BILL ANALYSIS Ó
SB 1241
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Date of Hearing: June 29, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
SB 1241
(Wieckowski) - As Amended June 20, 2016
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill allows a consumer or an employee to void a
choice-of-venue or choice-of-law provision in a purchase or
employment contract, entered into after January 1, 2017, that
would either require the consumer or employee to adjudicate a
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legal claim outside of California or require the consumer or
employee to waive their protections under California law. This
bill also:
1)Stipulates that if provision or condition described above is
rendered void at the request of the consumer or employee, the
matter must be adjudicated, through litigation or arbitration,
in California and California law shall govern the dispute.
2)Allows a court to award a consumer or employee, who is
enforcing his or her rights under this act, reasonable
attorney's fees, in addition to other remedies available.
3)Provides that this act does not apply to a contract with an
employee who is individually represented by legal counsel in
negotiating the terms of an agreement to designate either the
venue or forum in which a controversy arising from the
employment contract may be adjudicated or the choice of law to
be applied.
FISCAL EFFECT:
Any fiscal impact to the courts should be minor.
COMMENTS:
1)Purpose. According to author and supporters of the bill, an
increasing number of businesses and employers are imposing
choice of venue and choice of law contractual provisions on
Californians in order to evade California law. These
contractual provisions allow businesses and employers to pick
laws or venues of another state (and even another country)
that are favorable to the business interest to govern a legal
dispute if one should arise. Accordingly, Californians who
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are forced to agree to these contractual terms must travel to
other states or countries to litigate or arbitrate a legal
claim. Given the expense and burdens of going to another
forum, this ultimately means that a consumer or an employee is
unlikely to vindicate his or her legal rights.
This bill prohibits a seller or an employer from requiring a
consumer or an employee from agreeing to a provision, as a
condition of entering into a contract, that would either
require the consumer or employee to adjudicate a legal claim
outside of California, or deprive the consumer or the employee
of protection under California law. Additionally, if a
consumer or an employee becomes subject to such contractual
provisions during a contractual relationship with a seller or
employer, this bill allows a consumer or an employee to void
these provisions so that the legal claim may be adjudicated in
California under California law. This bill applies to
contracts commencing after January 1, 2017, and also allows a
court to award reasonable attorney's fees for a consumer or an
employee who enforces rights under this bill.
2)Opposition. Various business interests led by the Chamber of
Commerce, contend that this bill is unnecessary because courts
may already invalidate choice of law of venue clauses in
California contracts by evaluating, in part, the bargaining
power and convenience of the parties involved.
3)Prior Legislation. AB 267 (Swanson) of 2011, which included
provisions similar to this bill with respect to employment
contracts, was vetoed. The Governor indicated, "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."
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Analysis Prepared by:Chuck Nicol / APPR. / (916)
319-2081