Cyrus Dugger

Congress Begins Steps Towards Curbing Mandatory Arbitration: Livestock & Poultry

An article from Farm News speaks for itself about the need to curb mandatory arbitration contract abuse for all Americans. Our hat goes off to Iowa Senators Charles Grassley (R) and Tom Harkin (D) for taking a stand on an important, but under-appreciated issue. What’s even more notable is that senators from both parties were able to see how this issue negatively affects Americans. Republicans are generally less responsive on the issue of access to the courts.

Senate takes step toward competition title

By Randy Mudgett, Managing Editor

Iowa Sen. Tom Harkin, the new chairman of the U.S. Senate Agriculture Committee, made it clear Tuesday he is in favor of introducing legislation for a title in the 2007 farm bill that addresses competition in agriculture.

As a first step in the effort, Harkin joined a group of senators which include Iowa Sen. Charles Grassley in introducing legislation that would end the use of mandatory arbitration clauses in livestock and poultry contracts. The clause that is often written into processor contract arrangements with producers calls for any disputes between the two parties be settled through arbitration.

In the case of arbitration, often an arbitration officer is chosen by the packers with the producer having little chance to prove his side of the dispute. Harkin said the mandatory arbitration clause results in an unfair treatment of producers.

‘‘Producers or growers who feel they have been subject to breach of contract, fraud or illegal activity should be allowed to pursue their rights and remedies in our courts and forced into arbitration,’’ Harkin said Tuesday. ‘‘I fully intend to include this legislation in the upcoming farm bill.’’
Mandatory arbitration clauses have been a common practice in the livestock industry often written so producers must agree that nay disputes or disagreements that may later arise will be submitted to an arbitrator for resolution, one usually appointed by the packer.

Grassley said during a press conference with Iowa reporters Tuesday he believes that producers have had virtually no rights in the expensive process in the past, and farmers have been forced into accepting the language in their production agreements as a ‘‘take-it-or-leave-it’’ inclusion in the contract. ‘‘I have been involved with this issue for a long time and I think it is time we amend the Packers and Stockyards Act to help producers in this area,’’ Grassley said. (link)

Congress previously created a similar prohibition of mandatory binding arbitration agreements in franchise agreements between car dealers and manufacturers when it passed the Motor Vehicle Franchise Contract Arbitration Fairness Act of 2001

However, no such prohibition exists between car dealers and consumers.

Read more about why car dealers cannot logically object to the prohibition of these types of contracts extending to consumers as well.

Auto Dealers and Consumers Agree: Mandatory Arbitration Is Unfair

Posted at 11:50 AM, Jan 12, 2007 in Permalink | Comments (0) | TrackBack (0)