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Bills to ban mandatory arbitration draw ire

Some business groups are very unhappy about a number of bills in Congress that seek to limit or eliminate mandatory arbitration in a host of situations.

While some opponents of the bills say the legislation is nothing but a big kiss from Hill Democrats to trial lawyers for helping them regain Congress, proponents of the bills said there are simply a way to ensure that everyone can have their day in court, reports the Los Angeles Times’ Richard Simon today.

There are a number of measures seeking to limit mandatory arbitration, Simon reports:

One measure, attached to a House bill that deals with the sub-prime loan crisis, would make arbitration voluntary instead of mandatory in residential mortgage contracts. Another, approved by the Senate Judiciary Committee and attached to the farm bill, would prohibit binding arbitration between livestock and poultry producers and packers, unless the parties agree.

But the biggest is a bicameral bill – sponsored by Sen. Russ Feingold, D-Wisc., on the Senate side and Rep. Hank Johnson, D-Ga., on the House side – that would bar mandatory arbitration agreements involving employment, consumer rights, franchise or civil rights claims. In those cases, post-dispute agreements to arbitrate would be enforceable, but such agreements could not be made before a dispute arises. [See Lawyers USA summary.]

Not all lawmakers like the bill. “Democrats want to pay back trial lawyers,” Utah Republican Rep. Chris Cannon told the LA Times.

Not so, said Ira Rheingold, executive director of the National Association of Consumer Advocates, who points out that even cell phone contracts bind customers to arbitration – and many may not realize it due to the finely-printed way the deals of often spelled out.

“The creation of a private system of government [is] antithetical to what our country stands for,” he said.

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