Fall of the paper wall: Arbitration may be curtailed in 2021

Miracles of miracles, the Democrats pulled off a double win in Georgia. Just days ago, we expected to see business as usual in Washington with gridlock between Speaker Pelosi and Senate Majority Leader Mitch McConnell. However, Mitch will need to get new business cards and adjust to a less powerful bargaining position.

With the election of Raphael Warnock and Jon Ossoff from Georgia, the Democrats will have a 50-50 tie in the upper chamber. With the inauguration of Kamala Harris and Joe Biden on Jan. 20, Vice-President Harris will be able to break the tie and anoint Chuck Schumer as the new Majority leader.

While there are surely more pressing issues that the new majority will want to wrestle with, it is possible and maybe even likely that they may address the issue of arbitration.

The Forced Arbitration Injustice Act, or FAIR Act, passed by the House of Representatives last September by a vote of 225-186 will most assuredly be able to pass again this year in the House of Representatives, despite Democrats losing a few members. The act states, that, "The purpose of the Act are to (1) prohibit predispute arbitration agreements that force arbitration of future employment, consumer, antitrust or civil rights disputes; and (2) prohibits agreements and practices that interfere with the right of individuals, workers and small business to participate in a joint, class or collective action related to an employment, consumer, antitrust or civil rights dispute."

If passed into law, this will all but nullify millions of contracts across California and the nation that prohibit access to the courts and further prohibit group, collective or class actions. Since the U.S. Supreme Court decided AT&T v. Concepcion in 2011, we have been locked in a slow but steady erosion of our access to the courthouse and to basic justice. The five-member majority was able to apply a 1925 law, the Federal Arbitration Act, in a manner that Congress never conceived of over 95 years ago. The result was the right for employers and corporations to implement mandatory and binding arbitration agreements in their contracts of adhesion that included a waiver of class and collective actions. Effectively, they can put up a paper wall that shields them from large liability.

Fast forward 10 years later and that paper wall is everywhere. Savvy lawyers draft boilerplate arbitration agreements for employees and consumers that force them to forgo their rights without any reasonable choice. Without the possibility of aggregating small claims into one large action, Corporate America has been able to all but eliminate any redress for its violations. Plaintiffs lawyers are deterred from bringing small value claims in arbitration on an individual basis and so the misdeeds go unchecked. We've seen arbitration agreements included on seals of packaging and in rewards card programs. They can be snuck in almost anywhere and even if an eagle-eyed consumer susses the arbitration agreement out, they are left with no real leverage to make any changes. With lax enforcement by state and federal authorities and with litigation curtailed by one at a time arbitration, the FAA has been a tort reform blanket that has prevented real accountability for corporate America. Long gone is the right to a jury trial. Replaced by a group of arbitrators whose pay checks are beholden to a corporate America that could choose to stop using them. This repeat player syndrome has not only closed the courthouse doors but allowed the very wrongdoers to choose who decides their fate.

Those who advocate for arbitration will say that this is in response to frivolous lawsuits that are cheaper to settle than litigate and has allowed the plaintiff's bar to shakedown corporations with these expensive suits. While I disagree with the premise of the argument, even if this sentiment rings true, that must never justify locking the courthouse doors and denying justice for everyone. This truly is an example of throwing the baby out with the bath water.

So where are we on the quest to upend the FAA and sign the FAIR Act into law? Well, there are several paths, but the primary one involves eliminating the filibuster in its current form. Obviously if the bill could get 60 votes to end debate in the Senate, or cloture, then the bill would arrive on President Biden's desk and be signed into law. But, that seems unlikely. Although, there have been some Republican Senators including Lindsey Graham (R-SC) and John Kennedy (R-LA) who have indicated some support for the FAIR Act due to their belief in originalism and the sanctity of the right to a jury under the Bill of Rights. The bill would need eight more Republicans to invoke cloture so that path is unlikely.

Is eliminating the filibuster rule possible? Yes, it is. There is nothing in the constitution that provides for the filibuster. It's merely a Senate tradition that is voted on by a majority vote. The problem is Democrats have no margin for error, and Joe Manchin (D-WV), has said "I will not vote to end the filibuster." He could change his mind or Majority Leader Schumer could direct some sort of major project toward the great state of West Virginia as an inducement, but only time will tell.

There is another path. Biden could name a moderate Republican senator to his cabinet. Patrick Toomey (R-PA) is perhaps the most likely target given his indication that he will not seek reelection in 2022. If he were willing to serve, that would give Gov. Tom Wolf (D-PA) the right to appoint his successor until the midterms in 2022. Then Joe Manchin could sit out, or vote down the elimination of the filibuster, but with 51 seats and a tie breaking Vice-President it would not matter.

Once the filibuster is eliminated, the FAIR Act could come on the floor without consequence and likely be passed by a 52-54 seat margin. President Biden would be overjoyed to sign this bill into law.

If the filibuster cannot be eliminated, perhaps it could be modified. Currently the filibuster is not being utilized in the way it was originally intended. We do not see scenes from "Mr. Smith Goes to Washington," on the Senate floor because the filibuster does not work that way anymore. Once the specter of a filibuster is invoked, the Senators move on to different things and the bill dies. If, with Manchin on board, the filibuster was restored to its cinematic ideal, then senators would have to stay on their feet and recite prose or read the phone book to stop passage of a bill. They would be forced to use up their precious time and energy to stop the things they deemed most egregious. This would be a more exciting filibuster but would likely only be trotted out in the most extreme situations and for the most controversial bills. Otherwise, an up or down vote would be called. This solution would likely allow the FAIR Act to fly under the radar and make its way to the White House for swift passage.

While each of these paths is unlikely and maybe even farfetched. In concert, they present a scenario that should make proponents of arbitration a tad nervous. Corporate America might have come out from behind its paper wall and justify its practices the old-fashioned way, in front of a jury. 