SACRAMENTO - Governor Jerry Brown is being urged to veto a bill that critics say would eliminate arbitration as a practical option for parties who want to resolve disputes quickly, cost effectively and outside of a courtroom.
The head of Civil Justice Association of California (CJAC) said that arbitration is a fair and efficient way to resolve disputes, but the bill before Brown would "unjustifiably hinder arbitration by adding obstacles to scheduling."
"There is no reason to do so," said Kim Stone, president of CJAC.
Senate Bill 1078, which passed Aug. 30, will prohibit arbitration companies from soliciting business from a party to a consumer arbitration for as long as the arbitration lasts.
In opposition to the bill, Stone and other groups said that because some arbitration companies offer "dozens or hundreds of neutrals, any one of whom could be providing service as a neutral at any time for a party that frequently uses arbitration, SB 1078 will operate as a ban on solicitation by arbitration companies of their most frequent users."
Before the Senate acted on the bill, opposition groups, including the state's Farm Bureau Federation, Hospital Association, Professional Association of Specialty Contractors, Restaurant Association and Retailers Association joined CJAC, writing that the bill will create "impractical and logistical barriers that reduce the effectiveness of arbitration as a faster, less expensive alternative to civil litigation."
The bill will also prohibit an arbitrator, during an arbitration, from entertaining any offers of employment as a dispute resolution neutral from a party to the arbitration, according to the opposition.
The groups also say that a party to an ongoing arbitration is a frequent user of arbitration and that the ban "constitutes a practical barrier to the arbitrator scheduling subsequent work, and will complicate the logistical challenge faced by arbitration companies as they try to keep track of which neutrals are available."