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Congressman Tom McClintock

Representing the 4th District of California

In Opposition to the FAIR Act

September 20, 2019
Speeches

In Opposition to the FAIR Act
House Floor

September 20, 2019

M. Chariman,

This bill purports to assert a very important constitutional right: the right to trial by jury in civil actions.  But it does so by denying another very important constitutional right – the freedom of unimpaired contract – the right of two parties to agree to exchange goods and services according to their own best judgment.

Because of excesses, expenses and uncertainties that have plagued our civil courts, many consumers and producers – and many employees and employers -- find it mutually advantageous to waive their right to civil jury trials in any disputes between them in favor of simpler, cheaper and faster arbitration.

Proponents tell us that it’s an uneven playing field, and this requirement is often imposed in non-negotiable take-it-or-leave-it propositions.  This isn’t exactly true – every employee and every consumer – no matter how weak and vulnerable – has an absolute defense against a bad agreement – it is the word, NO.  No, the pay isn’t good enough, no, the price is too high, no, I don’t like the terms and I’m taking my business elsewhere.

And even when there aren’t good alternatives, the fact is that EVERY provision in a contract is a take it or leave it proposition if one side or the other insists on it.  The question for each side is if the totality of the contract is beneficial or not.  It is my right to make that decision for myself – without somebody in government making it for me.

Remember, the so-called “forced” arbitration provision forces the company to accept arbitration as well.  For example, I’m not a lawyer and I can’t afford to hire one to take a big company to court.  For me, binding arbitration helps level the playing field by providing an inexpensive alternative that the company must abide by.  This bill takes that protection away from me.

According to the U.S. Chamber of Commerce, through arbitration, employees prevail three times more often, recover twice as much money and resolve their claims more quickly than through litigation.   And in most cases, the employer pays the entire cost of the arbitration.  According to one study, in claims between $10,000 and $75,000, the consumer claimant was charged an average of $219.  Compare that to the cost of hiring an attorney and taking on an entire corporate legal department.

The net result of this bill will be higher prices for products and lower wages for workers as companies factor the high cost of litigation into their business models.  Meanwhile, it denies consumers and employees the freedom to choose a much simpler and less expensive way to resolve disputes.

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Remarks as prepared