BILL ANALYSIS Ó
SB 1007
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SENATE THIRD READING
SB
1007 (Wieckowski)
As Amended June 15, 2016
Majority vote
SENATE VOTE: 26-10
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Judiciary |8-2 |Mark Stone, Alejo, |Wagner, Maienschein |
| | |Chau, Chiu, | |
| | |Gallagher, Cristina | |
| | |Garcia, Holden, Ting | |
| | | | |
| | | | |
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SUMMARY: Allows a party to an arbitration proceeding the right
to have a court reporter during the arbitration proceeding.
Specifically, this bill:
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
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record of the deposition, proceeding, or hearing.
2)Requires a party requesting a certified shorthand reporter to
make the request in any of the following:
a) A demand for arbitration, or in a response, answer, or
counterclaim to a demand for arbitration.
b) A pre-hearing scheduling conference where any
deposition, proceeding, or hearing is being calendared.
3)Establishes 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.
4)Requires a certified shorthand reporter to be provided to an
indigent consumer, upon request, at the expense of the
nonconsumer party in a consumer arbitration.
5)Provides that if an arbitrator refuses to allow a party to
have a certified shorthand reporter transcribe any deposition,
proceeding, or hearing, the party may petition the court for
an order to compel the arbitrator to grant the party's
request.
6)Further provides that a petition may include a request for an
order to stay any deposition, proceeding, or hearing related
to the arbitration pending the court's determination of the
petition.
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7)States that this act does not add grounds for vacating an
arbitration award or for correcting an arbitration award.
FISCAL EFFECT: None.
COMMENTS: Justice Brennan once said that, "courts are the
central dispute-setting institutions of our society. They are
bound to do equal justice under the law, to rich and poor
alike." It comes as no surprise then that the phrase, "Equal
Justice Under Law," is engraved above the entrance to our
nation's highest court. And so it seems, we put a great deal of
faith in our courts - but would we expect any less? We
anticipate our courts to apply the law in a fair, neutral, and
open manner. We hold judges to high standards, and ask that
they avoid even the appearance of impropriety. We count on our
judiciary to advance the law, issue orders, and render written
opinions. And yet, we acknowledge that our system isn't perfect
and that despite their best efforts, courts sometimes get it
wrong. Acknowledging the imperfection of our justice system is
undoubtedly one reason why it has safeguards. We remember that
decisions of courts are reviewed by appellate courts and indeed,
reviewed by our elected branches. In order to facilitate the
right to appeal, we provide a record of the proceedings, in
criminal matters at least. And so, when our families, friends,
and neighbors are injured, wronged, or have a dispute, we rely
upon that faith that our courts-the institution we trust upon to
promote fairness-will deliver equal justice under the law.
Arbitration is a form of alternative dispute resolution held
outside of courts where a third-party (rather than a judge)
makes a binding (and rarely appealable) award. Because most
arbitration is created by entering into a contract (usually a
contract that is adhesive or take-it-or-leave-it), the
arbitration agreement will lay-out the procedures that will be
followed during the arbitration hearing. For example, the terms
of the arbitration agreement may stipulate that the award need
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not be written or justified (unlike in court), and that the
entire process be kept in secret (rather than in public view).
Arbitrators do not need to be lawyers, nor do they need to be
trained in the law. Arbitrators who issue favorable awards to a
particular company can be repeatedly-hired by that same company
to serve as the arbitration-neutral without ever notifying the
public about that award-history. Arbitrators do not need to be
trained in the law, or even apply the law, or render a decision
consistent with the evidence presented to them. What evidence
is presented may, in fact, be incomplete because parties in
arbitration have no legal right to obtain evidence in support of
their claims or defenses, or the claims or defenses of the other
party, contrary to the longstanding discovery practice in public
courts. Advocates continue to debate about the benefits and
harms of mandatory-arbitration. Proponents of arbitration say
that arbitration produces quicker results and reduces litigation
costs. Opponents argue that arbitration harms consumers and
workers because arbitration proceedings render unfair awards.
What happens after an arbitrator issues an award? When a court
renders a final judgment, parties in an action have the right to
appeal the court's judgment for appellate review. The same is
not true for arbitration. When an arbitrator issues an award,
the award is usually binding and final. Although the parties
may move to correct or vacate the award, the grounds for
correction or vacatur (vacating an award) are limited. For
instance, an award may be vacated if: 1) the award was procured
by corruption or fraud; 2) the rights of the party were
substantially prejudiced by the arbitrator's misconduct; 3) the
arbitrator exceeded his or her powers and the award cannot be
corrected without affecting the merits of the decision; or 4)
the arbitrator failed to disclose certain matters to the
parties. Parties seeking vacatur under these limited grounds
must provide evidence to the court to prove that an award should
be vacated. However, because arbitration awards do not need to
be written or justified (unlike in court), and the entire
process may be kept in secret (rather than in public view),
parties have a difficult time proving that an arbitrator has
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engaged in prejudicial misconduct. This bill seeks to remedy
this problem by allowing litigants to obtain an official record
of an arbitration or arbitration-related proceeding to not only
serve as a record of the proceeding, but also as a check on the
arbitrator and the other parties during the proceedings.
Summary of the bill: This bill would establish that a party to
an arbitration proceeding has the right to have a certified
shorthand reporter (i.e. a court reporter) in any arbitration
deposition, proceeding, or hearing. This bill also provides
that if an arbitrator denies a party's request for a court
reporter, the party may petition the court for an order to
compel the arbitrator to grant the party's request.
Access to an official transcript for any adjudicatory proceeding
is an important component of access to justice. Without an
official record of what transpired at an arbitration proceeding,
litigants may be unable to draft effective petitions to a court
and will be unable to recount what actually happened during
proceedings with any degree of accuracy. This bill reasonably
allows a party the right to request a court reporter during the
arbitration proceedings, at the expense of the requesting party,
without interfering with the arbitration process. In order to
provide access to justice for indigent litigants, this bill also
provides that a court reporter shall be provided to an indigent
consumer at the expense of the nonconsumer party.
To prevent gamesmanship, this bill requires parties to an
arbitration proceeding to request a shorthand reporter in a
timely manner. To address the concern that this act would allow
parties to use a request for shorthand reporters to cause delay,
this bill requires a party to make a request for a certified
shorthand reporter either in the initial demand for arbitration
(or in the response or answer to the demand), or during a
scheduling conference between the parties. Although most
arbitration proceedings only have one initial pre-hearing
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scheduling conference, this bill also envisions that there may
be multiple scheduling conferences before the arbitration
hearing. Accordingly, as long as a request for a shorthand
reporter is made at the scheduling conference when a deposition,
proceeding, or hearing is being calendared, the request would
appear to satisfy the parameters for timeliness under this bill.
A party may petition the court to enforce his or her right to
have a court reporter in arbitration under this bill. To ensure
that this important right can be enforced, this bill allows a
party to petition the court to compel the arbitrator to allow
the party to have a court reporter in the event that an
arbitrator denies a request. This bill additionally allows a
party to petition the court to stay the arbitration proceeding
while the court reviews the petition to compel. Although this
bill allows parties to have the right to have a court reporter
in an arbitration proceeding, the state of arbitration law
theoretically would allow a party to contract away this right -
even though such a contract provision would appear to violate
the public policy of this state. The Legislature, in the
future, may wish to consider whether it should adopt a measure
to prevent this type of unscrupulous conduct by making such
contractual provisions void as against public policy.
Analysis Prepared by:
Eric Dang / JUD. / (916) 319-2334 FN: 0003502
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