CDRC

The current legislative session in Sacramento. of course, focused on the budget.  Still, there were a variety of proposed bills that directly or tangentially affected ADR and the ways it is conducted.

 

The bill that most serious concerned CDRC was AB 1062. The bill would have eliminated the ability of a party to appeal from the denial of a petition to compel arbitration. Ostensibly, the bill achieved fairness because there is no current provision for an appeal from the grant of a petition to compel arbitration, other than by use of a writ. CDRC believes fairness would better be achieved by allowing for appeals from the grant of a petition to compel arbitration and it therefore opposed the bill. Although the bill passed the assembly, it failed in the Senate after being substantially amended.

 

These proposed bills and changes in procedure include the following:

 

The bill would make void and unenfoceable as against public policy any provision in an employment contract that required an employee, as a condition of obtaining or continuing employment, to use a forum other than California, or to agree to a choice of law other than California law, to resolve any dispute with an employer regarding employment related issues that arise in California. The bill passed the Legislature but was vetoed by the Governor.

 

After discussing the bill with CDRC, the author agreed to eliminate all references to “mediation” or “mediator”. The process would be called “neutral evaluation” and the person conducting the process w0uld be designated as a “neutral evaluator” . CDRC therefore decided to support the bill.  The bill passed the Assembly by a vote of 48-27 but stalled in the Senate Governance and Finance Committee. The author thereupon withdrew the bill and then reintroduced an amended version which largely gutted the bill and defined ” neutral evaluation” as “a form of mandatory mediation”. This concerned CDRC because mediation is not mandatory. The amended bill passed the Legislature and was chaptered. CDRC intends to support legislation next year that will eliminate the reference to mandatory mediation.

The Meyers-Milias-Brown Act covers collective bargaining for employees of public agencies. The statute permitted the agency to implement its last best offer if negotiations failed. This bill amended that provision by setting up a procedure which allowed representatives of the employees and the agency to mediate the dispute if they mutually agreed. CDRC did not initially support the bill because it also provided that if the mediation failed, then the dispute would be reviewed by a fact finding board if the mediator so determined. CDRC believed that the mediator should have no such authority. The bill was then amended by provided for submission to a fact finding board only if requested by the employee organization following the failed mediation. The bill passed both houses and was chaptered.

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This bill would give those who participate in child custody “mediations”, including psychiatrists, quasi-immunity. Citizens who are displeased by the performance of these mediators still would be unable to file suit but could file a claim with the court. If the court deemed the claim to be invalid, the complainant could not proceed further. The author converted this to a two year bill and so it will not be voted upon  until the 2012 legislative session.

CDRC opposed this bill. The bill amended Code of Civil Procedure 1294 by striking the provision that allows for appeals from a denial of a petition to compel arbitration except in the case involving a collective bargaining agreement. .

 

The reasoning of the bill’s author was that since Section 1294 does not provide for appeals from the grant of a petition to compel arbitration, fairness would dictate that appeals from denials of a petition to compel arbitration should also not be allowed. But the bill discriminated against California citizens because Section 16 of the Federal Arbitration Act permits appeals from final decisions involving arbitration, which would include a decision by a court granting a motion to compel arbitration and dismissing the underlying case. Thus, an out of state party to an arbitration agreement could preserve its right to appeal, provided that the suit mes the $75,000 jurisdictional threshold, by filing the petition in federal court, an avenue which would be denied to a California citizen unless its adversary were from out of state.

 

It was the position of CDRC that, useful decisions result from these appeals. In order to meet the fairness argument, CDRC proposed that Section 1294 be amended, not by eliminating the right to appeal from the denial of a petition to compel arbitration but rather by adding the right to appeal from the granting of a motion to compel arbitration, thus putting the California law in line with Section 16. The bill’s sponsor rejected CDRC’s proposal.

 

Although the bill passed the Assembly, it encountered difficulty in the Senate and thus was amended to narrow its application to suits by citizens over the age of 65 or dependent adults. CDRC thereupon changed its position from opposed to neutral. The bill was defeated in the Senate by a vote of 21-15.

This bill would permit courts to use funds allocated to them by the state for any purpose. This presumably this would include DRPA funds and thus was of concern to CDRC. The bill failed.

 

The purpose of this bill was to encourage worker’s compensation insurers to voluntarily enter into arbitration agreements with employers. CDRC’s original position on the bill was to watch it because CDRC did not believe that the bill would effectively achieve its goal. However, after the author made several amendments, CDRC chose to support the bil

The bill requires that if an insurer intends to use a dispute resolution or arbitration agreement to resolve disputes arising in California arising out of a workers’ compensation insurance policy or endorsement issued to a California employer and the agreement provides that choice of law and choice of venue or forum may be a jurisdiction other than California, it must notify the employer in writing that these terms are negotiable.  Failure to adhere to this requirement shall result in a default to California  as the choice of law and venue for resolutions of disputes within California. The bill passed both houses and was chaptered.

 

 

Section 3 of the bill pertains to court connected non binding arbitrations that are held pursuant to Code of Civil Procedure 1141.10 et seq. It amended Sections 1141.20(a) and 1141.23 so that a disappointed party to the arbitration will have 60 days, not 30 days, to request a trial de novo. CDRC supported the bill and it passed both houses and was chaptered. The bill will require amendment of California Rules of Court 3826(a) and 3827(a). The proposed amendment is out for comment by the Judicial Council. See SPR 11-01.

Form ADR 100 is the Judicial Council approved form by which mediators in court connected mediations report the final status of cases assigned to them to the court. Prior to this year, courts were not obliged to use Form ADR 100. The Judicial Council revised the form as part of an effort to require all courts to use it and asked the ADR community to comment.

CDRC supports the concept of a uniform reporting procedure but has suggested deletion of the portion of the revised form that requires that, if a mediation does not take place, a mediator must report why it did not, including whether a person who was ordered to appear at the mediation did not appear.

 

CDRC believes that this provision conflicts with Evidence Code Section 1121, which prohibits reports by a mediator to the court “other than a report…..that states whether an agreement was reached”. Furthermore, a failure to appear constitutes conduct and the California Supreme Court has held that a mediator is prohibited from reporting a party’s conduct to the court. Foxgate Homeowners Association v Bramalea California, Inc., 163 Cal App 4th 1, 17 (2001).

The Judicial Council has proposed to amend the Ethical Standards for Neutral Arbitrators in Contractual Arbitrations by imposing stricter disclosure rules on arbitrators. This decision stems from the Supreme Court’s decision in Haworth v Superior Court, 50 Cal 4th 372 (2010) which overturned a decision vacating an arbitration because the arbitrator did not reveal a ten year old censure that he received when he was a judge.

 

CDRC generally supports the proposal with two caveats. First, it believes that there should be a time limit on the event except in the case of disbarment of a lawyer or its equivalent in other licensable professions where disclosure would be required no matter when the discipline was imposed.

 

Second, CDRC suggests that the disciplinary action must relate to the matter involved in the pending arbitration.