BILL ANALYSIS Ķ SENATE JUDICIARY COMMITTEE Senator Hannah-Beth Jackson, Chair 2013-2014 Regular Session AB 2617 (Weber) As Amended April 30, 2014 Hearing Date: June 24, 2014 Fiscal: No Urgency: No RD SUBJECT Civil Rights: Waiver of Rights DESCRIPTION This bill would impose specified restrictions on the future contractual waivers of rights under the Ralph Civil Rights Act and the Tom Bane Civil Rights Act. BACKGROUND California has led the nation in enacting a statutory scheme which provides for civil, criminal, and administrative penalties for violations of civil rights laws. In particular, the Ralph Civil Rights Act and Bane Civil Rights Act were designed to protect individuals from hate-based crimes of violence. Despite these statutory protections, hate crimes are still a common occurrence in some areas of California. This bill seeks to implement specified restrictions on future contractual waivers of rights under these civil rights statutes so as to ensure that the private and public enforcement of these rights are not undermined. CHANGES TO EXISTING LAW Existing law authorizes a court, if it finds as a matter of law that the contract or any clause of the contract was unconscionable at the time it was made, to refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any (more) AB 2617 (Weber) Page 2 of ? unconscionable result. (Civ. Code Sec. 1670.5(a).) Existing law , the Ralph Civil Rights Act, provides that all persons within the jurisdiction of this state have the right to be free from any violence, or intimidation by threat of violence, committed against their persons or property because of personal or other characteristics or statuses, such as political affiliation, sex, race, color, religion, marital status, sexual orientation, or position in a labor dispute. (Civ. Code Sec. 51.7.) Existing law , the Bane Civil Rights Act, prohibits violence or the threat of violence based on grounds such as race, color, religion, ancestry, national origin, political affiliation, sex, sexual orientation, age, disability, or position in a labor dispute. (Civ. Code Sec. 52.1.) Existing law provides that a person who violates the Ralph Civil Rights Act or aids, incites, or conspires in that act, is liable for actual damages suffered by any person denied that right, as well as a civil penalty and attorney's fees. (Civ. Code Sec. 52(b).) Existing law provides that whenever there is reasonable cause to believe that any person or group of persons is engaged in conduct of resistance to the full enjoyment of any of the foregoing rights the Attorney General, any district attorney or city attorney, or any person aggrieved by the conduct may bring a civil action. (Civ. Code Sec. 52(c).) Existing law provides that a person whose enjoyment of legal rights has been interfered with, or attempted to be interfered with, may bring a civil action for damages, including injunctive relief, and other appropriate equitable relief. (Civ. Code Sec. 52.1.) This bill would provide that a person shall not require another person to waive any legal right, penalty, remedy, forum, or procedure for violation of the Ralph Civil Rights Act or the Bane Civil Rights Act as a condition of entering into a contract for the provision of goods and services, including the right to file and pursue a civil action or complaint with or otherwise notify the Attorney General or any other public prosecutor or any law enforcement agency, the Department of Fair Employment and Housing, or any court or other governmental entity. AB 2617 (Weber) Page 3 of ? This bill would provide that a person shall not refuse to enter into a contract with, or refuse to provide goods or services to, another person on the basis that the other person refuses to waive any legal right, penalty, remedy, forum, or procedure for violation of these civil rights acts, including the right to file and pursue a civil action or complaint with or otherwise notify the Attorney General or any other public prosecutor or any law enforcement agency, the Department of Fair Employment and Housing, or any court or other governmental entity. This bill would provide that the exercise of a person's right to refuse to waive any legal right, penalty, remedy, forum, or procedure for a violation of these civil rights laws shall not affect any otherwise legal terms of a contract or an agreement. This bill would require that any waiver of any legal right, penalty, remedy, forum, or procedure for violation of these civil rights acts be knowing and voluntary, and in writing, and expressly not made as a condition of entering into the contract or as a condition of providing or receiving goods and services, and that any person who seeks to enforce such a waiver shall have the burden of proving that it was knowing and voluntary and not made as a condition of the contract or of providing or receiving the goods or services. This bill would provide that any waiver of any legal right, penalty, remedy, forum or procedure for a violation of this bill that is required as a condition of entering into a contract for goods or services shall be deemed involuntary, unconscionable, against public policy, and unenforceable. This provision does not affect the enforceability or validity of any other provision of the contract. This bill would provide that the foregoing protections apply to any agreement to waive any legal right, penalty, remedy, forum, or procedure for a violation of these civil rights laws entered into, altered, modified, renewed, or extended on or after January 1, 2015. The bill would not apply to any agreement to waive any legal rights, penalties, remedies, forums, or procedures for a violation of these civil rights acts after a legal claim has arisen. This bill would provide that these provisions shall not be construed to negate or otherwise abrogate certain rights under the law that are currently unwaivable. AB 2617 (Weber) Page 4 of ? This bill would include legislative findings and declarations as follows: it is the policy of the State of California to ensure that all persons have the full benefit of the rights, penalties, remedies, forums, and procedures established by the Ralph Civil Rights Act and the Tom Bane Civil Rights Act, and that individuals shall not be deprived of those rights, penalties, remedies, forums, or procedures through the use of involuntary or coerced waivers; and it is the purpose of this act to ensure that a contract to waive any of the rights, penalties, remedies, forums, or procedures under the Ralph Civil Rights Act or the Tom Bane Civil Rights Act, including any provision that has the effect of limiting the full application or enforcement of any right, remedy, forum, or procedure available under the Ralph Civil Rights Act or the Tom Bane Civil Rights Act, is a matter of voluntary consent, not coercion. COMMENT 1. Stated need for the bill According to the author: The Ralph Civil Rights Act ([Civ. Code Sec.] 51.7) and the Bane Civil Rights Act ([Civ. Code Sec.] 52.1) prohibit violence or the threat of violence based on race, color, religion, ancestry, national origin, political affiliation, sex, sexual orientation, age, disability, or position in a labor dispute. An aggrieved individual can sue based on violations of the rights expressed in these acts, but courts are increasingly inclined to honor a signed waiver requiring the parties to submit to arbitration. Arbitration can be a legitimate form of conflict resolution provided that the parties involved are fully informed of how arbitration works and both agree to submit to it voluntarily. Unfortunately, the increasingly widespread practice of making mandatory arbitration a condition of a contract puts the consumer at an extreme disadvantage as there is not equity in the agreement where a waiver of legal rights is a condition of the contract. This is especially true in civil rights cases, where the intent of the laws is [ ] to provide a mechanism for a legal remedy and to reinforce through public proceedings that these actions are not sanctioned by the state. Because the nature of arbitration is secret and decisions can be AB 2617 (Weber) Page 5 of ? rendered by the arbitrator without reference to statute or case law, the spirit and intent of the state's civil rights laws are being seriously undermined. The case of DC v. Harvard Westlake [(2009) 176 Cal.App.4th 836] illustrates why the bill is needed. A high school student received death threats from classmates based on his misperceived sexual orientation. On the advice of law enforcement, he withdrew from the private school and moved to another part of the state. His parents decided to hold the school accountable for inaction on disciplining the perpetrators and for revealing the student's new school. Like any victim of hate crimes and violation of civil rights, he deserved his day in court, yet was denied because of a mandatory arbitration clause in the enrollment contract signed by his parents. There is no right without a remedy and the remedy for violations in these cases is best adjudicated under the state's civil rights statutes and enforced by the courts. Mandatory arbitration preemptively forces victims to submit to arbitration proceedings conducted behind closed doors where arbitrators are not required to adhere to the state's civil rights statutes or existing case law, yet their decisions are still binding and enforced by the courts. The forum of redress in civil rights cases should be chosen freely rather than dictated to them by fine-print contract provisions. The courts play an irreplaceable role by establishing precedents and issuing decisions in these cases which bear on the public's interest in protecting citizens from bias-based intimidation and discrimination. In support of the bill, the California State Conference of the NAACP writes that "AB 2617 is good public policy in that it strengthens the circumvention of California Civil Rights by closing a loophole and prevents consumer abuse. Currently some employers, landlords and merchants abuse consumers by requiring the consumer as a condition of receiving employment, housing, or goods and services to enter a contract with a mandatory arbitration clause buried in the contract preventing the consumer from going to court to seek justice under California's civil rights statutes. [ . . . ] Unfortunately, because of the widespread mandatory arbitration waivers in contracts, the effectiveness of the protections afforded by these [civil rights] laws is being seriously undermined. A right that is not AB 2617 (Weber) Page 6 of ? enforceable in the courts is no right at all." 2. Bill seeks to respond to a problem highlighted in a controversial appellate court decision regarding hate crimes This bill would impose specified restrictions on the future contractual waivers of rights under the Ralph Civil Rights Act and the Bane Civil Rights Act, in part in response to the case of D.C. et al. v. Harvard-Westlake School et al., (2009) 176 Cal.App.4th 836. D.C. involved alleged threats of violence against a student, D.C., at Harvard-Westlake school, a private educational institution in Los Angeles. According to the facts of the case, several students at Harvard-Westlake used the school's computers, went to D.C.'s Web site and posted death threats against D.C., along with derogatory comments about him. Several other posts contained threats with references to D.C.'s misperceived sexual orientation as a homosexual. When D.C.'s father read the threats on the Web site, he immediately informed Harvard-Westlake of the problem, believing that some of its students were responsible. The father also contacted the Los Angeles Police Department, which, in turn, notified the Federal Bureau of Investigation. On the advice of the police, D.C. withdrew from Harvard-Westlake. He and his family moved to another part of California, where he enrolled at a different educational institution. The Chronicle, Harvard-Westlake's student newspaper, ran an article disclosing D.C.'s new residential location and the name of the school he was attending. The article also disclosed that postings at the Web site had referred to D.C. as a "faggot." The faculty advisor to the staff of The Chronicle approved the article before publication. Harvard-Westlake did not suspend or expel any of the students who admitted posting the threats. D.C. and his parents attempted to sue Harvard-Westlake under the hate crimes law. (Civ. Code Secs. 51.7, 52.1.) In response, the school filed a petition to compel arbitration of all claims. The petition was based on the contents of Harvard-Westlake's "Enrollment Contract," signed by D.C.'s father, which consisted of five pages. The contract contained an arbitration provision, stating: "I understand that any legal and actionable controversy or claim arising out of or relating to this Agreement (including but not limited to the determination of the scope and applicability of this Agreement to arbitrate), the student's enrollment in/departure from Harvard-Westlake or the student's educational experience at Harvard-Westlake (including, but not limited to academic matters and extracurricular activities and AB 2617 (Weber) Page 7 of ? community service) shall be submitted to final and binding arbitration to be held in Los Angeles County, California, before a single, neutral arbitrator in accordance with JAMS' Comprehensive Arbitration Rules and Procedures. This arbitration agreement applies during the term of this enrollment agreement and survives after the termination of the enrollment agreement." The contract further contained an attorney's fees provision, stating that in the event of any arbitration or litigation between the parties, the prevailing parties would be entitled to recover all reasonable attorney's fees. The trial court granted the petition to compel arbitration and the case went to a private arbitrator retained by JAMS (Judicial Arbitration and Mediation Services) as specified in the enrollment contract. The arbitrator found for the school on all counts, and ordered the parents to pay the school over half a million dollars in attorney's fees and arbitration costs. The school then filed a petition to confirm the arbitrator's award. The appellate court concluded that because hate crimes laws constitute unwaivable statutory rights comparable to antidiscrimination laws, arbitral expenses and attorney's fees may not be imposed on plaintiffs. The court noted that the plaintiffs would not have been required to pay these expenses had the dispute been heard in court and allowing them to be imposed in arbitration would deter the filing of hate crimes claims. Thus, the court, although recognizing that the rights provided for hate crimes statutes are unwaivable, upheld the order to arbitrate, but reversed the order for the plaintiff to pay the school's arbitral expenses and costs. 3. Controversy surrounding mandatory arbitration In recent years, there have been frequent discussions as to the merits and benefits of mandatory private arbitration as an alternative forum to the civil justice system. Supporters of mandatory arbitration generally assert that it is a more efficient and less costly manner of resolving legal disputes because they are able to limit discovery, set their own rules for presenting evidence, schedule proceedings at their own convenience, and select the third party who will decide their cases. However, critics of private arbitration contend that it is an unregulated industry, which is often costly and unreceptive to consumers. Consumer advocates view mandatory arbitration as putting consumers and businesses employees on an uneven playing field that creates an inclination by arbitrators to decide cases in favor of businesses. They further view AB 2617 (Weber) Page 8 of ? arbitration as an expensive process which also puts consumers at a disadvantage by imposing procedural limitations on their ability to pursue their legal claims. This is especially true in cases where the business has pre-selected the company in the contract who will arbitrate the claim. Critics contend that arbitrators have far less incentive to be fair to both sides when they owe their engagement to the business that will repeatedly appear before them, unlike the consumer party who did not choose the arbitration company and is not likely to be the source of future work for the arbitrator. These concerns are compounded by the fact that there are little, if any, regulations or legal standards imposed on arbitrators or their decisions. Regardless of the level or type of mistake, or even misconduct, by the arbitrator, the grounds on which a court will allow judicial review of an arbitration are extremely narrow. (See Moncharsh v. Heiley & Blase (1992) 3 Cal.4th 1 (holding that a court is not permitted to vacate an arbitration award based on errors of law by the arbitrator, except for certain narrow exceptions).) Courts have recently begun to make some exceptions to Moncharsh, and allowed for more expanded judicial review of arbitral awards in certain circumstances. (See Pearson Dental Supplies Inc. v. Superior Court (2010) 48 Cal.4th 665 (holding that error of law was sufficient grounds to vacate the arbitral award because an arbitrator whose legal error barred an employee subject to a mandatory arbitration agreement from obtaining a hearing on the merits of a discrimination claim under the Fair Employment and Housing Act (or other claims based on unwaivable statutory rights) exceeded his or her legal powers).) Although the Pearson decision does provide some recourse for individuals who were compelled to arbitrate claims of unwaivable statutory rights, and effectively denied a hearing on the merits for their claim, the general rule providing for limited judicial review of arbitral awards is still controlling. 4. Mandatory arbitration may infringe upon meaningful enforcement of unwaivable civil rights laws While arbitration may be appropriate where parties have relatively equal bargaining power and have mutually agreed upon the forum, it arguably is not appropriate when the contract is one of adhesion that a person has been forced to sign without the right to negotiation. This is particularly true in instances where an individual signs arbitration agreements that encompass unwaivable statutory rights. AB 2617 (Weber) Page 9 of ? While a party is free to waive the advantage of a law intended solely for his or her benefit, a law established for a public reason cannot be waived by private agreement. (Civ. Code Sec. 3513.) Both the Ralph and Bane Civil Rights Acts provide for enforcement by the Attorney General and other public prosecutors, as well as the Department of Fair Employment and Housing (DFEH), in addition to private rights of action for equitable relief, civil penalties, and damages. The rights and remedies afforded under these Acts reflect their purpose in not only vindicating individual rights, but also to provide a mechanism to redress the harms hate-based violence causes to the larger community. Indeed, the court in D.C. v. Harvard-Westlake recognized the fundamental public nature of the hate crimes statutes in holding that the rights they establish should not be subject to waiver by private contracts. However, the court disregarded the implications of upholding the mandatory arbitration of a violation of the hate crimes laws. The court instead distinguished the required waiver of the right to have claims resolved by the court from a complete waiver of statutory rights. ("While we recognize that a party compelled to arbitrate such rights does not waive them, but merely 'submits to their resolution in an arbitral, rather than judicial, forum' ? arbitration cannot be misused to accomplish a de facto waiver of these rights." (citing Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064).) In other words, according to the D.C. Court, requiring a party to allow a private arbitrator to decide hate crimes violations is not, inherently, a waiver of rights and procedures provided by the statutes. However, as discussed in the previous comment, there are many problematic aspects of private arbitration which arguably indicates that a waiver of the right to have the claims resolved by the court does essentially equate with a complete waiver of rights. This is especially true with arbitration of civil rights cases, where private arbitration may block not only an individual's access to the civil justice system, but also public prosecution by the Attorney General or other prosecutors or a complaint to the DFEH. (See Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109) (private arbitration clause precluded employee from making use of the enforcement mechanism of the state Labor Commissioner for redress of alleged labor law violation).) Moreover, a fundamental feature of the hate crimes enforcement scheme is that immediate protective and/or restraining orders AB 2617 (Weber) Page 10 of ? may often be needed to prevent further abuse. Even if an arbitrator were to believe that immediate intervention was necessary, private arbitration does not provide for orders necessary for immediate injunctive relief. Thus, there are ample policy reasons for which to conclude that claims rooted in unwaivable civil rights are not appropriate for private arbitration, particularly mandatory private arbitration. 5. Bill would prohibit waiver of rights under hate crimes laws except as specified This bill would provide that no person shall require another person to waive any legal rights, penalty, remedy, forum, or procedure for a violation of the Ralph Civil Rights Act or Bane Civil Rights Act as a condition of entering into a contract for goods or services. This bill would further provide that no person shall refuse to enter into a contract with, or refuse to provide goods and services to another person on the basis that the person refuses to waive his or her rights. Thus, for example, a private school could not require, as in the D.C. case, a student's parents to sign a mandatory arbitration agreement as a condition of enrolling the student at the school. Nor could the private school refuse to enroll the student because his or her parents refused to waive their rights. Any waiver of legal rights, penalty, remedy, forum, or procedure for a violation of the Ralph Civil Rights Act or Bane Civil Rights Act that is required as a condition of entering into a contract for goods and services would be deemed to be involuntary, unconscionable, against public policy, and unenforceable. In addition, this bill would prohibit waivers of any legal right, penalty, remedy, forum, or procedure for violations of the Ralph and Bane Civil Rights Act, unless they are knowing and voluntary, in writing, and expressly not made as a condition of entering into a contract for, or receiving, goods and services. Any person seeking to enforce a waiver of rights under this bill would have the burden of proving that the waiver was made knowingly and voluntarily, and not made as a condition of receiving goods or services. This bill would apply to any agreement, including an agreement to accept private arbitration, entered into, altered, modified, renewed, or extended on or after January 1, 2015. As articulated by the D.C. court, the legal rights to be free from unlawful violence afforded under the Ralph and Bane Civil AB 2617 (Weber) Page 11 of ? Rights Act, are unwaivable statutory rights. However, this bill would provide that an individual may knowingly and voluntarily waive a legal right, remedy, forum, or procedure for violations of the Acts, which could arguably be interpreted as authorizing a complete waiver of all rights. This would be contrary to the longstanding public policy that civil rights established by the state for a public reason cannot be contravened by a private agreement. (Civ. Code Sec. 3513; see also Civ. Code Sec. 1668 (stating that all contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law) and Civ. Code Sec. 1953 (stating that any provision of a lease or rental agreement of a dwelling by which the lessee agrees to modify or waive specified rights shall be void as contrary to public policy).) As it is not the author's intent to allow individuals to completely waive otherwise unwaivable rights by contract, this bill also provides that its provisions shall not be construed to authorize the knowing and voluntary waiver of such rights that currently are unwaivable. 6. Federal Arbitration Act The Federal Arbitration Act (FAA) (9 U.S.C. Sec. 2) provides that an arbitration agreement shall be valid, irrevocable, and enforceable, except on such grounds as exist at law or in equity for the revocation of any contract. Opponents have raised concerns that the restrictions on waivers in this bill may be preempted by federal law. In a coalition letter, they write: The Federal Arbitration Act (FAA) and the California Arbitration Act (CAA) evidence a strong preference for enforcement of arbitration agreements, so long as the underlying contract is fair. The FAA generally prohibits state laws that restrict enforcement of arbitration agreements. [See Armanderiz v. Foundation Health Psychcare Services, Inc. 24 Cal.4th 83 (2000) ("California law, like federal law, favors enforcement of valid arbitration agreements."); Sonic-Calabasas A, Inc. v. Moreno, 57 Cal.4th 1109 (2013) (agreeing that FAA preempts state law that seeks to limit the waiver of administrative hearing in arbitration agreement, as it interferes with arbitration goals of providing "'streamlined proceedings and expeditious results'"); and AT&T Mobility LLC v. Concepcion, 131 S.Ct. AB 2617 (Weber) Page 12 of ? 1740 (2011) (holding that the FAA prohibits states from conditioning the enforceability of an arbitration agreement on the availability of class wide arbitration procedures, as such a requirement would be inconsistent with the intent of the FAA).] Despite consistent authority from both the United States Supreme Court and California Supreme Court regarding the inclination to promote arbitration and limit any statutes or common law that interfere with arbitration, AB 2617 seeks to do just that. Specifically, AB 2617 prohibits any contract that requires a waiver of the right to pursue a civil action for the violation of any alleged civil rights under the Civil Code or Fair Employment and Housing Act. Given that all valid arbitration agreements for goods and services require both parties to waive their rights to pursue a civil action, AB 2617 directly interferes with the FAA and CAA. In response, the author argues that "[n]o court has ever suggested that the FAA compels anyone to enter into an involuntary arbitration contract. State laws that govern arbitration, but do not affect its enforcement, are outside the Act's preemptive scope. This bill simply allows the individual to make the choice to enter into an arbitration agreement knowingly and voluntarily." Staff notes that this bill generally applies to all waivers of legal rights, penalties, remedies, forums, or procedures under the hate crimes statutes, not just specifically to arbitration agreements. This bill also relies on the general contract law principle of unconscionability to invalidate waivers that are required as a condition of entering into a contract for goods or services. Unconscionability is routinely applied by the courts to invalidate contracts, including arbitration agreements. It would be difficult to imagine a scenario where a required waiver of civil rights is not unconscionable. Finally, this bill does not completely bar waivers of legal rights under the hate crimes statutes, or agreements to arbitrate such claims. Instead, this bill requires that all waivers be knowing and voluntary. Thus, it does not appear that this bill conflicts with the FAA. 7. Other opposition arguments The opposition coalition to this bill raises not only federal preemption under the California and Federal Arbitration Acts (see Comment 2 above), but it also makes several other AB 2617 (Weber) Page 13 of ? arguments. First, the opposition argues that courts already provide adequate protection for arbitration agreements. For example, the coalition cites Armanderiz v. Foundation Health Psychcare Services, Inc. 24 Cal.4th 83 (2000), where "the California Supreme Court held that, for employment arbitration agreements that encompass unwaivable statutory rights, the following protections must be included: (1) provide for a neutral arbitrator; (2) no limitation of remedies; (3) adequate opportunity to conduct discovery; (4) written arbitration award and judicial review of the award; and, (5) no requirement for the employee to pay unreasonable costs that they would not incur in litigation or arbitration fees." The opposition also cites several other recent cases, including Wherry v. Award, Inc., 192 Cal.App.4th 1242 (2011), where "a court deemed an independent contractor arbitration agreement unconscionable where it expanded the right to attorney's fees for FEHA violations to the company, and reduced the time to file a FEHA claim from one year to 180 days;" and Ajamian v. CantorCO2e, L.P., 203 Cal.App.4th 771 (2012), where the court denied arbitration "where terms that required California independent contractor to pay upfront costs, arbitrate in New York, and waived statutory rights was substantively unconscionable." Second, the opposition argues that arbitration provides an effective and efficient means to resolve claims, compared to the courts. According to the U.S. District Court Judicial Caseload Profiler, there were 278,442 civil cases filed in 2012, which was approximately three percent lower than the previous year. Over [30,000] of those cases were filed in California. As of September 2012, California had over 25,000 civil cases pending, approximately 8,000 of which have been pending for over a year. Of those 8,000 cases, approximately 2,000 of them have been pending for over three years. Comparatively, in 2007 the American Arbitration Association [AAA] produced a study titled 'AAA Arbitration Roadmap' that provided the following statistics: for cases involving a claim of up to $75,000, the median time for a final resolution was 175 days; for claims between $75,000 and $499,999, the median time for final resolution was 297 days; and, for claims between $500,000 and $999,999, the median time for final resolution was 356 days. [ . . . ] Not only is arbitration more efficient, but also it is less costly for employers/businesses, as well as financially beneficial to consumers/ employees." The opposition cites a study that AB 2617 (Weber) Page 14 of ? analyzed data from California that "found that consumers prevail in arbitration 65.5 [percent] of the time, as compared to 61 [percent] of the time in court. Additionally, California businesses paid an average of $149.50 in arbitration fees whereas consumers only paid an average of $46.63. [ . . . ]" Lastly, the opposition argues that AB 2617 potentially prohibits pre-litigation settlement agreements, because of a provision that "states that the provisions of AB 2617 do not apply 'after a legal claim has arisen.' To the extent this section refers to claims that have actually been filed in civil court, AB 2617 would restrict pre-litigation settlement agreements as well. There are certainly numerous situations where two parties are able to come to a resolution regarding a dispute before litigation is filed. AB 2617 would remove this opportunity and force the parties to actually file a claim in civil court before they could proceed with a settlement agreement that includes a waiver of all claims." In response to these arguments, the author stresses that "AB 2617 is about choice. When a dispute arises, it leaves open all dispute resolution options open, including going to arbitration if both parties voluntarily agree. Forced arbitration limits the forum of resolution to a single choice made by a single party." With respect to any limitation on pre-litigation settlement agreements, the author outright rejects this assertion, arguing that "[t]he bill does not even address pre-litigation settlement agreements and there is nothing in the bill that affects them." 8. Governor's veto message of AB 1680 This bill is substantially similar to the AB 1680 (Saldaņa, 2010) as was approved by this Committee. In vetoing AB 1680, Governor Arnold Schwarzenegger stated: This bill would prohibit businesses from being able to enter into contracts that require disputes to be resolved through arbitration. Arbitration has evolved into a productive and useful method for resolving disputes. It allows parties the opportunity to resolve cases faster than traditional litigation and without incurring the enormous expenses associated with going to court. Since this measure limits the ability of parties to use arbitration, I am unable to sign this bill. AB 2617 (Weber) Page 15 of ? Support : American Civil Liberties Union; California School Employees Association; California State Conference of the NAACP; Consumer Attorneys of California; Equality California; Western Center on Law & Poverty Opposition : California Chamber of Commerce; Acclamation Insurance Management Services; Allied Managed Care; California Apartment Association; California Association of Health Facilities; California Bankers Association; California Chapter of American Fence Association; California Employment Law Council; California Farm Bureau Federation; California Fence Contractor's Association; California Grocers Association; California Hospital Association; California Manufacturers and Technology Association; California New Car Dealers Association; California Restaurant Association; California Retailers Association; California Citizens Against Lawsuit Abuse; Civil Justice Association of California; Coalition of Small and Disabled Veteran Business; Cooperative of American Physicians; Flasher Barricade Association; Marin Builders Association; National Federation of Independent Business; Southwest California Legislative Council; Torrance Area Chamber of Commerce; Western Growers Association HISTORY Source : Author Related Pending Legislation : None Known Prior Legislation : AB 1680 (Saldaņa, 2010) See Comment 8. AB 1715 (Committee on Judiciary, 2003) would have, among other things, made it an unlawful employment practice for a covered employer to require an employee to waive any rights or procedures under the Fair Employment and Housing Act (FEHA) as a condition of employment. This bill was vetoed by Governor Gray Davis. SB 1538 (Burton, 2002) would have, among other things, made it an unlawful employment practice to require an employee to waive any rights or procedures under FEHA, and would have made any predispute arbitration agreement between an employer and employee that violated this prohibition unenforceable. This AB 2617 (Weber) Page 16 of ? bill was vetoed by Governor Gray Davis. Prior Vote : Assembly Floor (Ayes 49, Noes 25) Assembly Judiciary Committee (Ayes 7, Noes 2) **************