Section 1 Short title
This Act may be cited as the “Mandatory Arbitration Transparency Act of 2017”.
Mandatory Arbitration Transparency Act of 2017
A BILL
To amend title 9, United States Code, with respect to arbitration.
Sec. 2 Validity and enforceability of predispute arbitration agreements containing confidentiality clauses
In general— Title 9, United States Code, is amended by adding at the end the following:
“4 Predispute arbitration agreements containing confidentiality clauses
“401. Definitions
“(a) In this chapter—
“(1) the term civil rights dispute means a dispute—
“(A) arising under—
“(i) the Constitution of the United States or the constitution of a State; or
“(ii) a Federal or State statute that prohibits discrimination on the basis of race, sex, disability, religion, national origin, or any invidious basis in education, employment, credit, housing, public accommodations and facilities, voting, or any program funded or conducted by the Federal Government or a State government, including any statute enforced by the Civil Rights Division of the Department of Justice and any statute enumerated in section 62(e) of the Internal Revenue Code of 1986 (relating to unlawful discrimination); and
“(B) in which at least 1 party alleging a violation of the Constitution of the United States, a State constitution, or a statute prohibiting discrimination is an individual;
“(2) the term consumer dispute means a dispute between an individual who seeks or acquires real or personal property, services, securities or other investments, money, or credit for personal, family, or household purposes and the seller or provider of such property, services, securities or other investments, money, or credit;
“(3) the term covered confidentiality clause means a provision of a predispute arbitration agreement that, with respect to an employment dispute, consumer dispute, or civil rights dispute, purports to, or could be interpreted by a reasonable person to, prohibit a party to the dispute from—
“(A) making a communication in a manner such that the prohibition would violate a State or Federal whistleblower statute; or
“(B) reporting or making a communication, including to any relevant public official, elected official, or other State or Federal authority, about—
“(i) tortious conduct;
“(ii) otherwise unlawful conduct; or
“(iii) issues of public policy or public concern;
“(4) the term employment dispute means a dispute between an employer and employee arising out of the relationship of employer and employee as defined in section 3 of the Fair Labor Standards Act of 1938 (29 U.S.C. 203); and
“(5) the term predispute arbitration agreement means any agreement to arbitrate a dispute that had not yet arisen at the time of the making of the agreement.
“402. Validity and enforceability
“(a) In general
“(1) Prohibition on predispute arbitration agreements with confidentiality clauses—Notwithstanding any other provision of this title, no predispute arbitration agreement shall be valid or enforceable if the agreement contains a covered confidentiality clause.
“(2) Exception—Paragraph (1) shall not apply to a predispute arbitration agreement if a party to the agreement can demonstrate a confidentiality interest that significantly outweighs the private and public interest in disclosure.
“(b) Applicability
“(1) In general—An issue as to whether this chapter applies to an arbitration agreement shall be determined under Federal law. The applicability of this chapter to an agreement to arbitrate and the validity and enforceability of an agreement to which this chapter applies shall be determined by a court, rather than an arbitrator, irrespective of whether the party resisting arbitration challenges the arbitration agreement specifically or in conjunction with other terms of the contract containing such agreement.
“(2) Collective bargaining agreements—Nothing in this chapter shall apply to any arbitration provision in a contract between an employer and a labor organization or between labor organizations, except that no such arbitration provision shall have the effect of waiving the right of an employee to seek judicial enforcement of a right arising under a provision of the Constitution of the United States, a State constitution, or a Federal or State statute, or public policy arising therefrom.”
Technical and conforming amendment— The table of chapters for title 9, United States Code, is amended by adding at the end the following:
Sec. 3 Unfair or deceptive act or practice
Definition— In this section—
the term Commission means the Federal Trade Commission; and
the terms covered confidentiality clause and predispute arbitration agreement have the meanings given those terms in section 401 of title 9, United States Code, as added by section 2.
Prohibition—
In general— It shall be unlawful for a person to knowingly offer to another person for ratification a predispute arbitration agreement that contains a covered confidentiality clause.
Exceptions—
Confidentiality interest— Paragraph (1) shall not apply to a person that offers a predispute arbitration agreement with a covered confidentiality clause if the person can demonstrate a confidentiality interest that significantly outweighs the private and public interest in disclosure.
Collective bargaining agreements— Paragraph (1) shall not apply with respect to any arbitration provision in a contract between an employer and a labor organization or between labor organizations, if the arbitration provision does not waive the right of an employee to seek judicial enforcement of a right arising under a provision of the Constitution of the United States, a State constitution, or a Federal or State statute, or public policy arising therefrom.
Enforcement by Federal Trade Commission—
Treatment as unfair or deceptive act or practice— A violation of subsection (b) by a person with respect to which the Commission is empowered under section 5(a)(2) of the Federal Trade Commission Act (15 U.S.C. 45(a)(2)) shall be treated as a violation of a rule defining an unfair or deceptive act or practice prescribed under section 18(a)(1)(B) of that Act (15 U.S.C. 57a(a)(1)(B)).
Powers of Commission—
In general— The Commission shall enforce this section in the same manner, by the same means, and with the same jurisdiction, powers, and duties as though all applicable terms and provisions of the Federal Trade Commission Act (15 U.S.C. 41 et seq.) were incorporated into and made a part of this section.
Privileges and immunities— Any person who violates subsection (b) shall be subject to the penalties and entitled to the privileges and immunities provided in the Federal Trade Commission Act (15 U.S.C. 41 et seq.).
Rulemaking— The Commission shall promulgate standards and rules to carry out this section in accordance with section 553 of title 5, United States Code.
Civil action—
Private right of action— Any person aggrieved by a violation of subsection (b) may bring a civil action in an appropriate district court of the United States.
Remedies— In an action under paragraph (1), the court may award—
actual damages, but not less than liquidated damages in an amount equal to $1,000;
punitive damages;
reasonable attorney's fees and other litigation costs reasonably incurred; and
any other preliminary and equitable relief that the court determines appropriate, including injunctive relief.
Sec. 4 Effective date
In general— This Act, and the amendments made by this Act, shall take effect on the date of enactment of this Act.
Applicability—
Validity and enforceability— Chapter 4 of title 9, United States Code, as added by section 2, shall apply with respect to any dispute or claim that arises on or after the date of enactment of this Act.
Unfair or deceptive act or practice— Section 3 shall apply with respect to any predispute arbitration agreement offered for ratification on or after the date of enactment of this Act.