Wells’ CEO Tells Senate Banking Committee Firm is Liberalizing Customer Arbitration Agreements. Goldman is looking at its employment arbitration policy. And Amazon drops PDAA from terms of use.
Wells Fargo’s Chief Executive Officer and President, Charles W. Scharf, testified at a May 26 Senate Banking Committee hearing that the firm is in the process of improving the predispute arbitration agreement (“PDAA”) it uses in customer account agreements. Also, Goldman Sachs announced that it was reviewing the firm’s employment arbitration policy. And Amazon has dropped the PDAA from its Terms of Use.
Wells
In prepared remarks, Mr. Scharf said: “[W]e are in the process of removing confidentiality restrictions in all types of customer arbitration agreements that have them, thereby increasing the transparency of the arbitration process. Moreover, we will be updating all consumer arbitration agreements to provide for reimbursement of filing fees where the customer prevails.” As to what’s driving the changes, he said: “This is designed to ensure the costs of filing for arbitration do not prevent consumers from bringing justified disputes to the Bank’s attention. These changes follow our decision last year to end the use of mandatory arbitration for future employee claims of sexual harassment. We are committed to maintaining a thoughtful approach to resolving disputes fairly and efficiently.” A May 26 ThinkAdvisor story added: “In a statement to ThinkAdvisor the same day, Wells Fargo said that ‘Wells Fargo Advisors follows the FINRA dispute resolution process rules, which already state that arbitrators may assess fees against either party even if Wells Fargo prevails.’” The same story reported that PIABA President David Meyer said in an email: “removing the arcane confidentiality restrictions is appropriate and reflects basic decency but if WF truly was committed to resolving disputes fairly and efficiently, it would agree to permit its brokerage firms customers to choose between court and arbitration after a dispute arises and do away with pre-dispute forced arbitration altogether.”
Goldman
Goldman Sachs on June 4 announced that it was yielding to a shareholder proposal that it review the firm’s employment arbitration policy. Goldman Sachs Issues Statement on Arbitration Policy Review, states: “We are appreciative of the dialogue we have had with our shareholders in recent months on the issue of employee arbitration. Providing our employees a safe and inclusive workplace that is free of discrimination and harassment is among our highest priorities. In consideration of the feedback we have received, as well as the results of the recent shareholder vote at our Annual Meeting, we believe it is appropriate to undertake a review to assess this issue comprehensively. We look forward to sharing further information with our shareholders once this review is completed.”
Amazon
We covered in SAA 2021-08 (Mar. 4) the case of Tice v. Amazon.com, Inc., No. 20-55432 (9th Cir. Feb. 19, 2021) (unpublished), in a Short Brief titled: “Alexa … Do I Have to Arbitrate My Dispute with Amazon?” Yes You Do, According to a Divided Ninth Circuit. The Plaintiff had sought class certification under California’s Invasion of Privacy Act, asserting: “she and other class members were injured because Amazon’s voice-activated device, Alexa, recorded Tice’s communications without her consent.” Amazon sought to compel arbitration at the AAA based on the predispute arbitration agreement (“PDAA”) in the Conditions of Use. The divided Ninth Circuit compelled arbitration, holding: “[T]he arbitration clauses apply to ‘any dispute or claim relating in any way to . . . use of any Amazon Service, or to any products or services sold or distributed by Amazon or through Amazon.com’ and to ‘[a]ny dispute or claim arising from or relating to this Agreement or Alexa’” (emphasis in original). Now comes news that Amazon has dropped the PDAA, and replaced it in the Conditions as of May 3 with this dispute resolution language:, “Any dispute or claim relating in any way to your use of any Amazon Service will be adjudicated in the state or Federal courts in King County, Washington, and you consent to exclusive jurisdiction and venue in these courts. We each waive any right to a jury trial.” Media conjecture is that the high fees associated with the tens of thousands of Alexa-based arbitrations drove the change.
(ed: *Interesting! We wonder if other firms will follow suit? **We also wonder whether the firms are trying to position themselves for a day when investors and/or employees will get to choose whether to agree to PDAAs. Ditto Amazon.***So, customers will be required to litigate in Kings County, Washington, with no jury trial? This is better than a local arbitration?)
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