Requires employment and consumer dispute arbitrations to be submitted to neutral third party arbitrators…

◆ The sponsor's argument

Why the sponsor says this is needed

"Forced arbitration" or "mandatory arbitration" clauses are fine-print terms included in contracts of adhesion - often contracts between an employee and her employer or a consumer and a merchant - that, in the case of consumer and employment contracts in non-unionized workplaces, require the consumer or employee to give up her right to assert claims against the merchant or employer in court as a condition of obtaining or keeping her job or using the consumer goods or services. These clauses are prevalent in a number of types of contracts including, among others, cellphone contracts, and employment contracts in non- union workplaces. Instead of providing employees and consumers with access to state or federal court or administrative agencies, these clauses purport to provide employees and consumers with a private forum to resolve their claims against the company. But in actuality many consumers and employ- ees are never actually able to access this alternative, private forum, because forced arbitration clauses also often require the employee or consumer to pursue her claims individually, without the benefit of class or collective action procedures that many consumers and employees rely on to assert their rights. Moreover, some clause s require the consumer or employee to pay exorbitant arbitration fees or even to arbitrate in a far-off forum. This bill builds upon the proscription against mandatory arbitration clauses which is contained in General Business Law Sec.399-c. The presumption that an arbitration clause is enforceable has, however, become a sword to wield against parties of lesser means rather than a shield to protect against unnecessary litigation. Currently, a party must prove, either during the course of misconduct by the arbitrator or after an award by an arbitrator is perceived to be unfair, that the arbitrator was biased even if the arbitrator clearly has an economic stake in the outcome of the dispute. This outcome is in direct oppo- sition to the reasons (efficiency and fairness) why arbitration is favored. As arbitration is commonly thought to be a dispute resolution procedure that occurs in front of a neutral third party, codifying it as such will enforce the original intent of the law. Even when the employee or consumer is able - or required - to pursue her claims in arbitration, she often finds that the deck is stacked against her. The arbitration process is secret, and arbitrators are often subject to "repeat player" bias in favor of the business and against the employee or consumer, because the business is the entity appearing in front of the arbitrator most frequently and is the one paying the arbitrator's salary. What is more, under both state and federal law, the right to vacate an arbitrator's decision is extremely limited. A consum- er or employee cannot obtain relief on a challenge to an arbitrator's decision even when the arbitrator is clearly wrong on the facts or the law. This bill requires that an arbitrator in such matters state the basis for her decision, which is modeled after 11 NYCRR 65-4.5 (s), which has been used in no-fault insurance arbitrations for many years. The bill also allows an arbitration award to be vacated because of an arbitrator's manifest disregard of the law. This latter standard is used in arbitrations which are sought to be vacated pursuant to federal law. See, Schwartz v. Merrill Lynch & Co., Inc. 665 F.3d 444 (2011).Likewise for the provisions in the bill that call for arbit rators to provide basic conflict disclosure. Given the high bar presently contained in CPLR 7511 (b)(1)(ii), it is very difficult to establish arbitrator partiality. This bill sets affirmative requirements for arbitrators concerning disclosure of conflicts. For the most part, business are allowed to write their contracts in a way which is not consumer or employee-friendly, because of the Supreme Court's recent interpretations of the Federal Arbitration Act (FAA), a law that has been on the books f

This is the sponsor's own case for the bill, quoted from their memorandum. It is not Agora's description of what the bill does.