BILL NUMBER: SB 1078 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY JUNE 14, 2016
AMENDED IN SENATE MAY 10, 2016
AMENDED IN SENATE APRIL 14, 2016
AMENDED IN SENATE APRIL 4, 2016
INTRODUCED BY Senator Jackson
FEBRUARY 17, 2016
An act to amend Sections 1281.85 and 1281.9 of, and to add Section
1281.65 to, 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. 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 as
to the proposed neutral arbitrator's impartiality. 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.
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 only require disclosure of
solicitations made after January 1, 2017. 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, employment or offers of new
professional relationships, or and, in a
consumer arbitration case, would prohibit the arbitrator from
entertaining or accepting any offers of employment as a dispute
resolution neutral in another case from a party or lawyer for a
party in the pending arbitration.
Existing law requires a court to vacate an arbitration award if it
determines that certain circumstances exist.
This bill bill, in a consumer arbitration
case, would authorize a party to recover arbitration proceeding
costs from a private arbitration company or arbitrator if the
arbitration award is vacated by the court based on a determination
that there was corruption in any of the arbitrators, the rights of
the party were substantially prejudiced by misconduct of a neutral
arbitrator, or the arbitrator making the award either failed to
timely disclose a ground for disqualification, as specified, or the
arbitrator was subject to disqualification, as specified, but failed
to disqualify himself or herself after receiving a timely demand to
disqualify. disqualify because of a violation
of specified ethics standards or disclosure requirements. The bill
would only allow the recovery of costs after the private arbitration
company or arbitrator is provided notice and an opportunity to be
heard only on the issue of whether there was a violation of the
ethics standards or disclosure requirements. The bill would prohibit
the recovery of costs if the arbitration award is vacated solely on
the basis of a harmless error .
This bill would exempt specified self-regulatory organizations
from the application of the bill.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1281.65 is added to the Code of Civil
Procedure, to read:
1281.65. (a) From the time of appointment
until the conclusion of the arbitration, an arbitrator shall not
entertain or accept either of the following:
(a) Any
(1) 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
(2) In a consumer arbitration case, an
y 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.
(b) This section does not apply to an arbitration conducted or
administered by a self-regulatory organization, as defined by the
federal Securities Exchange Act of 1934 (15 U.S.C. Sec. 78a) or
regulations adopted under that act.
(c) For purposes of this section, "lawyer for a party" has the
same definition as that term is defined in Section 1281.9.
SEC. 2. Section 1281.85 of the Code of Civil Procedure is amended
to read:
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 ethics 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
expand, but shall not limit limit,
the disclosure and disqualification requirements established by
this chapter. The ethics 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.
(d) If (1) In a
consumer arbitration case, if an arbitration award is vacated
pursuant to paragraph (2), (3), or (6) of subdivision (a) of Section
1286.2 because of a violation of the ethical
ethics standards adopted by the Judicial Council pursuant to
this section or a violation of the disclosure requirements
established by this chapter, a party may recover any costs incurred
in the arbitration proceeding from the private arbitration company or
from the arbitrator to whom the costs were paid. A recovery of
costs from the private arbitration company or from the arbitrator is
only allowed after the private arbitration company or the arbitrator
is provided notice and an opportunity to be heard only on the issue
of whether there was a violation of the ethics standards or
disclosure requirements. A recovery of costs under this paragraph is
pro hibited if the arbitration award is vacated solely on
the basis of a harmless error. For purposes of this paragraph,
"costs" include filing fees, administrative costs, arbitrator fees,
or any other fees paid to the private arbitration company or
arbitrator.
(2) This subdivision does not apply to an arbitration conducted or
administered by a self-regulatory organization, as defined by the
federal Securities Exchange Act of 1934 (15 U.S.C. Sec. 78a) or
regulations adopted under that act.
SEC. 3. Section 1281.9 of the Code of Civil Procedure is amended
to read:
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 a 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' 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 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 a 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 a 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 a party to the
arbitration proceeding or lawyer for a party.
(7) (A) 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 be made of a party to
the arbitration or of a lawyer for a party to the arbitration.
For Any solicitation made before January 1,
2017, is not required to be disclosed pursuant to this paragraph.
(B) This paragraph does not apply to an arbitration conducted or
administered by a self-regulatory organization, as defined by the
federal Securities Exchange Act of 1934 (15 U.S.C. Sec. 78a) or
regulations adopted under that act.
(C) (i) 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. all of the following:
(I) Private presentations made to a party or lawyer for a party by
the private arbitration company or the arbitrator.
(II) An oral or written request for arbitration business.
(III) Oral or written discussions, meetings, or negotiations to
designate the private arbitration company or the arbitrator as the
arbitration provider or arbitrator for a party.
(ii) For purposes of this paragraph, "solicitation" does not
include any of the following:
(I) Advertising directed to the general public.
(II) Communications indicating a general willingness to serve as
an arbitrator or private arbitration company.
(III) Presentations made by the private arbitration company or the
arbitrator at a program or seminar held open to the public.
(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 before 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.