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<xTITLE>Bipartisan House Bill Introduced to Amend FAA to Ban PDAA Enforcement for Physical Sexual Assault Claims</xTITLE>

Bipartisan House Bill Introduced to Amend FAA to Ban PDAA Enforcement for Physical Sexual Assault Claims

by George Friedman
October 2020 George Friedman

This article was first published on the Securities Arbitration (SAA) blog, here.

A bipartisan bill has been introduced in the House to amend the Federal Arbitration Act (“FAA”) to restrict predispute arbitration agreement (“PDAA”) enforcement for disputes involving physical sexual assault claims.

Readers may recall we reported in SAA 2019-12 (Mar. 20) that, undaunted by the rather poor prospects of enactment, Congressional Democrats announced in early 2019 the reintroduction of several bills aimed at curtailing mandatory arbitration in a broad range of contracts. Among them was the Ending Forced Arbitration of Sexual Harassment Act (H.R. 1443), a reintroduction of bills of the same name that were introduced in the 115th Congress in the wake of seemingly daily accusations of workplace sexual harassment.

Broad Reach of Original Bill

The original 2019 bill aimed to amend the FAA to retroactively ban PDAAs covering sexual discrimination disputes, and prohibit delegation. And no delegation: “The applicability of this chapter to an agreement to arbitrate and the validity and enforceability of an agreement to which this chapter applies shall be determined by a court, rather than an arbitrator, irrespective of whether the party resisting arbitration challenges the arbitration agreement specifically or in conjunction with other terms of the contract containing such agreement.” Despite significant bipartisan support, the bills have languished in the 116th Congress.

Narrower Scope this Time

Rep. Karen Bass (D-CA) and Rep. Debbie Lesko (R-AZ) on October 16 introduced Carrie’s Law (H.R. 8608 ) the purpose of which is to amend the FAA to bar mandatory arbitration of claims involving physical sexual assault. A Lesko Press Release states: “The bill was inspired by Carrie Bobb, an Arizona native and California resident who was physically sexually assaulted at a corporate event. Due to an arbitration clause in her employment contract, Carrie was unable to have her case heard in court, and was forced into a confidential process, which left her silenced.” Although the text is not yet posted, the Release provides some elaboration: “Carrie’s Law establishes a narrow prohibition on pre-dispute arbitration agreements by making any clause mandating the use of arbitration as the only avenue for conflict resolution unenforceable for claims of physical sexual assault. Under this legislation, a victim may choose to bring their physical sexual assault claim out of arbitration to handle in civil court. An accompanying claim (i.e. hostile work environment, negligent supervision, etc.) that is based upon the initial claim of physical sexual assault may also be brought out of arbitration to be litigated. If the physical sexual assault claim is dismissed with prejudice by a court, then the entire matter is dismissed and may be dealt with under the relevant arbitration agreement. The time period for which the relevant pre-dispute arbitration agreement is valid will be tolled while the matter is pending before a Federal Court.”

(ed: *The bill will be referred to the House Judiciary Committee. **We assume a Senate version will soon be introduced. ***We were a bit confused by the “is dismissed with prejudice by a court” language. However, we believe it can be explained this way: The arbitration carve-out only applies if a case includes a claim for physical sexual assault. Therefore, if that claim is dismissed with prejudice, but other claims survive, those claims must be “dealt with under the relevant arbitration agreement.” ****We had thought the original 2019  bill had a decent chance of enactment, but that was pre-COVID-19. We think this narrower bill, which already has bipartisan support, will be passed by this or the next Congress and we sense that the President (Trump or Biden) will sign it.)


George H. Friedman is the publisher and Editor-in-Chief of the Securities Arbitration Alert, a weekly online publication covering the latest developments in financial services arbitration and mediation. He is also the principal of George H. Friedman Consulting, LLC, providing expert advice on arbitration and mediation in general and the FINRA dispute resolution forum in particular.

He is former Executive Vice President - Dispute Resolution of the Financial Industry Regulatory Authority (“FINRA”), a position he held through January 2013. He held the same title at NASD, which consolidated with NYSE Member Regulation to form FINRA in 2007. In this capacity, he was in overall charge of FINRA's dispute resolution program, carried out by the company's four regional offices and 72 hearing locations in the United States and abroad, 200 employees, and an annual budget of $50 million. He also served as Secretary of the Securities Industry Conference on Arbitration. He has been referred to by the U.S. Court of Appeals—4th Circuit as a “leading arbitration expert.” He is a member of the American Arbitration Association's National Roster of Neutrals.

Mr. Friedman is an Adjunct Professor of Law at Fordham Law School, where he has taught a course on alternative dispute resolution since 1996. He is Chairman of the Board of Directors of Arbitration Resolution Services, Inc. of Coral Springs, Florida. Arbitration Resolution Services is an innovative online arbitration services company facilitating an affordable alternative to costly courtroom litigation and in-person arbitration for resolving Business-to-Business, Business-to-Individual, and Vehicle and Property Damage disputes. ARS is unique in that its entire process can be completed online through the company website.

In his extensive dispute resolution career, he previously held a variety of positions of responsibility at the American Arbitration Association, most recently as Senior Vice President from 1994 to 1998. He joined NASD in 1998 as Senior Vice President of NASD's Dispute Resolution Division, and was named Executive Vice President in 2002.

Mr. Friedman received a B.A. in Political Science from Queens College, and a Juris Doctor from Rutgers Law School - Newark, where he was an editor of the Law Review. He is admitted to the New York and New Jersey Bars and the United States Supreme Court, and is a Certified Regulatory and Compliance Professional. Mr. Friedman is a member of the Securities Experts Roundtable, and of several bar associations. He is past chair of the Committee on Alternative Dispute Resolution of the New York County Lawyers Association. He is a member of the Banking Advisory Committee of Bergen (NJ) Community College.

Mr. Friedman has lectured extensively on the subject of alternative dispute resolution, and has the distinction of being one of the architects of the American Arbitration Association’s Due Process Fairness Protocols for both employment arbitration and health care dispute resolution, and assisted in creating the Consumer Due Process Protocol. He has published often, with articles appearing in the Securities Arbitration Commentator, the ABA's Dispute Resolution Magazine, the New York Law Journal, the Rutgers Law Review, and the National Law Journal. He has blogs at Arbitration Resolution Services, Inc., the Securities Arbitration Commentator, and the World Future Society, among others.

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