By George H. Friedman, SAA Publisher & Editor-in-Chief
A bipartisan bill has been introduced in the House to amend the Federal Arbitration Act (“FAA”) to restrict predispute arbitration agreement (“PDAA”) enforcement for disputes involving physical sexual assault claims.
Readers may recall we reported in SAA 2019-12 (Mar. 20) that, undaunted by the rather poor prospects of enactment, Congressional Democrats announced in early 2019 the reintroduction of several bills aimed at curtailing mandatory arbitration in a broad range of contracts. Among them was the Ending Forced Arbitration of Sexual Harassment Act (H.R. 1443), a reintroduction of bills of the same name that were introduced in the 115th Congress in the wake of seemingly daily accusations of workplace sexual harassment.
Broad Reach of Original Bill
The original 2019 bill aimed to amend the FAA to retroactively ban PDAAs covering sexual discrimination disputes, and prohibit delegation. And no delegation: “The applicability of this chapter to an agreement to arbitrate and the validity and enforceability of an agreement to which this chapter applies shall be determined by a court, rather than an arbitrator, irrespective of whether the party resisting arbitration challenges the arbitration agreement specifically or in conjunction with other terms of the contract containing such agreement.” Despite significant bipartisan support, the bills have languished in the 116th Congress.
Narrower Scope this Time
Rep. Karen Bass (D-CA) and Rep. Debbie Lesko (R-AZ) on October 16 introduced Carrie’s Law (H.R. 8608 ) the purpose of which is to amend the FAA to bar mandatory arbitration of claims involving physical sexual assault. A Lesko Press Release states: “The bill was inspired by Carrie Bobb, an Arizona native and California resident who was physically sexually assaulted at a corporate event. Due to an arbitration clause in her employment contract, Carrie was unable to have her case heard in court, and was forced into a confidential process, which left her silenced.” Although the text is not yet posted, the Release provides some elaboration: “Carrie’s Law establishes a narrow prohibition on pre-dispute arbitration agreements by making any clause mandating the use of arbitration as the only avenue for conflict resolution unenforceable for claims of physical sexual assault. Under this legislation, a victim may choose to bring their physical sexual assault claim out of arbitration to handle in civil court. An accompanying claim (i.e. hostile work environment, negligent supervision, etc.) that is based upon the initial claim of physical sexual assault may also be brought out of arbitration to be litigated. If the physical sexual assault claim is dismissed with prejudice by a court, then the entire matter is dismissed and may be dealt with under the relevant arbitration agreement. The time period for which the relevant pre-dispute arbitration agreement is valid will be tolled while the matter is pending before a Federal Court.”
(ed: *The bill will be referred to the House Judiciary Committee. **We assume a Senate version will soon be introduced. ***We were a bit confused by the “is dismissed with prejudice by a court” language. However, we believe it can be explained this way: The arbitration carve-out only applies if a case includes a claim for physical sexual assault. Therefore, if that claim is dismissed with prejudice, but other claims survive, those claims must be “dealt with under the relevant arbitration agreement.” ****We had thought the original 2019 bill had a decent chance of enactment, but that was pre-COVID-19. We think this narrower bill, which already has bipartisan support, will be passed by this or the next Congress and we sense that the President (Trump or Biden) will sign it.)