BILL ANALYSIS Ó
SENATE JUDICIARY COMMITTEE
Senator Hannah-Beth Jackson, Chair
2015-2016 Regular Session
SB 1241 (Wieckowski)
Version: April 18, 2016
Hearing Date: April 26, 2016
Fiscal: No
Urgency: No
RD
SUBJECT
Contracts
DESCRIPTION
This bill, with respect to contracts entered into, modified, or
extended on or after January 1, 2017, would make any provision
in a consumer or employment contract that purports to designate
the venue in which a controversy arising from the contract may
be litigated, or the choice of law to be applied, voidable by
the consumer or employee, under specified circumstances.
Further, this bill would prohibit a seller or employer from
requiring a consumer or employee to agree to such a provision,
as specified, and if such a provision is required, it shall be
inoperative and California law shall apply in its place. Lastly,
this bill would authorize a court to award a plaintiff enforcing
his or her rights under this bill attorney's fees, as specified.
BACKGROUND
As a general matter, arbitrations provide an alternative method
of dispute resolution, outside of the courts, wherein a neutral
third party, known as the arbitrator, renders a decision after a
hearing to which both parties have had an opportunity to be
heard. Under California law, there are two distinguishable types
of arbitration: judicial arbitration (also known as
court-annexed arbitration, governed under Code of Civil
Procedure Sections 1141.10 -1141.31) and private arbitrations
(also commonly known as "contractual," "voluntary," or
"nonjudicial" arbitrations; governed under the California
SB 1241 (Wieckowski)
Page 2 of ?
Arbitration Act, Code of Civil Procedure Section 1280 et seq.).
On March 1, 2016, the Senate Judiciary Committee held an
informational hearing on the topic of private or contractual
arbitration agreements, entitled The Federal Arbitration Act,
the U.S. Supreme Court, and the Impact of Mandatory Arbitration
on California Consumers and Employees. In that hearing, many
issues facing consumers and employees who are subject to
arbitration clauses contained in standardized,
take-it-or-leave-it, or "adhesive," contracts were brought to
light. That hearing also brought to light the various
difficulties facing the State in addressing some of the
underlying, fundamental harms faced by consumers and employees
as a result of federal preemption and U.S. Supreme Court
precedent interpreting the Federal Arbitration Act. A package
of arbitration bills, of which this bill is one, arose out of
the hearing, seeking to address various fairness issues
surrounding the rules that govern the conduct and operation of
arbitrators and arbitrations in this state.
Of particular relevance to this bill are issues of fairness
surrounding choice of law and choice of forum clauses as a
condition of non-negotiable consumer and employment contracts,
and, specifically, the ability of a seller or employer to
require a California consumer or employee to litigate or
arbitrate their claims arising out of California in another
state, or pursuant to another state's laws. Generally speaking,
California law does not currently prohibit companies or
employers from requiring consumers or employees to agree to a
non-California forum or to apply non-California law to resolve
their disputes. As a matter of case law, such clauses are valid
so long as the California consumer or employee "will not find
their substantial legal rights significantly impaired by their
enforcement." (America Online, Inc. v. The Superior Court of
Alameda County (2001) 90 Cal.App.4th 1, 21, 23.)
This bill seeks to ensure that California consumers and
employees cannot be forced to litigate or arbitrate their
California-based claims outside of California, under
out-of-state laws, as a condition of a consumer or employment
contract. Specifically, this bill would provide that, in any
consumer or employment contract entered into on or after January
1, 2017, a provision that purports to designate the venue in
which a controversy arising from the contract may be litigated
SB 1241 (Wieckowski)
Page 3 of ?
or arbitrated, or the choice of law to be applied, is voidable
by the consumer or employee, if it: (1) deprives the consumer or
employee of the protection of California law with respect to a
controversy arising in California; or (2) requires the consumer
or employee to litigate outside of California a claim arising in
California. This bill would prohibit a seller or employer from
requiring a consumer or employee to agree to such a provision as
a condition of a consumer or employment contract, and would
provide that such a provision is inoperative and California law
must be applied in its place.
CHANGES TO EXISTING LAW
Existing law permits California courts to exercise jurisdiction
on any basis not inconsistent with the state or federal
Constitutions. (Code Civ. Proc. Sec. 410.10.) A court is also
authorized to stay or dismiss most actions in which it finds
"that in the interest of substantial justice" the action should
be heard in a forum outside of California. (Code Civ. Proc. Sec.
410.30(a).)
Existing law codifies the established doctrine that the courts
will not enforce an unconscionable contract. Specifically,
existing law provides that, if a court finds as a matter of law
that a contract or any clause of the contract was unconscionable
at the time it was made, the court may refuse to enforce the
contract or the unconscionable clause. (Civ. Code Sec. 1670.5.)
Existing case law , in which the California Supreme Court struck
down a mandatory arbitration agreement in an employment contract
as an unconscionable contract of adhesion, holds that
"unconscionability has both a 'procedural' and a 'substantive'
element, the former focusing on 'oppression' or 'surprise' due
to unequal bargaining power, the latter on 'overly harsh' or
'one-sided' results." (Armendariz et al. v. Foundation Health
Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114.)
Existing case law , in which the appellate court refused to
enforce a forum selection clause in a consumer contract, holds
that forum selection clauses will be enforced only "so long as
California consumers will not find their substantial legal
rights significantly impaired by their enforcement." "California
courts will refuse to defer to the selected forum if to do so
would substantially diminish the rights of California residents
in a way that violates our state's public policy." (America
SB 1241 (Wieckowski)
Page 4 of ?
Online, Inc. v. The Superior Court of Alameda County (2001) 90
Cal.App.4th 1, 21, 23.)
Existing law provides, with respect to a contract between a
contractor and a subcontractor for the construction of a public
or private work of improvement in this state, that a provision
shall be void and unenforceable if it purports to require any
dispute between the parties to be litigated, arbitrated, or
otherwise determined outside this state or purports to preclude
a party from commencing such a proceeding or obtaining a
judgment or other resolution in this state or the courts of this
state. (Code Civ. Proc. Sec. 410.42.)
Existing law provides for a maxim of jurisprudence that "[a]ny
one may waive the advantage of a law intended solely for his
benefit. But a law established for a public reason cannot be
contravened by a private agreement." (Civ. Code Sec. 3513.)
Existing law provides the waiver of certain substantive rights
as against public policy, such as a person's rights under the
Consumer Legal Remedies Act (Civ. Code Sec. 1751) and a person's
rights under state securities laws (Corp. Code Sec. 25701).
Thus, those rights are non-waivable.
Existing law makes certain other employment contract provisions,
such as non-compete clauses, void or voidable as against public
policy. (See e.g., Civ. Code Secs. 1670.8, 1751, 1799.207, Bus.
& Prof. Sec. 16600; Edwards v. Arthur Andersen LLP (2008) 44
Cal.4th 937, Fillpoint, LLC v. Maas, 208 Cal.App.4th 1170,
1182-1183.)
Existing law , the Consumer Contract Awareness Act, defines a
consumer contract as a writing prepared by a seller to be signed
by a consumer which provides for the sale or lease of goods or
services that are purchased or leased primarily for personal,
family, or household purposes. (Civ. Code Sec. 1799.201.)
This bill would add to the Consumer Contract Awareness Act that,
notwithstanding any other law, a provision in a consumer
contract that purports to designate the venue in which a
controversy arising from the consumer contract may be litigated,
or the choice of law to be applied, is voidable by the consumer
if the provision would either:
deprive the consumer of the protection of California law with
respect to a controversy arising in California; or
SB 1241 (Wieckowski)
Page 5 of ?
require the consumer to litigate outside of California a claim
arising in California.
This bill would add to the Labor Code that, notwithstanding any
other law, a provision in an employment contract that purports
to designate the venue in which a controversy arising from the
employment contract may be litigated, or the choice of law to be
applied, is voidable by the employee if the provision would
either:
deprive the employee of the protection of California law with
respect to a controversy arising in California; or
require the employee to litigate outside of California a claim
arising in California.
This bill would provide that, for these purposes, litigation
includes arbitration.
This bill would prohibit a seller or employer from requiring a
person to agree to a provision as described above as a condition
of entering into a contract regulated by the Consumer Contract
Awareness Act or an employment contract. If such a provision is
required, the provision would be inoperative and California law
would apply in its place.
This bill would provide that, in addition to injunctive relief
and any other remedies available, a court may award a plaintiff
who is enforcing his or her rights under this section reasonable
attorney's fees.
This bill would provide that these provisions shall apply to a
contract entered into, modified, or extended on or after January
1, 2017.
COMMENT
1. Stated need for the bill
According to the author:
Arbitration goes wrong when it is forced - when a company
requires a consumer to submit any dispute that may arise to
arbitration as a nonnegotiable condition of employment or
buying a product or service. Forced arbitration is a private
out-of-court process that businesses and employers usually
SB 1241 (Wieckowski)
Page 6 of ?
require as a condition of receiving a good, service, or a job.
The California consumer is required to waive her right to sue,
to participate in a class action lawsuit, or to appeal. Forced
arbitration is mandatory, the arbitrator's decision is
binding, and the results are not public.
Unfortunately, forced arbitration clauses are everywhere:
They're in the fine print of car loans and leases, credit
cards, checking accounts, insurance, investing accounts,
student loans, and even certain employment and nursing home
agreements. (In the credit card market alone, arbitration
clauses bind as many as 80 million consumers.)
SB 1241 focuses in on two of the worst clauses that can appear
in a consumer [or employment] contract: (1) Choice of forum
clauses that require a consumer [or employee] to go to an
arbitration or to a court in an entirely different state, and;
(2) Choice of law clauses that intentionally pick what state's
law governs the case - thus deciding what the rules are - to
disadvantage the consumer [or employee].
Specifically, SB 1241 states that consumer and employment
contracts that require a party to litigate or arbitrate in a
different state or require that a different state's law govern
the dispute are voidable by the consumer.
In support of the bill, the California Employment Lawyers
Association writes:
Increasingly, employers, particularly out-of-state employers,
are imposing choice-of-law and forum selection provisions on
their California workers in order to: evade California law,
make it more difficult for employees to pursue legitimate
claims, and ensure that any disputes are decided in a forum
that is most favorable to the employer. [ . . . ]
Needless to say, most workers lack the resources to travel
across the country-let alone around the world-to pursue an
employment claim in another state or country. The problem is
particularly acute for lower income workers and disabled
workers. Those workers that do have the resources and ability
to travel might well find that the protection that they had
under California law does not exist, or is not as
comprehensive, in the jurisdiction that will be deciding their
SB 1241 (Wieckowski)
Page 7 of ?
dispute. [ . . . ]
In [a] recent case, a California employee was fired after
speaking to other employees about alleged violations of
California's Labor Code and because she refused to sign a new
arbitration agreement. Rather than taking her case to court in
California, her employer has forced the claim to be arbitrated
in New York because of a choice-of-venue provision buried in
her new-hire paperwork.
In support, the Consumer Attorneys of California adds that:
Without any legislation to guide them, California courts have
freely enforced these choice of law and choice of forum
provisions, sending California workers to Florida, Illinois,
New York, Minnesota, and even out of the country, to resolve
their claims and other employment disputes.
People and small businesses should not be forced to travel
outside of California to have their claims heard. Likewise,
it is unconscionable to have to waive your rights to have
California's laws apply to your claims.
2. California's interest in consumer and employment contracts
in California
This bill would remove the ability of a seller or employer to
require a consumer or employee to sign a choice of forum or the
choice of law agreement designating a non-California venue, or
non-California law to be applied, if it would: (1) deprive the
consumer of the protection of California law with respect to a
controversy that arose in California; or (2) require the
consumer to litigate or arbitrate outside of California if the
claim arose in California. Any such provision would be voidable
by the consumer or employee and rendered inoperative, thus
requiring California law to be applied. Of particular concern
to the proponents of this bill appears to be the use and impact
of such choice of law and choice of forum clauses alongside
provisions mandating arbitration of all disputes in
standardized, contracts of adhesion, or largely non-negotiable
contracts where the parties have unequal bargaining power.
In support, the Consumer Federation of California writes that
"[t]he use of mandatory arbitration clauses in consumer
contracts has skyrocketed over the last few years. These clauses
are often in adhesion contracts, conditional to receiving a
SB 1241 (Wieckowski)
Page 8 of ?
good, service, or a job, and deny consumers their day in court.
Consumers are required to waive their right to sue, to
participate in a class action lawsuit, or to appeal. Forced
arbitration clauses are particularly harmful when they limit the
choice of forum, requiring a consumer to go to an arbitration or
to a court in a different state, and when they determine what
state's law governs the arbitration. The choice of law is made
intentionally by selecting state law advantageous to the company
and detrimental to the consumer."
The author asserts that California consumers and employees
should never be forced to travel to a different state to resolve
their disputes, or have the laws of a different state govern
their dispute by way of choice of law and choice of forum
clauses. As stated by the author, "if you're selling goods or
services in California or employing Californians, you should not
be able to force all dispute resolution to take place in Florida
or Delaware. These clauses have a chilling effect for several
reasons. Just the cost of travel alone prevents California
consumers who have been harmed by an illegal practice from
seeking compensation. This is especially true when the amount in
controversy is not very large." Furthermore, the author argues,
"[t]he only reason an entity doing business in California
through selling a product or service in California or employing
a Californian would want the laws of another state to apply is
to disadvantage the consumer because that state's consumer
protection laws are weaker."
California has a history of protecting against potentially
one-sided contractual arrangements. The California Supreme Court
struck down a mandatory arbitration agreement in an employment
contract as an unconscionable contract of adhesion, holding that
"unconscionability has both a 'procedural' and a 'substantive'
element, the former focusing on 'oppression' or 'surprise' due
to unequal bargaining power, the latter on 'overly harsh' or
'one-sided' results." (Armendariz et al. v. Foundation Health
Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114.)
Further, California also has a demonstrated and legitimate
interest in protecting its residents from unconscionable
contracts that overly burden the resident by forcing him or her
to litigate or arbitrate a claim arising in California in a
different state, while applying out-of-state law. In America
Online, Inc. v. Superior Court (2001) 90 Cal.App.4th 1, a
California Court of Appeal addressed forum selection clauses and
SB 1241 (Wieckowski)
Page 9 of ?
held that "[o]ur law favors forum selection agreements only so
long as they are procured freely and voluntarily, with the place
chosen having some logical nexus to one of the parties or the
dispute, and so long as California consumers will not find their
substantial legal rights significantly impaired by their
enforcement." (Id. at 21.) Accordingly, having sufficiently
drawn a nexus between California's desire to protect its
citizens and the nature of certain contracts between the
parties, this Legislature has at various times approved laws
restricting choice of law and forum selection between certain
contracting parties in order to protect its residents. (See
Comment 3 for more on such existing law.)
Surely, this state has a substantial nexus to claims or
controversies arising in California between an employer and
California employee, or a seller and California consumer, as
well as a substantial interest in ensuring California laws
govern such claims. Moreover, given that employees may not have
the freedom to select their employer with particularity, let
alone negotiate the terms of their employment contracts,
employers largely have the upper hand when requiring an employee
to agree to choice of law, choice of venue, and choice of forum
provisions. A similar imbalance of power lies between a
consumer and the seller of the goods or services that the
consumer needs. As such, choice of law and choice of forum
agreements contained in consumer and employment contracts, to a
great degree, are arguably not procured "freely and
voluntarily." Further, given that the employment dispute
between the employer and the California employee arises in
California, where the employee performs his or her services,
applying California law in these disputes is certainly logical.
And where a company sells goods in California to California
consumers, using California law in these consumer law disputes
is logical as well. Thus, as a matter of public policy, this
bill appears to level the playing field between companies and
consumers, and employers and employees in many otherwise
non-negotiable contracts in a reasonable fashion. Furthermore,
as noted by the California Employment Lawyers Association, in
support of the bill, this bill also levels the playing field
between California and non-California businesses and employers:
The current situation clearly benefits out-of-state employers
at the expense of California employers. Employers who remain
subject to the rigorous requirements of California labor and
employment law are at a distinct competitive disadvantage when
SB 1241 (Wieckowski)
Page 10 of ?
an out-of-state employer uses a choice-of-law provision to
exempt itself from California's laws governing employment
relationships and adopt another State's less protective
regime. Correcting this problem therefore benefits California
employers as well as employees and contributes to fair
competition in California.
3. Freedom of parties to contract
Several bills brought in this Legislature over the last 15 years
have sought to limit or ban choice of law or choice of forum
clauses in various contracts, particularly where an agreement
would require the employee to litigate in another state or
deprive the employee of substantive rights available in
California. Similar to those prior efforts, this bill seeks to
prohibit choice of law and choice of forum clauses in consumer
and employment agreements if they would require the consumer or
employee to litigate or arbitrate in another state or deprive
the employee of substantive rights available in California.
Such protective statutes have been enacted in other areas, such
as in construction cases, and in regulating private child
support collections. Specifically, existing law provides with
respect to a contract between a contractor and a subcontractor
for the construction of a public work of improvement in
California that a provision shall be void and unenforceable if
it purports to require any dispute between the parties to be
litigated, arbitrated, or otherwise determined outside this
state, or purports to preclude a party from commencing such a
proceeding or obtaining a judgment or other resolution in this
state or the courts of this state. (Code Civ. Proc. Sec.
410.42.)
In addition, private child support collectors are forbidden to
require, as a condition of providing services to an obligee,
that the obligee waive any right or procedure provided for in
any state law regarding the right to file and pursue a civil
action, or that the obligee agree to resolve disputes in a
jurisdiction outside of California or to the application of laws
other than those of California. Any waiver, including, but not
limited to an agreement to arbitrate or regarding choice of
forum or choice of law, that is required as a condition of doing
business with the private child support collector is presumed
involuntary, unconscionable, against public policy, and
unenforceable. (Fam. Code Sec. 5614(b)(7).)
SB 1241 (Wieckowski)
Page 11 of ?
Under both the federal and state constitutions, a federal or
state law may not unduly impair existing contractual
relationships. (U.S. Const. art. I, Sec. 10, Cal. Const. art.
I, Sec. 9.) In Energy Reserves Group v. Kansas Power & Light
(1983) 459 U.S. 400, the U.S. Supreme Court laid out a
three-part test for whether a state law violates the Contract
Clause. First, the state regulation must substantially impair a
contractual relationship. Second, the state "must have a
significant and legitimate purpose behind the regulation, such
as the remedying of a broad and general social or economic
problem." (Id. at 411-13.) Third, the law must be reasonable
and appropriate for its intended purpose (this test is similar
to the rational basis review). Thus, a state regulation that
imposes a substantial impairment on a contractual relationship
will be upheld if a significant or legitimate public interest
justifies the regulation and if the law adjusts the parties'
rights in a reasonable and appropriate way. (Id. at 411-413;
Associated Builders & Contractors v. Baca (1991) 769 F. Supp.
1537, 1551 (N.D. Cal.).)
A ban on choice of law and choice of forum clauses in employment
agreements could arguably pass constitutional muster under the
above test only if the ban is imposed as a condition of
employment and because it would be aimed at a broad, generalized
social problem potentially affecting every California employee,
not a private interest matter. (See Allied Structural Steel Co.
v. Spannaus (1978) 438 U.S. 234, 261.)
Notably, a Louisiana law that imposes an outright ban on such
clauses was upheld as constitutional by the Louisiana Supreme
Court in Sawicki v. K/S Stavanager Prince and
Assurane-Foreninger Skuld (La.2001) 802 So.2d 598. The
Louisiana law prohibits choice of forum clauses and choice of
law clauses in employment contracts, except where "expressly,
knowingly, and voluntarily agreed to and ratified by the
employee after the
occurrence of the incident which is the subject of the civil or
administrative action." (La. Rev. Stat. 23:921(a)(2).) The
Louisiana Supreme Court held that the statute did not violate
the Contract Clause because it did not impair the contractual
relationship between the employer and the employee and that the
statute reasonably accomplished a legitimate public purpose.
Likewise, this bill would ban such clauses under the same
conditions to protect the rights of California workers. In the
SB 1241 (Wieckowski)
Page 12 of ?
context of consumer agreements, which are also covered by this
bill, choice of law and forum selection clauses that take
Californian consumers out of state to litigate their claims
arguably undermines a host of state consumer protection laws
which not only seek to protect the public against various
business practices, but that contain anti-waiver provisions that
seek to prohibit a consumer from being forced to waive their
rights under those laws in any contract. Being forced to
litigate their claims outside of California or by out-of-state
laws would presumably undermine those very anti-waiver
provisions.
4. Veto of similar bills
The prohibitions of this bill limiting choice of law or choice
of forum provisions in employment contracts are similar to three
prior bills. First, this bill is similar to the enrolled
version of AB 267 (Swanson, 2011). In vetoing AB 267, Governor
Brown stated:
This measure would prohibit employment contracts that require
California employees to agree to the use of legal forums and
laws of other states.
Current law prohibits California employees from being
subjected to laws or forums that substantially diminish their
rights under our laws and I have not seen convincing evidence
that these protections are insufficient to protect employees
in California.
Finally, I would note that imposing this burden could deter
out of state companies from hiring Californians - something we
can ill afford at this time of high unemployment.
This bill is similar to the enrolled version of AB 335 (Fuentes,
2009). In vetoing AB 335, Governor Schwarzenegger stated:
This bill is similar to AB 1043 (Swanson, 2007), which I also
vetoed. Like AB 1043, this bill would discourage out-of-state
and multinational employers from hiring California-based
workers and potentially contribute toward the growing problem
of unemployment. Additionally, the bill is unnecessary
because courts are already well equipped to determine when a
choice of law or choice of forum provision in a private
contract should be enforced in consideration of all applicable
SB 1241 (Wieckowski)
Page 13 of ?
circumstances.
Lastly, this bill is substantially similar to the enrolled
version of AB 1043 (Swanson, 2007). In vetoing AB 1043,
Governor Schwarzenegger stated:
This bill appears to create a solution in search of a problem.
California law currently ensures that employees can not [sic]
be subjected to unconscionable contract provisions that would
force them to forego the protections of California law or
litigate their claims in an inappropriate out-of-state forum.
Moreover, this bill creates unnecessary and unhelpful
uncertainties for the employers and employees concerning
issues of federal preemption. Lastly, I strongly support the
right of parties to freely contract for the terms of their
employment relationship. This bill fundamentally conflicts
with that policy.
In contrast to those bills, this bill would make the choice of
law and choice of forum provisions voidable by the employee, and
not automatically void and unenforceable.
5. Opposition concerns
In opposition, the Civil Justice Association of California
(CJAC) writes that similar prohibitions existed in prior bills
that were vetoed by Governors Brown and Schwarzenegger. (See
Comment 4, above.) "In their veto messages both governors noted
that California law already prohibits Californians from being
subject to laws or forums that substantially diminish their
rights under California law. Governor Brown noted that AB 267
could deter out-of-state employers from hiring Californians."
CJAC argues further that this bill is unnecessary:
California consumers and employees are already protected from
unconscionable contract provisions, including forum selection
and choice of law. In America Online, Inc. v. Superior Court,
90 Cal.App.4th 1 (2001), a California appeals court refused to
enforce a forum selection clause in a class-action consumer
contract dispute, holding that California class members'
rights would be substantially diminished if they were required
to litigate their claims in Virginia.
In Verdugo v. Alliantgroup, L.P., 237 Cal.App.4th 141 (2015),
a California appeals court refused to enforce a forum
designation clause in an employment dispute, holding that the
SB 1241 (Wieckowski)
Page 14 of ?
employer could not demonstrate that enforcement would not
diminish employee's rights if litigated in Texas courts.
Judges evaluating these clauses for enforceability should be
allowed to balance factors in individual cases to determine if
choice of law or forum clauses are valid. Prohibiting these
clauses by statute is unnecessary as the law already protects
Californians from unconscionable contracts.
In response, the author writes that this bill is clearly
necessary, as only a few weeks ago, a California employee was
forced to arbitrate her wrongful termination claim in New York
because of a choice-of-venue provision buried in her new-hire
paperwork. In addition to that recent case, the author writes
that:
[N]umerous courts have enforced choice-of-law and forum
selection provisions in employment contracts.
Olinick v. BMG Entm't, 138 Cal. App. 4th 1286 (Cal. Ct.
App. 2006) (requiring California employee to litigate
discrimination claims in New York);
Hopkinson v. Lotus Dev. Corp, 1995 U.S. Dist. Lexis 8804
(N.D. Cal. June 21, 1995) (requiring California employees
to litigate age discrimination and other claims in
Massachusetts);
Flake v. Medline Indus., Inc., 882 F. Supp. 947 (E.D.
Cal. 1995) (requiring California employee to litigate age
discrimination claims in Illinois);
Sarmiento v. BMG Entm't, 326 F. Supp. 2d 1108 (C.D. Cal.
2003) (requiring California employee to litigate breach of
contract and wage claims in New York).
Spradlin v. Lear Siegler Management Services (9th Cir.
1991) 926 F.2d 865, (requiring a California citizen to
litigate his age discrimination claims in Saudi Arabia)
These cases hold that the burden is on the employee to prove
that the provision is unconscionable or unreasonable. As a
practical matter, this means that the choice-of- law and forum
selection provisions are usually enforced.
Support : California Employment Lawyers Association; Consumer
Attorneys of California; Consumer Federation
Opposition : Civil Justice Association of California
SB 1241 (Wieckowski)
Page 15 of ?
HISTORY
Source : Author
Related Pending Legislation :
SB 1078 (Jackson, 2016) would add specified rules relating to
marketing activities of private arbitration companies and
relating to the ability of arbitrators to enter into future
arrangements with one party to a pending arbitration. This bill
would also allow parties to recoup fees where an award has been
vacated or the arbitrator has been removed during an arbitration
for violations of ethical rules or disclosure requirements.
SB 1065 (Monning, 2016) would eliminate the existing law right
of appeal when a motion to compel arbitration has been denied,
if the case involves a claim under the Elder Abuse and Dependent
Adult Civil Protection Act and the senior has received a trial
preference under existing law due to age and health.
SB 1007 (Wieckowski, 2016) would establish 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 would provide that the transcript shall be the
official record of the deposition, proceeding, or hearing. The
refusal of this right would be a ground for vacatur of the
arbitration award.
Prior Legislation :
AB 267 (Swanson, 2011) See Comment 4.
AB 335 (Fuentes, 2009) See Comment 4.
AB 1403 (Swanson, 2007) See Comment 4.
AB 1740 (Assembly Judiciary Committee, 2005) would have provided
that an agreement entered into or renewed on or after January 1,
2006, establishing a forum outside of this state for the hearing
of specified matters relating to a California consumer would be
contrary to public policy and void and unenforceable. This bill
died without a hearing in our Committee.
SB 1241 (Wieckowski)
Page 16 of ?
AB 2331 (Wayne, Ch. 815, Stats. 2002) added anti-waiver
provisions to various consumer protection laws.
AB 256 (Wayne, 2001) would have required that any action
commenced against a resident who is a consumer in this state
arising out of a consumer contract or other transaction for the
purchase, lease, license, or bailment of goods or services
primarily for personal, family, or household purposes, be filed
in the county in which the consumer signed the contract, the
county in which the consumer resided at the time the transaction
was entered into, or the county in which the consumer resides at
the time action is filed. That bill was vetoed.
**************