Nine times out of 10 when there's a challenge to an online contract the object of the court's attention is the arbitration clause. Arbitration clauses are the first line of defense against class action lawsuits. A Texas court's recent ruling that Blockbuster's terms of service were an unenforceable illusory contract is just one of many examples of where the plaintiff really just wants to get out from under an arbitration clause.
Today a Public Citizen-sponsored group, the Fair Arbitration Coalition, announced the formation of a coalition that will be lobbying in support of the Arbitration Fairness Act of 2009 (H.R. 1020), a bill that would deny enforceability of most arbitration agreements entered into by individuals: bank accounts, credit card statements, employee handbooks, cell phone contracts, health insurance plans etc. H.R. 1020 provides that "No predispute arbitration agreement shall be valid or enforceable if it requires arbitration of-- (1) an employment, consumer, or franchise dispute; or (2) a dispute arising under any statute intended to protect civil rights."
Agreements to arbitrate that are reached after a dispute is filed would still be enforeable. H.R. 1020 targets the pre-dispute arbitration clauses that consumers agree to as a pre-condition to receiving some desired good or service.
H.R. 1020 has 43 sponsors already. Similar legislation languished in prior Congresses.
Comments