CPR’s new website now hosts the CPR Speaks blog. You can find new posts, at https://www.cpradr.org/news/cpr-speaks.
Government Support: Task Force Meeting Covers ADR’s Reach into Federal Agencies
By Katerina Karamousalidou
A CPR Government & ADR Task Force meeting last month focused on the U.S. government’s executive branch alternative dispute resolution use. The participants, who included authors of a recent federal government ADR study, described ADR use and emphasized the need for support and assessments of the effectiveness of the processes used to negotiate and settle.
The April 19 meeting started with an introduction from CPR Senior Vice-President Ellen Parker, who explained that the Task Force’s mission is to educate companies, law firms, and government agencies and their attorneys on the laws and the specific requirements for engaging in ADR with target government agencies.
The Task Force comprises leading practitioners, corporate counsel, neutrals, academics, and current and former federal government employees, including ADR specialists and dispute resolution directors. Parker introduced the Committee chair, Pete Swanson, Director of the Office of Conflict Management and Prevention at the Federal Mediation and Conciliation Service, a 75-year-old independent Washington, D.C., agency whose mission is to preserve and promote labor-management peace and cooperation.
Swanson, together with Jeremy Graboyes, Director of Public and Interagency Programs at the Administrative Conference of the United States, an independent federal agency whose statutory mission is to identify ways to improve the procedures by which federal agencies protect the public interest and determine the rights, privileges, and obligations of private persons.
They dove into ACUS’s history and the work it has been doing in promoting ADR use by federal agencies. Swanson and Graboyes were joined by University of Nebraska College of Law Prof. Kristen M. Blankley, of Lincoln, Neb., and Mediator Judith Starr, who heads ADR consulting firm Starr ADR in Palmetto, Fla. Blankley and Starr are co-authors of a consulting report on ACUS’s work, “Alternative Dispute Resolution in Agency Administrative Programs with the Administrative Conference of the United States” (Dec. 17, 2021) (available at https://bit.ly/38Vaeii).
Jeremy Graboyes set the stage by explaining ACUS’s mission in promoting effective public participation in the regulatory process by reducing unnecessary litigation and improving the use of science and the effectiveness of applicable laws.
He emphasized that ACUS has long been active in examining how agencies use ADR to manage federal administrative programs fairly and efficiently. ACUS also has published a variety of ADR-related reports in source books during its tenure, including a 1995 practitioners’ deskbook developed in partnership with the CPR Institute, the “The ADR Breakthrough for Government Contract Disputes.”
The agency’s efforts led to passage of the Administrative Dispute Resolution Act in 1990 and 1996 (an ACUS wiki explains the acts here), and the Negotiated Rulemaking Act (ACUS wiki here). Both acts designated ACUS as the lead agency responsible for coordinating ADR and negotiated rulemaking.
Jeremy Graboyes also mentioned that ACUS undertook an important project, the use of ombuds in federal agencies, and launched a new project to investigate how agencies might better use different types of ADR to resolve matters related to their core statutory authorities.
ACUS has recently established an ADR Advisory Group to advise the agency on potential new initiatives to improve ADR design and administration across the federal government, working closely with Pete Swanson and FMCS.
Kristen Blankley explained the overview, methodology, and main research areas of the ACUS consulting report. Judith Starr then talked about ADR’s deep historical roots in federal agencies since early 1900s to 1990 ADRA, the subsequent legislative landmarks, and the ACUS’s role in assisting in executive branch ADR implementation.
Blankley analyzed the most preferred selection and implementation of ADR modalities, including mediation, facilitation, ombuds, arbitration, conciliation, and factfinding. She reviewed recommendations regarding the selection and implementation of ADR processes in relation to the increased visibility of these programs, as well as the need to establish routine outside program evaluation.
Judith Starr said that staffing practices are highly dependent on agency resources. She talked about training programs and opportunities, their variation in length and form, and recommended continuing education, certification opportunities, and specialized training. Blankley emphasized the importance of increasing transparency in ADR proceedings, confidentiality, and harmonized ethics rules. Blankley also highlighted ADR case management strategies and tools, the importance of external audits, software review, and ethics policies for case managers.
Starr concluded her presentation by talking about interagency ADR operations, and Blankley discussed areas for further research, such as wellness, diversity, online dispute resolution, and supporting ADR across the executive branch.
The meeting concluded with a Q-and-A session.
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The author, an LLM student focusing on international commercial arbitration at Pepperdine University School of Law’s Straus Institute for Dispute Resolution in Malibu, Calif., is a Spring 2022 CPR Intern.
Update: An Influx of Arbitration Legislation
By Tamia Sutherland
The passage and March 3 signing of H.R. 4445, Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 has inspired the introduction of more than 170 bills involving arbitration.
Sen. Lindsey Graham, R., S.C., called H.R. 4445 the most significant workplace reform since the Occupational Safety and Health Act of 1970, and said he is open to further arbitration law changes, on a bipartisan basis. Lindsay Wise and Jess Bravin, Senate Approves Bill Barring Forced Arbitration in Sexual-Assault, Harassment Claims, Wall Street Journal (Feb. 10)(available at https://on.wsj.com/38tmR3Q).
Of the current arbitration-related proposals, there are some duplicates with House and Senate introductions. Still, many facets of arbitration, in and out of government, are covered by the bills.
Activity on some is possible this year.
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In an April 6 Securities Arbitration Alert blog post, George Friedman, Publisher & Editor-in-Chief, discussed Congress and the rise in arbitration legislation:
The recent pace of legislative activity prompted us to look up how many bills have been introduced in the 117th Congress that in some way, shape, or form, refer to arbitration.
A search we conducted using the non-partisan www.govtrack.us Website shows that 171 bills have been introduced so far that contain the term “arbitration” or “arbitrate” – 106 in the House and 65 in the Senate.
Not all bills are anti-arbitration, although the majority would amend the Federal Arbitration Act, other federal laws, or both, to curb pre-dispute arbitration agreement use. Democrats introduced all but four bills.
The Securities Arbitration Alert post can be found here.
A few days after the passage of H.R. 4445, the U.S. Senate Committee on Banking, Housing, and Urban Affairs held a March 8 hearing on arbitration’s effects on consumers’ financial services contracts. The purpose was to introduce another arbitration bill.
Chairman Sherrod Brown, D., Ohio, presided over the hearing, and in his opening statement said that:
Big companies should not decide on behalf of Americans how they should pursue justice. Consumers–not corporations–should be able to decide whether they want to go through the public court system, through mediation, or through arbitration. . . . That’s why I introduced the Arbitration Fairness for Consumers Act last week with 21 cosponsors in the Senate, many of whom serve on this Committee.”
The Arbitration Fairness for Consumers Act would prohibit arbitration clauses in consumer financial products by amending the Consumer Financial Protection Act of 2010. Chairman Brown explained that the bill “gives consumers the right to decide how they want to pursue justice.” Brown’s website lists this press release and one-pager regarding the bill.
Following the opening statement, Ranking Member Patrick J. Toomey, R., Pa., provided background on Congressional attempts at arbitration restrictions in consumers’ financial services contracts:
In 2017, the CFPB issued a rule that would’ve banned these agreements for consumer financial products. However, Congress overturned this rule under the Congressional Review Act. Since then, Democrats have introduced bills that would undo Congress’ sensible decision.
Then, witnesses representing consumer interest groups Public Justice and Public Citizen, and the business-backed U.S. Chamber of Commerce, provided opposing testimony regarding the regulation of arbitration clauses in consumers’ financial services contracts.
In addition, law professors Todd J. Zywicki and Myriam Gilles from, respectively, Arlington, Va.’s George Mason University Antonin Scalia School of Law and Yeshiva University’s Benjamin N. Cardozo School of Law in New York also provided expert testimony, with Zywicki anti-legislation and Gilles strongly supporting the proposal.
A video of the March 8 hearing and the witness statements are available here. Since its introduction, no further action has occurred on the Arbitration Fairness for Consumers Act.
There’s more. The Forced Arbitration Injustice Repeal (FAIR) Act of 2022, a broad bill that would void all pre-dispute mandatory arbitration agreements in employment, antitrust, consumer, and civil rights passed the House by a 222-209 vote on March 17. That vote’s margin is much narrower than the 335-97 vote the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act received in the House in February.
The FAIR Act passed the House despite strong opposition. Two reports from the Institute for Legal Reform, a U.S. Chamber of Commerce unit that lobbies for tort reform on behalf of businesses and has long opposed arbitration restrictions, concluded that consumers and workers typically do better in arbitration. A November 2020 Institute for Legal Reform report is available here, updated from 2019, and an even more recent November 2021 update is available here.
Consumer organizations, on the other hand, were elated. Following the FAIR Act’s passage Lisa Gilbert, executive vice president of Public Citizen, noted:
“…Today, in an important step forward, the House passed the FAIR Act, a measure that would end the tricks and traps that are endemic in form contracts, including those you enter by clicking ‘I agree’ on the internet.
Hundreds of millions of contracts contain forced arbitration provisions and class-action waivers, denying consumers and workers the ability to file lawsuits in court and preventing them from joining with other similarly situated people to sue together…Today, the House finally stated: No more.”
Gilbert’s full statement is available here.
The FAIR Act was introduced by longtime mandatory arbitration opponent Hank Johnson, D., Ga., who has introduced this legislation in the past. For a discussion of the act’s September 2019 House passage–it later stalled in the Senate–and the controversy over the Institute for Legal Reform’s original 2019 arbitration report, is available at Andrew Garcia, The Fairness Agenda: Arbitration Legislation Advances in the Wake of a Critical Report , 37 Alternatives 157 (November 2019) (available at https://bit.ly/3LSoG93).
The House Committee on the Judiciary published this press release following last month’s passage of the FAIR act. There has been no action yet on the Senate version, which is before the Judiciary Committee.
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Other arbitration bills have attracted attention, and could gain traction in the wake of H.R. 4445’s passage and signing. They include:
- The Justice for Servicemembers Act,
- Fairness in Nursing Home Arbitration Act, and
- The Investor Choice Act.
The Justice for Servicemembers Act aims to amend Title 9 of the U.S. Code—the Federal Arbitration Act—to prohibit pre-dispute agreements that require arbitration of certain disputes arising from claims of servicemembers and veterans. The disputes are claims brought under chapter 43 of U.S.C. Title 38 relating to employment and reemployment rights of members of the uniformed services, and under the Servicemembers Civil Relief Act (50 U.S.C. 3901–4043).
The Fairness in Nursing Home Arbitration Act was introduced to amend titles XVIII and XIX of the Social Security Act “to prohibit skilled nursing facilities and nursing facilities from using pre-dispute arbitration agreements with respect to residents of those facilities under the Medicare and Medicaid programs, and for other purposes.”
The Investor Choice Act attempts to amend the Securities Exchange Act of 1934 to prohibit mandatory pre-dispute arbitration in investment adviser agreements.
Also, H.R. 5974, the Veterans and Consumers Fair Credit Act, was introduced in both the House and Senate to amend the Truth in Lending Act to extend to all consumers the consumer credit protections provided to U.S. Armed Forces members and their dependents under title 10 of the U.S. Code. The bill garnered a joint letter in support signed by 188 civil rights, community, consumer, faith, housing, labor, legal services, senior rights, small business, veterans’ organizations, and academics representing all 50 states and the District of Columbia. Some of the signatories include Main Street Alliance, Minority Veterans of America, the NAACP, National Fair Housing Alliance, and Public Citizen. The joint letter is available at the website of Public Justice, a Washington nonprofit law consumer- and employee-side law firm, here.
Many of these proposals are riding H.R. 4445’s coattails and have the potential to be framed as an extension of the bill ahead of the midterm elections.
For more background information on H.R. 4445, and how it restricts arbitration use for certain employment matters, see Tamia Sutherland & Russ Bleemer, Senate Sends Bill Restricting Arbitration for Workplace Sexual Assault Victims for Biden’s Signature, CPR Speaks (Feb. 10) (available here).
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The author, a second-year law student at the Howard University School of Law, in Washington, D.C., is a CPR 2021-22 intern.
#CPRAM22 Highlights: Hot Topics/Initiatives in ADR
By Andrew Ling
Lucila Hemmingsen, a partner in the New York office of King & Spalding practicing international commercial and investment arbitration and public international law, moderated a third-day CPR Annual Meeting panel on cutting-edge topics in ADR. The panel focused on arbitration cases pending before the U.S. Supreme Court, new arbitration legislation, an initiative to reduce arbitration’s carbon footprint, and diversity in ADR.
Hemmingsen was joined at the March 4 online #CPRAM22 session by three panelists:
- Angela Downes, who is assistant director of experiential education and professor of practice law at University of North Texas Dallas College of Law;
- Benjamin Graham, an associate at Williams & Connolly, in Washington, D.C., who focuses on complex commercial litigation and international arbitration. He has represented sovereign states and multinational corporations in investment-treaty disputes before ICSID and commercial disputes before leading arbitral institutions, and
- Rachel Gupta, a mediator and arbitrator with her own New York City-based ADR practice, Gupta Dispute Resolutions. She is a mediator for state and federal court ADR panels and is an arbitrator and panelist for CPR, the American Arbitration Association, and FINRA.
Graham and Downes began the discussion by reviewing arbitration cases pending before the U.S. Supreme Court. Downes highlighted Henry Schein Inc. v. Archer and White Sales Inc., No. 19-963, in which the question concerned whether a delegation provision in an arbitration agreement constitutes clear and unmistakable evidence that the parties intend the arbitral tribunal to decide questions of arbitrability.
Traditionally, courts are presumed to decide whether a dispute is subject to arbitration, phrased as the “question of arbitrability.” But in recent Supreme Court decisions, the Court has looked at the parties’ agreement and allowed the arbitral tribunal to decide questions of arbitrability if there is clear and unmistakable evidence indicating parties’ intent to delegate the authority to arbitrators.
Panelist Angela Downes said she views the fundamental Henry Schein issue as the drafting of the arbitration agreement, noting that disputes often arise when the agreement or provision lacks clarity. She pointed out that the case, which was dismissed a month after the oral arguments in January 2021 in a one-line opinion in which the Court said that it had “improvidently granted” review in the case, leave the status of delegation agreement still unsettled enough for potential future litigation.
Rachel Gupta then led the discussion on recent legislation on arbitration, focusing on H.R. 4445, titled Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.
The panel discussed the Congressional backdrop to the bill, which was signed into by President Biden on March 3, the day before the panel discussion. In many employment contracts, employees have been bound by arbitration agreements and prohibited from bringing sexual harassment claims to a court. Arbitration proceedings are generally confidential, and the amount of an arbitral award tends to be lower than the damages rendered by a court. And when parties settle the dispute, employees are usually required to sign non-disclosure agreements. As a result, victims of sexual harassment are often silenced.
There are four amendments to the Federal Arbitration Act. First, it does not categorically ban arbitration agreements between employers and employees, but it allows plaintiffs to bring sexual harassment claims to courts. Second, plaintiffs have the option to bring the case individually or on behalf of a class, even if the employer’s arbitration agreement prohibits class arbitration. Third, FAA applicability will be decided by a federal court, not the arbitral tribunal. Finally, the amendments are retroactive.
Gupta pointed out that the bill does not address non-disclosure agreements. Angela Downes said she believed the omission was intended as a compromise to gain bipartisan support for the bill. In addition, many lawmakers and sexual harassment victims view binding arbitration agreements as the cause of the “broken system,” not the non-disclosure agreements.
The new law, the panel suggested, could drastically change employment arbitration practices. As Rachel Gupta commented, it will be interesting to observe if lawmakers intend to make similar amendments to other areas of arbitration, such as consumer class arbitration.
On reducing arbitration’s carbon footprint, Gupta first discussed the Campaign for Greener Arbitrations, founded by U.K. arbitrator Lucy Greenwood in 2019. The Campaign developed a set of Green Protocols to reduce the environmental impact of international arbitrations, such as using electronic correspondence and organizing virtual conferences.
Moderator Hemmingsen shared several changes in international arbitration practice: sending iPads to arbitrators instead of papers; reducing in-person meetings, and using advanced technology to take construction-site photos instead of traveling. She also predicted that more conferences and hearings would be held virtually.
The panel concluded by discussing diversity and inclusion among arbitrators and mediators. There have been several initiatives on appointing diverse neutrals and offering training and networking opportunities, such as the Ray Corollary Initiative, the JAMS Diversity Fellowship Program, New York Diversity and Inclusion Neutral Directory, the ADR Inclusion Network, and the Equal Representation in Arbitration pledge. Many arbitral institutions have taken action to place more women in arbitration panels. And CPR incorporated a “Young Lawyer” Rule in its Administered, Non-Administered and International Arbitration Rules to increase opportunities for junior lawyers to take a more active role in arbitration hearings (see Rule 12.5 in the rules available at https://www.cpradr.org/resource-center/rules/arbitration).
The panelists agreed that promoting diversity among arbitrators and mediators must be a concerted effort from ADR providers, arbitrators, law firms, and clients. Progress in diversity and inclusion is needed to grow the profession and benefit the next generation of ADR practitioners.
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The author, a third-year law student at the University of Texas School of Law, in Austin, Texas, is a CPR 2022 Spring Intern.
Senate Sends Bill Restricting Arbitration for Workplace Sexual Assault Victims for Biden’s Signature
By Tamia Sutherland & Russ Bleemer
The U.S. Senate passed H.R. 4445, Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, this morning on a voice vote.
The bill had bipartisan support in both legislative chambers and quickly cleared the 60-vote procedural step to advance in the Senate. The House had passed the bill on Monday by a vote of 335-97.
President Biden has signaled he will sign the bill, which will take effect immediately. The Office of Management and Budget expressed the administration’s support in a Statement of Administration Policy letter, published Feb. 1, noting, “This bipartisan, bicameral legislation empowers survivors of sexual assault and sexual harassment by giving them a choice to go to court instead of being forced into arbitration.”
The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act invalidates pre-dispute arbitration agreements and waivers of joint proceedings for individuals alleging conduct constituting a sexual harassment dispute or sexual assault. It effectively overrides employment contracts that require arbitration and allows all cases which include sexual assault or harassment claims to be resolved in court, despite the signed agreement containing an arbitration clause.
The language targets predispute arbitration agreements and predispute joint-action waivers, but not ad hoc or post-dispute processes. In fact, the law apparently allows employees an option to stay in existing arbitration agreements, noting at the outset that an arbitration clause will not be valid “at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute, or the named representative of a class or in a collective action alleging such conduct. . . .” The law focuses on the filing of cases; a determination of the arbitrability of matters is sent by the law to courts, not arbitrators. . . .”
In introducing the bill this morning, Senate Majority Leader Charles Schumer, D., N.Y., noted the bipartisan agreement on the bill, and emphasized that it will apply retroactively. The law states that it “shall apply with respect to any dispute or claim that arises or accrues on or after the date of enactment of this Act.” Said Schumer, “That’s an important point that hasn’t gotten enough attention.”
The text of the bill is available here.
Arbitration clauses in employment contracts have been characterized by legislators as “forced” and were discussed in depth at the Nov. 16 House Judiciary hearing, “Silenced: How Forced Arbitration Keeps Victims of Sexual Violence and Sexual Harassment in the Shadows.” A blog post about the Nov. 16 hearing can be accessed here, and the hearing can be viewed in its entirety at https://bit.ly/3wTDLkf.
Some legislators and attorneys were worried that the proposed reforms could unwittingly fail in practice. There is concern because litigation can be more expensive; the bill does not prevent companies from forcing people to sign nondisclosure agreements that also could hide sexual misconduct allegations, and plaintiffs’ attorneys could be incentivized to include sexual harassment allegations in cases that have nothing to do with sexual harassment to evade arbitration.
“Unfortunately, some of the language in the statute is potentially ambiguous,” says Christopher C. Murray, a shareholder in the Indianapolis office of Ogletree, Deakins, Nash, Smoak & Stewart, and co-chair of the firm’s Arbitration and Alternative Dispute Resolution Practice Group. He explains:
Specifically, the statute bars enforcement of certain arbitration agreements with respect to “cases” relating to sexual harassment and sexual assault disputes. The statute probably should state it bars enforcement of agreements with respect to ‘claims’ relating to sexual harassment and sexual assault disputes. Some plaintiffs’ counsel may try to make hay out of this ambiguous use of ‘cases’ and seek to expand the scope of the statute to bar the arbitration of other types of claims that happen to be in the same case. I expect that effort by plaintiffs’ counsel will ultimately be unsuccessful under cases like CompuCredit Corp. v. Greenwood, but the ambiguity may still result in some extra litigation in the short term. . There’s no indication the new law is intended to change the “Congressional command” analysis for claims under other federal statutes that have nothing to do with a sexual harassment or sexual assault dispute.
In CompuCredit Corp. v. Greenwood, 565 U.S. 95 (2012), the Supreme Court held that because the Credit Repair Organizations Act is silent on whether claims can be arbitrated, the Federal Arbitration Act required the plaintiff’s arbitration agreement to be enforced according to its terms. Moreover, the case stands for the proposition that an arbitration agreement should be enforced if the claims at issue are federal statutory claims, unless the mandate of the Federal Arbitration Act, 9 U.S.C. § 1, et seq., has been overridden by a contrary Congressional command. Parties likely will dispute whether the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, which specifically amends the FAA, changes that analysis in any way for claims under federal statutes that do not relate to sexual harassment or assault.
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The Senate also was concerned about the misuse of sexual assault and harassment claims to piggyback arbitrable claims into court, and this morning addressed the issue.
Sen. Joni Ernst, R., Iowa, emphasized that the act should not be used for other workplace disputes. “Those claims are meaningfully different,” she said, emphasizing that if an employment agreement has a predispute arbitration provision and a sexual assault or harassment claim is brought with another claim, and the assault or harassment claim is later dismissed, “the court should remand the other claim back to the arbitration” system.
Ernst told the Senate that the presence of sexual assault or harassment claims “should not effectively destroy arbitration in employment litigation.”
Ernst pledged to work with Schumer and other senators, she said, “if there are indications that there is gaming of the system” by claimants or lawyers.
Sponsor Kirsten Gillibrand, D., N.Y., expressed appreciation for work on the bill by Ernst and Sen. Lindsey Graham, R., S.C., and agreed with Ernst’s cautions. “I do not believe that survivors of sexual assault and harassment will use the claims” to avoid arbitration, she said, adding, “If those claims on assault or harassment are dismissed, [victim claimants] will go back to arbitration.”
“But,” continued Gillibrand, “it is important that all claims related to assault or harassment are dealt with at the same time” to avoid sending victims to multiple forums. “If victims and attorneys break those rules, they can be sanctioned in court,” she said.
Ahead of the voice vote, Lindsey Graham said, “It does not hurt business to make sure that people harassed in the workplace [get justice]. It helps business. . . . Arbitration has its place in business. . . . [But] you’re not going to sign away your life.”
He concluded, “This is not bad for business. This is good for America.”
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The passing of the Ending Forced Arbitration Act marks a significant national reform in the fight against sexual misconduct in the workplace that emerged from the bravery of the #MeToo movement. It also may be a harbinger of more to come in terms of arbitration restrictions. The White House statement supporting the legislation, which now goes to the president’s desk to be signed into law, ended by noting,
The Administration also looks forward to working with the Congress on broader legislation that addresses these issues as well as other forced arbitration matters, including arbitration of claims regarding discrimination on the basis of race, wage theft, and unfair labor practices.
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Sutherland, a second-year law student at the Howard University School of Law, in Washington, D.C., is a CPR 2021-22 intern. Bleemer edits Alternatives to the High Cost of Litigation for CPR.
Highlights from the House Judiciary Hearings Targeting Arbitration’s Role in Prosecuting Sexual Harassment
By Tamia Sutherland
The House Committee on the Judiciary held a Nov. 16 hearing on arbitration’s effects on victims of sexual violence and harassment. Chairman Jerrold Nadler, D., N.Y., presided over the hearing, “Silenced: How Forced Arbitration Keeps Victims of Sexual Violence and Sexual Harassment in the Shadows.”
A second hearing followed the next day, marking up a bill introduced to restrict the use of arbitration in sexual harassment employment cases, and sending it to the full House, where it awaits action.
In his opening statement at the first hearing, Nadler said that “arbitration was originally developed as an alternative to the court system, for parties of relatively equal bargaining power to enter into voluntarily.”
But, he continued, “forced arbitration” clauses, seen in “take it or leave it contracts,” have grown in popularity between large corporations and individuals. Nadler asserted that forced arbitration is most problematic in the workplace. He provided data projecting that by 2024, 80% of private-sector employees will be required to sign an arbitration clause when accepting employment. Moreover, he stated that employers prevailed over employees in 98.1% of arbitrations.
Notwithstanding the statistical information, Nadler explained that the purpose of the hearing was to examine the “true human toll of forced arbitration, [based on] stories that cannot be distilled down to a number or a statistic.” He set out the theme of the hearing by declaring arbitration a system that is “fundamentally unjust,” but noting that the decisions in the matters involving the witnesses would not be reversed. He added that the witnesses’ appearances were to provide a voice for other victims of sexual harassment.
Ranking minority committee member Jim Jordan, R., Ohio, also provided an opening statement in which he explained that the committee must ensure that “pathways that Americans have to resolve their disputes function properly and are fair to everyone.” He added, “Arbitration should be as fair as court.”
He noted the declining number of civil cases that concluded in a trial. Jordan said that if the arbitration system is not being used properly, there is an obligation to fix it to benefit the parties to the dispute.
Many of the witnesses who provided hearing testimony are survivors of sexual harassment and/or sexual assault who reported that they were forced into arbitration agreements based on their employment. Chairman Nadler explained that the witnesses faced off in arbitration with their employers, who had the opportunity to select “the judge and the jury, truncate the discovery process, choose the law applied, and prevent all appeals.” The individuals who provided testimony, Nadler reported, were only allowed to do so because a congressional subpoena has compelled their testimony. Here is the witness list:
- Eliza Dushku, actor/producer and philanthropist;
- Tatiana Spottiswoode, first-year Columbia University Law School student and former business analytics associate at Afiniti Ltd., a Hamilton, Bermuda-based software developer;
- Anna St. John, president and general counsel at Washington, D.C., public interest law firm Hamilton Lincoln Law Institute;
- Andowah A. Newton, vice president for legal affairs and head of litigation for LVMH Moët Hennessy Louis Vuitton Inc.;
- Sarah Parshall Perry, Legal Fellow, Edwin Meese III Center for Legal and Judicial Studies at the Heritage Foundation, a Washington, D.C. membership think tank focusing on conservative issues;
- Lora Henry, a sales associate for Wacom Mitsibushi in Canton, Ohio, and
- Myriam Gilles, the Paul R. Verkuil Chair in Public Law at the Yeshiva University’s Benjamin N. Cardozo School of Law in New York.
Eliza Dushku began the witness testimony, noting that she has worked in the entertainment industry on high-profile films and television for nearly 30 years. She also identifies as a victim and survivor of sexual harassment in the workplace—she was fired and says she was silenced when she attempted to speak out.
She told the story of being aggressively pursued by CBS to co-lead in a 2017 show, “Bull,” in which she said her character was written with her in mind, and which required a six-year commitment to playing a strong, confident lawyer. But within the first week of her new job, she reported that she became the brunt of crude sexualized, lewd verbal assaults and suffered near-constant sexual harassment from her co-star, Michael Weatherly, who also was the show’s co-producer.
Dushku says she wasn’t physically harmed, but the effects of verbal abuse have been long lasting. Examples of some of the comments endured included being called “legs” and being told she would be taken to a “rape van” where “long phallic things” would be used, or she would be “take[n] over his knee and spank[ed] like a little girl.” Additionally, she reported Weatherly told her that his sperm were “powerful swimmers,” and he shouted out loud on set that he and his buddy wanted to have a “threesome” with her.
The comments were not scripted lines. They were made in front of the cast and crew members, and sometimes while the cameras were still rolling. She stated that her co-star’s comments emboldened other male crew members. One said to her, “I’m with Bull, I want to have a threesome with you, too, Eliza,” between scenes.
Dushku reported that she was horrified and became physically nauseous but, she said, her drive to succeed was strong, and she loved the role, so she tried to maintain her professionalism. And as a result, she said, she received positive reviews from the showrunner and other CBS employees and officials.
After speaking with her manager about the work conditions, Dushku said that she asked her co-star to be her ally and “tone down some of the sexualized comments.” His response was that “no one is more respectful of women than me.”
But then he texted the head of CBS Studios that Dushku was “humor deficit,” who she reported replied that Dushku made the show better. Nevertheless, Dushku was fired the next day and told she was only in three more episodes despite the six-year deal.
Despite her longevity in the entertainment industry, Dushku said she never understood the mandatory arbitration clauses in her contracts. In this case, the harassment of Dushku was caught on camera, in tapes CBS provided in a poorly constructed attempt to defend itself. Still, Dushku told the House Judiciary Committee that no one will see the tapes due to her signing a binding arbitration clause.
Dushku concluded her testimony by asserting that there will never be real justice for her and for countless other victims of sexual harassment who unknowingly signed binding arbitration clauses.
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Tatiana Spottiswoode explained that she first met Zia Chishti, the founder of Invisalign and CEO of Afiniti, when she was around 12-13 years old, as a business associate and friend of her father’s. When Spottiswoode was a college senior in 2014, Chishti, then 43, deceived Spottiswoode by insisting that she attend a ski trip to meet a nephew that she later discovered didn’t exist. Spottiswoode believes the trip was an attempt to groom her and introduce her to “an extravagant lifestyle.”
When Chishti explained that he had feelings for her, she rejected him but agreed to date him nine months later. After 10 weeks of dating, Spottiswoode ended the relationship. ‘
Months later, Spottiswoode was offered a job with an annual $60,000 salary, and she was assured Chishti did not expect a sexual relationship. In April 2016, Spottiswoode signed an employment contract that included an arbitration agreement. And over the next 18 months, Spottiswoode was pressured for sex and punished or humiliated when she did not comply. Chishti, she said, also retaliated by ignoring her for months after her rejection.
Chishti fixated on another young female employee on a Dubai business trip, according to Spottiswoode. After the employee was violated by Chishti after a night of drinking, the other young employee was flown home and paid a secret settlement, according to Spottiswoode’s testimony. Afiniti did not take any steps to prevent other women from this behavior, she reported, noting that in all interactions with Chishti she made clear that she did not want to have a sexual relationship with Chishti. In a January 2017 email, Spottiswoode wrote to Chisti: “three times you have behaved inappropriately and with my explicit non-consent.”
Chishti only became more hostile. He called Spottiswoode petulant and told her to fix her behavior in writing. After expressing concern to Chishti, Spottiswoode received pornographic emails describing Chishti’s rape fantasies. On a business trip to Brazil, where Spottiswoode had business accounts, Chishti forced sex with her, and beat her. Spottiswoode’s was covered with scratches, cuts, and contusions; gruesome images, including choke marks, were submitted in the hearing (and are available at the committee hearing link below).
According to Spottiswoode’s testimony, Chishti then initiated arbitration against Spottiswoode. He filed suit against her father, who had quit his employment with the company when she returned from Brazil the day before her deposition was scheduled.
In May 2019, an arbitrator ruled that Spottiswoode was sexually harassed. Chishti’s Big Law representation, she told the House Judiciary Committee hearing, have tried to get Spottiswoode to vacate the arbitration award by offering her money and to drop the suit against her father, and pay him $1 million. Spottiswoode’s father’s arbitration was continuing as of the House Judiciary Committee hearing, she said. Spottiswoode she said she is terrified about the ramifications of her testimony because forced arbitration gave Chishti the power for continuing a “campaign of retaliation.”
Zia Christie Chishti stepped down from his role as Afiniti CEO three days after the hearing, but denied all of the allegations. Rimal Farrukh, “She Wanted to Accuse a Celebrated Techie of Sexual Assault But Couldn’t. Until Now.” Vice.com (Nov. 29, 2021) (available at https://bit.ly/3sBblvu).
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Committee witness Anna St. John of the Hamilton Lincoln Law Institute argued that removing arbitration is not in the best interests of those subjected to sexual harassment and assault. St. John explained that studies show that arbitration provides a faster and less expensive way to resolve claims against employers and to obtain greater relief because (1) arbitration is more flexible, (2) involves less burdensome discovery and traditional rules, and (3) organizations support arbitration proceedings to increase accessibility and fairness for individual claimants, and which can lower the costs of claims.
St. John argued that secondary benefits include corporations having more funds for employee benefits or lowering costs to consumers. Furthermore, St. John stated that the U.S. Supreme Court and Congress have expressly recognized the benefits of arbitration.
St. John said that she believes that taking away arbitration for victims is a “top-down, heavy-handed approach that denies them the advantages of arbitration as a means of adjudicating their claims.” Moreover, she believes that overburdened courts are slow-moving, which in turn benefits attorneys, not victims. And class actions do not benefit sexual assault victims because their experiences are often individualized, according to St. John.
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Other testimony included the Heritage Foundation’s Sarah Parshall Perry, who testified strongly in support of arbitration as support for helping congested court dockets. She said that “the basic premise of all limiting legislation that arbitration is somehow unfair to or bad for employees and consumers is false. The evidence shows precisely the opposite.” She concluded noting that the elimination of the use of arbitration ultimately could hurt victims of sexual harassment and violence.
During the questioning that followed testimony, Perry repeatedly said that more scrutiny should be made of confidentiality provisions and nondisclosure agreements, the use of which she said could be “a particularly pernicious setup” when teamed with an arbitration agreement. But she warned later during questioning that reforms on confidentiality and NDAs can’t become “a piecemeal slice-and-dice of the [Federal Arbitration Act].”
Prof. Myriam Gilles discussed H.R. 4445, the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021,” which was introduced and debated the day after the hearing. The bill would bar predispute arbitration agreements or predispute joint-action waiver in sexual assault or harassment disputes. Gilles focused on the secrecy aspect of arbitration in her support of the bill. But during questioning late in the hearing, Gilles made clear that the target is arbitration and court-waiver provisions as a condition of employment, noting, “Post-dispute arbitration is fine.”
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The House Judiciary Committee marked up the bill the next day, Nov. 17. The bill prohibits the validity or enforcement of any pre-dispute arbitration agreement or a pre-dispute joint-action waiver with respect to a case “which is filed under Federal, Tribal, or State law and relates to the sexual assault dispute or the sexual harassment dispute.”
The terms “sexual assault dispute, “sexual harassment dispute,” “sexual assault dispute,” “pre-dispute arbitration agreement” and “pre-dispute joint-action waiver” are defined in detail in the bill. The proposed legislation, however, says nothing about NDAs, but it excepts application to collective bargaining agreements, which often depend on arbitration.
The bill was reported out to the full House at the markup hearing, 27–14, with four Republicans joining the majority Democrats in passing the proposal.
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The Nov. 16 House Judiciary hearing, “Silenced: How Forced Arbitration Keeps Victims of Sexual Violence and Sexual Harassment in the Shadows,” can be viewed in its entirety at https://bit.ly/3wTDLkf. The link includes the biographies, written testimony, and evidence submissions of each of the hearing witnesses. The Nov. 17 House Judiciary markup, with role-call votes on the bill and proposed amendments, as well as more supporting submissions, is available at https://bit.ly/3FFNw9p.
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The author, a second-year law student at the Howard University School of Law, in Washington, D.C., is a CPR 2021-22 intern.
House Subcommittee Introduces Bill that Would Restrict Arbitration
By Tamia Sutherland
The House Committee on Education and Labor’s Subcommittee on Health, Employment, Labor, and Pensions held a Nov. 4 hearing on employment arbitration to introduce the “Restoring Justice for Workers Act.” The meeting and bill was presented by House Education and Labor Committee Chairman Bobby Scott, D., Va., and House Judiciary Committee Chairman Jerrold Nadler, D., N.Y.
The text of the Restoring Justice for Workers Act is available here. The act would
- prohibit pre-dispute arbitration agreements that require arbitration of work disputes;
- prohibit retaliation against workers for refusing to arbitrate work disputes;
- provide protections to ensure that post-dispute arbitration agreements are truly voluntary and with the informed consent of workers;
- amend the National Labor Relations Act to prohibit agreements and practices that interfere with employees’ right to engage in concerted activity regarding work disputes, and
- reverse the U.S. Supreme Court’s 5-4 decision in Epic Systems Corp. v Lewis, available here. (Earlier this week, the Court agreed to hear a case that could clarify the extent of the seminal case’s application. For more, see Mark Kantor, “U.S. Supreme Court Adds an Arbitration Issue: Is Proof of Prejudice Needed to Defeat a Motion to Compel?” CPR Speaks (Nov. 15) (available at https://bit.ly/3FnfyGd).
The subcommittee meeting, “Closing the Courthouse Doors: The Injustice of Forced Arbitration Agreements,” began with an opening statement from committee Chairman Mark DeSaulnier, D., Calif. Senior Georgia Republican committee Rick W. Allan gave an opening statement, and then four witnesses provided testimony:
- Alexander Colvin, Dean of the School of Industrial and Labor Relations at Cornell University;
- Glenda Perez, Former Implementation Set-Up Representative at Cigna;
- G. Roger King, Senior Labor and Employment Counsel at the Arlington, Va.-based HR Policy Association, a nonprofit membership group of “over 390 large” corporations’ chief human resource officers; and
- Kalpana Kotagal, a Partner in Cohen Milstein Sellers & Toll’s Washington, D.C., office.
First, Chairman DeSaulnier began by introducing the topic of “forced arbitration” agreements and collective action waivers, explaining that for many employees, employment documents “include an arbitration clause, hidden in the fine print,” which requires workers to sign the document or forgo employment.
Next, he provided data to support the assertion that the use of these agreements is widespread. He explained that “in 1990, 2.1% of non-union employees had an arbitration clause in their employment contracts . . . [and in] 2018, nearly 60% of all nonunionized private-sector employees were covered by forced arbitration agreements.”
Chairman DeSaulnier provided other examples of what he described as unfair practices and, finally, introduced the Restoring Justice for Workers Act as a solution.
Rep. Allan countered in his opening statement that the act is another instance of heavy-handed government reach that will be burdensome to employers and unfairly target job creators. Moreover, he asserted that the act would delay justice and continue to clog an already overrun court system.
Prof. Colvin, a longtime critic of mandatory arbitration processes, was the first witness to provide testimony. He provided statistics from his studies, cited at his link above, to show the increase use of arbitration, and how employees do worse in arbitration as opposed to the court. He also discussed how employees who use the arbitration process for the first time are at a structural disadvantage to companies who repeatedly use the process.
Next, Glenda Perez provided a personal account of her struggles with the arbitration process without a lawyer. Perez reported that she and her husband worked for Bloomfield, Conn.-based insurer Cigna from October 2013 to July 2017. In April 2017, Cigna put her on a performance correction plan for work “errors” after meeting with her team on pharmacy benefits.
Her husband, a Cigna analyst, found evidence of errors by white women but none by his wife, according to Perez’s witness statement. She filed a discrimination complaint with Cigna’ human resources department. Typically, a full investigation takes 60 days, she reported, but in her statement, Perez said her investigation took one day, with human resources backing her manager’s claim. Two months later, she was fired.
Perez wanted to file a claim for discrimination and retaliation, but could not find an attorney to represent her in mandatory arbitration. She said she was forced to drive to a law library to do research while also taking care of her three children and looking for a new job. She claimed it took several months to choose an arbitrator.
Moreover, Perez reported, the arbitrator selected may have had a conflict of interest that was not disclosed. Perez’s testimony focused on arbitrator’s lack of impartiality. She reported that there are photos online of the arbitrator, and Cigna’s attorney, at the arbitrator’s 50th birthday party, which she filed with her committee testimony. Additionally, she testified, the arbitrator formerly worked for the firm representing Cigna and had Cigna’s counsel as a reference on his CV.
The arbitrator denied Perez’s request for materials to prove her case as Cigna claimed it would cost more than $1 million to retrieve “even though,” she said, “I was only requesting my employee personal profile.” Cigna moved for summary judgment, and then the arbitrator ruled in favor of Cigna, and canceled a hearing that had been scheduled. When Perez filed a motion to vacate the decision in court, she said Cigna fired her husband.
HR Policy Association attorney Roger King said that two of the legislation’s primary objectives are big mistakes and are a substantial overreach of congressional action. He explained that completely eliminating pre-dispute arbitration was a mistake, and a total prohibition on class-action waivers would be burdensome. Also, in response to Glenda Perez’s testimony, he asserted that generally, arbitrators are ethical.
Finally, Kalpana Kotagal testified that the justification for forced arbitration is predicated on myths because (1) there is no equal bargaining power in most forced arbitrations, (2) it burdens those who are already marginalized, (3) it is not speedy, and (4) it deters workers from bringing claims.
The meeting concluded with a Q&A from other committee members.
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A video of the hearing, and witness statements, is available here. The Congressional repository page for the event can be found here.
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The author, a second-year law student at the Howard University School of Law in Washington, D.C., is a CPR 2021 Fall Intern.
Increased Mobile Health Triggers Increased FTC Enforcement, and Points to a Need for Dispute Prevention Efforts
By Janice L. Sperow
The pandemic changed how we work, how we shop, how we communicate, and how we “meet.” It changed our world’s “normal.”
Most significantly, it changed the healthcare industry, but not only with new vaccines and protocols. It revolutionized the way we maintain our health and wellness, as healthcare app development now shapes the future of medicine.
That, in turn, provides an opportunity for a new application for alternative dispute resolution—specifically, a recent Federal Trade Commission statement puts health-care industry managers on notice that they should institute dispute prevention steps and protocols to avoid potentially costly civil penalties as their products face closer federal scrutiny.
Spurred by rapid significant advances in mobile technology, artificial intelligence, and the internet of things, medical apps have accelerated at an unprecedented rate. Even before the pandemic’s uptick in the use of healthcare mobility tools, the Physicians Practice medical publication conducted a mobile health survey in 2018 and found that more than 75% of respondents used some form of mobile health solutions on a weekly basis.
Since the pandemic, the use of mobile applications in healthcare, MedTech (see www.medtech.org), and eHealth has skyrocketed. A $21.3 billion market in 2017, the global mobile health market is anticipated to reach $151 billion by 2025. See, e.g., Grand View Research, mHealth Apps Market Size, Share & Trends Analysis Report By Type (Fitness, Medical), By Region (North America, APAC, Europe, MEA, Latin America), And Segment Forecasts, 2021–2028 (February 2021) (available at https://bit.ly/2Zqo5bR).
The U.S Food and Drug Administration defines a health app as mobile software that diagnoses, tracks, or treats disease. A wellness app uses mobile software to enhance or track overall user health. They can and do address every facet of life impacting wellness from mental, physical, social, environmental, nutritional, behavioral, to even spiritual factors.
In response to the market’s growth, the Federal Trade Commission issued its “Statement of the Commission on Breaches by Health Apps and Other Connected Devices” (Sept. 15) (available at https://bit.ly/3bgLv63). The statement stresses the FTC’s commitment to protecting private medical and health information inputted into these apps and devices, and explains the FTC’s Health Breach Notification Rule in more detail. (The Rule is available at https://bit.ly/3nFzkpk.) The Statement unequivocally declares the Rule’s scope and the FTC’s intention to enforce the rule.
The FTC’s Health Breach Notification Rule has been in effect since 2009, when the American Recovery and Reinvestment Act of 2009 (text at https://bit.ly/3pGHtMy) became effective. The Rule addresses the security of personal health records, or PHR, defined to include an electronic record of identifiable health information on an individual that can be drawn from multiple sources and that is managed, shared, and controlled by or primarily for the individual. See 16 C.F.R. § 318.2(d).
“PHR identifiable health information” includes “individually identifiable health information,” as defined in section 1171(6) of the Social Security Act. See 42 U.S.C. 1320d-6. It also includes individual information provided by or on behalf of the individual that actually identifies or reasonably can be used to identify the individual. See 16 C.F.R. § 318.2(e) (“reasonable basis to believe that the information can be used to identify the individual”).
The Rule applies to (1) vendors of personal health records; (2) PHR-related entities that interact with vendors of PHRs or HIPAA-covered entities by offering products or services through their sites; (3) PHR-related entities that access information from or send information to a PHR; (4) PHR-related entities that process unsecured PHR identifiable health information as part of providing their services; and (5) third-party service providers for PHRs vendors.
The Rule does not apply to HIPAA-covered entities or any other entity to the extent that it engages in activities as a business associate of a HIPAA-covered entity.
Under the Rule, vendors of PHRs and PHR related entities must report a “breach of security” involving PHRs to the FTC, the consumers, and in some cases to the media. Service providers that process information for PHR vendors and PHR related entities also have a duty to notify their business customers of a security breach.
Typically, these service providers handle data storage or billing as a third-party provider. The Rule defines a “breach of security” as the acquisition of unsecured, PHR identifiable health information without the individual’s authorization.
Upon discovering a security breach, the entity must notify the required recipients within 60 days; but it must alert the FTC within 10 business days if the breach involves more than 500 individuals. Noncomplying entities face civil penalties of $43,792 per violation per day.
The FTC’s new Statement clarifies the Rule’s scope and application. It explains that the Rule covers PHRs vendors that contain individually identifiable health information created or received by health care providers. The Statement then specifies that health app and connected-device developers qualify as “health care providers” under the Rule because they “furnish health care services or supplies.”
Consequently, the Rule’s protections encompass any personally identifiable information developers create or receive that relates to the past, present, or future physical or mental condition of an individual; the provision of healthcare to an individual; or the past, present, or future payment for healthcare to an individual.
The Statement also emphasized that an electronic health record must draw information from multiple sources and be managed, shared, or controlled by or primarily for the individual before the FTC will consider it to be a PHR under the Rule.
The Statement, however, interprets multiple sources liberally to include other non-health related information. An electronic health record can draw information “from multiple sources” in the context of a health app, for example, through a combination of consumer inputs and application programming interfaces.
Hence, the Rule would apply to an app if it collects information directly from consumers and can technically draw information through an application programming interface that enables syncing with a consumer’s fitness tracker or phone, even if only one source provided the health information. For example, the Rule would cover a blood sugar monitoring app that collects health information only from the user’s blood sugar levels if it then uses non-health information from the user’s phone, such as date, time, or percentage figures.
The Statement also warns entities that the Rule does not limit a “breach of security” to cybersecurity intrusions, illegal behavior, or ill-intentioned activities. Rather, any unauthorized access will trigger the Rule’s notification duties, much like under HIPAA. Thus, a health app developer faces a reportable breach of security if it accidentally discloses private health information to a third party without the individual’s consent.
Rule Enforcement Change
In addition to clarifying the Rule’s scope, the FTC’s new Statement also signaled an enforcement sea change. Even though the Rule was enacted more than a decade ago, the FTC has not enforced it once since 2009.
The FTC admitted that it has not used the Rule. The Statement cautioned, however, that the FTC considers the Rule’s notification duties critical now in light of the surge in health apps and connected devices. The Statement explicitly declares the FTC’s intent to notify entities of their continuing obligation to publicize breaches under the Rule.
The Statement’s message is unequivocal: the FTC will enforce the Rule and its notice requirements from now on.
A Dispute Prevention Opportunity
Instead of being in a “more bad news” category, healthcare managers should file the FTC’s Statement as a new opportunity to prevent future disputes. The FTC Statement serves as a warning, affording the healthcare industry some time to implement strategies to protect itself from class actions, mass claims arbitration, and other costly disputes. By taking the warning seriously, the industry can assess and then minimize its risk.
The bottom line: Healthcare and wellness app developers should assess the Rule’s application to their services and the adequacy of their current security measures in order to prevent triggering the Rule’s notification provisions or even the possibility of a noncompliance finding.
And then they can breathe a sigh of relief if the current measures adequately protect the business, or implement new measures now to upgrade them until they do. Either way, the FTC handed the healthcare industry an opportunity to prevent costly future risk.
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The author is a full-time neutral, arbitrator, mediator, dispute prevention facilitator, and Hearing Officer specializing in mass claims, healthcare, technology, employment, and all commercial matters. She works on domestic and international matters, and is based in La Mesa, Calif.
UNCITRAL Adopts Expedited Arbitration Rules
By Mylene Chan
This is the third part of a series of CPR Speaks posts reporting on the United Nations Commission on International Trade Law’s 54th session where the commission adopted legislative and non-legislative texts relating to alternative dispute resolution.
At the three-week session concluding July 16, the commission adopted the UNCITRAL Expedited Arbitration Rules and the Explanatory Notes to the UNCITRAL Expedited Rules. These rules and notes complement and are intended to be read together with UNCITRAL’s well-known arbitration rules, which are for resolving international disputes and applicable both in administered arbitrations under the auspices of an arbitral institution, as well as in ad hoc arbitrations.
The UNCITRAL Arbitration Rules were originally developed as an alternative to other major rule systems. UNCITRAL’s innovative rules were initially viewed with skepticism, but over time, they have been frequently used in investment arbitrations, commercial arbitrations, arbitrations between states, and between states and individuals, such as for the Iran-U.S. Claims Tribunals and several bilateral investment treaties. Latham & Watkins Guide to International Arbitration (2019) (available at https://bit.ly/2VeZKU8).
The UNCITRAL Arbitration Rules have gone through three versions, in 1976, 2010 (revised to meet the needs of modern business including improvements to procedural efficiency, inclusion of provisions on multi-party arbitration and the development of rules on interim measures; available at https://bit.ly/3i7UrPq), and 2013 (incorporated rules on transparency for investment arbitrations based on treaties; available at https://bit.ly/2UZMEKH). See general background on the rules from UNCITRAL at https://bit.ly/3l6RyjD.
In 2018, UNCITRAL mandated Working Group II to explore ways to improve the efficiency of the arbitral proceedings through streamlining and simplifying procedures, resulting in the drafting of the UNCITRAL Expedited Arbitration Rules. The goal is to reach a final dispute resolution in a cost- and time-effective manner while ensuring due process and fair treatment for the disputants. (See https://undocs.org/en/A/CN.9/934 for the 2018 statement on expedited rules.)
For coverage of the early drafting process of the UNCITRAL Expedited Arbitration Rules, see Piotr Wójtowicz & Franco Gevaerd, “How UNCITRAL’s Working Group II on Arbitration Is Analyzing the Field to Help Expedited Processes” 37 Alternatives 90 (June 2019) (available at https://bit.ly/377Nfwg), and Piotr Wójtowicz & Franco Gevaerd, “The Framework: The U.N.’s Working Group II Debates New Expedited Arbitration Rules,” 37 Alternatives 99 (July/August 2019) (available at https://bit.ly/3l5OLqS).
Special features in the UNCITRAL expedited arbitration rules include the following:
- Disputes under the expedited procedures shall be settled in accordance with the UNCITRAL Arbitration Rules as modified by the expedited rules.
- The expedited rules shall apply only with express consent by the disputants.
- To facilitate speedy constitution of the tribunal, the claimant must include, with its notice of arbitration, the proposal of an appointment authority and the arbitrator. The notice of arbitration constitutes the claimant’s statement of claim. The respondent then has 15 days to file a response to the notice of arbitration. By contrast, under UNCITRAL Arbitration Rules, the time to respond is 30 days from the receipt of the notice of arbitration.
- When the disputants cannot agree on an appointing authority, any disputant can request that the Permanent Court of Arbitration Secretary-General designate the appointing authority or serve as appointing authority. The PCA Secretary-General has discretion to decline serving as appointing authority and designate another authority if it deems it more appropriate. In this way, the UNCITRAL Expedited Rules have deviated from the default two-step designation/appointment procedure found in the non-expedited UNCITRAL Arbitration Rules.
- The tribunal has discretion in shaping the proceedings, including extending or abridging timeframes (except for award issuance, as discussed in the bullet below) and determining whether hearings will be held or evidence taken. This discretion represents an expansion of the discretion contained in the UNCITRAL Arbitration Rules.
- The time period for rendering the award employs a bifurcated approach. If the tribunal considers that it is at risk of not rendering an award within nine months, it shall propose a final extended time limit. If all disputants agree, the extension is considered adopted. If a party objects to the extension, however, any party may make a request that the UNCITRAL Expedited Rules no longer apply to the arbitration. After hearing the disputants, the tribunal may then decide that it will instead conduct the proceedings in accordance with the UNCITRAL Arbitration Rules, which do not contain the time limits.
The most contentious issue was the last bullet point above regarding the time period for rendering the award. Working Group II spent more than six hours debating on this point during the 54th session, focusing on how to balance the policy interest of promoting a truly expedited process with the goal of ensuring that the result of that process would be enforceable through the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, better known as the New York Convention.
At one point, the U.S. delegation objected vehemently that “[u]sing this approach, as the default in the rules, creates a very concerning precedent for an uncontrolled instrument in our delegation’s experience. . . . That is why we have drafted the compromise language that . . . seeks to bridge the gap between delegations like ours, who are very concerned about adopting a system that will likely produce unknowable awards, and those delegations who primarily are concerned that without a hard stop at nine months, the rules will enable arbitrators who were not very diligent, or who simply procrastinated to continue to take extensions.”
There were more concerns about protecting those with lesser means and bargaining power:
- The U.S. delegation noted, “We think that given that these rules may be used by unsophisticated parties because they are expedited, . . . one of the goals is to reach out to parties who might be otherwise deterred from pursuing arbitration because of the cost. . . .”
- The Israel delegation point out that “[t]here could be concerns of parties with weaker bargaining powers that would have to be essentially compelled to agree to this. . . .”
While the debate was heated, ultimately the member states drafted an innovative approach to reach a consensus.
The UNCITRAL Expedited Arbitration Rules will appear together with the explanatory notes toward the end of the year as an appendix to the UNCITRAL Arbitration Rules. In the fall, Working Group II will deliberate on rules about early dismissal of frivolous claims that will require modifications to the UNCITRAL Arbitration Rules. Working Group II will post the final rules, and currently has the drafts, here.
In addition, UNCITRAL is contemplating developing a new framework for adjudication. commonly known as dispute resolution boards, to complement the UNCITRAL Arbitration Rules. There has been a recurring expression of interest within UNCITRAL member states in the principle of rapid decision common to adjudication in construction projects. The U.S. delegation noted that it hoped that this principle can be adapted to expedite the resolution of disputes in other long-term contracts, or at least to mitigate the impact of those disputes.
UNCITRAL expects to conduct colloquiums to discuss adjudication next spring. With the adoption of the expedited rules, UNCITRAL is taking steps to expand the use of arbitration as a method of dispute resolution available to a wider range of parties.
Thomas W. Walsh, special counsel based in the New York office of Freshfields, who in his arbitration work focuses on UNCITRAL matters and worked on an early draft of the UNCITRAL Expedited Rules, said that the rules “are a welcome example of the arbitration community responding to the needs of the businesses that use arbitration. If parties have a commercial need to expedite the resolution of their dispute, the rules offer a thoughtful, ready-made procedure that they can select to meet that commercial need.”
The UNCITRAL Expedited Rules eliminate many of the obstacles that made arbitration costly and overly time-consuming, and the role of UNCITRAL as a global trend-setter on arbitration means that these new provisions are likely to be used as models worldwide.
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The author, an LLM candidate at Yeshiva University’s Benjamin N. Cardozo School of Law in New York, has covered UNCITRAL’s 54th Session proceedings for CPR Speaks as a 2021 CPR Summer Intern. Her articles can be found using the search box on the upper right of this page.
Biden Signs Resolution Restoring Pre-Trump EEOC Conciliation Rules
By Cai Phillips-Jones
On June 30, President Biden signed S.J. Res. 13, overturning a recent U.S. Equal Employment Opportunity Commission rule change that briefly required the EEOC to share more information with employers during the EEOC conciliation process.
CPR Speaks previously discussed the rule reversion, which Congress passed along party lines, and which will bring back the previous higher level of discretion on information to be provided by defendant companies.
Conciliation is a mediation-like process which happens after evidence of discrimination is found by the EEOC. Proponents and opponents of the short-lived rule both argued that their rule preferences would increase efficient settlement of EEOC cases.
The standard emanates from Mach Mining v. EEOC, 575 U.S. 480 (2015) (available at https://bit.ly/2TmuMZg), in which the U.S. Supreme Court granted broad discretion to the EEOC to determine how to proceed with the conciliation process, including the amount of information shared with the parties.
But the Trump-era rule, which went into effect in February, tamped down on this discretion, requiring the EEOC to share factual findings of discrimination such as the identity of witnesses to the discrimination.
Biden’s remarks upon signing can be found here.
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The author, a J.D. student who will enter his third year this fall at Yeshiva University’s Benjamin N. Cardozo School of Law in New York, is a 2021 CPR Summer Intern.