Amended in Senate April 4, 2016

Senate Bill No. 1078

Introduced by Senator Jackson

February 17, 2016

An act to amend begin delete Section 1280 of end delete begin insert Sections 1281.85 and end insert begin insert 1281.9 of, and to add Section 1281.65 to, end insert the Code of Civil Procedure, relating to arbitration.

LEGISLATIVE COUNSEL’S DIGEST

SB 1078, as amended, Jackson. Civil procedure: arbitration.

Existing law governs arbitration in civil proceedings. Under existing law, a neutral arbitrator is defined as one who is selected jointly by the parties or by the parties’ arbitrators, or is appointed by the court if the parties or their arbitrators cannot jointly select an arbitrator. begin delete Existing law provides that a party to an arbitration includes the party seeking to arbitrate the agreement, a party against whom arbitration is sought, or a party who is made a party by any of the parties to an agreement, including the arbitrator. Existing law also provides that a written arbitration agreement includes a written agreement that is extended or renewed by an implied or oral agreement. end delete begin insert Existing law requires a person selected to serve as a neutral arbitrator to disclose all matters that could cause a person aware of the facts to reasonably entertain a doubt that the proposed neutral arbitrator would be able to be impartial. Existing law requires the disclosure to include, among other things, whether or not the proposed neutral arbitrator has a current arrangement concerning prospective employment or other compensated service as a dispute resolution neutral with a party to the proceeding, or is participating in, or has participated within the last 2 years in, discussions regarding such prospective employment or service. end insert

begin delete

This bill would make a technical, nonsubstantive change to these provisions.

end delete begin insert

This bill, in a consumer arbitration case, would also require the disclosure of any solicitation made within the last 2 years by, or at the direction of, a private arbitration company to a party or lawyer for a party. The bill would prohibit the solicitation of a party or lawyer for a party during the pendency of the arbitration. The bill would also prohibit an arbitrator, from the time of appointment until the conclusion of the arbitration, from entertaining or accepting any offers of employment, offers of new professional relationships, or offers of employment as a dispute resolution neutral in another case from a party or lawyer for a party in the pending arbitration.

end insert begin insert

Existing law requires a person serving as a neutral arbitrator pursuant to an arbitration agreement to comply with the ethics standards for arbitrators adopted by the Judicial Council, as specified.

end insert begin insert

This bill would authorize a party to recover arbitration proceeding costs from a private arbitration company if the arbitration award is vacated because of a violation of the Judicial Council ethical standards or a violation of the disclosure requirements described above. The bill would also authorize a party to petition the court to recover arbitration proceeding costs from a private arbitration company if the arbitrator is dismissed during the pendency of the arbitration because of a violation of the Judicial Council ethical standards or a violation of the disclosure requirements described above.

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Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 1281.65 is added to the end insert begin insert Code of Civil
Procedure end insert begin insert , to read: end insert

begin insert

begin insert 1281.65. end insert   

From the time of appointment until the conclusion of
the arbitration, an arbitrator shall not entertain or accept either
of the following:

(a) Any offers of employment or new professional relationships
as a lawyer, expert witness, or consultant from a party or lawyer
for a party in the pending arbitration.

(b) Any offers of employment as a dispute resolution neutral in
another case involving a party or lawyer for a party in the pending
arbitration unless all parties to the pending arbitration, including
the lawyers in the arbitration, have conferred and agreed in
writing, before any solicitation of the arbitrator, to allow offers
of future employment as a dispute resolution neutral to be made
to the arbitrator.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 1281.85 of the end insert begin insert Code of Civil Procedure end insert begin insert is
amended to read: end insert

1281.85.  

(a) Beginning July 1, 2002, a person serving as a
neutral arbitrator pursuant to an arbitration agreement shall comply
with the ethics standards for arbitrators adopted by the Judicial
Council pursuant to this section. The Judicial Council shall adopt
ethical standards for all neutral arbitrators effective July 1, 2002.
These standards shall be consistent with the standards established
for arbitrators in the judicial arbitration program and may expand
but begin delete may end delete begin insert shall end insert not limit the disclosure and disqualification
requirements established by this chapter. The standards shall
address the disclosure of interests, relationships, or affiliations that
may constitute conflicts of interest, including prior service as an
arbitrator or other dispute resolution neutral entity,
disqualifications, acceptance of gifts, and establishment of future
professional relationships.

(b) Subdivision (a) does not apply to an arbitration conducted
pursuant to the terms of a public or private sector collective
bargaining agreement.

(c) The ethics requirements and standards of this chapter are
nonnegotiable and shall not be waived.

begin insert

(d) A party may recover costs incurred in an arbitration
proceeding from a private arbitration company if the arbitration
award is vacated because of a violation of the ethical standards
adopted by the Judicial Council pursuant to this section or a
violation of the disclosure requirements established by this chapter.
A party may also petition the court to recover costs incurred in an
arbitration proceeding from a private arbitration company if the
arbitrator is dismissed during the pendency of the arbitration
because of a violation of the ethical standards adopted by the
Judicial Council pursuant to this section or a violation of the
disclosure requirements established by this chapter.

end insert

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 1281.9 of the end insert begin insert Code of Civil Procedure end insert begin insert is
amended to read: end insert

1281.9.  

(a) In any arbitration pursuant to an arbitration
agreement, when a person is to serve as a neutral arbitrator, the
proposed neutral arbitrator shall disclose all matters that could
cause a person aware of the facts to reasonably entertain a doubt
that the proposed neutral arbitrator would be able to be impartial,
including all of the following:

(1) The existence of any ground specified in Section 170.1 for
disqualification of a judge. For purposes of paragraph (8) of
subdivision (a) of Section 170.1, the proposed neutral arbitrator
shall disclose whether or not he or she has a current arrangement
concerning prospective employment or other compensated service
as a dispute resolution neutral or is participating in, or, within the
last two years, has participated in, discussions regarding such
prospective employment or service with a party to the proceeding.

(2) Any matters required to be disclosed by the ethics standards
for neutral arbitrators adopted by the Judicial Council pursuant to
this chapter.

(3) The names of the parties to all prior or pending noncollective
bargaining cases in which the proposed neutral arbitrator served
or is serving as a party arbitrator for any party to the arbitration
proceeding or for a lawyer for a party and the results of each case
arbitrated to conclusion, including the date of the arbitration award,
identification of the prevailing party, the names of the parties’
begin delete attorneys end delete begin insert attorneys, end insert and the amount of monetary damages awarded,
if any. In order to preserve confidentiality, it shall be sufficient to
give the name of any party who is not a party to the pending
arbitration as “claimant” or “respondent” if the party is an
individual and not a business or corporate entity.

(4) The names of the parties to all prior or pending noncollective
bargaining cases involving any party to the arbitration or lawyer
for a party for which the proposed neutral arbitrator served or is
serving as neutral arbitrator, and the results of each case arbitrated
to conclusion, including the date of the arbitration award,
identification of the prevailing party, the names of the parties’
attorneys and the amount of monetary damages awarded, if any.
In order to preserve confidentiality, it shall be sufficient to give
the name of any party not a party to the pending arbitration as
“claimant” or “respondent” if the party is an individual and not a
business or corporate entity.

(5) Any attorney-client relationship the proposed neutral
arbitrator has or had with any party or lawyer for a party to the
arbitration proceeding.

(6) Any professional or significant personal relationship the
proposed neutral arbitrator or his or her spouse or minor child
living in the household has or has had with any party to the
arbitration proceeding or lawyer for a party.

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(7) For a consumer arbitration case, any solicitation made
within the last two years by, or at the direction of, the private
arbitration company to a party or lawyer for a party to the
consumer arbitration. During the pendency of the consumer
arbitration, no solicitation shall made of a party to the arbitration
or of a lawyer for a party to the arbitration. For purposes of this
paragraph, “solicitation” includes an oral or written request for
arbitration business, but does not include advertising directed to
the general public or communications indicating a general
willingness to serve as an arbitrator or private arbitration
company.

end insert

(b) Subject only to the disclosure requirements of law, the
proposed neutral arbitrator shall disclose all matters required to
be disclosed pursuant to this section to all parties in writing within
10 calendar days of service of notice of the proposed nomination
or appointment.

(c) For purposes of this section, “lawyer for a party” includes
any lawyer or law firm currently associated in the practice of law
with the lawyer hired to represent a party.

(d) For purposes of this section, “prior cases” means
noncollective bargaining cases in which an arbitration award was
rendered within five years prior to the date of the proposed
nomination or appointment.

(e) For purposes of this section, “any arbitration” does not
include an arbitration conducted pursuant to the terms of a public
or private sector collective bargaining agreement.

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SECTION 1.  

Section 1280 of the Code of Civil Procedure is
amended to read:

1280.  

As used in this title:

(a) “Agreement” includes but is not limited to agreements
providing for valuations, appraisals and similar proceedings and
agreements between employers and employees or between their
respective representatives.

(b) “Award” includes but is not limited to an award made
pursuant to an agreement not in writing.

(c) “Controversy” means any question arising between parties
to an agreement whether such question is one of law or of fact or
both.

(d) “Neutral arbitrator” means an arbitrator who is either
(1) selected jointly by the parties or by the arbitrators selected by
the parties or (2) appointed by the court when the parties or the
arbitrators selected by the parties fail to select an arbitrator who
was to be selected jointly by them.

(e) “Party to the arbitration” means a party to the arbitration
agreement:

(1) Who seeks to arbitrate a controversy pursuant to the
agreement;

(2) Against whom such arbitration is sought pursuant to the
agreement; or

(3) Who is made a party to such arbitration by order of the
neutral arbitrator upon such party’s application, upon the
application of any other party to the arbitration or upon the neutral
arbitrator’s own determination.

(f) “Written agreement” shall be deemed to include a written
agreement which has been extended or renewed by an oral or
implied agreement.

end delete