SACRAMENTO – Opposition has formed against an arbitration bill designed to increase time and cost burdens for arbitrators in California.
Senate Bill 1078 would create an additional burden for arbitrators that could ultimately eliminate arbitration as an option for resolving consumer disputes in California, opponents say. Several groups are urging the governor to veto Senate Bill 1078, as it could increase litigation costs and decrease the ability to use arbitration as a means to defuse disputes.
Under proposed Senate Bill 1078, arbitrators would be required to disclose any solicitation that they have made within the last two years to lawyers that represent parties in the dispute. Experts say the problem with this is how broadly solicitation is defined because it could be any manner of presentations made by an arbitrator. This would create a costly inconvenience to arbitrators as they would need to disclose every instance when they discussed arbitration with any person, company or entity nationwide.
“We are concerned that Senate Bill1078 will force many experienced employment arbitrators to refuse these cases moving forward,” Chris Poole, JAMS president, and chief executive officer told the Northern California Record. “Additionally, the no-solicitation rule is unclear and nearly impossible for ADR providers and practitioners, especially an international firm like JAMS, to monitor.”
With the solicitation disclosure regulation under Senate Bill 1078, arbitrators would have to report every time they made a presentation to promote their business, creating an additional burden for arbitrators that routinely hold meetings and educational events to promote the benefits of arbitration. The disclosure clause of Senate Bill 1078 would mean that every individual who attends the events held by an arbitrator would have to be reported without even the hint that they would later be involved in consumer arbitration in California.
This documentation would be costly and time-consuming for arbitrators to undertake, experts say, making some arbitrators consider not operating in California as a result. The American Arbitration Association has indicated in a letter that it would discontinue operating in California if Senate Bill 1078 is passed.
Other organizations such as the American Farm Bureau Federation has also opposed the bill and signed a letter, along with the Civil Justice Association of California, asking for a veto of Senate Bill 1078.
“Farm Bureau opposed Senate Bill 1078 and signed a letter requesting a veto,” Dave Kranz, communications/news division manager at the California Farm Bureau Federation told the Northern California Record. “We have deferred to the Civil Justice Association of California on leading the effort.”
Opposition has also formed from the American Hospital Association, Professional Association of Specialty Contractors, Restaurant Association and Retailers Association, which have all joined the Civil Justice Association of California in requesting a veto of SB 1078 by Gov. Brown.
If Senate Bill 1078 is not vetoed, it could have a significant impact on the availability of arbitration in California, Poole said.
"This would ultimately mean more litigation in the state as consumers wouldn’t have the opportunity to resolve cases through arbitration that can often be a less costly and efficient means to end a dispute," he said.