The Corporation's New Lethal Weapon: Mandatory Binding Arbitration Clauses

By Sergeant, Ashley M. | South Dakota Law Review, Spring 2012 | Go to article overview
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The Corporation's New Lethal Weapon: Mandatory Binding Arbitration Clauses


Sergeant, Ashley M., South Dakota Law Review


Mandatory binding arbitration clauses require that all disputes be submitted to binding arbitration, rather than being settled within the traditional court system. Such clauses are often found within consumer and employment contracts. Over the years, these clauses have become extremely controversial across America. Those opposed to these clauses believe that they trample on an individual's right to go to court. However, those in favor of these clauses argue that binding arbitration is more efficient and affordable. In 2010, Congress enacted the Department of Defense Appropriations Act, which prohibited defense contractors from requiring their employees to submit to binding arbitration in pursuing claims such as rape, assault, wrongful imprisonment, harassment, and discrimination. Because this Act was limited to employees of defense contractors, select members of Congress introduced the Arbitration Fairness Act of 2011 to ban all binding arbitration clauses in the context of employee, consumer, and civil rights disputes. This comment supports the enactment of the Arbitration Fairness Act of 2011 to ensure American citizens' constitutional rights are protected.

I. INTRODUCTION

Arbitration is a method of dispute resolution (1) that has been utilized for hundreds of years. (2) Over the years, the use of arbitration has drastically changed. (3) Since 1998, the United States Supreme Court has issued opinions that have greatly expanded corporations' use of mandatory binding arbitration clauses. (4) These clauses are commonly placed in contracts by corporations as a condition of employment or a condition of purchasing a product or service. (5)

In 2009, America took notice when Jamie Leigh Jones came forward to describe her experience with a corporation's mandatory binding arbitration clause. (6) After four years of struggle between Jones and her former employer, KBR, the Southern District of Texas allowed Jones to bypass the mandatory binding arbitration clause and litigate several of her claims. (7) During this litigation, Senator A1 Franken proposed a provision in the Department of Defense Appropriations Act, (8) which has become known as the Jamie Leigh Jones Amendment. (9) Upon the passing of this amendment, defense contractors can no longer impose mandatory binding arbitration in cases of rape, assault, wrongful imprisonment, harassment, and discrimination, (10)

Subsequently, on May 12, 2011, Senators AI Franken and Richard Blumenthal, and U.S. Representative Hank Johnson introduced the Arbitration Fairness Act of 2011. (11) The passage of this Act would ban any predispute arbitration clauses that are in employment, consumer, or civil rights contracts. (12) In order to ensure that American citizens' rights are not infringed upon, Congress must pass this Act. (13)

This comment begins by explaining the history and development of arbitration. (14) It then goes on to provide background information on the Federal Arbitration Act as well as five significant United States Supreme Court cases, which have greatly expanded the use of binding arbitration in employment and consumer contracts. (15) Further, this comment provides discussion about Jamie Leigh Jones's fight against mandatory binding arbitration clauses. (16) It then provides an overview of the Arbitration Fairness Act of 2011, including the Act's main purpose. (17) This comment then compares and contrasts the advantages and disadvantages of mandatory binding arbitration clauses. (18) Finally, this comment calls for the enactment of the Arbitration Fairness Act to ensure the protection of all American citizens against large, powerful corporations. (19)

II. BACKGROUND

A. THE HISTORY AND DEVELOPMENT OF ARBITRATION

Alternative dispute resolution provides individuals with various opportunities and procedures to resolve disputes without the utilization of the public courts, (20) Arbitration is a "method of dispute resolution in which the parties submit a dispute to an impartial [person or] persons who have been selected by the parties for a final and binding decision.

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