerce
Nebraska
Greater Omaha Chamber
Holdrege Area Chamber of Commerce
Nevada
Henderson Chamber of Commerce
Reno + Sparks Chamber of Commerce
New Jersey
Hudson County Chamber of Commerce
New Jersey State Chamber of Commerce
New York
Capital Region Chamber
Lawsuit Reform Alliance of New York
North Carolina
Greenville-Pitt County Chamber of Commerce
NC Chamber
North Carolina Chamber
Perquimans County Chamber of Commerce
The Chamber, Leading Business in Cabarrus
North Dakota
Fargo Moorhead West Fargo Chamber of Commerce
Greater North Dakota Chamber
Jamestown Area Chamber of Commerce
The Chamber Grand Forks / East Grand Forks
Ohio
Chillicothe Ross Chamber of Commerce
Hilliard Area Chamber of Commerce
Huber Heights Chamber of Commerce
Licking County Chamber of Commerce
Ohio Chamber of Commerce
Stow-Munroe Falls Chamber of Commerce
Streetsboro Area Chamber of Commerce
Oklahoma
State Chamber of Oklahoma
Tulsa Regional Chamber
Oregon
Canby Area Chamber of Commerce
Lake County Chamber of Commerce
Oregon Business & Industry
Portland Metro Chamber
Salem Area Chamber of Commerce
Pennsylvania
Columbia Montour Chamber of Commerce
Erie Regional Chamber and Growth Partnership
Greater Susquehanna Valley Chamber of Commerce
Huntingdon County Chamber of Commerce
Northside / North Shore Chamber of Commerce
Pennsylvania Chamber of Business and Industry
Pennsylvania Coalition for Civil Justice Reform
Pittsburgh Airport Area Chamber of Commerce
Schuylkill Chamber of Commerce
Somerset County Chamber
Westmoreland County Chamber of Commerce
South Carolina
Greater Columbia Chamber of Commerce
Greenville Chamber
Myrtle Beach Area Chamber of Commerce
South Carolina Chamber of Commerce
South Dakota
Greater Sioux Falls Chamber of Commerce
Tennessee
Tennessee Chamber of Commerce & Industry
Texas
Longview Chamber of Commerce
Mansfield Area Chamber of Commerce
North Texas Commission
San Marcos Area Chamber of Commerce
Texans for Lawsuit Reform
Utah
Davis Chamber of Commerce
Salt Lake Chamber
South Valley Chamber
Virginia
Hampton Roads Chamber
Virginia Chamber of Commerce
Washington
Burlington Chamber of Commerce
Covington Chamber of Commerce
Gig Harbor Chamber of Commerce
Greater Oak Harbor Chamber of Commerce
Greater Vancouver Chamber
Moses Lake Chamber of Commerce
Sammamish Chamber
Wisconsin
Mosinee Area Chamber of Commerce
Wisconsin Manufacturers & Commerce
Wyoming
Jackson Hole Chamber of Commerce
Riverton Chamber and Visitors Center
Rock Springs Chamber of Commerce
Wyoming State Chamber of Commerce
[1]See Fairer, Faster, Better III: An Empirical Assessment of Consumer and Employment Arbitration (March 2022) available at https://instituteforlegalreform.com/research/update-an-empirical-assessment-of-consumer-employment-cases-in-arbitration-litigation/.
[2]See Consumer Financial Protection Bureau, Arbitration Study: Report to Congress (March 2015) available at https://files.consumerfinance.gov/f/201503_cfpb_arbitration-study-report-to-congress-2015.pdf. Finding that 87% of resolved class actions resulted in no benefit to class members, and in the rare cases they did, the average settlement payment was no better than $32.35 per class member, but attorneys’ fees averaged $1 million per case.
[3]See, e.g., H.R. 5350, S. 2799, H.R. 4966, H.R. 4587, S. 2640, S. 2703, H.R. 5115, S. 2367, S. 2031, S. 2026, H.R. 3036, H.R. 2889, S. 1060, S. 130, S. Amendment 3451, S. Amendment 2789. These are just some among the litany of proposed bills and amendments that contain various forms of anti-arbitration and/or pro-class action provisions.
