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