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In a suit in U.S. District Court in Ohio, a company buried its mandatory arbitration provision in an employee handbook.
The Court also rejected the merchants' claim that the mandatory arbitration provision deprived them of enforcing a statutory claim - in this case, their allegations under the Sherman Antitrust Act.
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The rule is radioactive to banks, credit card companies and other lenders because, like Trump when he was running his businesses, these firms routinely include mandatory arbitration provisions in their contracts, forcing people to privately arbitrate rather than have a day in court.
It has been estimated that roughly 20% of the non-unionized American workforce is covered by mandatory arbitration provisions, and this number may well increase.
For years, courts have upheld these mandatory arbitration provisions under settled freedom-of-contract principles.
It gives the agency authority to ban mandatory arbitration provisions that strip consumers' right to go to court for redress of scams and rip-offs.
More than five years ago, the SEC's Staff indicated that mandatory-arbitration provisions may not comply with federal securities law.
Supporters of mandatory-arbitration provisions often argue that investors, aware that the company has adopted these provisions, can adjust the price they pay for the company's shares at the IPO stage.
The Consumer Financial Protection Bureau is considering a ban on mandatory-arbitration provisions in contracts for credit cards and other financial services.
The combination of its card check provisions and its mandatory interest arbitration provision will surely change the balance of advantage in labor organization.
But that's all the more reason why we need a careful, deliberative process in this area rather than an effort to open the door to mandatory arbitration by slipping provisions into IPO filings.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com