Amtrak Shouldn’t Get Billions in Taxpayer Money While Forcing Consumers Into Arbitration
Many of the 55 million people expected to travel this Thanksgiving season will take Amtrak to visit family and friends, never realizing that the company recently made it nearly impossible for customers to sue it if they are injured in an accident or have some other legal claim. In January, Amtrak quietly added a forced arbitration clause to its tickets.
Forced arbitration clauses are take-it-or-leave-it provisions that force individuals into a private, secret justice system. In private arbitration, there is no judge or jury, and the right to appeal is severely limited. Arbitrators do not have to follow the law or precedent. The arbitrator has an incentive to keep the company happy since it is a repeat customer, and proceedings take place behind a veil of secrecy. In cases of small-dollar injuries, forced arbitration typically bars victims from joining together in class actions and circumvents the broad discovery rules and procedural protections of the courts.
Amtrak’s arbitration provision is far-reaching in scope. In fact, the provision states that it is “intended to be as broad as legally possible” – applying not only to individuals who buy tickets, but to “family members, minor passengers, colleagues and companies” for whom tickets are bought. The provision also lists a litany of claims that cannot be heard in court: negligence, gross negligence, disfigurement, wrongful death, medical and hospital expenses, discrimination and failure to accommodate an actual or perceived disability. In other words, ride at your own risk.
In 2016, Amtrak agreed to pay up to $265 million dollars to settle claims in the aftermath of a 2015 crash that killed eight and injured more than 200. Had the forced arbitration clauses been in place at the time, none of the victims or their families would have been able to use the courts to hold Amtrak accountable.
The U.S. Supreme Court has ruled that Amtrak was “created by the Government, is controlled by the Government, and operates for the Government’s benefit,” and the federal government is a majority stakeholder in it. Amtrak is dependent on federal financial support, having received nearly $2 billion in funding in 2018. A railroad financially supported by taxpayers should not be allowed to shut the courthouse doors on customers who are discriminated against or injured.
Over the past decade, forced arbitration clauses have gone from being the exception to the rule in consumer and employment contracts, and now they’re almost impossible to avoid. Even by the most conservative estimates, the raw number of forced arbitration agreements in effect in the U.S. is at least 2.5 times the population, and the overwhelming majority of these agreements waive a person’s right to join others in a class action. Public Citizen recently compiled a wall of shame showing that more than 100 major companies use these clauses to deny justice to customers and workers. Amtrak now joins this ignominious list.
The reason so many companies insist on using forced arbitration instead of the court system is simple: It effectively lets corporations escape accountability for wrongdoing. But the public opposes these clauses. Overall 84% of voters want to stop corporations from forcing consumers and workers into arbitration, and surprisingly, more Republicans than Democrats feel this way (87% vs. 83%). Fortunately, there is a remedy at hand.
In June, the U.S. House of Representatives passed the Forced Arbitration Injustice Repeal (FAIR) Act (H.R. 1423) on a bipartisan basis by a vote of 225-186. The FAIR Act would prohibit forced arbitration for employment, consumer, antitrust and civil rights disputes. Instead of being forced into a system that is rigged to let corporate criminals off the hook, the victims of rip-offs, scams, wage theft, sexual harassment and discrimination could choose between going to arbitration or going to court. Now the U.S. Senate should pass this legislation.
Public Citizen will urge Amtrak to reverse course and remove forced arbitration clauses from its ticketing. If Amtrak refuses, we will urge congressional appropriators to intervene.