On March 17, 2022, the U.S. House of Representatives passed H.R. 963, also called the “Fair Arbitration In-justice Repeal Act of 2022” or the “Fair Act of 2022”. A similar bill (S.505) was introduced in the U.S. Senate and currently sits in the Senate Judiciary Committee.
The bill prohibits pre-dispute arbitration agreements that force arbitration of future employment, consumer, antitrust, or civil rights disputes. It also prohibits agreements and practices that interfere with the right of individuals, workers, and small businesses to participate in a joint, class, or collective action related to an employment, consumer, antitrust, or civil rights dispute.
Under the bill, arbitration clauses will be governed by Federal Law and decisions about the bill’s applicability to an agreement to arbitrate and the validity and enforceability of an agreement must be determined by a court and not an arbitrator. The bill is not applicable to collective bargaining agreements, but forbids an arbitration provision that effectively waives the right of a worker to seek judicial enforcement of a right arising under a provision of the U.S. Constitution, a State Constitution, or a Federal or State statute or public policy.
If this bill is ultimately passed by the Senate and signed by the President, it could have an impact on the automotive industry. Many NJ CAR members utilize a standard Arbitration Clause in their Retail Order Form (ROF) that limits the disputes to arbitration for potential claims against the dealership. If signed into Law, this bill could create a significant increase in lawsuits, including class action lawsuits, against dealers.
NJ CAR will continue to monitor these bills and will advise the membership of the outcome. For additional information or to read the text of the bill please follow this link: https://www.congress.gov/bill/117th-congress/house-bill/963/related-bills.