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Carter: Arbitration Legislation

Many Vermonters are rightfully concerned about the impacts of money in politics and the effect the Supreme Court’s Citizen’s United decision has on our government. However, there’s another perhaps equally concerning battle going on right now that pits consumers against the same sophisticated corporations many of us feel are unfairly influencing politics.

The battle has to do with an obscure contractual provision called an “arbitration clause.” On the surface, they don’t sound all that bad – they simply require that parties to a contract settle any disputes outside of court. However, several years ago the U.S. Supreme Court decided a series of cases that dismissed lawsuits in which consumers alleged illegal corporate behavior. They did so on the grounds that arbitration clauses in the contracts foreclosed the consumers’ ability to sue in court.

The First Amendment protects our right to petition the government for a redress of grievances. Typically, we associate this right with our ability to organize, advocate and lobby our government. However, the First Amendment also protects our right to seek redress through the courts - to sue if we’ve been wronged.

But since the Supreme Court’s decisions upholding arbitration clauses despite alleged illegal corporate behavior, we’ve seen a sharp increase in the number of companies making these clauses standard in their contracts. From credit card and cell phone agreements to employment contracts, these arbitration clauses are becoming so widespread that consumers have virtually no choice but to agree to them. This means consumers lack access to the courts to petition for redress – even if a company engages in patently illegal behavior. This is a serious problem – perhaps even on the order of Citizen’s United.

And to address it, Senator Leahy has introduced the Restoring Statutory Rights Act, to reinstate the ability of people to seek redress in court for violations of state, federal or constitutional law. Under the proposed legislation, an arbitration agreement can only block a consumer’s access to court if the arbitration agreement is signed after the dispute has arisen. This provision protects consumers from being coerced into signing contracts with arbitration clauses and effectively means fewer disputes will end up in arbitration.

This legislation goes a long way to righting the wrongs caused by the U.S. Supreme Court’s decisions. It puts all of us back where we belong, on equal footing with the sophisticated corporations whose contracts we are forced to sign in order to function in our society. While there are powerful interests arrayed against the legislation, Senator Leahy deserves credit for speaking up about fairness in contractual agreements and helping to protect our right to petition the government for a redress of grievances.

Jared Carter teaches legal activism, legal writing and appellate advocacy at Vermont Law School. He also directs the Vermont Community Law Center, a non-profit legal services organization focused on social justice, constitutional rights and consumer protection.
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