This post first appeared on the Securities Arbitration Alert blog. The blog’s editor-in-chief is George H. Friedman, Chairman of the Board of Directors for Arbitartion Resolution Services, Inc.
A bill has been introduced in the House to curb predispute arbitration agreement (“PDAA”) use in a range of transactions involving servicemembers.
Representative Katie Porter (D-CA) on August 1 introduced H.R. 5125, the purpose of which is: “to amend the Servicemembers Civil Relief Act [“SCRA”] to limit the use of arbitration to resolve controversies under the Act, and for other purposes.” The text of the End Servicemember Forced Arbitration Act would amend the SCRA as follows:
“Notwithstanding any other provision of law, whenever a contract with a servicemember, or a servicemember and the spouse of the servicemember jointly, provides for the use of arbitration to resolve a controversy subject to a provision of this Act and arising out of or relating to such contract, arbitration may be used to settle such controversy only if, after such controversy arises, all parties to such controversy consent in writing to use arbitration to settle such controversy.” The changes would be effective: “with respect to contracts entered into, amended, altered, modified, renewed, or extended after the date of the enactment of this Act.”
SCRA Primer
The SCRA: “postpones or suspends certain civil obligations to enable service members to devote their full attention to duty and to relieve stress on their families.” The act covers:
“Outstanding credit card debt; Mortgage payments; Pending trials; Taxes; Termination of lease; Eviction from housing; and Life insurance protection. The SCRA covers all active duty service members, reservists, and members of the National Guard while on active duty.”
Several Arbitration Bills Introduced in this Congress So Far
Recall that we had reported in SAA 2023-09 (Mar. 2) that, by the beginning of March 2021, with the Democrats then in control of the Senate and House, scores of bills had been introduced to limit mandatory arbitration. Some bills sought to amend the Federal Arbitration Act (FAA”), others another federal statute, and some both. We added that, as of press time, with the House now under GOP control, only 14 arbitration-related bills had been sponsored, according to www.govtrack.us. That’s no longer the case, as an impressive 69 arbitration-related bills have now been introduced. We again point out that not every bill has been introduced by a Democrat (Republicans have sponsored 18), and not every bill is anti-arbitration (see, e.g., H.R. 636 — the Forest Litigation Reform Act of 2023).
Prospects for Enactment
We provide here our brief analysis of enactment prospects for a few key bills:
- The reintroduced FAIR Act – R. 2953 and S. 1376 – was announced in an April 28 Press Release. There are just 93 cosponsors in the House and 37 in the Senate, and there are no Republicans in either group. Unlike the last iteration of the FAIR Act, which passed in a Democratic-controlled chamber, we don’t see the new bill passing the GOP-controlled House.
- On the other hand, we expect the Porter bill will get bipartisan support. Why? Because, like the March 2022 enactment of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (“EFASASHA”), which expressly amended the FAA to make predispute arbitration agreements and class action waivers voidable at the option of the victim, this subject cuts across party lines.
- Also, as reported in SAA 2023-24 (Jun. 22), the Protecting Older Americans Act of 2023 – R. 4120 – was introduced in the House on June 14. It would amend the FAA: “with respect to arbitration of disputes involving age discrimination.” Like EFASASHA, the bill would make predispute arbitration agreements and class action waivers voidable at the option of the victim. This subject, too, cuts across party lines. What makes this bill unusual is that it was introduced by a Republican, Rep. Nancy Mace (SC).
(ed: We’ll of course check in from time to time.)
