AAI Supports Senator Franken’s Arbitration Reform Bill

In a letter to Senator Franken, AAI offered its support for the Arbitration Fairness Act of 2013 (AFA), a bill that would amend the Federal Arbitration Act (FAA) to invalidate certain agreements that mandate individual arbitration of antitrust disputes.  The practical effect of the AFA would be to prevent several recent Supreme Court decisions, including Stolt-Nielsen, Concepcion, and Italian Colors, from eliminating class actions and class arbitration as means of redressing an important category of consumer antitrust violations.  Section 3 of the AFA would prevent class action waivers inserted into arbitration agreements from acting as de facto exculpatory clauses that eliminate the only procedural mechanisms able to convert certain antitrust claims into financially rational pursuits.  AAI noted that the ability to aggregate claims is essential to effective private antitrust enforcement, and without legislative action, a wide swath of consumer antitrust cases will go uncompensated, under-deterred, or altogether un-remedied.  The elimination of aggregation mechanisms in consumer antitrust cases is particularly troubling in the online context, where forced class action waivers can be surreptitiously inserted into electronic “adhesion” contracts, which consumers don’t and aren’t expected to read, let alone understand.