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Ever since the Federal Arbitration Act was enacted in 1925, the Supreme Court and state courts routinely remind us that they have adopted a “liberal federal policy favoring arbitration agreements.” Moses Cone Memorial Hosp. v. Mercury. However, there is no legislative history or court dicta favoring or presumptively upholding mandatory arbitration agreements, which are found in most standard consumer contracts. We dare say that most of our readers do not realize that their credit card agreements mandate arbitration of any dispute they might have. One cannot buy or sell a publicly traded security without signing a boiler-plate client agreement mandating arbitration of any broker-client dispute. The Economic Policy Institute in a report a year ago found that 53.9 percent of the nonunion private sector, 65 percent of those hired by companies with more than 1,000 employees, must arbitrate any employment dispute. Employees not only waive the usual benefits of civil litigation, but like the plaintiffs in Epic Systems v. Ernst & Young, about which we recently commented, also give up the right to initiate a class action. This drastic waiver has severe consequences with regard to consumer contracts because individual claims usually are so small that they are not worth pursuing.

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