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Legislative Memo

Cate Tully
T 518.465.7511
www.bcnys.org

BILL:

A.108-C (Dinowitz)

Support

SUBJECT:

Require arbitration organizations to make public dispute resolution information

 

DATE:

May 16, 2016

 

The Business Council opposes A.108-C (Dinowitz) requiring private arbitration organizations to collect, publish at least quarterly, and provide public access to certain information regarding arbitrations.

Arbitration is an important tool benefiting consumers by providing a fair and accessible means for resolving disputes. The Federal Arbitration Act, 9 U.S.C. §2 states that a written provision in a contract providing for arbitration as a means to settle disputes “…shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”  The United States Supreme Court has consistently ruled that federal and state courts must enforce the Act and “reflects an emphatic federal policy in favor of arbitral dispute resolution’” Marmet Health Care Center, Inc. v. Brown, 132 S.Ct.1201(1202) quoting Dean Witter Reynolds Inc. v. Byrd, 470 U.

Arbitration enables consumers with grievances to obtain redress for the vast majority of disputes they are likely to have – small, individualized claims for which litigation in court is impractical. It also serves the court system by providing an alternative means of resolution thus freeing up the already overburdened state court system – a problem that was discussed extensively in this year’s joint Senate/Assembly hearing on the judiciary budget.

Naysayers argue that arbitration clauses threaten due process because consumers are deprived their day in court. The process of arbitration generally provides a consumer with a forum to obtain redress for actions alleged committed by companies. Those arguing against such procedures want consumers to join class action suits where their voices can be heard in a more collaborative approach. This is disputable as well. It is not uncommon to receive notice that you are a party to a class action and the outcome resulted in a class settlement. Here is a recent example: a proposed settlement regarding dishwashers provided the consumer with a rebate of up to 15% purchase of a new machine. The settlement also approved the attorneys request for $19 million in fees. Who truly benefited in that settlement? (Chambers v. Whirlpool)

The American Arbitration Association (AAA) administers consumer arbitrations and has implemented rules and policies tailored for the resolution of consumers’ and employees’ disputes, which provide basic requirements of procedural fairness and afford strong protections for consumers and employers. In fact, the AAA’s Consumer Rules already makes public information about consumer arbitrations administered by the AAA. This includes Rules establishing a registry of businesses with AAA consumer arbitration agreement and another that provides for the publication of redacted consumer arbitration awards.

If the goal of the legislation is to ensure fairness and accountability, it appears as though a system is already in place thus obviating the need for such legislation.

For these reasons The Business Council opposes A.108-C (Dinowitz).