BILL ANALYSIS �
AB 1062
Page 1
ASSEMBLY THIRD READING
AB 1062 (Dickinson)
As Amended April 26, 2011
Majority vote
JUDICIARY 6-3
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|Ayes:|Feuer, Atkins, Dickinson, | | |
| |Huffman, Monning, | | |
| |Wieckowski | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Wagner, Huber, Jones | | |
| | | | |
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SUMMARY : Eliminates the current right to appeal from an order
denying a petition to compel. Specifically, this bill would put
a court order denying a petition to compel arbitration on the
same footing as an order granting a petition to compel - neither
would be immediately appealable, but both would be subject to
review by writ of mandate.
FISCAL EFFECT : None
COMMENTS : The author explains the bill as follows: "AB 1062 is
a procedural fix that would speed up the judicial process when
the court reviews a motion to compel arbitration. AB 1062 will
ensure that these motions are speedy and efficient, thereby
saving the court time and money. Every day consumers face
situations where they have no choice but to sign pre-dispute
binding arbitration agreements as a condition of employment or
receipt of service. Such 'agreements' between parties of
unequal power have been looked at with growing skepticism by
both consumer advocates and the courts, especially when they are
made mandatory. ?Under current law, if a consumer files a
lawsuit in court, the defendant usually files a motion to compel
arbitration. If the defendant's motion is denied, the defendant
has the option of either filing a discretionary writ of mandate,
or filing an appeal which must be heard by the Court of Appeal
by a matter of right. Defendants frequently file appeals, the
results of which are lengthy delays due to the additional work
and lack of court resources. Such delays are especially harmful
in employment cases where an employee's employment status may be
AB 1062
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in question and in cases involving the elderly, wherein during
the delay the plaintiff dies. The delay of justice is most
damaging to the plaintiffs because of the potential loss of
evidence and witnesses during that extended period of time. On
the other hand, a discretionary writ of mandate encourages
judicial efficiency without the potential loss of evidence,
witnesses and legal standing. AB 1062 simply leaves it within
the court's discretion to review the denial to compel
arbitration instead of allowing time-consuming appeals by right.
It would still allow a party the opportunity to ask for review
if a motion to compel arbitration is denied, as well as the
right to appeal the final judgment at the end of trial."
This bill does not actually propose to change whether
arbitration is permissible, or the extent to which mandatory
arbitration clauses are enforceable. That so much of the debate
on both sides focuses on the claimed virtues or evils of
arbitration compared to litigation, however, illustrates what is
at stake regarding a petition to compel arbitration, and informs
the question whether it is critical that there be an immediate
right to appeal when a court finds an arbitration agreement
unenforceable but no right to appeal when a court orders a party
into arbitration.
Not only is private arbitration effectively unregulated, it has
caused concerns among workers' rights and consumer advocates
because it is a revenue-driven system where, critics contend,
"repeat players" have unfair advantages when they are involved
in mandatory arbitration against "one-shot" users, such as
individual consumers. This may be particularly true where the
dispute involves stigmatizing allegations, such as race
discrimination, sexual harassment, and elder abuse. As evidence
of this contention, the California Employment Lawyers
Association points to a recent study, which it argues,
demonstrates why employers seek to force arbitration clauses on
workers: because arbitration favors employers in employment
disputes.
The general rule is that there is a right to appeal only from
final judgments, not from interlocutory orders. "There are
sound reasons for the one final judgment rule. These include
the obvious fact that piecemeal disposition and multiple appeals
tend to be oppressive and costly. Interlocutory appeals burden
the courts and impede the judicial process in a number of ways:
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(1) They tend to clog the appellate courts with a multiplicity
of appeals; (2) Early resort to the appellate courts tends to
produce uncertainty and delay in the trial court; (3) Until a
final judgment is rendered the trial court may completely
obviate an appeal by altering the rulings from which an appeal
would otherwise have been taken; (4) Later actions by the trial
court may provide a more complete record which dispels the
appearance of error or establishes that it was harmless; (5)
Having the benefit of a complete adjudication will assist the
reviewing court to remedy error (if any) by giving specific
directions rather than remanding for another round of open-ended
proceedings." (Vivid Video, Inc. v. Playboy Entertainment
Group, Inc. (2007) 147 Cal. App. 4th 434, 442-444 (citations
omitted).) The same "strong policy reasons" against multiple
piecemeal demands on the courts of appeal generally applies to
arbitration disputes also.
Despite the general rule requiring finality prior to appeal,
supporters and opponents of this bill agree that the law
currently allows defendants to appeal when a petition to compel
arbitration is denied, but does not allow plaintiffs to appeal
when a petition to compel is granted. The justification for the
rule is not clear, and neither supporters nor opponents of this
bill offer an explanation. Whatever the rationale, the current
rule dates from a time before mandatory arbitration clauses in
consumer adhesion contracts were widespread.
The California Chamber of Commerce and other business groups
oppose the bill, arguing that it will raise the cost of doing
business in the state by undermining enforcement of valid
arbitration agreements, and forcing cases into the courts that
can be effectively and efficiently handled through arbitration
proceedings. Opponents contend that arbitration can deliver
justice faster than litigation, and thus while appeals of right
can extend the time necessary to resolve disputes over the
validity of an arbitration agreement it does not necessarily
result in a faster resolution of the primary dispute between the
parties. As such, eliminating access to this important
procedural mechanism will merely undermine protections for
employers and the enforcement of valid arbitration clauses,
increasing the number of non-meritorious claims that receive a
full trial.
AB 1062
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Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334
FN: 0000317