NY State Senate Bill 2021-S144

Senate Bill S144

2021-2022 Legislative Session

Relates to the validity of mandatory arbitration clauses printed on tickets by common carriers

download bill text pdf

Archive: Last Bill Status - In Senate Committee Judiciary Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 05, 2022	referred to judiciary
Jan 06, 2021	referred to judiciary

2021-S144 (ACTIVE) - Details

Current Committee:: Senate Judiciary
Law Section:: General Obligations Law
Laws Affected:: Add §5-338, Gen Ob L
Versions Introduced in 2019-2020 Legislative Session:: S7772

2021-S144 (ACTIVE) - Summary

Provides that mandatory arbitration clauses printed on tickets issued by a common carrier which limits the purchaser's ability to sue for damages caused by negligence are void and unenforceable.

2021-S144 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S144

SPONSOR: THOMAS
 
TITLE OF BILL:

An act to amend the general obligations law, in relation to the validity
of mandatory arbitration clauses on tickets issued by a common carrier

 
PURPOSE OR GENERAL IDEA OF BILL:

To prohibit mandatory arbitration clauses on travel tickets.

 
SUMMARY OF PROVISIONS:

  Section  1:  Amends the general obligation law to prohibit tickets for
common carriers from  containing  a  mandatory  arbitration  clause  for
claims  or  disputes  alleging negligence of the common carrier or their
agents. Any such clause is void as against public policy and unenforcea-
ble.

Mandatory arbitration clause is defined as a term or provision requiring

the parties to the contract to submit any controversy arising under  the
contract to arbitration that is final and not subject to court review.

  Section 2: Effective Date.

 
JUSTIFICATION:

Adhesion contracts contain terms and conditions that are often unfavora-
ble  to  consumers  because  they  establish  a  "take  it  or leave it"
relationship between the company and  consumer  and  give  consumers  no
opportunity to negotiate.

Buried   within  adhesion  contracts  are  often  mandatory  arbitration
provisions. Mandatory arbitration requires parties to resolve a contract
dispute before an arbitrator rather than through the  court  system  and
may  force  parties  to  waive their legal rights such as the ability to
appeal the decision of the arbiter. Mandatory arbitration can be a  tool
for  companies to prevent consumers from being able to join class action
lawsuits.

In January 2018, Amtrak changed its standard contract to include  manda-
tory  arbitration  with  no  right  for judicial review. The arbitration
clause covered disputes ranging from ticket complaints through  wrongful
death.  Mandatory  arbitration  is increasingly common in companies that
are consumer facing because those companies are frequently sued in class
actions. This bill would prohibit common carriers from including  manda-
tory arbitration in their ticket agreements.

 
PRIOR LEGISLATIVE HISTORY:

2020:5.7772 (Thomas) - Referred to Judiciary Committee.

 
FISCAL IMPLICATIONS:

None to the state.

 
EFFECTIVE DATE:
This act shall effect immediately.

2021-S144 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    144
 
                        2021-2022 Regular Sessions
 
                             I N  S E N A T E
 
                                (PREFILED)
 
                              January 6, 2021
                                ___________
 
 Introduced  by  Sen.  THOMAS -- read twice and ordered printed, and when
   printed to be committed to the Committee on Judiciary
 
 AN ACT to amend the general obligations law, in relation to the validity
   of mandatory arbitration clauses on tickets issued by a common carrier

   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  The  general  obligations  law is amended by adding a new
 section 5-338 to read as follows:
   § 5-338. VALIDITY OF CERTAIN CONTRACTS PRINTED  ON  TICKETS.    1.  NO
 COVENANT, AGREEMENT OR UNDERSTANDING IN OR IN CONNECTION WITH, OR COLLA-
 TERAL  TO, ANY CONTRACT, TICKET OR SIMILAR WRITING, ENTERED INTO BETWEEN
 THE OWNER OR OPERATOR OF A COMMON CARRIER OR A COMMON CARRIER OF PASSEN-
 GERS BY MOTOR VEHICLE IN THIS STATE, AND  A  PASSENGER  OF  SUCH  COMMON
 CARRIER,  SHALL  CONTAIN  A  MANDATORY  ARBITRATION CLAUSE FOR CLAIMS OR
 DISPUTES ALLEGING NEGLIGENCE OF THE OWNER, OPERATOR OR PERSON IN  CHARGE
 OF  SUCH  COMMON  CARRIER,  OR THEIR AGENTS, SERVANTS OR EMPLOYEES.  ANY
 SUCH MANDATORY ARBITRATION CLAUSE SHALL BE DEEMED TO BE VOID AS  AGAINST
 PUBLIC  POLICY  AND  WHOLLY  UNENFORCEABLE; PROVIDED THAT ANY SUCH ARBI-
 TRATION CLAUSE SHALL BE CONSIDERED SEVERABLE, AND ALL  OTHER  PROVISIONS
 OF THE CONTRACT SHALL REMAIN IN EFFECT AND GIVEN FULL FORCE.
   2.  THE  TERM  "MANDATORY  ARBITRATION  CLAUSE"  SHALL  MEAN A TERM OR
 PROVISION WHICH REQUIRES THE PARTIES TO  SUCH  CONTRACT  TO  SUBMIT  ANY
 CONTROVERSY  THEREAFTER ARISING UNDER SUCH CONTRACT TO ARBITRATION PRIOR
 TO THE COMMENCEMENT OF ANY LEGAL ACTION TO  ENFORCE  THE  PROVISIONS  OF
 SUCH  CONTRACT  AND  WHICH  ALSO FURTHER PROVIDES LANGUAGE TO THE EFFECT
 THAT THE DECISION OF THE ARBITRATOR  OR  PANEL  OF  ARBITRATORS  IN  ITS
 APPLICATION  TO  THE  CONSUMER  PARTY  SHALL BE FINAL AND NOT SUBJECT TO
 COURT REVIEW.
   § 2. This act shall take effect immediately.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD02868-01-1

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