BILL ANALYSIS
AB 1680
Page 1
ASSEMBLY THIRD READING
AB 1680 (Saldana)
As Amended April 22, 2010
Majority vote
JUDICIARY 6-3
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|Ayes:|Feuer, Brownley, Skinner, | | |
| |Jones, Lieu, Monning | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Tran, Hagman, Knight | | |
| | | | |
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SUMMARY : Restricts future contractual waivers of certain civil
rights statutes. Specifically, this bill :
1)Provides that no person shall require another person to waive
any legal right, penalty, remedy, forum, or procedure for
violation of the Ralph Civil Rights Act or the Bane Civil
Rights Act as a condition of entering into a contract for the
provision of goods and services, including the right to file
and pursue a civil action or complaint with or otherwise
notify the Attorney General or any other public prosecutor or
any law enforcement agency, the Department of Fair Employment
and Housing, or any court or other governmental entity.
2)Provides that no person shall refuse to enter into a contract
with, or refuse to provide goods or services to, another
person on the basis that the other person refuses to waive any
legal right, penalty, remedy, forum, or procedure for
violation of these civil rights acts.
3)Provides that the exercise of a person's right to refuse to
waive any legal right, penalty, remedy, forum or procedure for
a violation of these civil rights laws shall not affect any
otherwise legal terms of a contract or an agreement.
4)Requires that any waiver of any legal right, penalty, remedy,
forum, or procedure for violation of these civil rights acts
shall be knowing and voluntary, and in writing, and expressly
not made as a condition of entering into the contract or as a
condition of providing or receiving goods and services, and
that any person who seeks to enforce such a waiver shall have
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the burden of proving that it was knowing and voluntary and
not made as a condition of the contract or of providing or
receiving the goods or services.
5)Provides that the foregoing protections apply to any agreement
to waive any legal right, penalty, remedy, forum or procedure
for a violation of these civil rights laws entered into,
altered, modified, renewed, or extended on or after January 1,
2011.
FISCAL EFFECT : None
COMMENTS : The author explains the reason for the bill as
follows:
The purpose of AB 1680, the Hate Crimes Protection
Act, is to ensure that a contract requiring the
waiver of rights or procedures under the hate
crimes statute is a matter of voluntary consent and
not coercion.
The Ralph Civil Rights Act provides civil penalties
and remedies to victims of hate-based violence and
threats of violence. A central feature of the
Ralph Act affords an individual the opportunity to
file a private civil action, as well as a complaint
with the Department of Fair Employment and Housing
(DFEH).
However, it is becoming common for contracts to
mandate wavier of these rights, including clauses
that mandate private arbitration of any legal
controversy or claim. A person who signs such a
contract but later becomes the victim of a hate
crime is forced to privately arbitrate the hate
crime violation, rather than bring the civil action
to court.
While voluntary agreements for arbitration are
appropriate, many contracts make accepting a
mandatory arbitration provision a condition of
entering into a contract which cannot be refused
without invalidating the entire agreement. When
waiving the right to go to redress under the law is
made a condition of entering into a contract,
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rather than as a term that can be knowingly and
freely accepted or rejected, statutory enforcement
of the rights of Californians to be free from
hate-based violence is undermined.
AB 1680 is narrow in its scope to address only hate
crimes, not other types of employment or consumer
disputes, and to ensure that the waiver of any
legal rights under the hate crimes laws is knowing
and voluntary, not imposed as a condition of
entering into the contract. It also prohibits
refusing to enter into a contract on the basis that
the other person declines to waive his/her rights
under the hate statutes. However, the bill does
not prohibit all waivers, or even all pre-dispute
waivers, when the parties voluntarily believe it is
in their interest to do so.
The impetus for the bill is the controversy arising out of a
recent incident involving alleged threats of violence against a
young man identified by his initials, "D.C.," who was a student
at Harvard-Westlake School, a private educational institution in
Los Angeles. With his parents, D.C. attempted to sue
Harvard-Westlake and others under the hate crimes law.
According to the facts recited in the court opinion, several
students at Harvard-Westlake, using its computers, went to
D.C.'s Web site and posted death threats against D.C. and made
derogatory comments about him. The students who posted the
threats sought to destroy D.C.'s life, threatened to murder him,
and wanted to drive him out of Harvard-Westlake and the
community in which he lived.
The trial court granted the petition to compel arbitration, the
case went to a private arbitrator retained by JAMS as specified
in the enrollment contract, the arbitrator found for the school
on all counts, and the arbitrator ordered the parents to pay the
school over half a million dollars in attorney's fees and
arbitration costs. The school then filed a petition to confirm
the arbitrator's award - in essence, to convert it from a
private agreement into a court order. The court upheld the
order to arbitrate and confirmed the arbitrator's award in favor
of the school, although the award of money to the school was
reversed by the court.
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Supporters of this bill contend that private arbitration is a
mostly anything-goes private "court" industry which is often
costly and allegedly unreceptive to consumers. There is little
if any regulation, oversight or legal accountability to the
parties or the public beyond certain disclosures arbitrators are
to make to the parties. Arbitration's stark differences from
the public justice system are generally believed to be
appropriate where parties with relatively equal bargaining power
have voluntarily chosen to have their dispute and legal rights
resolved by a method other than the courts. Indeed, parties to
a contract might choose to simply flip a coin to resolve their
disputes, and public policy may favor holding them to that
bargain. Private arbitration becomes more controversial,
however, when it is imposed by more powerful parties without
negotiation or the right to withhold consent to allegedly unfair
terms.
The favorable reputation arbitration has long enjoyed largely
grows out of its use in the resolution of labor disputes in the
first part of the 20th Century. In the labor-management
context, where the parties mutually choose the arbitrator from
among a small group of specialists, the arbitrator has an
incentive to be perceived as fair by both sides over the long
term. By contrast, critics contend, arbitrators have far less
incentive to be fair to both sides when they owe their
engagement (and future work) to the business that pre-selected
the arbitration company in the contract and who will repeatedly
appear before them, unlike the consumer party who did not choose
the arbitration company and is not likely to be the source of
future work for the arbitrator. This reluctance to offend the
source of repeat business may be particularly true where the
dispute involves stigmatizing allegations, such as the
hate-crimes charges at issue in this bill.
Supporters of this bill contend that hate crimes laws are
fundamentally different from the type of commercial disputes
that may be appropriate for private arbitration. Nor do hate
crimes appear to generate concerns about "abusive litigation"
that have caused some business groups to defend the imposition
of mandatory arbitration provisions in consumer contracts.
A coalition of business interests argues against the bill, based
on a perception that bill would outlaw arbitration agreements,
contrary to the author and sponsor's representations. Opponents
contend generally that arbitration is fair, fast and
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inexpensive.
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334
FN: 0003916