>> they know very little, if anything, about police procedure. >> what is forced arbitration? >> you're giving up your right to take a dispute to court. this is a constitutional right you have.

you are giving it up even before you know there is a dispute. >> arbitration clauses are buried in the fine print of a product manual or website. most people don't realize they are agreeing to them. >> the car he bought seven years ago has hardly ever left the garage. there was an engine problem that the manufacturer first refused to acknowledge, then refused to fix. >> i didn't even know what an arbitration agreement was. i was beside myself that we lost our right to court. >> i am a lieutenant commander the and -- commander in the navy reserves. i was forced to arbitrate my disk termination claim when i returned home. in november 2012, i received orders to deploy to afghanistan for 12 months. on my last day of work, my colleagues greeted me with a standing ovation. at noon, they held a surprise party in my honor. around 4:45 that same afternoon, i was called into a meeting in

the hr department where i was fired and told my position would not be available after my deployment. >> i am a former tesla employee. i did not sign the arbitration, then there was no opportunity for me to continue with the job. i had racial slurs shouted at me. i had to give myself a pep talk every single day to go to work. i dreaded it, yet i needed my paycheck. i was often blamed for the harassment i received. i was retaliated against. they used the weapon of arbitration to avoid countability. >> forced arbitration is prosaic -- pervasive. it affects an estimated 825 million agreements enforced in 20, a number that will undoubtedly go up since then. if you have signed up for a credit card, bought a mattress, television, countless products, you likely agreed to arbitrate any future disputes with the

manufacturer or service provider. don't be embarrassed if you're just learning that you likely waive your constitutional right to bring a claim to court. you are part of the 90% of american consumers that use popular products and had no idea that signed up for forced arbitration. all of us agree to forced arbitration when we click that button or check that box, accepting terms of service. we may have no idea we are agreeing to this process when we sign up. the rules governing arbitration often limit the information victims can get from corporations, making it even more difficult to prove their claims. the process is overseen by arbitrators who can be biased in favor of one side or the other, because they want to ensure a steady pipeline of work. those arbitrators are not bound by precedent, and they are subject to limited -- limited judicial review. nowhere was this more pronounced than in cases of sexual assault

and sexual harassment. for years, predators like roger ailes preyed upon women without fear because their employers would hide behind arbitration proceedings. thankfully, that is no longer the case. brave survivors like gretchen carlson, with us today -- thank you for joining us -- stepped forward to break the cycle of abuse. as a result of her advocacy and this committee's determination to do something on a bipartisan basis, the ending of forced arbitration of sexual assault and harassment was signed into law by president biden in march of 2022. as the name suggests, this law prohibits forced arbitration in cases of sexual assault or sexual harassment. while this marked a significant achievement, there is more to be done. we will hear from witness joan van grace -- joanne grace, about how forced arbitration is used to cover up illegal age

discrimination. the same is true of racial discrimination abuse and countless other harms. joann and others like her deserve their day in court. that is what congress should provide. i want to thank ranking member graham and his staff are working with us to select today's witnesses. before i turn the microphone over to senator graham, i want to congratulate south carolina and iowa for their terrific basketball experience over the last two weeks. senator graham? sen. graham: thank you. it was a heck of a ballgame. caitlin clark was a phenomenal college athlete. personally, i am glad she is going to the pros. she beat us last year. but we came back. it was a great game. so, what are we trying to do here? we are trying to level the playing field. i cosponsored the bill with

senator hildebrandt about sexual harassment and sexual assault employment contracts. when you go to work for someone, you signed an employment contract, pretty much take it or leave it. most of these contracts require mandatory arbitration, binding arbitration. it isn't really a level playing field. i think most americans believe that you shouldn't sign away your right to have a day in court. that is just too personally important. we passed the law to say you cannot require through binding arbitration, you cannot deny the employee their day in court. ms. carlson was instrumental in that. now we have the protecting older americans act. what is that all about? a lot of people are discriminated in the workplace, in my view, because of their age, because it is so much cheaper to have a younger

employee. we have seen there are articles about cvs and other companies that routinely engage in these kinds of practices, where an older employee is under a lot of scrutiny and harassment, and the next thing you know, they are terminated. so, what i want to do is make sure that if you feel like you have been discriminated based on your age that you can have your day in court. the burden is on you to prove you were. the company or individual involved will have plenty of defenses. but i think forced arbitration in that situation does not serve the public interest, and i hope after this hearing we can have a vote on protecting older americans act that would do away with binding arbitration in employment contracts. finally, arbitration is ok. if you are seeking advice in an

investment business, trying to go get some advice for investment, it is a business relationship. two companies want to agree to arbitration. there is a level playing field. that is not my problem. there is plenty of space in the american economy for arbitration. but what we have seen are these employment contracts pretty much written to the advantage of the employer in areas like sexual harassment, age discrimination, and a few other areas. it has gotten out of hand and i want to level the playing field. thank you for having this hearing. chair durbin: thank you. we agreed on the witnesses. i introduce -- i will introduce gretchen carlson. former cbs news and fox news journalist and vocal advocate for women's rights, curbing the abuse of forced arbitration and nondisclosure agreements. her 2016 sexual harassment lawsuit against roger ailes was one of the first high-profile

cases of the #metoo movement. in 2019, she cofounded lift our voices, an organization to advocate for a ban on nda's and forced arbitration in employment contracts. miriam gillis -- i hope i pronounced that correctly, did i get that right? professor at the cardozo school of law. she has written extensively on arbitration come up previously testified before our committee. victor schwartz, cochair of the public policy group at shook, hardy & bacon. he served as law professor and dean of the university of cincinnati college of law. before his current position, he previously testified before the committee, and we welcome him. joanne grace of columbiana, ohio has served her community in a variety of nursing homes since 1976, including as a floor nurse, supervisor, manager, and

director of nursing services. thanks for joining us today. i will swear in the witnesses and each will have five minutes for an opening statement, then the question period, five-minute rounds for each senator's. i asked the witnesses to please rise. raise your right hand. do you solemnly swear the testimony you are about to give is the truth, the whole truth, and nothing but the truth? all right, thank you. ms. carlson, you are first. ms. carlson: thank you so much. thank you for the opportunity to testify about my experience with forced arbitration and the work i am doing to make workplaces safer in america. in 2016, i found the courage to say one of the most powerful men in the world, former fox news

chair and ceo roger ailes, for sexual harassment. toughest decision of my life. but after they fired me, i said to myself, if i don't do it, who will? my story certainly made headlines, but it could have easily been swept under the rug like countless others because of that forced arbitration clause in my contract. no one starts a new job expecting harassment. i know i didn't. few people can walk away from a job because of the fine print. i don't care who you are. most people have no idea what forced arbitration means. in my case, it showed up in my last contract with fox. i was told not to worry because it was "becoming the way of the world." i could not have imagined how true that would prove to be. employees have no idea that signing on the dotted line accepting a forced arbitration clause can strip them of their rights for future justice. back then, i could have never known that my story would help propel congress to start examining forced arbitration in a meaningful way.

thanks to other courageous women, members of this committee, and other champions in congress hailing from both sides of the aisle, survivors of sexual misconduct can now seek justice. witnessing the president signed the ending forced arbitration of sexual assault and sexual harassment act two years ago was one of the proudest moments of my life. courage is contagious, and this new law is already having significant impact. a bartender at a country club, who alleged she was sexually harassed by multiple members, was able to bring a harassment lawsuit against her employer last year. even though her employer tried to still silencer, the request was denied because of the new law. a judge in texas also declined to grant a motion to dismiss last year after an employee alleged harassment in the workplace. her case can also continue in case thanks to the new law. while i feel in this gratitude

towards this committee for restoring the rights of sexual misconduct survivors like these, i am now surer than ever before that all americans deserve this right. it is why i am a champion of the new bipartisan forced arbitration bill cosponsored by senators graham and jill a brand -- and senator grassley, too. thank you. and thank you, senator booker, for leading the effort to introduce the act. these bills give americans a choice on whether or how to seek accountability, a choice that should not be made by companies or the government. you will hear from joanne about age discrimination in a moment, but let me tell you about two former tesla employees. they reported racist behavior at their california tesla plants, graffiti that read "kkk" and the n-word.

but no action was taken when they went to hr and they were forced into arbitration. stephanie weaver's grandmother went missing in a nursing home after being left unattended. when the home called her to come look for her grandmother, she found her grandmother's dismembered body had been eaten by an alligator in a nearby pond. stephanie fought all the way to the south carolina court of appeals after the home tried to force her into arbitration. if your grandmother can be eaten by an alligator because she wasn't properly cared for and a major employer like tesla can be accused of rampant race discrimination, and in both cases forced arbitration eliminates justice, something must be terribly wrong with our system. so, the naysayers out there, the u.s. chamber claimed all hell would break loose if you let women file their assault and harassment cases in court. there would be a slew of new cases and companies would go out of business. but none of that has happened. instead, survivors are simply being empowered with a choice.

after my story at fox news, a close friend said to me, gretchen, something good is going to come of this. at the time, i couldn't see it, but something great has come of all of this. thank you for holding this hearing, and i hope when you consider the horrible stories currently being allowed to flourish within the secrecy of forced arbitration, you will agree that all americans deserve this choice. thank you. chair durbin: and thank you for stepping up. america is better because you had the courage to step up and say things which were painful. thank you again. professor gilles? ms. gilles: chairman durbin, ranking member graham, distinguished members of the senate judiciary committee, thank you for inviting me to speak today about the harmful effects of worst arbitration clauses that are imposed on all of us in take it or leave it contracts that shut cases out of our public courts and into secret one-on-one arbitration.

and i say all of us because as we sit here today in this room, everybody in this room is subject to a forced arbitration clause. everybody in this country is subject to a forced arbitration clause in some aspect of their life. as senator durbin noted, if you use a credit part, to apply for a job, to use a cell phone, to put your mom in a nursing home, you have to sign away your freedom to decide for yourself how to exercise your right. forced arbitration takes that power, that agency away from each of us and hands it over to powerful corporations. what this means is when there is a forced arbitration clause in effect, americans often have no way of getting justice under federal laws that would otherwise be enforced in court, whether they be consumer protection, antitrust, privacy, or discrimination laws. forced arbitration essentially replaces the laws that this body enacts with private legislation written by corporations into the

fine print of contracts that nobody reads and nobody can negotiate. one way of grasping the enormity of the problem we have come to talk to you about today is to consider some recent cases where there was no forced arbitration clause in effect, and to think about the injustices that would still be happening if those cases had been blocked by forced arbitration. i think we have all heard about the massive antitrust case brought against the real estate industry, which recently resulted in a jury verdict in favor of home purchasers and a settlement that promises to change the way americans buy homes by reducing commission and opening up competition among agents. total happenstance that most real estate brokers simply didn't impose arbitration on their clients, because if they had, this historic end industry changing settlement would never have come about. and since we are talking about the protecting older americans

act, i want to tell you about another case in 2016, a group of hewlett-packard employees sued, alleging -- excuse me -- alleging the company violated the ada by terminating them because of their age. about 140 of the laid-off workers signed releases that included forced arbitration clauses, while another 320 refused to sign. those free workers were allowed to continue, where the judge agreed to a settlement for $18 million, the highest settlement ever recovered in an age discrimination suit, while the workers who had the misfortune of signing releases with forced arbitration clauses are out of luck. that makes no sense. i could go on and on. there are many examples like this, but the point is simply this -- congress enacts laws to protect americans. many of those laws rely on their enforcement on courageous individuals bringing lawsuits

challenging harmful and sometimes long-standing policies and practices. forced arbitration denies victims the right to bring such challenges and denies all of us the ability to know what is going on in the marketplace and the workplace. and for what? why has this unjust regime of forced arbitration developed? it is not because, as the chamber would tell us, because forced arbitration is cheaper, faster, or easier. that is not it. if it were, companies would not have to force us to do it. we would want to do it. instead, companies impose forced arbitration to immunize themselves from public accountability. i think the evidence of this true motivation is now glaringly obvious in the recent phenomenon of mass arbitration, in which victims simultaneously file thousands of individual arbitration, basically forcing corporations to face claims of wrongdoing and make good on their contractual promises to

pay the cost of arbitrating large numbers of single file claims. no surprise, i think, that just about every company hit with a mass arbitration has gone running to court seeking relief from their own contracts. also no surprise that the chamber of commerce characterizes mass arbitration as extortion. meanwhile, federal judges faced with these cases have called it poetic justice. here is the point. whatever you think about mass arbitration, the resistance these companies have to arbitrarily these claims makes clear that forced arbitration was never about fairness or efficiency but about suppressing worker and consumer cases. thank you so much. chair durbin: thank you, professor. professor schwartz? prof. schwartz: thank you.

today is april 9. i want to mention on a personal note, it is my dad's birthday. he died when i was 10, so i don't want to goof up too much today encase case he is hanging around somewhere. there is a lot of myths and truths about arbitration, but a couple things that i wanted to mention, because i had a minister who taught me something not in context. it is pretext. you have to put arbitration in the context of litigation, which i know about. i have lived it for 50 years. the cost of arbitration is far less than litigation. we have data that shows that. it is much cheaper. there is, in litigation, a lot of delay. i mean, real delay. it may take a year, more than a

year, to have your case is heard, whereas with arbitration you get hurt right away. that is -- you get heard right away. that is an important thing. it is a benefit because it is simpler. you can not have to go to court. after disease, nothing is worse than being in litigation. i know what it is on both sides. you don't have to go to court, you don't have to disrupt your family, and that is a definite benefit because you work on your own time. we will submit data to show the amount you receive in litigation is not less than you would in arbitration, or the reverse. not at all. and i mention the disruption that occurs with litigation. it is just not good. and then getting an attorney.

employment cases, it is almost impossible to get an attorney today unless the contingency fee is very, very substantial. a $200,000 case, you not going to get an attorney, unless he or she wants to volunteer. not on a contingency basis. and it is proper. they end up getting $100 an hour, and they don't want that, so you can't get an attorney, and all you've got is arbitration itself. there's a lot of things said about predispute arbitration. there can be debates about it. but that is this little fella's point of view. in most instances, it really is not forced. if you want to buy a phone, a lot of the phone companies require you to sign an arbitration agreement. not all. there often is an alternative. or you can say, i don't want to

do it at all. sometimes, it is small print in a big, long contract. but if it is too varied and can't be seen, courts can rule that unconscionable. if the agreement has things that are just improper, state courts hold them improper under unconscionability. about confidence. you can tell any public official about your agreement. you can tell them the result. gag order's are strictly struck stricken down by courts. since this committee has been hearing hearings, it is helpful because more courts are hearing that. some people say we will do it post arbitration -- i mean,

post-dispute. that doesn't work because both side tries to bring it in its own way -- rig it in its own way. businesses don't prevail at a greater length with arbitration versus litigation. and i would be very happy to take your questions. i see the orange light. for 50 years, i have never gone beyond the orange light, so i have kept it up. chair durbin: you are the first witness who can say that. thank you very much, professor. at this point, ms. grace? ms. grace: chairman derman, -- durbin, ranking member graham, and committee members, it is an honor to be here. thank you for giving me the opportunity to tell my story on how i was wrongfully terminated because of my age, and how my former employer is using forced arbitration to steal my rights, my voice, and even my dignity.

i started my career as a registered nurse in 1976. i have dedicated my whole life to others. after working hard for almost 50 years as a floor nurse, supervisor, manager, and director, my health care system was acquired by stewart health systems. shortly thereafter, i became a patient advocate. i loved being a patient advocate because it allowed me to speak up when a patient wasn't being heard. this is the same purpose for which i am here today, to speak for those who are being silenced with forced arbitration. when stewart hired a new director of nursing, the overt ageism started. what was a second home to me became a hostile work environment. older employees were being replaced with younger employees. at least once a week, this director of nursing would say something to me like, why do you want to keep working at your age?

or, why aren't you retiring? she openly talked about my age, and even a medical condition, in meetings just to embarrass me. hr dismissed my discrimination. you know what hr told me? they called me an old lawyer. old. old. why would an hr representative feel so brazen and so shameless as to outright called -- call me old to my face? when i was out of work with covid-19, stewart posted a new supervisor job online. the job description made it very clear to me it was my position. just with a different title. two days after i returned to work, one decision was -- one position was reduced. it was mine. because my position legally needed to be felt, the hospital hired for that position somebody in their 20's who did not even

meet the minimum experience requirements for a supervisor. my reduction was a lie to force me out. i was devastated. in getting rid of more experienced nurses like myself, the hospital was putting patient safety at risk. i hired an attorney to sue stewart for age discrimination. it is not about the money. i love being a nurse. i want to protect other nurses and keep patients safe. i hope that my lawsuit can effectuate that change. stewart moved to my lawsuit by forcing an arbitration agreement, even though i had never signed any forced arbitration agreement. my employer pointed to my name on an excel list as having attended a training about arbitration. i didn't even attend that training. they said that by continuing to

work after that training session, i lost my right to hold them accountable in court. the wickedness did not stop there. this so-called forced arbitration agreement further rigs the process by allowing me only to call one witness from stewart and limits me calling on and asking for 25 documents. in court, i could depose the director of nursing, the hr representative, those decision-makers, and all the witnesses that witnessed my age discrimination. in forced binding arbitration, i can only call one witness. they claimed this agreement allows the employer to pick the pool of potential arbitrators, which is mainly defense oriented attorneys. this means that a defense oriented attorney is going to decide my case. if i somehow make it through this rig process and win, no one will know and no change can ever happen.

as long as congress allows companies to sweep accountability under the rug, they will continue to do just that. i hope you now understand why and hr representative felt so brazen and shameless to call me old. the ability to use forced arbitration empowers companies to violate the law while hurting nurses and patients. as more older americans remain in the workforce, our rights need to be protected. older workers should not be forced into retirement, nor enter forced arbitration. chairman durbin, ranking member graham, committee members, thank you for listening to how allowing forced arbitration is destroying my dignity. legislation is needed to end this practice, and i am happy to answer any questions you may have. chair durbin: ms. grace, thank you for being here. on behalf of an institution filled with seasoned warriors,

we stand shoulder to shoulder with you in this effort. and thank you for telling your story for all the country to hear. it is very important. i take it from what you said you never signed, checked a box, or in any way indicated that you were part of any forced arbitration agreement. ms. grace: no, i did not. in fact, as part of management at the director level, through part of stewart health acquisition, i saw other people go who were older. they signed the arbitration paperwork. at the end, when they were terminated and returned for some kind of monetary agreement that they can receive, i never signed that and i would never advocate for anyone to sign that. chair durbin: mr. schwartz, this

is a legendary moment in my life. now i have discovered a man who was the author of a textbook which i purchased in law school at georgetown quite a few years ago. i was impressed not only with the contents, but the weight of that book. i carried it around all year, trying to learn from it. i salute you for being the co-author of one of the most famous legal textbooks in america. i am glad to learn this. may i ask you, following up on the question with ms. grace -- mr. schwartz: i just want to thank you, sir. i can tell you one thing about that book you may not know. if you put it on the floor of your kitchen, you can reach the top shelf. a lot of people don't know. chair durbin: [laughter] that is good practical advice. recently, a company called roku, which is a streaming

service, updated its dispute resolution terms. i pulled out the contract which they offered to people who wanted their services. despite not providing descriptions on what terms changed, they would not allow you to keep using your device to stream your favorite shows unless you agreed to the terms of the contract. assuming the user took time to read them, any disputes will be settled by binding arbitration, meaning we both give up the right to go to court. let's work through what it talks -- takes to opt out of that provision. you cannot opt out by email. instead, you have 30 days to mail a letter to roku's general counsel. the letter must include the name of each person opting out, their contact information, the specific roku product models

owned, software, and the email address used to set up your roku account, and a copy of your purchase receipt. opt out notices submitted any other way, including email, are considered ineffective. when you hear ms. grace's experience where they are trying to infer she signed up for arbitration and you see the rigmarole you have to go through at roku to get out of it, do you think this is a contract which should be honored? mr. schwartz: i'm sorry, sir. could you repeat the question, please? chair durbin: it is a long question. i am asking you about the roku company that has forced arbitration agreement. to opt out of it, you need to send an elaborate number of communications specified in a manner they accept. you have heard ms. grace sitting next to you talking about what she went through where it was inferred she had signed this

agreement. could you comment on that aspect of forced arbitration? mr. schwartz: some people call it forced. but in that situation with age, there should be an opt out. age situations are different than your regular purchase of a product. and i think it is an area where carefully drawn rules should regulate such contracts. in fact, in general, i would say that this is an area where it is hard to find rules in the abstract. having federal regulation of these arbitration agreements, i think it is a sound step to do rather than limit to the whim of the state courts because some of the agreements may be unfair.

they may be unfair with ms. grace. but it is very hard to do that in the abstract without specific knowledge of the specific contract. so, i am suggesting consideration of having regulation at the federal level of these agreements, especially in areas of controversy like age, military, children, nursing homes. chair durbin: thank you. senator graham. sen. graham: that idea of some kind of repertory scheme, we will see where that takes us. good suggestion to the committee. ms. grace, did you find it more of a common practice that the older you got, the more scrutiny you were under in terms of your employer? ms. grace: i did, sir. in the prior hospital

system i was at. sen. graham: what is the difference in your salary and the person who took your job? ms. grace: much less because they hire by experience. my salary was as patient advocate. $38 an hour, which is good money for a nurse. but supervisor who took on my job probably was making $25 an hour. sen. graham: in the age discrimination area, is it one of the common themes that replacing the older employee with a younger employee saves money? prof. gilles: yes, because they believe -- it has been a long time belief in health care -- i am going to continue with what

joanne just told us. the idea is that younger workers come in cheaply. each promotion gets you more and more money. so if you can get rid of those expensive, older experienced workers and call it a worker reshuffle and hire younger workers with less experience, you can do so more cheaply. sen. graham: the idea of going to court, the burden is still on the plaintiff, right? prof. gilles: yes. let's not pretend that getting rid of forced arbitration means that everyone is going to walk into court and get a check once they walk into court. the federal judicial system has tremendous amounts of tools for federal judges to use to make sure the cases before them are meritorious, and they use them on a daily basis. sen. graham: i think rule 11 is one of those tools, right? prof. gilles: it is one of the tools when we think something has gone awry, but i would say rule eight that tells us you

have to be able to plead your case in a way that shows there is an actual there there, that is a meaningful role. rule 12 b-6 which gives victor the opportunity to represent his clients. there is a ton of stuff that lawyers and judges do to ensure that the system of laws operates the way that we want it to. but forced arbitration basically says let's forget all that and forget all those cases and shunt them into a private system. that is the real problem here. sen. graham: ms. grace indicated she could only call one witness in the arbitration setting. is that common. prof. gilles: i'm sorry, you are still asking me? sen. graham: yes. prof. gilles: yes. providers really limit discovery. that is one of the ways they can promise -- not have many of

their clients sit for deposition. my understanding is very tight limits on discovery. sen. graham: thank you. i think the protecting older americans act, i hope the committee will take it up and we can pass it. mr. schwartz, i think your idea about some federal guidelines in this area make some sense to me. i would like to continue this discussion. there is a place for arbitration. i am not against arbitration as a general concept. i think the idea of leveling the playing field and the kind of services you seek matter. the more sophisticated the service, the more level the playing field would be in my view. at the end of the day, basic consumer engagements, we need to make sure people are not left out to dry. when it comes to sexual harassment, age discrimination, and other areas of our lives, that people have the chance to have their day in court.

but generally speaking, having their arbitration is a good thing. but there are situations where it does not render justice, and that is what i am looking for. chair durbin: senator whitehouse? sen. whitehouse: thank you all for being here for this important cause. the chairman mentioned that the important role of the amendment as part of our constitution. you can go well back before the seventh amendment to blackstone's commentaries, speaking about how the glory of english legal system, which we inherited, had the benefit of being a bastion.

i would say sources, because the most powerful and wealthy influences right now tend to be corporate. you can see the reason why corporate america would like to be out from the jury system. it is the place where you can't fix things. you can come to congress and a shower money around and send lobbyists all over the place, get favored. but you pull stunts with the jury, you go to jail for jury tampering. we have seen cases where an honest courtroom is susceptible to lies and bullying that were protected and the political space. there is a lot going on when the supreme court tries to disable americans rights to trial by

jury, and how corporations shunt them to binding arbitration. professor gilles, this has had particular impact in the high volume, low dollar frauds that are really only economically answerable by class actions. could you talk a little bit about how the power to take away jury rights and force citizens into mandatory arbitration has impacted the ability of corporations to get away with low dollar, high volume fraud? prof. gilles: sure. this is the very reason we are here. as the cfpd found in its study of forced arbitration, most

provisions combine a class-action ban. the idea is we would prefer these companies to not be responsible or accountable for, as you described it, small injuries. we can spread the pain around to lots of individuals. most of us will never arbitrate those claims because it is not worth it to do so. sen. whitehouse: a fake $15 fee on all of your customers' bills, you might get some calls complaining, in which case you reverse it. you can build them, but nobody will stop you, but it is not worth it to anybody to go to a lawyer and litter cave -- and litigate. but 30 million customers, that's a lot of money you rob from the public. prof. gilles: this is why the adopters of the rule decided there needed to be a procedural

pathway to allow small dollar claims into the court system. otherwise, corporations could run roughshod over all of our rights. most of us wouldn't even notice that $15 overcharge. it is really important to see that right here companies could be doing so many things, so many illegal things along the edges that are simply following through the legal cracks because class actions are impossible to bring when forced arbitration clauses are in effect. sen. whitehouse: compared to the elaborate and well-developed procedural and substantive provisions that make sure a courtroom is fair, how has it worked out in arbitration chambers? prof. gilles: that is a complicated question, but i will give you a few bullet points. first off, and i want to disagree with my esteemed colleague victor schwartz,

arbitration fees are dramatically higher than court fees. they are just higher. arbitrators are paid a daily rate of somewhere between $1000 and $2000 an hour. we don't have individuals paying judges to hear their cases. the provider is picked by the very company that the worker and consumer is complaining about. most of you in this room are lawyers. imagine if you could pick your judge. the repeat player bias should not surprise us. the arbitration clauses we are seeing prohibit all forms of collective action. for most people, it is simply not viable. we talked about this with ms. grace. the rules of the bodies limit discovery and other attempts to discover evidence. they have very limited appellate

rights, almost zero appellate rights. for all of these reasons, we are talking about systems that were created by companies and look exactly like what a company would create. it protects them, not the rest of us. sen. whitehouse: back when i was attorney, one of my attorney general colleagues brought an action against one of these arbitration offices and caused them to shut down because they had been so crooked in their manipulation of the outcomes against the individual, in favor of their corporate clients. there is a long record, and i appreciate your attention to this matter. chair durbin: thank you, senator. senator kotten. sen. cotton: mr. schwartz, i have a senate -- series of questions to establish a baseline facts. since the professor mentioned you by name for disagreement, would you like to respond? i think she said arbitration fees are higher than court fees.

mr. schwartz: i submit the rules of the american arbitration association. the payment is not more than $300, and there is one way of fee sharing if you win the arbitration. all of your fees are reimbursed. i will submit the rules to the committee and to the professor. sen. cotton: is that $300 a day? mr. schwartz: no, an immediate fee. i will submit the rules to the committee. the rules don't lie. people can speculate about them. take a look at them. sen. cotton: thank you. i will go to the questions i have two establish baseline facts. the point of having a court system is that people who have been wronged can have a fair and efficient system, correct? mr. schwartz: that is right. sen. cotton: are state and federal courts overburdened?

mr. schwartz: yes, they are. before covid, they were backed up. now it is about 18 months before you can have your case heard. meanwhile, you have medical expenses, other situations where you can't work, where arbitration can be heard much more quickly. sen. cotton: is it true that arbitration is faster at resolving those claims and taking some of those claims to the court system? mr. schwartz: we can submit information to you. it is much faster. i want to mention something about class actions, because this committee should look into how class actions are used. end up with quite a bit of money. and members of the class don't. i see this every year where the willingness -- and sometimes

defense lawyers settle because they want to get rid of the case, and the ones who want to get the benefit are the lawyers and not the victims who are supposed to be helped in the class. this committee looks at different things. class-action should have the original purpose of rule 23 and not be abused. sen. cotton: plaintiffs in arbitration can recover the same amounts in damages they would get in a court? mr. schwartz: they will submit information, that is true. the stanford study shows the amount of damages don't vary between arbitration and court. sen. cotton: academic studies show the amount of recovery does not vary, is not materially different between court and arbitration? mr. schwartz: the stanford study, which is respectful, shows that. sen. cotton: is it true that arbitration is more flexible than the court system? for instance, that arbitration can occur any, anywhere, is convenient for both parties, rather than a courtroom? mr. schwartz: for regular people

with regular jobs, it is much better. with people with families. dragged into court is no fun. this can be done at a nearby place where people live at a time that is convenient for your job, and so i appreciate the question. sen. cotton: claimants in arbitration who have a lawyer, they can get discovery, get relevant materials? mr. schwartz: the discovery is lengthy, costly, and disruptive to one's life, that is for sure. i don't want to be on the wrong side of that one. sen. cotton: there has been a lot of talk about nda's, nondisclosure agreements, or secrecy agreements. just be clear, arbitration agreements and nondisclosure agreements are not the same thing? mr. schwartz: correct.

nondisclosure agreements are a separate peace, and they are used in litigation when you settle a case. you sign nda's. but you cannot muzzle somebody from giving the results of arbitration or complaining about it. sen. cotton: ok. my time is almost up, but it sounds like from your testimony you believe that arbitration is less expensive and faster than federal courts that claimants tend to do just as well as they do in court, maybe make their own decision or publicize or talk about their claims, and that in general they are going to do better, based on your earlier testimony, from what they would do in court versus what the lawyer would take of their cut. mr. schwartz: from a practical reason. and it is important to remember that with many of these disputes today, you cannot get a lawyer. so, an employee who has a case that is $100,000, lots of luck

for them getting a lawyer because the contingency fee system does not provide an adequate reward to the counselor. it is either arbitration or nothing. it is not comparing it to the court. i made that point in my testimony, but i think it is important to be in the record. sen. cotton: this is why the supreme court has acknowledged that federal law and policy has generally been favorable towards arbitration going back almost 100 years now. mr. schwartz: surprisingly, it is an area where the court has been in agreement. they fight each other quite a bit, but in this area, they respected the federal arbitration act. sen. cotton: thank you. chair durbin: senator klobuchar. sen. klobuchar: thank you to the witnesses today. i am going to focus on gretchen carlson from the great state of minnesota, and i will focus my questions today on antitrust. and mr. schwartz, i wrote a book

on this that also can help you step on it to get to the top shelf. i will ask ms. gilles questions on this front because i think it is important and has not been touched on yet. i am chair of that subcommittee, worked with senator lee on this, as well as senator grassley. and i am concerned that some of the forced arbitrations are frustrating the purpose of our antitrust laws. like i noted during our hearing on the topic in 2019, i was and still am disappointed to see that the supreme court allowed american express to force arbitration even though doing so in her dissent, justice kagan wrote that forced arbitration:

it's a challenge monopolistic conduct and large companies were able to negotiate better fees and clauses you testified in both 2019 and in your testimony today that forced arbitration interferes with antitrust and other laws. >> he told us that other companies were able to take american express to trial because they have market power.

they cannot buy those companies into forced arbitration but did so with all small businesses which means he cannot hold american express for these trust issues. all businesses do a tremendous amount of they enforce laws and are often at the front lines of enforcing into trust laws because they are victims of anticompetitive behavior which is what that case was about. sen klobuchar: as we see more consolidation and issues with the tech companies we have been stagnant here about changing

antitrust laws. we have gotten bills through the committee and i appreciate that. all bipartisan but they are sitting there and we had one victory at the end of 2021 given these huge cases involving based, apple and amazon and google. we got that done a change to merger fees which is estimated to be 50 million less merger fees. and then we passed it in the money disappears and for the first time in 25 years did not go to the antitrust division after an attempt was made to delay them.

ed is about the private enforcement of antitrust laws but i want to end with ms. carlson who i have known for quite a while and just asking about what you said in your testimony. i think my colleagues for their leadership about ending forced arbitration and harassment. you said this law is making an impact in the loss of childhood survivors. ms. carlson: from our great state of minnesota. there was the waitress who was harassed by members and adore

men and they are trying to force members of sexual misconduct into forced arbitration and they don't have to go into arbitration. i speak to women every day and my company is trying to force me into arbitration. they went to a judge and her company filed a motion to compel arbitration and he denied it because of this groundbreaking law had pass. blaze media was also denied because of the law. what i have found that the biggest and most important thing after passing a law is to educate people about it.

company use are not going to willingly tell you you no longer get forced arbitration. it is my goal to be able to protect all human rights violations that work including rape discrimination and forced arbitration. after my experience of fox news and respectfully mr. schwartz, no one would've known about my story if i were forced into arbitration. that is not a compelling story, it is time to do it for other people who are having their human rights violated at work and shoved into secrecy.

sen. blackburn: thank you to each of you for being here today and for this hearing. i am so pleased you mentioned ending forced arbitration of sexual assault and sexual harassment act. that is something that we put a good deal of time into. it was a strong bipartisan effort and something that was needed. i fully appreciate what it is like to be a female in a man's world and i had great experiences whether with the southwestern company or people i did contract work for, and i know not everyone has thought. making certain when we are not going to be isolated and had the

ability to tell their story and achieve what they felt like was justice is something that is important. and of course we think you for the work you did on that bill in the speak out act, those offers have been invaluable. as i said here and look at this issue i agree with sen. cotton there is a place and role for arbitration as he went through his questioning with you all, i know what has been used as a beneficial tool to be certain that you don't get trapped into lengthy and costly litigation.

i am appreciative of that and i have to say, if we look carefully at this. i am not in favor of expanding this prohibition on arbitration beyond that unique context we found with sexual harassment and assault. while i am glad we have prohibited forced arbitration and those limited circumstances, sometimes we have to be very careful when we look is something that would expand these prohibitions. i am so pleased we had the opportunity to hear from you all and have this discussion today. and ms carlson education to

women when it comes to sexual harassment and prohibition and the opportunities they have for self protection is something that is important. so thank you all for being here. >> after the supreme court decision that pretty much said arbitration clauses are ok and the arbitration would force the law i would like to ask professor gillis is not the way her name is pronounced? isn't it legal malpractice not to counsel not to have

arbitration clauses to cover every dispute that could arise? prof gilles: i tell them if you work in big law make sure you put in a forced arbitration clause. the best way for corporations to immunize themselves from all legal liability. >> this is why we find ourselves describing certain kinds of complaints and allegations that should be treated differently and not have forced arbitration applicable to them. in the case of sexual assault, these are instances where it is very difficult as we heard from ms. carlson how difficult it is for people who experience sexual

harassment and assault to come forward and there are many other instances where it is very difficult for people to come forward and launch their complaint. -- lodge their complaint. do you think there are other instances where forced arbitration makes it difficult for complainants to come forward? for instance, hate crimes within the workplace? there could be retaliation. i let our effort to pass a covid hate crime act realizing that hate incidents are difficult to report. anyone want to weigh in on other

examples of behavior where forced arbitration should be applied? >> this boils down to people not being able to decide what's best for themselves. when you have forced arbitration the decision has been made for you. if it is so great why is it forced on you? the majority of americans when they understand with arbitration they disagree with that because they want to make the decision for themselves. they at least want to have that choice. >> who selects the chair of the arbitration panel? who makes those decisions? >> the company.

they write the rules and they write the rules in a way that's most beneficial to them. >> in a arbitration where they get to select their own arbitrators and they selected chair, without make it clearer? >> the truth is companies like the big platforms that provide arbitration services, there is a stable of x judges and x defense lawyers and you could give me a list of all of them i would not know who among them to choose.

whereas a company who is a repeat player no exactly who the right arbitrator to choose. even if there is a system of choice among corporate minded arbitrators. i want to give you one example. an nfl coach tried to bring arbitration alleging race discrimination. not surprisingly the arbitration the soul arbitrator is the commissioner of the nfl. i can imagine anyone who would be less likely to sign these black coaches then roger goodell. he works for the teams so how

could he possibly be unbiased in a case of race discrimination brought by former coaches? what we are seeing across the board. >> can you revisit the arbitration act? >> when you amended the statute to add, i congratulate you for that. i think the act that senator blumenthal proposed would amended the statute that it does not apply to pre-arbitration disputes. >> we have been thinking about different behaviors so it's time to look at the whole statue.

sen. booker: i am so grateful for this panel and conversation had today. i have always had this reference for the justice system and its ideals and values in is unique the principles that we put forward when you see the rights and protections our founders believed in that justice should be a place where it is balanced and justice is blind. a lot of my career has been about living in a low income african-american community. the reality is you get better justice if you are rich and guilty than if you are poor and innocent. then the areas of employment law have the power of corporations has grown so dramatically i am

stunned at the levels of lobbyists advocating for things that will protect corporate power but any of the people who are workers are losing a lot of their access to a balanced and fair system. the work done in this space has been extraordinary and miss carlson you are her relic in my office but more than that, the work that colleagues have done with forced arbitration of sexual assault has transformed our country. what changes the culture in workplaces, cultures that are toxic, cultures that are demeaning and violating our values of human decency and now that you have found ways to get justice and expose cultures to

light is extraordinary so what might be justice for one person affects millions of people in terms of what is a healthy culture and to all the naysayers and doomsayers that say this will result in clogging up courts and exorbitant costs and excuses. corporations will find it cheaper to cultures that are kinder to the bottom line. this is been really exciting to see this change but the fact you have said, you are not going to stop. i will not stop until we achieve

the same rights for workers who have raised discrimination based on race, age, disability. it is just justice a matter of having justice. ms. gilles talking about race discrimination that are so similar to other kinds of discrimination. the stories i have heard from tesla from black workers are shocking and should be shocking to everyone who believes in human decency. why is this so passionate for you having achieved such an incredible change to still be in the trenches to see it affects all workers? ms. carlson: i don't believe that forced arbitration was to

be used to adjudicate human rights violations. if were talking about knocking over a neighbor's fence, why clog up the courts? but not when someone is discriminated against. and you brought up an interesting point that i want to echo. part of my hope in passing such landmark legislation is that it would change the culture as well and you know why that happens? the power pendulum is like this with forced arbitration. but if you give this person a voice and this person knows that you can't be forced into silence with forced arbitration the behavior may also stop.

that to me is the most gratifying part of this experience is knowing we might start to change culture as well as lives. changing culture and the most hyper political time is more difficult than passing bipartisan legislation. sen. booker: the stories of humiliation and real financial catastrophe that happens to people who have been discriminated against. it is agonizing to note there are hundreds of thousands of americans dealing with this. and for us to try to parse it out is astonishing to me. what would it have meant to you

to have the choice to decide whether to go into arbitration or have your day in court? >> having worked as long as i did. chair durbin: can you make sure your microphone is turned on? thank you. >> when you work in the field as long as i have you develop a trust in your organization that they will do right by you because you have given your whole life to them and when you find out that is not the case. i think i want a right to say to other older americans, you have to watch her own back. you have to make sure they're not going to do the same thing to you that they have done to me.

blinding me and not allowing me to speak. i think employees everywhere, older americans who deserve the right to vote, i'm sorry, to have their own representative forgive their voice. they can't do it because we are old, older. and we can't do it ourselves, we need to have that help. that is when they offer arbitration which is a means not to change anything but hide something as a form of secrecy that should not exist because of their is fairness on behalf of of the corporation to the employee as i have been faithful to them, why would they do that

to me? they would not. it would be an even play. if we are down here and they decide at their whim we will get rid of her for someone younger. i can understand that they think it is more efficient to pay someone $25 worth $38. the older person has the wisdom, the knowledge of the younger person can't possibly have yet. it takes years of experience to develop that and what we know directly affects to our patients and to their safety and health. we affect a lot of things just as a nurse and you are telling me i'm going to get rid of you because we have someone younger

that we want in here and i don't have a voice to say, this is not fair and other people seem to know it's not fair. my parents were both world war ii veterans and they taught me how to work hard and they taught me everything american was wonderful. my mother was an immigrant from russia/poland. to say that the justice system can tire hands behind her back and we are not allowed to speak and they take her voice away, thus not america anymore and i want to see that come back. they started with sexual harassment, older americans have given their lives for their community and corporations and they deserve and even playing

field. chair durbin: senator tillis? sen. tillis: when did you first come to this committee? >> i talked to you about my legislation before the house judiciary. sen. tillis:: and when was that? >> i have been here waiting and watching. sen. tillis: you are still trying to accomplish what you set out to accomplish years ago. i am wondering, mr. schwartz, for people making employment decisions you need to know if

they require forced arbitration you don't have the right to an employment contract. i hate to say that in coldhearted terms. there have been abuses particularly in age and sexual misconduct. how do we not have this hearing six years from now that gets rid of binding arbitration? how do we bridge the gap rather than have this discussion so that one side wins and the other loses. what are they thinking of us a happy medium and is there one? how can we release some of the pressure to write some of the obvious wrongs that have occurred under the current

system and fall short of what my colleagues want to achieve. mr. schwartz: gag order's, state courts led by the chairman of this committee have ruled gag order's unconscionable in the record should show the and i think that's important. i think people should be able to discuss the results of their arbitration if they disagree with them as a matter of free speech in our country. there are certain isolated areas and i suggested the chair and ranking members this committee consider regulatory matters to address those areas where there is a problem that has been carefully articulated by ms.

carson. so you don't get rid of, i think it's important to at least contradict yourself at least once. follow-up, so we don't have the same hearing over and over again. consider a regulation of these agreements because for the most part they are helpful. i know the litigation system and you don't want to get involved in it. in many cases it is the only alternative is arbitration in looking at the possibility of

regulation we can avoid having this hearing every three years. sen. tillis: unless there's a cd you're going to need a bipartisan agreement which is why ms. carlson has to spend time appear in d.c.. count me in a someone who wants to get fair treatment i believe there are a lot of paths to arbitration. the one thing i can say about committee leadership as they bring forth sympathetic cases and i get that. how anyone could say that is an acceptable outcome, nobody could. i have few skills and we arei would like to find progreso

that ms. carlson can go to other things, she was to report on it again. mr. schwartz, we will reach out to you. i want to be a part of a group that makes progress that provides, i think, some answer for the egregious examples exhibited here in the committee prep materials. not just a change in the way business is used. thank you all for being here. >> lots of times it is a client, money. i'm not testifying for a client. i'm not being paid. i met a stage in life where i would like to be a little more helpful. sen. tillis: we would like to tap into your expertise, as long as you will not bill me for it. mr. schwartz: that would be unfair at your salary chair

durbin: senator butler. sen. butler: thank you to all of the witnesses here. there has been so much that has grabbed both my imagination and a source of incredible frustration. also tapped into a number of experiences i have had across my career. professor gilles, as someone who spent 20 years in the labor movement, another tool that we have to give voice to workers is that of unionization. in the space of unionization there also is an arbitration process. there's an arbitration process that gives voice to the point you made that equalizes the

voices and power of employers and employees through their chosen organizational representative or union. every experience of union arbitration i have had there was a jointly chosen panel. not association that gave you a list of names to consider. every instance a workers grievance went through to arbitration the union and the employer had to agree on who was going to be the arbitrator or panel of arbitrators. everyone had a strike ability to eliminate a name from that mutually chosen list. i do believe there is a framework here in terms of how we can utilize and get the best benefits from our arbitration.

we just have to look to some of the models we have created. i am not here to say that unionization is the only answer, but we do have models of fairness that we can call upon. ms. carlson, it struck me your reference to tesla workers who have been in a number of my colleagues have been working to support their unionization. their choice they are making to choose to form a union there at tesla. we know there are certain cadres of workers today are label laws don't allow t -- our labor laws don't allow to unionize. as i was reading the testimony one thing i was curious about has been referenced here. you have been relentless. you are not going to quit.

there are the category of workers that have available to them the tool of unionization. there is the category of workers who only by integrated laws are traditionally excluded. what are some of the recommended new tools that you would suggest this committee, the senate really take up to advance the protection of human rights you are so dedicated to? >> my strategy has been to try to take a bite out of the apple for each protected class. as senator tillis mentioned, it has to be bipartisan. it should be bipartisan because we are talking about human rights violations. that has been the strategy and i'm moving forward with the protector older americans act and i support senator booker's bill about race discrimination and forced arbitration.

giving workers choice and not being forced into arbitration is what this is all about. you suddenly give them the option of being able to have a voice. trust me, a lot of them will not choose to speak it. i can tell you from personal experience that it ain't fun to come forward. as the professor has also spoken about this morning, it is very hard to prove your case. most of these cases are extremely relevant and sound if they actually get to court. that proves a notion -- disproves the notion we will have a flurry of cases when the forced arbitration arbitration --forced arbitration arbitration act -- what you call it? that's even harder. it's a mouthful. that is what i keep coming back to if you give workers choice

and their own liberty to make their own decisions, that to me is the fairest way to do this. if you want to make arbitration an option, which it is under the law, they can choose it but i would not recommend it. sen. butler: one last question if i could. professor gilles, you talked in your testimony about how forced arbitration exacerbates economic inequality in the country. another gift of the labor movement and unitization is greater pay equity. but it seems that in this space of forced arbitration we continue to see those -- according to the data you made reference to -- greater economic inequality in the space. i'm curious. i want to ask a question out of

curiosity. is there any further information or greater detail you can reveal for us about what the data shows relative to forced arbitration, particularly on women workers and workers of color? just to try to pair the two conversation -- response ms. carlson just gave. ms. gilles: i appreciate the question. more data is always better. the studies show women and minorities tend to work in fields where forced arbitration is employed far more often than other fields. that is one good bit of evidence. we also take a historical view. there are studies that take a historical view. women and minorities are the least likely to bring claims in court, even before forced arbitration. the fear of retaliation, the

intimidation that comes with being the person who is bringing the claims are often silenced women and minorities. we have to be aware that poor people in this country bump into corners of our law and all sorts of ways. those are sharp corners. they don't necessarily know who to go to, how to get representation, how to get advice. many times they just end up -- they can't afford to quit their job and find some thing else. even if they did quit the job and find thing else -- everybody's dim good, mom -- everybody's forcing you an arbitration. i wrote this in my testimony. for those of us that are concerned about the rising levels of inequality, forced arbitration is just one additional tool that enables that chasm to continue to grow. chair durbin: i listened to the

defense of forced arbitration. what i heard was desert within the words -- it is easier. it is cheaper. it is faster. just as fair as a court. if that is all true, why is it forced? if the employee or the person who is aggrieved things it's a good idea, why not just make it an option? why not pick arbitration? we will not take away your constitutional right under the seventh amendment. it is your right as a citizen of the united states. the argument about arbitration being a much better outcome maybe in some cases. i don't know. by and large that decision should be made by the worker, by the citizen. i think that is so fundamental and so basic. professor carlson -- ms. carlson, thank you for coming back in an official capacity. thank you for telling your story.

you will inspire us to have another hearing. maybe a markup soon. maybe a federal law. maybe you will join ms. carlson and pointing to something that changed america because you took the time to speak up and stand up. you might get some written questions remember the committee. if you do, please return them as quickly as you can. this meeting of the senate judiciary committee stance adjourned. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] [captions copyright national cable satellite corp. 2024] [crowd talking]