Class(less) Action: Undermining Consumers at the FCC Law360 - International Center for Law & Economics
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Class(less) Action: Undermining Consumers at the FCC Law360

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Over the weekend, Sen. Al Franken and Federal Communications Commission Commissioner Mignon Clyburn issued an impassioned statement calling for the FCC to thwart the use of mandatory arbitration clauses in internet service providers’ consumer service agreements — starting with a ban on mandatory arbitration of privacy claims in the chairman’s proposed privacy rules. Unfortunately, their call to arms rests upon a number of inaccurate or weak claims. Before the commissioners vote on the proposed privacy rules later this week, they should carefully consider whether consumers would actually be served by such a ban.

To begin with, it is firmly cemented in U.S. Supreme Court precedent that the Federal Arbitration Act “establishes ‘a liberal federal policy favoring arbitration agreements.’” As the court recently held:
[The FAA] reflects the overarching principle that arbitration is a matter of contract … [C]ourts must “rigorously enforce” arbitration agreements according to their terms … That holds true for claims that allege a violation of a federal statute, unless the FAA’s mandate has been “overridden by a contrary congressional command.”
For better or for worse, that’s where the law stands, and it is the exclusive province of Congress — not the FCC — to change it. Yet nothing in the Communications Act (to say nothing of the privacy provisions in Section 222 of the act) constitutes a “contrary congressional command.”

And perhaps that’s for good reason. In enacting the statute, Congress didn’t demonstrate the same pervasive hostility toward companies and their relationships with consumers that has characterized the way this FCC has chosen to enforce the act. As Commissioner Michael O’Rielly noted in dissenting from the privacy notice of proposed rulemaking (NPRM):
I was also alarmed to see the Commission acting on issues that should be completely outside the scope of this proceeding and its jurisdiction. For example, the Commission seeks comment on prohibiting carriers from including mandatory arbitration clauses in contracts with their customers. Here again, the Commission assumes that consumers don’t understand the choices they are making and is willing to impose needless costs on companies by mandating how they do business.

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