Introduction of the Automobile Arbitration Fairness Act of 2008

Floor Speech

INTRODUCTION OF THE AUTOMOBILE ARBITRATION FAIRNESS ACT OF 2008 -- (Extensions of Remarks - February 07, 2008)

HON. LINDA T. SÁNCHEZ
OF CALIFORNIA
IN THE HOUSE OF REPRESENTATIVES
THURSDAY, FEBRUARY 7, 2008

* Ms. LINDA T. SÁNCHEZ of California. Madam Speaker, I rise today to introduce the Automobile Arbitration Fairness Act of 2008. This legislation will extend to certain consumers what Congress granted to automobile dealers in 2002: freedom from mandatory binding arbitration agreements.

* Automobile manufacturers imposed mandatory binding arbitration clauses in their dealer contracts to forego forums otherwise available under state law. Unfortunately, states could not effectively address the increasing imposed use of mandatory arbitration clauses because the Federal Arbitration Act preempts such state laws. As a result, auto dealers had no legal recourse and were bound to using arbitration. Automobile dealerships voiced their plight to Congress, which in 2002 passed the 21st Century Department of Justice Appropriations Authorization Act. This legislation included language to allow arbitration only if both parties to a motor vehicle franchise contract consented in writing to arbitration and if the consent was done after a controversy arose out of that contract.

* Although automobile dealerships now have the option not to enter into mandatory binding arbitration agreements, many dealers require such binding agreements in their sales or lease contracts with automobile purchasers and lessees. This legislation would connect the chain from manufacturers to dealers and from dealers to consumers, by requiring the consent of both parties to enter into contracts with binding arbitration clauses in automobile sales and lease contracts.

* I urge my colleagues to join as cosponsors of this legislation.

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