Looming Senate repeal of forced arbitration rule would hit Alaskans hardest

With the Senate’s hopes of repealing Obamacare dashed (at least for now), the Senate GOP’s attention is quietly turning to repealing consumer protection rules on forced arbitration.

Republican leaders are gathering votes needed to overturn a Consumer Financial Protection Bureau rule that protects customers’ ability to take companies to court in class-action lawsuits. Before the rule, plenty of companies used arbitration clauses in contracts that bar customers from taking disputes to court.

There was talk of a vote on the matter last week because the issue is likely to come into the spotlight with Wells Fargo and Equifax set to testify in court this week. On Wednesday of last week, Sen. John Cornyn of Texas told Law360 that they were close but still short of the 50 votes needed to overturn the rule.

“We are still working on this, but we aren’t ready to pull the trigger yet,” Cornyn said.

Tea Party activist and founder Judson Phillips recently made the case for preserving the protection on Alaska airwaves and talked with The Midnight Sun about why Alaska should be watching the vote closely.

He said normal legal proceedings would allow people to bring their disputes to a local court, but much of arbitration is dictated by the company. Not only is the arbitrator picked by the company, but they can also choose the venue.

He said it has the potential to be particularly challenging for Alaskans because a company chooses a venue somewhere in the Lower 48, adding travel expenses on top of arbitration fees.

“From everything I’ve been hearing both Sen. Murkowski and Sullivan are undecided on this issue right now and this is something that hey need to hear about,” he said. “It’s fundamentally unfair to someone in Alaska to give up their right to a jury trial. … In order to pursue your claim you have to pay a very large filing fee for arbitration and you’re not going to get to arbitrate it in Alaska. (As a lawyer) I’m going to have to take the witnesses down, and if I’m really lucky it’s Seattle or Los Angeles. All the sudden this becomes a very expensive proposition.”

He said companies and some senators have defended arbitration clauses as a cheaper and faster way to deal with legal disputes, but Judson says that’s really only true for the company.

“The potential attorneys fees with arbitration makes it that much harder for a consumer to get their day in court. In many cases it makes it impossible,” he said. “It’s the opposite of what they claim. They claim it’s a faster, less expensive way for justice. No, it’s a fast er less expensive way for them to get rid of a consumer’s claim.”