WASHINGTON -- A congressional panel today approved a bill that would prohibit auto dealers from forcing customers into binding arbitration to settle disputes.
The voice vote by a subcommittee of the House Judiciary Committee appeared to be along party lines, with Democrats in favor and Republicans opposed. The bill is a long way from becoming law, and the partisan split indicates its chances this year are slim.
But the subcommittee action could prepare a path toward enactment next year, especially if Democrats take the White House and increase their majorities in Congress in the November elections, as many forecasts suggest.
The American International Automobile Dealers Association, which represents the operators of about 11,000 import-brand franchises, opposes the arbitration ban.
AIADA President Cody Lusk, in a letter to lawmakers, said disputes at dealerships usually are not complicated and can be settled quickly and economically through arbitration. By contrast, drawn-out and expensive legal proceedings clog our court system, Lusk said.
Rep. Linda Sanchez, D-Calif., who chairs the subcommittee on commercial and administrative law, is the chief sponsor of the bill. She noted that a 2002 law bars automakers from requiring dealers to accept binding arbitration in their franchise agreements.
It seems only fair that consumers receive the same protections, Sanchez said.
The National Automobile Dealers Association, which lobbied hard for the 2002 law, is officially neutral on the Sanchez bill. The measure is part of a broader push in Congress to eliminate requirements for mandatory binding arbitration from all kinds of business transactions.
Rep. Chris Cannon of Utah, ranking Republican on the subcommittee, said the bills are an attempt by plaintiffs lawyers to enrich themselves through litigation over matters that are more easily resolved often in consumers favor through arbitration.
Cannon said the anti-arbitration legislation is aimed at transforming the nature of how our commercial system operates.