BILL ANALYSIS                                                                                                                                                                                                    Ó



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          SENATE THIRD READING


          SB  
          1007 (Wieckowski)


          As Amended  June 15, 2016


          Majority vote


          SENATE VOTE:  26-10


           ------------------------------------------------------------------ 
          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Judiciary       |8-2  |Mark Stone, Alejo,    |Wagner, Maienschein |
          |                |     |Chau, Chiu,           |                    |
          |                |     |Gallagher, Cristina   |                    |
          |                |     |Garcia, Holden, Ting  |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
           ------------------------------------------------------------------ 


          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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