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WASHINGTON � Consumer groups and others opposed to mandatory, predispute arbitration clauses are gearing up for what is likely to be a hard-fought effort in Congress to ban those clauses in consumer, employment and franchise agreements. Senator Russ Feingold, D-Wis., and Representative Hank Johnson, D-Ga., recently introduced identical bills in the Senate and House that would amend the Federal Arbitration Act (FAA) to establish that agreements to arbitrate employment, consumer or franchise disputes are not enforceable if they are entered into before an actual dispute arises. The legislation also would apply to disputes arising under civil rights statutes and statutes regulating contracts or transactions between parties of unequal bargaining power. Any disagreement over whether the act applies would be resolved by a court, not by arbitration, according to the bills. The proposed changes would not apply to collective bargaining agreements, and mandatory predispute arbitration would continue in most business-to-business dealings. The bills, titled “The Arbitration Fairness Act of 2007,” state that a series of U.S. Supreme Court decisions have extended the FAA to disputes between parties of greatly unequal economic power. As a result, the bills say, many corporations are requiring millions of consumers and employees to give up their right to resolve disputes before judges or juries. “If arbitration were in any way beneficial to consumers, it could be made an option and consumers would choose it,” said Associate Dean Richard M. Alderman, director of the Consumer Law Center at the University of Houston Law Center. “We need courts in the consumer area to create common law, to interpret statutes,” he said. His position is echoed by the bills’ supporters, which include such groups as Public Citizen, the American Association for Justice and the National Association of Consumer Advocates. But a coalition of business groups, including the U.S. Chamber of Commerce, Business Roundtable and Council for Employment Law Equity, disagrees. In recent testimony before a House Judiciary subcommittee, the coalition said, [T]he FAA is not an anti-consumer statute. It is precisely these contractually negotiated arbitration provisions that are critically necessary to help staunch the nation’s rush to litigation.” Alderman predicted a “long, hard fight,” involving “a lot of education” for the legislation to succeed. “Gradually consumers are starting to understand arbitration and becoming more and more opposed,” Alderman said. “It will have to be a grassroots process.”

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