BILL ANALYSIS �
SENATE JUDICIARY COMMITTEE
Senator Hannah-Beth Jackson, Chair
2013-2014 Regular Session
AB 2617 (Weber)
As Amended April 30, 2014
Hearing Date: June 24, 2014
Fiscal: No
Urgency: No
RD
SUBJECT
Civil Rights: Waiver of Rights
DESCRIPTION
This bill would impose specified restrictions on the future
contractual waivers of rights under the Ralph Civil Rights Act
and the Tom Bane Civil Rights Act.
BACKGROUND
California has led the nation in enacting a statutory scheme
which provides for civil, criminal, and administrative penalties
for violations of civil rights laws. In particular, the Ralph
Civil Rights Act and Bane Civil Rights Act were designed to
protect individuals from hate-based crimes of violence. Despite
these statutory protections, hate crimes are still a common
occurrence in some areas of California.
This bill seeks to implement specified restrictions on future
contractual waivers of rights under these civil rights statutes
so as to ensure that the private and public enforcement of these
rights are not undermined.
CHANGES TO EXISTING LAW
Existing law authorizes a court, if it finds as a matter of law
that the contract or any clause of the contract was
unconscionable at the time it was made, to refuse to enforce the
contract, or it may enforce the remainder of the contract
without the unconscionable clause, or it may so limit the
application of any unconscionable clause as to avoid any
(more)
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unconscionable result. (Civ. Code Sec. 1670.5(a).)
Existing law , the Ralph Civil Rights Act, provides that all
persons within the jurisdiction of this state have the right to
be free from any violence, or intimidation by threat of
violence, committed against their persons or property because of
personal or other characteristics or statuses, such as political
affiliation, sex, race, color, religion, marital status, sexual
orientation, or position in a labor dispute. (Civ. Code Sec.
51.7.)
Existing law , the Bane Civil Rights Act, prohibits violence or
the threat of violence based on grounds such as race, color,
religion, ancestry, national origin, political affiliation, sex,
sexual orientation, age, disability, or position in a labor
dispute. (Civ. Code Sec. 52.1.)
Existing law provides that a person who violates the Ralph Civil
Rights Act or aids, incites, or conspires in that act, is liable
for actual damages suffered by any person denied that right, as
well as a civil penalty and attorney's fees. (Civ. Code Sec.
52(b).)
Existing law provides that whenever there is reasonable cause to
believe that any person or group of persons is engaged in
conduct of resistance to the full enjoyment of any of the
foregoing rights the Attorney General, any district attorney or
city attorney, or any person aggrieved by the conduct may bring
a civil action. (Civ. Code Sec. 52(c).)
Existing law provides that a person whose enjoyment of legal
rights has been interfered with, or attempted to be interfered
with, may bring a civil action for damages, including injunctive
relief, and other appropriate equitable relief. (Civ. Code Sec.
52.1.)
This bill would provide that a person shall not 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.
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This bill would provide that a person shall not 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, 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.
This bill would provide 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.
This bill would require that any waiver of any legal right,
penalty, remedy, forum, or procedure for violation of these
civil rights acts 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 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.
This bill would provide that any waiver of any legal right,
penalty, remedy, forum or procedure for a violation of this bill
that is required as a condition of entering into a contract for
goods or services shall be deemed involuntary, unconscionable,
against public policy, and unenforceable. This provision does
not affect the enforceability or validity of any other provision
of the contract.
This bill would provide 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, 2015. The bill would not apply to any agreement to
waive any legal rights, penalties, remedies, forums, or
procedures for a violation of these civil rights acts after a
legal claim has arisen.
This bill would provide that these provisions shall not be
construed to negate or otherwise abrogate certain rights under
the law that are currently unwaivable.
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This bill would include legislative findings and declarations as
follows:
it is the policy of the State of California to ensure that all
persons have the full benefit of the rights, penalties,
remedies, forums, and procedures established by the Ralph
Civil Rights Act and the Tom Bane Civil Rights Act, and that
individuals shall not be deprived of those rights, penalties,
remedies, forums, or procedures through the use of involuntary
or coerced waivers; and
it is the purpose of this act to ensure that a contract to
waive any of the rights, penalties, remedies, forums, or
procedures under the Ralph Civil Rights Act or the Tom Bane
Civil Rights Act, including any provision that has the effect
of limiting the full application or enforcement of any right,
remedy, forum, or procedure available under the Ralph Civil
Rights Act or the Tom Bane Civil Rights Act, is a matter of
voluntary consent, not coercion.
COMMENT
1. Stated need for the bill
According to the author:
The Ralph Civil Rights Act ([Civ. Code Sec.] 51.7) and the
Bane Civil Rights Act ([Civ. Code Sec.] 52.1) prohibit
violence or the threat of violence based on race, color,
religion, ancestry, national origin, political affiliation,
sex, sexual orientation, age, disability, or position in a
labor dispute. An aggrieved individual can sue based on
violations of the rights expressed in these acts, but courts
are increasingly inclined to honor a signed waiver requiring
the parties to submit to arbitration.
Arbitration can be a legitimate form of conflict resolution
provided that the parties involved are fully informed of how
arbitration works and both agree to submit to it voluntarily.
Unfortunately, the increasingly widespread practice of making
mandatory arbitration a condition of a contract puts the
consumer at an extreme disadvantage as there is not equity in
the agreement where a waiver of legal rights is a condition of
the contract. This is especially true in civil rights cases,
where the intent of the laws is [ ] to provide a mechanism
for a legal remedy and to reinforce through public proceedings
that these actions are not sanctioned by the state. Because
the nature of arbitration is secret and decisions can be
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rendered by the arbitrator without reference to statute or
case law, the spirit and intent of the state's civil rights
laws are being seriously undermined.
The case of DC v. Harvard Westlake [(2009) 176 Cal.App.4th
836] illustrates why the bill is needed. A high school student
received death threats from classmates based on his
misperceived sexual orientation. On the advice of law
enforcement, he withdrew from the private school and moved to
another part of the state. His parents decided to hold the
school accountable for inaction on disciplining the
perpetrators and for revealing the student's new school. Like
any victim of hate crimes and violation of civil rights, he
deserved his day in court, yet was denied because of a
mandatory arbitration clause in the enrollment contract signed
by his parents.
There is no right without a remedy and the remedy for
violations in these cases is best adjudicated under the
state's civil rights statutes and enforced by the courts.
Mandatory arbitration preemptively forces victims to submit to
arbitration proceedings conducted behind closed doors where
arbitrators are not required to adhere to the state's civil
rights statutes or existing case law, yet their decisions are
still binding and enforced by the courts.
The forum of redress in civil rights cases should be chosen
freely rather than dictated to them by fine-print contract
provisions. The courts play an irreplaceable role by
establishing precedents and issuing decisions in these cases
which bear on the public's interest in protecting citizens
from bias-based intimidation and discrimination.
In support of the bill, the California State Conference of the
NAACP writes that "AB 2617 is good public policy in that it
strengthens the circumvention of California Civil Rights by
closing a loophole and prevents consumer abuse. Currently some
employers, landlords and merchants abuse consumers by requiring
the consumer as a condition of receiving employment, housing, or
goods and services to enter a contract with a mandatory
arbitration clause buried in the contract preventing the
consumer from going to court to seek justice under California's
civil rights statutes. [ . . . ] Unfortunately, because of the
widespread mandatory arbitration waivers in contracts, the
effectiveness of the protections afforded by these [civil
rights] laws is being seriously undermined. A right that is not
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enforceable in the courts is no right at all."
2. Bill seeks to respond to a problem highlighted in a
controversial appellate court decision regarding hate crimes
This bill would impose specified restrictions on the future
contractual waivers of rights under the Ralph Civil Rights Act
and the Bane Civil Rights Act, in part in response to the case
of D.C. et al. v. Harvard-Westlake School et al., (2009) 176
Cal.App.4th 836. D.C. involved alleged threats of violence
against a student, D.C., at Harvard-Westlake school, a private
educational institution in Los Angeles. According to the facts
of the case, several students at Harvard-Westlake used the
school's computers, went to D.C.'s Web site and posted death
threats against D.C., along with derogatory comments about him.
Several other posts contained threats with references to D.C.'s
misperceived sexual orientation as a homosexual. When D.C.'s
father read the threats on the Web site, he immediately informed
Harvard-Westlake of the problem, believing that some of its
students were responsible. The father also contacted the Los
Angeles Police Department, which, in turn, notified the Federal
Bureau of Investigation. On the advice of the police, D.C.
withdrew from Harvard-Westlake. He and his family moved to
another part of California, where he enrolled at a different
educational institution. The Chronicle, Harvard-Westlake's
student newspaper, ran an article disclosing D.C.'s new
residential location and the name of the school he was
attending. The article also disclosed that postings at the Web
site had referred to D.C. as a "faggot." The faculty advisor to
the staff of The Chronicle approved the article before
publication. Harvard-Westlake did not suspend or expel any of
the students who admitted posting the threats.
D.C. and his parents attempted to sue Harvard-Westlake under the
hate crimes law. (Civ. Code Secs. 51.7, 52.1.) In response,
the school filed a petition to compel arbitration of all claims.
The petition was based on the contents of Harvard-Westlake's
"Enrollment Contract," signed by D.C.'s father, which consisted
of five pages. The contract contained an arbitration provision,
stating: "I understand that any legal and actionable controversy
or claim arising out of or relating to this Agreement (including
but not limited to the determination of the scope and
applicability of this Agreement to arbitrate), the student's
enrollment in/departure from Harvard-Westlake or the student's
educational experience at Harvard-Westlake (including, but not
limited to academic matters and extracurricular activities and
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community service) shall be submitted to final and binding
arbitration to be held in Los Angeles County, California, before
a single, neutral arbitrator in accordance with JAMS'
Comprehensive Arbitration Rules and Procedures. This
arbitration agreement applies during the term of this enrollment
agreement and survives after the termination of the enrollment
agreement." The contract further contained an attorney's fees
provision, stating that in the event of any arbitration or
litigation between the parties, the prevailing parties would be
entitled to recover all reasonable attorney's fees.
The trial court granted the petition to compel arbitration and
the case went to a private arbitrator retained by JAMS (Judicial
Arbitration and Mediation Services) as specified in the
enrollment contract. The arbitrator found for the school on all
counts, and 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.
The appellate court concluded that because hate crimes laws
constitute unwaivable statutory rights comparable to
antidiscrimination laws, arbitral expenses and attorney's fees
may not be imposed on plaintiffs. The court noted that the
plaintiffs would not have been required to pay these expenses
had the dispute been heard in court and allowing them to be
imposed in arbitration would deter the filing of hate crimes
claims. Thus, the court, although recognizing that the rights
provided for hate crimes statutes are unwaivable, upheld the
order to arbitrate, but reversed the order for the plaintiff to
pay the school's arbitral expenses and costs.
3. Controversy surrounding mandatory arbitration
In recent years, there have been frequent discussions as to the
merits and benefits of mandatory private arbitration as an
alternative forum to the civil justice system. Supporters of
mandatory arbitration generally assert that it is a more
efficient and less costly manner of resolving legal disputes
because they are able to limit discovery, set their own rules
for presenting evidence, schedule proceedings at their own
convenience, and select the third party who will decide their
cases. However, critics of private arbitration contend that it
is an unregulated industry, which is often costly and
unreceptive to consumers. Consumer advocates view mandatory
arbitration as putting consumers and businesses employees on an
uneven playing field that creates an inclination by arbitrators
to decide cases in favor of businesses. They further view
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arbitration as an expensive process which also puts consumers at
a disadvantage by imposing procedural limitations on their
ability to pursue their legal claims. This is especially true
in cases where the business has pre-selected the company in the
contract who will arbitrate the claim. Critics contend that
arbitrators have far less incentive to be fair to both sides
when they owe their engagement to the business that 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.
These concerns are compounded by the fact that there are little,
if any, regulations or legal standards imposed on arbitrators or
their decisions. Regardless of the level or type of mistake, or
even misconduct, by the arbitrator, the grounds on which a court
will allow judicial review of an arbitration are extremely
narrow. (See Moncharsh v. Heiley & Blase (1992) 3 Cal.4th 1
(holding that a court is not permitted to vacate an arbitration
award based on errors of law by the arbitrator, except for
certain narrow exceptions).) Courts have recently begun to make
some exceptions to Moncharsh, and allowed for more expanded
judicial review of arbitral awards in certain circumstances.
(See Pearson Dental Supplies Inc. v. Superior Court (2010) 48
Cal.4th 665 (holding that error of law was sufficient grounds to
vacate the arbitral award because an arbitrator whose legal
error barred an employee subject to a mandatory arbitration
agreement from obtaining a hearing on the merits of a
discrimination claim under the Fair Employment and Housing Act
(or other claims based on unwaivable statutory rights) exceeded
his or her legal powers).) Although the Pearson decision does
provide some recourse for individuals who were compelled to
arbitrate claims of unwaivable statutory rights, and effectively
denied a hearing on the merits for their claim, the general rule
providing for limited judicial review of arbitral awards is
still controlling.
4. Mandatory arbitration may infringe upon meaningful
enforcement of unwaivable civil rights laws
While arbitration may be appropriate where parties have
relatively equal bargaining power and have mutually agreed upon
the forum, it arguably is not appropriate when the contract is
one of adhesion that a person has been forced to sign without
the right to negotiation. This is particularly true in
instances where an individual signs arbitration agreements that
encompass unwaivable statutory rights.
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While a party is free to waive the advantage of a law intended
solely for his or her benefit, a law established for a public
reason cannot be waived by private agreement. (Civ. Code Sec.
3513.) Both the Ralph and Bane Civil Rights Acts provide for
enforcement by the Attorney General and other public
prosecutors, as well as the Department of Fair Employment and
Housing (DFEH), in addition to private rights of action for
equitable relief, civil penalties, and damages. The rights and
remedies afforded under these Acts reflect their purpose in not
only vindicating individual rights, but also to provide a
mechanism to redress the harms hate-based violence causes to the
larger community.
Indeed, the court in D.C. v. Harvard-Westlake recognized the
fundamental public nature of the hate crimes statutes in holding
that the rights they establish should not be subject to waiver
by private contracts. However, the court disregarded the
implications of upholding the mandatory arbitration of a
violation of the hate crimes laws. The court instead
distinguished the required waiver of the right to have claims
resolved by the court from a complete waiver of statutory
rights. ("While we recognize that a party compelled to
arbitrate such rights does not waive them, but merely 'submits
to their resolution in an arbitral, rather than judicial, forum'
? arbitration cannot be misused to accomplish a de facto waiver
of these rights." (citing Little v. Auto Stiegler, Inc. (2003)
29 Cal.4th 1064).) In other words, according to the D.C. Court,
requiring a party to allow a private arbitrator to decide hate
crimes violations is not, inherently, a waiver of rights and
procedures provided by the statutes. However, as discussed in
the previous comment, there are many problematic aspects of
private arbitration which arguably indicates that a waiver of
the right to have the claims resolved by the court does
essentially equate with a complete waiver of rights.
This is especially true with arbitration of civil rights cases,
where private arbitration may block not only an individual's
access to the civil justice system, but also public prosecution
by the Attorney General or other prosecutors or a complaint to
the DFEH. (See Sonic-Calabasas A, Inc. v. Moreno (2013) 57
Cal.4th 1109) (private arbitration clause precluded employee
from making use of the enforcement mechanism of the state Labor
Commissioner for redress of alleged labor law violation).)
Moreover, a fundamental feature of the hate crimes enforcement
scheme is that immediate protective and/or restraining orders
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may often be needed to prevent further abuse. Even if an
arbitrator were to believe that immediate intervention was
necessary, private arbitration does not provide for orders
necessary for immediate injunctive relief. Thus, there are
ample policy reasons for which to conclude that claims rooted in
unwaivable civil rights are not appropriate for private
arbitration, particularly mandatory private arbitration.
5. Bill would prohibit waiver of rights under hate crimes laws
except as specified
This bill would provide that no person shall require another
person to waive any legal rights, penalty, remedy, forum, or
procedure for a violation of the Ralph Civil Rights Act or Bane
Civil Rights Act as a condition of entering into a contract for
goods or services. This bill would further provide that no
person shall refuse to enter into a contract with, or refuse to
provide goods and services to another person on the basis that
the person refuses to waive his or her rights. Thus, for
example, a private school could not require, as in the D.C.
case, a student's parents to sign a mandatory arbitration
agreement as a condition of enrolling the student at the school.
Nor could the private school refuse to enroll the student
because his or her parents refused to waive their rights. Any
waiver of legal rights, penalty, remedy, forum, or procedure for
a violation of the Ralph Civil Rights Act or Bane Civil Rights
Act that is required as a condition of entering into a contract
for goods and services would be deemed to be involuntary,
unconscionable, against public policy, and unenforceable.
In addition, this bill would prohibit waivers of any legal
right, penalty, remedy, forum, or procedure for violations of
the Ralph and Bane Civil Rights Act, unless they are knowing and
voluntary, in writing, and expressly not made as a condition of
entering into a contract for, or receiving, goods and services.
Any person seeking to enforce a waiver of rights under this bill
would have the burden of proving that the waiver was made
knowingly and voluntarily, and not made as a condition of
receiving goods or services.
This bill would apply to any agreement, including an agreement
to accept private arbitration, entered into, altered, modified,
renewed, or extended on or after January 1, 2015.
As articulated by the D.C. court, the legal rights to be free
from unlawful violence afforded under the Ralph and Bane Civil
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Rights Act, are unwaivable statutory rights. However, this bill
would provide that an individual may knowingly and voluntarily
waive a legal right, remedy, forum, or procedure for violations
of the Acts, which could arguably be interpreted as authorizing
a complete waiver of all rights. This would be contrary to the
longstanding public policy that civil rights established by the
state for a public reason cannot be contravened by a private
agreement. (Civ. Code Sec. 3513; see also Civ. Code Sec. 1668
(stating that all contracts which have for their object,
directly or indirectly, to exempt anyone from responsibility for
his own fraud, or willful injury to the person or property of
another, or violation of law, whether willful or negligent, are
against the policy of the law) and Civ. Code Sec. 1953 (stating
that any provision of a lease or rental agreement of a dwelling
by which the lessee agrees to modify or waive specified rights
shall be void as contrary to public policy).)
As it is not the author's intent to allow individuals to
completely waive otherwise unwaivable rights by contract, this
bill also provides that its provisions shall not be construed to
authorize the knowing and voluntary waiver of such rights that
currently are unwaivable.
6. Federal Arbitration Act
The Federal Arbitration Act (FAA) (9 U.S.C. Sec. 2) provides
that an arbitration agreement shall be valid, irrevocable, and
enforceable, except on such grounds as exist at law or in equity
for the revocation of any contract. Opponents have raised
concerns that the restrictions on waivers in this bill may be
preempted by federal law. In a coalition letter, they write:
The Federal Arbitration Act (FAA) and the California
Arbitration Act (CAA) evidence a strong preference for
enforcement of arbitration agreements, so long as the
underlying contract is fair. The FAA generally prohibits
state laws that restrict enforcement of arbitration
agreements. [See Armanderiz v. Foundation Health Psychcare
Services, Inc. 24 Cal.4th 83 (2000) ("California law, like
federal law, favors enforcement of valid arbitration
agreements."); Sonic-Calabasas A, Inc. v. Moreno, 57 Cal.4th
1109 (2013) (agreeing that FAA preempts state law that seeks
to limit the waiver of administrative hearing in arbitration
agreement, as it interferes with arbitration goals of
providing "'streamlined proceedings and expeditious
results'"); and AT&T Mobility LLC v. Concepcion, 131 S.Ct.
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1740 (2011) (holding that the FAA prohibits states from
conditioning the enforceability of an arbitration agreement on
the availability of class wide arbitration procedures, as such
a requirement would be inconsistent with the intent of the
FAA).]
Despite consistent authority from both the United States
Supreme Court and California Supreme Court regarding the
inclination to promote arbitration and limit any statutes or
common law that interfere with arbitration, AB 2617 seeks to
do just that. Specifically, AB 2617 prohibits any contract
that requires a waiver of the right to pursue a civil action
for the violation of any alleged civil rights under the Civil
Code or Fair Employment and Housing Act. Given that all valid
arbitration agreements for goods and services require both
parties to waive their rights to pursue a civil action, AB
2617 directly interferes with the FAA and CAA.
In response, the author argues that "[n]o court has ever
suggested that the FAA compels anyone to enter into an
involuntary arbitration contract. State laws that govern
arbitration, but do not affect its enforcement, are outside the
Act's preemptive scope. This bill simply allows the individual
to make the choice to enter into an arbitration agreement
knowingly and voluntarily."
Staff notes that this bill generally applies to all waivers of
legal rights, penalties, remedies, forums, or procedures under
the hate crimes statutes, not just specifically to arbitration
agreements. This bill also relies on the general contract law
principle of unconscionability to invalidate waivers that are
required as a condition of entering into a contract for goods or
services. Unconscionability is routinely applied by the courts
to invalidate contracts, including arbitration agreements. It
would be difficult to imagine a scenario where a required waiver
of civil rights is not unconscionable. Finally, this bill does
not completely bar waivers of legal rights under the hate crimes
statutes, or agreements to arbitrate such claims. Instead, this
bill requires that all waivers be knowing and voluntary. Thus,
it does not appear that this bill conflicts with the FAA.
7. Other opposition arguments
The opposition coalition to this bill raises not only federal
preemption under the California and Federal Arbitration Acts
(see Comment 2 above), but it also makes several other
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arguments. First, the opposition argues that courts already
provide adequate protection for arbitration agreements. For
example, the coalition cites Armanderiz v. Foundation Health
Psychcare Services, Inc. 24 Cal.4th 83 (2000), where "the
California Supreme Court held that, for employment arbitration
agreements that encompass unwaivable statutory rights, the
following protections must be included: (1) provide for a
neutral arbitrator; (2) no limitation of remedies; (3) adequate
opportunity to conduct discovery; (4) written arbitration award
and judicial review of the award; and, (5) no requirement for
the employee to pay unreasonable costs that they would not
incur in litigation or arbitration fees." The opposition also
cites several other recent cases, including Wherry v. Award,
Inc., 192 Cal.App.4th 1242 (2011), where "a court deemed an
independent contractor arbitration agreement unconscionable
where it expanded the right to attorney's fees for FEHA
violations to the company, and reduced the time to file a FEHA
claim from one year to 180 days;" and Ajamian v. CantorCO2e,
L.P., 203 Cal.App.4th 771 (2012), where the court denied
arbitration "where terms that required California independent
contractor to pay upfront costs, arbitrate in New York, and
waived statutory rights was substantively unconscionable."
Second, the opposition argues that arbitration provides an
effective and efficient means to resolve claims, compared to the
courts.
According to the U.S. District Court Judicial Caseload
Profiler, there were 278,442 civil cases filed in 2012, which
was approximately three percent lower than the previous year.
Over [30,000] of those cases were filed in California. As of
September 2012, California had over 25,000 civil cases
pending, approximately 8,000 of which have been pending for
over a year. Of those 8,000 cases, approximately 2,000 of
them have been pending for over three years.
Comparatively, in 2007 the American Arbitration Association
[AAA] produced a study titled 'AAA Arbitration Roadmap' that
provided the following statistics: for cases involving a claim
of up to $75,000, the median time for a final resolution was
175 days; for claims between $75,000 and $499,999, the median
time for final resolution was 297 days; and, for claims
between $500,000 and $999,999, the median time for final
resolution was 356 days. [ . . . ] Not only is arbitration
more efficient, but also it is less costly for
employers/businesses, as well as financially beneficial to
consumers/ employees." The opposition cites a study that
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analyzed data from California that "found that consumers
prevail in arbitration 65.5 [percent] of the time, as compared
to 61 [percent] of the time in court. Additionally,
California businesses paid an average of $149.50 in
arbitration fees whereas consumers only paid an average of
$46.63. [ . . . ]"
Lastly, the opposition argues that AB 2617 potentially prohibits
pre-litigation settlement agreements, because of a provision
that "states that the provisions of AB 2617 do not apply 'after
a legal claim has arisen.' To the extent this section refers to
claims that have actually been filed in civil court, AB 2617
would restrict pre-litigation settlement agreements as well.
There are certainly numerous situations where two parties are
able to come to a resolution regarding a dispute before
litigation is filed. AB 2617 would remove this opportunity and
force the parties to actually file a claim in civil court before
they could proceed with a settlement agreement that includes a
waiver of all claims."
In response to these arguments, the author stresses that "AB
2617 is about choice. When a dispute arises, it leaves open all
dispute resolution options open, including going to arbitration
if both parties voluntarily agree. Forced arbitration limits the
forum of resolution to a single choice made by a single party."
With respect to any limitation on pre-litigation settlement
agreements, the author outright rejects this assertion, arguing
that "[t]he bill does not even address pre-litigation settlement
agreements and there is nothing in the bill that affects them."
8. Governor's veto message of AB 1680
This bill is substantially similar to the AB 1680 (Salda�a,
2010) as was approved by this Committee. In vetoing AB 1680,
Governor Arnold Schwarzenegger stated:
This bill would prohibit businesses from being able to enter
into contracts that require disputes to be resolved through
arbitration. Arbitration has evolved into a productive and
useful method for resolving disputes. It allows parties the
opportunity to resolve cases faster than traditional
litigation and without incurring the enormous expenses
associated with going to court.
Since this measure limits the ability of parties to use
arbitration, I am unable to sign this bill.
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Support : American Civil Liberties Union; California School
Employees Association; California State Conference of the NAACP;
Consumer Attorneys of California; Equality California; Western
Center on Law & Poverty
Opposition : California Chamber of Commerce; Acclamation
Insurance Management Services; Allied Managed Care; California
Apartment Association; California Association of Health
Facilities; California Bankers Association; California Chapter
of American Fence Association; California Employment Law
Council; California Farm Bureau Federation; California Fence
Contractor's Association; California Grocers Association;
California Hospital Association; California Manufacturers and
Technology Association; California New Car Dealers Association;
California Restaurant Association;
California Retailers Association; California Citizens Against
Lawsuit Abuse; Civil Justice Association of California;
Coalition of Small and Disabled Veteran Business;
Cooperative of American Physicians; Flasher Barricade
Association; Marin Builders Association; National Federation of
Independent Business; Southwest California Legislative Council;
Torrance Area Chamber of Commerce; Western Growers Association
HISTORY
Source : Author
Related Pending Legislation : None Known
Prior Legislation :
AB 1680 (Salda�a, 2010) See Comment 8.
AB 1715 (Committee on Judiciary, 2003) would have, among other
things, made it an unlawful employment practice for a covered
employer to require an employee to waive any rights or
procedures under the Fair Employment and Housing Act (FEHA) as a
condition of employment. This bill was vetoed by Governor Gray
Davis.
SB 1538 (Burton, 2002) would have, among other things, made it
an unlawful employment practice to require an employee to waive
any rights or procedures under FEHA, and would have made any
predispute arbitration agreement between an employer and
employee that violated this prohibition unenforceable. This
AB 2617 (Weber)
Page 16 of ?
bill was vetoed by Governor Gray Davis.
Prior Vote :
Assembly Floor (Ayes 49, Noes 25)
Assembly Judiciary Committee (Ayes 7, Noes 2)
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