Legislation To Bring Greater Fairness To Binding Arbitration Up for a Vote Today

April 26, 2016

SACRAMENTO – Californians wanting to use a cell phone, apply for a credit card, get a job, place a relative in a nursing home or purchase many other goods and services are increasingly being required to sign contracts that limit or prohibit their ability to resolve their disputes in court or file class-action lawsuits to protect their rights.

Four pieces of legislation that seek to bring greater fairness and integrity to this increasingly common “privatized court system” will be up for a vote in the Senate Judiciary Committee today as part of a special order of business immediately at 1:30 p.m. in Room 112 of the State Capitol.

The hearing will also be televised live on www.calchannel.com

“At our Senate Judiciary Committee hearing on this issue last month, we heard story after story of people who felt powerless going through the arbitration process and that this was a process where corporations stacked the deck in their favor,” said Senator Hannah-Beth Jackson (D-Santa Barbara), who is chair of the Senate Judiciary Committee. “As long as this system continues unrestrained, we need to address these disparities and the perception that this is a deeply unfair process for many Californians.”

Four bills will be up for a vote today:

Senate Bill 1007 by Senator Bob Wieckowski (D-Fremont) will affirm that a person has the right to a certified court reporter in an arbitration hearing. 

“How is a consumer supposed to prove the arbitration was a sham if they’re not allowed to keep a record of what happened?” Wieckowski said.

Senate Bill 1065 by Senator Bill Monning (D-Carmel) would allow seniors to have a more timely case resolution under the Elder Abuse Act.  If seniors obtain a legal preference for a court hearing because they are sick and dying, SB 1065 allows them to continue to trial without waiting years for an appellate process.  Currently, a court can find a nursing home or elder care facility’s arbitration provision unconscionable and unenforceable, but the defendant has the ability to file an appeal, preventing the case from going to court and  delaying the case for years.

“Under current law, nursing homes or elder care facilities that have been accused of elder abuse can prolong the court process by three years or more, which is time that sick and elder Californians do not necessarily have,” said Monning.  “SB 1065 creates a timely, expedited judicial process for elderly individuals who have been neglected, abandoned, isolated, or financially or physically abused in their final years, and is a step forward to assure that these victims will get their day in court.”

Senate Bill 1078 by Senator Hannah-Beth Jackson (D-Santa Barbara) helps protect against conflicts of interest in arbitrations and protects against “repeat players,” where a company brings the same arbitrator repeat business worth hundreds of thousands if not millions of dollars. It prohibits an arbitrator from entertaining or accepting additional work from one of the parties to the arbitration while an arbitration is pending, unless both parties agree, and places limits on targeted marketing activities during an ongoing arbitration. While there are rules arbitrators are supposed to follow, there are few consequences if they violate them. SB 1078 ensures arbitrators refund their fees if they violate ethical rules or disclosure requirements.  

Senate Bill 1241 by Senator Bob Wieckowski (D-Fremont) focuses on two of the worst clauses that can occur in a consumer or employee contract.  It ensures that a California consumer who purchases a good or service in California, or works in the state, is not forced to arbitrate or litigate in a different state or give up protections afforded under California law.

“In this world of for-profit justice, it’s outrageous that a company can not only force a local consumer or employee to travel out of California, but can also cherry-pick what state’s law governs the arbitration,” said Wieckowski, a member of the Judiciary Committee and author of the bill. “This stacks the deck against the consumer or employee and creates an unfair advantage for the company.”

Tara Zoumer, who sued her California employer for wrongful termination in Superior Court, but is now being required to arbitrate the case in New York, will testify at today’s hearing in support of SB 1241.