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Sessions Eyes Arbitration Rule Reform

BY Mary Orndorff
by Mary Orndorff on 10/18/00.

WASHINGTON - U.S. Sen. Jeff Sessions on Tuesday introduced legislation he says would protect consumers in out-of-court disputes with businesses, but he has an ulterior motive.

Sessions, R-Ala., wants his bill, which has no chance of passing this session, to trip up another bill that would exempt automobile dealers from the same legal obligations they demand of their customers. The proposal by U.S. Sen. Chuck Grassley, R-Iowa, would allow dealers to avoid arbitration when they have a dispute with an auto manufacturer, an option most Alabama car buyers don't have.

Sessions said Grassley's bill is a sign of how powerful the auto dealers are on Capitol Hill.

"I think we ought to slow down and analyze whether any special interest groups ought to be eliminated [from arbitration requirements]," Sessions said Tuesday in a briefing with reporters. He is introducing his Consumer and Employee Arbitration Bill of Rights on the same day a hearing is scheduled on Grassley's proposal.

"First let's fix the system, then let's decide who ought to opt out," Sessions said.

In Alabama, most dealers require car buyers to sign arbitra tion clauses, which means any disagreements over the purchase contract will be settled by a third party, rather than in a lawsuit. Arbitration is championed by the business community, which fears excessive jury verdicts, and opposed by trial lawyers and consumer groups, who say it takes away an individuals' right to go to court.

Sessions' positions create an interesting political twist. He sides strongly with the corporate community in supporting arbitration, yet says he's championing the rights of the individuals with his reform legislation.

He calls his bill "The Consumer and Employee Arbitration Bill of Rights."

It mostly adopts guidelines used by the American Arbitration Association. It would require arbitration clauses to be in large, bold print and easy to spot in a contract; give all parties an equal voice in selecting the third-party arbitrator; allow the consumer to be represented by a lawyer; make sure the hearing is held in a convenient location to the consumer; allow the consumer to collect and present evidence, cross-examine witnesses and record the proceeding; require a written ruling within one month of the hearing; get fees waived if necessary; or take the whole issue to small claims court if possible.

The bill would apply to arbitration clauses in contracts consumers and employees sign when they purchase a product or accept a job.

At the very least, Sessions is acknowledging that the Federal Arbitration Act needs reform and that there have been cases in which individuals were mistreated by "the big guys," as he put it.

An organization opposed to arbitration is skeptical of the senator's motives.

"Unless he's dealing with whether arbitration can be a condition of employment or a consumer transaction, it really doesn't make me stand up and cheer," said Hunter Ford, executive director of Alabama Consumers Against Arbitration.

His trial lawyer-affiliated organization supports auto dealers opting out of arbitration with manufacturers, but wants that option extended to consumers. He said Sessions' reform bill is a sign that the business community feels their ability to use arbitration is being threatened by the car dealer bill.

Tom Dart, president of the Automobile Dealers Association of Alabama, said his group is neutral on Grassley's bill because so many Alabama dealers have arbitration clauses in their dealings with car buyers. "It would be inconsistent for us to support that bill," he said.

The Alabama dealers, however, support Sessions' reforms because they mostly involve changes already endorsed by the American Arbitration Association and the Better Business Bureau. "His bill would help allay the fears of the public about arbitration," Dart said.

A pro-arbitration group in Montgomery opposes the auto dealers' exemption as a way for "trial lawyers to get their foot in the door," said Toby Roth, director of Alabama Citizens for a Sound Economy.

"The fact that [Sessions] wants to take steps to see arbitration is a fair process and remains a viable alternative form of dispute resolution is completely consistent to his message," Roth said.