The U.S. House Committee on the Judiciary’s Subcommittee on Antitrust, Commercial, and Administrative Law held a hearing on pre-dispute arbitration clauses on Thursday, May 16, 2019. PPI Center for Civil Justice Director, Phil Goldberg, and Andy Pincus, who served as general counsel of the Commerce Department under President Clinton, testified in support of pre-dispute arbitration clauses because of the value they provide to consumers, employees and businesses in avoiding prolonged litigation and resolving disputes.
The other participants in the hearing included Gretchen Carlson, formerly of Fox News, and Lt. Commander Kevin Ziober, each of which discussed their experiences with pre-dispute arbitration. Deepak Gupta of Gutpa Wessler and Prof. Myriam Gilles of the Cardozo School of Law advocated for legislation that would ban the use of these agreements.
Mr. Goldberg, who was testifying on his own behalf, explained that progressives agree that the civil justice system is a public good and a keystone of American economic and political liberty because it facilitates the peaceful resolution of disputes. But, we also know that it has its limitations and is subject to abuse. The major reason that pre-dispute arbitration is being increasingly common is because it achieves these goals of peaceful, quick and conclusive dispute resolution often better than the civil justice system for many claims.
In particular, Mr. Goldberg continued, pre-dispute arbitration agreements can be critical for consumers, employees and businesses to have access to justice in cases that are of modest value and where there is a premium on maintaining relationships after the dispute is resolved. In litigation, plaintiffs’ firms often will not take cases valued at under $100,000 – $200,000, and the adversarial nature of litigation generally poisons the sides against each other.
In contrast to the litigation system, as Mr. Pincus explained on behalf of the U.S. Chamber Institute for Legal Reform, pre-dispute arbitration is a fair, less-complex, and lower cost alternative to our overburdened court system. Also, empirical studies show that consumers and employees do as well or better in arbitration as in litigation: they prevail on their claims at the same rate or more frequently, and they recover as much or more when they do prevail.
Mr. Goldberg’s written testimony is here and a video of the House hearing is here.
