Administration View Sought on Arbitration Contracts

Article excerpt

WASHINGTON (AP) - The Supreme Court on Monday asked the Bush administration for its view on whether stockbrokers may be forced to give investors the option of suing rather than resolving fraud disputes in arbitration.

The court said it wants to hear from Justice Department lawyers about a ruling that barred Massachusetts from requiring brokers to make arbitration clauses optional, not mandatory, in brokerage contracts.

The justices are not expected to take any action in the Massachusetts case until hearing from the government lawyers, which could take months.

The Massachusetts appeal is supported by 30 other states, whose officials said a federal appeals court ruling leaves them ``powerless to protect consumers from being coerced to enter arbitration agreements.''

The Boston-based 1st U.S. Circuit Court of Appeals ruled last Aug. 31 that the Massachusetts regulations are pre-empted by federal law.

The prevailing practice in the brokerage industry is to require customers to agree to arbitrate all disputes as a condition to opening an account.

In other business-related rulings Monday, the court:

- Agreed to decide whether nuclear industry ``whistleblowers'' who say they were disciplined for complaining about lax safety may sue under state personal-injury laws. The justices will review a North Carolina case in which a federal appeals court said such workers must sue under a special federal law.

- Ruled against an Oregon couple that challenged a bank's foreclosure on a farm in their family since 1853. The court let stand a ruling that the federal law Myron and Jane Harper relied on in their legal fight gives only the government, not farmers, the right to sue.

- Refused to require arbitration for hundreds of thousands of federal workers when they are fired, demoted or otherwise disciplined. The court rejected appeals by a labor union and the Federal Labor Relations Authority seeking broader job protection for federal employees. …

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