BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1007|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
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THIRD READING
Bill No: SB 1007
Author: Wieckowski (D)
Amended: 5/3/16
Vote: 21
SENATE JUDICIARY COMMITTEE: 5-1, 4/26/16
AYES: Jackson, Hertzberg, Leno, Monning, Wieckowski
NOES: Anderson
NO VOTE RECORDED: Moorlach
SUBJECT: Arbitration: transcription by certified shorthand
reporter
SOURCE: Conference of California Bar Associations
DIGEST: This bill establishes the right of a party to an
arbitration to have a certified shorthand reporter transcribe
any deposition, proceeding, or hearing, at the expense of the
party requesting the transcript, except as specified, and
provides that the transcript shall be the official record of the
deposition, proceeding, or hearing. This bill requires that the
party request the reporter upon the initiation of the
arbitration or at the time that any deposition, proceeding, or
hearing is being calendared, and permits the party to petition
the court for an order to compel the arbitrator to grant the
party's request if an arbitrator refuses their request.
ANALYSIS:
SB 1007
Page 2
Existing law:
1)Governs, under the California Arbitration Act (CAA), private
arbitrations in this state, including the enforcement of an
arbitration agreement, the conduct of arbitration proceedings,
and the enforcement of arbitration awards. Provides that a
party to the arbitration has the right to be represented by an
attorney at any proceeding or hearing in arbitration under
this title.
2)Provides that any party to an arbitration in which an award
has been made may petition the court to confirm, correct or
vacate the award, as specified.
3)Requires that all fees and costs charged to or assessed upon a
consumer party by a private arbitration company in a consumer
arbitration, exclusive of arbitrator fees, be waived for an
indigent consumer. For these purposes, "indigent consumer"
means a person having a gross monthly income that is less than
300 percent of the federal poverty guidelines. Provides,
further, that nothing in these provisions affects the ability
of a private arbitration company to shift fees that would
otherwise be charged or assessed upon a consumer party to a
nonconsumer party.
4)Requires any consumer requesting a waiver of fees or costs may
establish his or her eligibility by making a declaration under
oath on a form provided to the consumer by the private
arbitration company for signature stating his or her monthly
income and the number of persons living in his or her
household. No private arbitration company may require a
consumer to provide any further statement or evidence of
indigence.
This bill:
SB 1007
Page 3
1)Provides that a party to an arbitration has the right to have
a certified shorthand reporter transcribe any deposition,
proceeding, or hearing. The transcript shall be the official
record of the deposition, proceeding, or hearing.
2)Requires that a party requesting a certified shorthand
reporter make his or her request upon the initiation of the
arbitration or at the time that any deposition, proceeding, or
hearing is being calendared.
3)Provides that if an arbitrator refuses to allow a party to
have a certified shorthand reporter transcribe any deposition,
proceeding, or hearing pursuant to the above provisions, the
party may petition the court for an order to compel the
arbitrator to grant the party's request.
4)Provides that if an arbitration agreement does not provide for
a certified shorthand reporter, the party requesting the
transcript shall incur the expense of the certified shorthand
reporter. Provides, further, however, that in a consumer
arbitration, a certified shorthand reporter shall be provided
upon request of an indigent consumer, as defined under
existing law, above, at the expense of the nonconsumer party.
Background
Arbitration is a method of alternative dispute resolution where
the disputing parties present their disagreement(s) to one or
more neutral third-party arbitrators whose decisions are
generally final and binding, instead of litigating the issues in
courts.
While the arbitration of certain types of disputes may be
governed by specific statutes, the CAA, Sections 1280 et seq. of
SB 1007
Page 4
the Code of Civil Procedure, provides for a comprehensive,
all-inclusive statutory scheme applicable to all written
agreements to arbitrate disputes. This law governs all aspects
of a nonjudicial arbitration: from the conduct of arbitrators,
private arbitration companies, and the arbitration proceedings,
to the enforcement of arbitration agreements and arbitration
awards, as well as related judicial proceedings. Currently, the
CAA is silent as to the right of parties to court reporters in
an arbitration.
Arbitration has been a topic of significant controversy over the
years as a form of alternative disputes resolution. Generally,
some advocates assert that private arbitration provides a
cheaper, faster, more efficient form of dispute resolution than
the overburdened courts. At the same time, other consumer and
employee advocates frequently raise issues with arbitration as
an unregulated industry, which can be costly, unreceptive, and
biased against consumers. These advocates assert that
boilerplate, or standardized, contracts forcing consumer and
employees into private arbitrations are problematic because
arbitrators can conduct arbitrations without allowing for
discovery, complying with the rules of evidence, or explaining
their decisions in written opinions (Code Civ. Proc. Secs.
1283.1, 1282.2, and 1283.4); and arbitrations may be conducted
in private with no public scrutiny (Ting v. AT&T, 182 F.Supp.2d
902 (N.D. Cal. 2002), affirmed, 319 F.3d 1126 (9th Cir. 2003)).
Critics' 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. As a result, arbitrators can disregard
the law and can issue binding decisions that are legally
enforceable but generally not reviewable by a court. (See
Moncharsh v. Heily & Blasé (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).) As a matter of statutory law, the CAA's remedies
are limited to vacatur of the award under limited circumstances.
This bill establishes the right of any party to an arbitration
SB 1007
Page 5
to have a court reporter transcribe any deposition, proceeding,
or hearing, as specified.
Comments
As stated by the author:
In arbitrations, as in all legal proceedings, the existence of
a reporter's transcript of a deposition, proceeding or hearing
can be absolutely essential to obtaining justice. In the
absence of such a transcript or a suitable substitute, a
reviewing court will conclude that an arbitration award, like
all judgments or orders of lower courts, are presumed to be
correct. Numerous appellate courts have refused to reach the
merits of an appellant's claims because no reporter's
transcript of a pertinent proceeding or a suitable substitute
was provided.
For this reason, the ability of a party or an arbitrator to
deny the other party's request to have, at the party's own
expense, a court reporter prepare a transcript of the
proceeding can substantially prejudice the rights of the
requesting party because no court report's transcript or
suitable substitute will be available for a reviewing court.
As a result, the reviewing court then has to assume that the
arbitration award is correct because no official record
exists. This is a denial of the fundamental due process right
to fairness of an arbitration hearing.
Although some of the major Alternative Dispute Resolution
(ADR) providers acknowledge the importance of the ability to
prepare a record of the proceedings, the practice is not
universal and abuse has occurred. Arbitrators can and will
deny parties the right to prepare a record of the proceedings.
Particularly in cases of mandatory arbitration and unequal
bargaining power between the parties, this can be a critical
factor in the denial of justice.
SB 1007
Page 6
FISCAL EFFECT: Appropriation: No Fiscal
Com.:NoLocal: No
SUPPORT: (Verified5/4/16)
Conference of California Bar Associations (source)
OPPOSITION: (Verified5/4/16)
Civil Justice Association of California
ARGUMENTS IN SUPPORT: The sponsor of this bill, the
Conference of California Bar Associations, writes in support
that:
SB 1007 would specify in statute that parties to an
arbitration have a right - at their own expense (except in the
case of a consumer arbitration) - to have a certified
shorthand reporter attend and transcribe any deposition,
proceeding, or hearing during the arbitration, and to have
that transcript be regarded as the official record. [ . . . ]
Under existing law [ . . . ] the arbitrator or another party
to an arbitration can deny the other party's request to have a
court reporter prepare a transcript of the proceedings, even
if the requesting party is paying for the reporter out of
pocket. The absence of such a record can substantially
prejudice the rights of the requesting party because no court
report's transcript or suitable substitute will be available
for a reviewing court considering the validity of the award.
Because no official record exists, the reviewing court has to
assume that the arbitration award is correct, even if the
record - if it existed - might clearly show error or
misconduct. In these cases, the absence of a transcript is a
denial of the fundamental due process right to fairness of an
arbitration hearing.
SB 1007
Page 7
The importance of having an official record in arbitration
proceedings is acknowledged by the state's major ADR
providers, each of whom has rules that encourage - but don't
guarantee - the ability to prepare a record of the
proceedings. However, the practice is not universal and abuse
has occurred, often in cases of mandatory arbitration and
unequal bargaining power between the parties. SB 1007 will
provide protection against such miscarriages of justice.
ARGUMENTS IN OPPOSITION: The Civil Justice Association of
California wrote in opposition to the prior version of this bill
that:
[C]urrent law sets standards for arbitration and requires a
court to vacate an arbitration award if it makes certain
findings, including:
" The award was procured by corruption, fraud, or other
undue means.
" There was corruption in any of the arbitrators.
" The rights of the party were substantially prejudiced
by misconduct of a neutral arbitrator.
" The arbitrators exceeded their powers and the award
cannot be corrected without affecting the merits of the
decision upon the controversy submitted.
" The rights of the party were substantially prejudiced
by the refusal of the arbitrators to postpone the hearing
upon sufficient cause being shown therefor or by the
refusal of the arbitrators to hear evidence material to
the controversy or by other conduct of the arbitrators
contrary to the provisions of this title.
SB 1007
Page 8
We do not believe that SB 1007 presents a comparable basis
for vacating an arbitration award. [ . . . ] We do not
believe that having a certified shorthand reporter should
provide the basis for vacating a permissible arbitration
award.
Prepared by:Ronak Daylami / JUD. / (916) 651-4113
5/4/16 14:57:54
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