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Assembly Bill A7445 - What are your thoughts?

In late April 2017, the New York State Senate introduced Assembly Bill

The Bill is available here: AB A7445.

The proposed bill primarily involves consumer arbitration and prohibition of certain contractual agreements to arbitrate personal injury and wrongful death claims. Notwithstanding, is such legislation, introduced with several prohibitions, harmful to arbitration at large?

Please provide your thoughts/comments below.

Comments (8)

I don't find the policy unwise but the prohibition on agreements to arbitrate personal injury and wrongful death claims do not appear consistent with Supreme Court precedent.

Arbitration requirement for disputes or claims is a required clause in contracts between consumers and business entities of enormous power. I don't think any such business will accept any customer/client who crosses out that provision, even if the rest of the clauses are left intact. This is really an adhesion agreement, although I'm not aware of courts calling it that. Consumers/customers/clients need protection, and should have the option to agree or delete the arbitration provisions. If a statute is required to give this option, then I would support it.

I think legislation requiring clear disclosure, modeled after the warranty limitation requirements in the UCC, is better than prohibition. Our economy runs off "contracts of adhesion", even in commercial agreements signed by businesses. Agreeing to arbitrate is no more odious, per se, than, say, agreeing the bank may foreclose on real property. That's not negotiable, either.

Agree with both commentators ... although the Constitutionality of mandatory arbitration provisions, in consumer adhesion contracts, may be vulnerable to the consumer who can prove s(he) did not agree to it.

scott link:

Don't let the camel get his nose in the tent or soon he will be in your bed. The pending Act is the first step in the erosion of the Arbitration process. Granted, it should be stricken down by the Courts, but that is not a certainty. Also, I am not sure how one enters into such an agreement unless it's incident to an employment contract.There has to be some privity with the Plaintiff for the agreement to have affect. I don't think a sign on the back of an 18 wheeler stating " if this truck crushes you and your car, you have to arbitrate', will suffice.

Micalyn S. Harris:

I agree with all of the above. Note: contracts of adhesion are not per se illegal so even if a court were to label a contract as a contract of adhesion, that would not end its analysis.

Paul Bennett Marrow:

Chances are that whatever the State legislature passes, if it in anyway attempts to restrict or regulate arbitration is a manner that offends the F.A.A. it will end up being preempted. My sense is that any bill submitted to either the State House or Senate is political grandstanding and in the end will be meaningless.

Edwin H. Stern:

There is a major difference between the clear language needed for waiver of jury trials and class actions or for mandatory arbitration in consumer contracts and the prohibition of arbitration altogether, although in some states the needed waivers may result in a total prohibition as a matter of reality. And clearly the SCOTUS interpretation of preemption and interpretation of the FAA is different than the view of many state courts (as evidenced by today's opinion out of Kentucky).

But I believe that legislative policy precluding arbitration of certain types of disputes is for the legislature to decide. I would only hope it be done for good and articulated reasons.

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