This week, the Franken amendment to a Defense appropriations bill became law, forbidding most defense contractors from using mandatory arbitration clauses in their employment contracts. I have written about this subject on my law firm blog site previously. This legislation is part of a larger, continuing trend towards the elimination of mandatory arbitration in virtually all employment and consumer disputes.
People in the ADR community may be concerned about this trend, but I think we should applaud it. The US Supreme Court in recent years went very far in the direction of upholding the enforceability of mandatory pre-dispute arbitration clauses (in contrast to the approach of the state courts in California for example). As a result of the inevitable backlash against the perceived harshness of this approach, Congress is on its way to eliminating pre-dispute arbitration clauses in most consumer and employment situations. (There is a nice list of pending legislation on this subject on the Disputing blog.) My view is that we are not eliminating arbitration; we are only restricting the non-knowing waiver of the consumer’s right to jury trial. People can always agree to arbitrate after a dispute arises if they really feel that arbitration is in both parties’ best interest. And in the brave new era when consumers can no longer be compelled to give up their constitutional right to jury trial in order to accept a job, open a bank account, or accept some other good or service, maybe companies should instead be encouraging mediation prior to commencing litigation or arbitration, which does not require anyone to waive anything.
(Scott Jacobs photo from Edmunds.com)