HISTORY OF CDRC
In November, 1992, thirty-five ADR pioneers from all over California attended a retreat to brainstorm and address future needs in the emerging field. This group included Bob Barrett, Randy Lowry (director of the Institute for Dispute Resolution at Pepperdine University), Ron Kelly, Ramon Raugust, and the late Don Weckstein of the University of San Diego. These and others represented court-connected and other established ADR programs in a variety of arenas, including family, environmental, public policy, commercial, and civil.
Brainstorming resulted in listing more than forty needs in the dispute resolution field, including the area of legislation. On the one hand, there was an identified need for a "cohesive voice for legislation, research about proposals, updating developments as they move through the legislation process, and education of legislators and staffs about the implications of different formulations of laws." On the other hand, the group saw the need to keep practitioners informed regarding legislation that had the potential to impact their practices and programs.
1992-1993: Early Visions
After the retreat, the number of interested participants expanded. Organizations such as the American Arbitration Association, the California Judicial Council, the State Bar Association's staff on Consumer Affairs, the three local chapters of the Society of Professionals in Dispute Resolution, the Southern California Mediation Association, the Northern California Mediation Association, county bar associations, and a number of community-based mediation programs joined the effort.
During a series of meetings that followed, the notion emerged that some of the needs would require a statewide organization with a focused purpose and mission if there were to be effective legislative advocacy for ADR. Legislative monitoring would require a day-to-day presence in Sacramento. In addition an organization was necessary to act quickly and draw ideas and views from a broad cross-section of the dispute resolution field in the state.
Key principles emerged:
The new organization would be inclusive, reaching out to all providers of dispute resolution services in all parts of the state;
The organization would concern itself with arbitration as well as mediation and other forms of ADR; and,
It would promote the interests of consumers as well as providers of dispute resolution services.
As the group had begun to track bills, there were many with important implications for ADR practice in the state. Several bills required close attention, focusing on mandatory mediation (SB 401) and proposing to set standards for these programs, encouraging mediation directed at reducing racial and ethnic tensions, and increasing funding for community mediation programs.
1994: Organizing, Electing Leaders, and Seeking Members
At the first meeting of the new CDRC on March 20, 1994, in Sacramento, the group elected board members and officers and began planning how to implement a membership program. Bob Barrett was elected as the first president. In response to Ron Kelly's suggestion, the group also adopted five brief "Consensus Points" to guide its lobbying:
1. Definition. The mediation process should be clearly defined in substantially the form that follows: "Mediation" means a process in which a neutral person or persons facilitate communication between the disputants to assist them in reaching a mutually acceptable agreement.”
2. Funding. Mediation should be available to all parties in all types of cases, regardless of the parties' ability to pay.
3. Education. The courts, public agencies, and dispute resolution providers should share responsibility for furnishing information to the public, the bar, judges, court and government personnel, and others concerning dispute resolution processes, the availability of programs, the differences among various processes, the possibility of savings in cost and time, and the consequences of participation in such processes.
4. Declarations and Findings. No mediator should be required to submit, and no court should consider, any declaration or finding of any kind by a mediator regarding a case, beyond a required statement of agreement or non-agreement, unless all parties in the mediation expressly agree in writing.
5. Qualifications for Dispute Resolution Providers. Qualification criteria should be based on training, experience, and performance, not on the attainment of any particular academic degree or professional license.
CDRC began to track 12 bills, dealing with both mediation and arbitration. The board decided to support two, one encouraging the use of mediation in land use cases, which passed and was signed by the governor, and the other to enlarge funding for community mediation programs, which was passed, but vetoed by the governor.
At a strategic planning retreat in San Diego on September 11-12, 1994, the CDRC board set as a goal that CDRC should become the primary contact for legislators on dispute resolution topics. The board hoped that CDRC would be routinely consulted by legislative staff and others around the state on policy topics. The board clarified procedures and policies, and resolved that only the president or the president's designee could speak for the organization.
In November, the board clarified the procedures for studying and rapidly coming to positions on bills, either by vote of the full board or the executive committee. The year ended with about 200 active members and plans for implementing the vision for an effective advocacy organization.
1995: Establishing Procedures and Hiring a Lobbyist
Lauren Burton, then Executive Director of the Los Angeles County Bar Association Dispute Resolution Services, began her term as president on January 1, 1995. The first order of business was the hiring of a lobbyist for the organization. Fortunately, an excellent candidate was available, Donne Brownsey, who was just beginning a new lobbying firm and looking for "anchor" clients. She was an experienced legislative staffer who had excellent relationships with members on both sides of the aisle. It was also important that she had taken mediation training, which helped assure that she knew and shared the values underlying the practice of mediation and arbitration. She was an outstanding choice, and the relationship continues with a contract that is renewed annually by mutual agreement.
With a headline announcing: "Bill Tsunami Hits ADR Shores," CDRC's March 1995 Newsletter reported there were 74 measures that mentioned the words "mediation" or "arbitration".
Among the bills were arbitration measures extending judicial immunity for arbitrators and defining the scope of appeal for arbitration awards. In addition, Dennis Sharp, a vice president of the American Arbitration Association and Jim Madison, a well-known arbitrator, developed language for a bill that CDRC could sponsor to "clean up" the arbitrator disclosure legislation that had been passed the year before.
Also included among the flood of bills were proposals to establish a mandatory mediation program for selected counties and to create a voluntary credentialing program. That proposal raised many concerns among some in the dispute resolution field.
The CDRC "Consensus Points" were expanded by the Committee on Qualifications and Standards, chaired by Don Weckstein, into a comprehensive listing of CDRC Principles on topics expected to come up sooner or later in the legislature. These principles poised CDRC to react rapidly when new legislative proposals came to its attention, and firmly established CDRC as a "principle driven" organization.
It was important to CDRC that its approach to the proposed credentialing legislation would be seen as deliberative and principled. A special committee, chaired by Bob Barrett, held meetings around the state and prepared detailed recommendations for the CDRC board regarding the measure.
CDRC also, for the first time weighed in on a case, Engalla v. Permanente Medical Group, Inc. (1995) 43 Cal.Rptr.2d 621. CDRC requested review by the California Supreme Court of the appellate decision that had approved a one-sided, but mandatory and binding arbitration system in the health care field. The Supreme Court granted review and reversed the decision in Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951.
1996: Enhancing CDRC's Reputation and Building Capacity
Ken Bryant, a commercial mediator and arbitrator from San Jose, took over as president in 1996. Membership had grown to nearly 500, and the budget had risen to $46,000, most of which was used to retain Donne Brownsey.
The most pressing legislative challenges included the review of more than 85 bills mentioning mediation or arbitration and the development of positions on the three bills introduced by Senator Russell in 1995 and held over as "two-year" bills.
The three bills proposed a voluntary mediator certification program, suggested a requirement that attorneys advise clients about ADR in all civil litigations, and required judges to hold early status conferences in all civil cases to consider mediation. Senator Russell wanted to promote greater use of dispute resolution, but many concerns had been identified with specific provisions of the bills. CDRC carefully studied each proposal and sought extensive input from its members, especially on the certification bill. Positions were prepared in order to describe the implications of the bills at legislative hearings. In the end, none of the three bills passed.
CDRC, however, was successful in sponsoring its first bill seeking to increase funding for mediation programs under the Dispute Resolution Programs Act. Lauren Burton drafted the bill's language, working closely with Los Angeles County's legislative staff, and it was introduced by Assemblyman Antonio Villaraigosa of Los Angeles. With extensive efforts by Donne Brownsey and DRPA-supported organizations throughout the state, the bill passed and was signed by the Governor.
Inspired by Dennis Sharp, president-elect, CDRC also began its first annual statewide dialogue programs, held during March in four locations: Sacramento, Los Angeles, Anaheim, and San Diego. More than 300 dispute resolution practitioners participated, with lively facilitated discussions on such issues as mediator certification, court-referred mediation, arbitrator immunity, arbitration vacatur grounds, DRPA funding, lawyer obligations to clients concerning advising about ADR, and arbitrator disclosure requirements.
1997: Expanding Membership and Developing Infrastructure
Dennis Sharp became president in 1997 and devoted much attention to building the membership of CDRC and improving CDRC's administrative capacity. Membership grew to 600 individual members and 150 organizational members. The budget increased again, to $60,000 and special contributions were also received to supplement membership dues revenues.
A key benefit of membership was the publication of CDRC's first Directory, which also included a copy of the CDRC Principles and a list of committee rosters and CDRC accomplishments.
CDRC became very involved in two key legislative projects. The first involved the efforts of the California Law Revision Commission to modify and clarify the law applying to mediator confidentiality in the state. Ron Kelly, on behalf of CDRC, closely followed the development of this comprehensive new statute, which successfully codified strong protections for confidentiality of the mediation process, explicitly protecting mediators from compelled disclosure of mediation communications, the substance of mediation participation, or efforts to set up a mediation in later civil litigation. CDRC played an active role in commenting on the specific legislative language that evolved. The second key proposal concerned arbitrator disclosures and CDRC successfully sponsored arbitrator disclosure cleanup legislation.
Finally, in the wake of the defeat of mediator certification in 1996, CDRC began an effort to develop a comprehensive set of standards that could govern mediation practice and that would be a model for courts, counties, and mediation programs to adopt. It was believed that the "model standards" approach would be preferable to legislation that would be difficult to enact and even more difficult to amend or modify as needed in later years. Lee Jay Berman, a Los Angeles mediator, chaired a special committee to prepare a draft set of standards. The committee's drafts were widely circulated within the state and improved through such consultation, and attracted a substantial list of endorsers.
1998: Lobbying Effectively and Looking Beyond Legislation
In 1998 Norm Brand, an arbitrator and mediator from San Francisco, began his term as president. A prominent legislative concern was whether disclosure requirements for mediators should be similar to those enacted earlier for arbitrators. CDRC representatives met several times during the fall of 1998 with the staff of the Assembly Judiciary Committee to discuss this complicated area. Due in part to the success of CDRC in articulating the difficulty of crafting appropriate language, no legislation emerged from the Committee.
The most important development during the year was the California Supreme Court's decision in Birbrower, Montalbano, Condon & Frank v. Superior Court (1998) 17 Cal.4th 119, holding that representation of a party in arbitration constituted the practice of law. CDRC advocated the standard of the international arbitration statute, permitting representation of a party in arbitration by anyone that party chooses. Despite those efforts, Birbrower remains the California rule.
CDRC also produced a widely endorsed draft of Standards of Practice for California Mediators, which were circulated for use by courts, counties, and mediation programs. They have since been adopted by two programs, have served as a model for several more programs, and are under consideration for adoption in many more locations throughout the state.
1999: Increasing Administrative Support
Liz O'Brien, executive director of the San Diego Mediation Center, became president of CDRC in 1999. One of the key issues during the year was the emergence of a series of proposed drafts of a Uniform Mediation Act being produced by committees of the American Bar Association and the National Conference of Commissioners on Uniform State Laws. The early drafts of that proposal included language that, if enacted in California, would weaken the protections for mediation confidentiality. John Seitman, an arbitrator and mediator from San Diego and formerly president of the state bar, chaired a committee that studied the draft proposal and prepared formal comments on it. Several CDRC representatives also met with the ABA/NCCUSL drafting committees in December in Monterey. In addition, CDRC sponsored well-attended dialogue sessions in May to focus on the Uniform Mediation Act draft.
On October 15, 1999, CDRC held its annual conference in the San Francisco area featuring discussions about where mediation and arbitration were going, dispute resolution research needs, and the Judicial Council's Task Force report on ADR and its implications for the courts, litigants, and the public. The conference also highlighted legislative developments, and sought membership input on priorities for attention in the upcoming year.
Principal legislative action focused on efforts to ban pre-dispute arbitration clauses in employment and insurance contracts, and in connection with contracts for medical care or treatment. The 1999 version of the bill was dropped after several amendments stripped the bill of its application to insurance, consumer, and health-care contracts.
Organizationally CDRC's membership leveled off, with the false perception that the legislative activity was not as urgent as it had been in the past. The board also began to address longer-term needs.
2000: Enhancing Influence and Visibility
John Seitman became president of CDRC in January 2000. In July CDRC launched a project focusing on compensation of neutrals in court-connected, agency-operated, and community-based programs.
2001: A Challenging Year
If ever the CDRC had to face a challenging year, it was 2001 with Jim Madison as president.
One challenge erupted when a panel of arbitrators chaired by retired California Supreme Court Chief Justice Malcolm Lucas rendered an award requiring the State to pay $88.5 million to lawyers in a fee dispute. The Governor thought the award was excessive, and a receptive Legislature passed Senate Bill 475. In its original form, this measure would have micro-managed arbitrator disclosures and disqualifications and vacatur of awards. Thanks in part to the efforts of the CDRC, the final form of the bill deferred establishment of arbitrator ethics standards, including disclosure requirements, to the Judicial Council.
The Judicial Council was mandated by the bill to act under a tight time schedule to adopt standards. To assist in its drafting task, the Judicial Council appointed an Advisory Committee of Experts in Judicial Ethics. Four CDRC members, including past-president Ken Bryant, Richard Chernick, John Kagel and current president Jim Madison were appointed to this Committee and served effectively in minimizing the adverse effects of the Standards on the arbitral process.
On the mediation front, CDRC co-sponsored a series of public dialogues in March at which members and other interested individuals could discuss the circumstances under which mediators should be paid and when they should serve pro bono.
The most satisfying development of the year for the CDRC was the California Supreme Court’s July decision in Foxgate Homeowners Association, Inc. v. Bramalea California, Inc., 26 Cal. 4th 1 (2001), in which the Court held that the Legislature did not leave California’s mediation confidentiality statute open to the creation of judicial exceptions. The CDRC had filed an amicus curiae brief authored by Madison and Michael Carbone in support of what turned out to be the Court’s decision. The prevailing party was represented by Ivan Stevenson, who joined the CDRC, became increasingly active as a mediator and was later elected to the CDRC board.
The efforts of the CDRC to influence the form of the proposed Uniform Mediation Act, which had been spearheaded by founding member Ron Kelly and 2000 president John Seitman, concluded in August 2001, when the National Conference of Commissioners on Uniform State Laws approved the Uniform Act.
CDRC’s well-attended annual ADR Conference in November featured a keynote address by United States District Court Magistrate Judge Wayne Brazil, in which, among other matters, he spoke of the need for “courts to refrain from imposing role-distorting pressures on ADR neutrals.” In particular, Judge Brazil appeared concerned lest mediations become nothing more than settlement conferences.
2002: The Year of Reform and Regulation
2002 was a year in which new rules for neutrals and providers took root. President Ruth Glick, Donne Brownsey and the entire board worked persistently and relentlessly to make sure new regulations would be reasonable and workable for ADR professionals.
The legislative agenda for ADR reform in 2002 was thrust into the public eye with a three part investigative report in the San Francisco Chronicle about the failures of private arbitration. A blue-ribbon panel was appointed by Chief Justice Ronald George to assist in drafting new ethical standards. CDRC members Jim Madison, Ken Bryant and Richard Chernick were part of the panel and added their sage advice and assistance to the drafting process. Their strong but minority voices sought to shape the rules to insure compliance by ADR professionals. Ruth Glick wrote two lengthy letters on behalf of CDRC warning of unintended consequences of the developing standards and explaining how to make them more practicable and useful to the arbitration community.
The Ethical Standards for Neutral Arbitrators in Contractual Arbitration were incorporated into California Code of Civil Procedure on July 1, 2002. For the first time anywhere in the nation, in any state, arbitration providers, community non-profits and private arbitration companies became subject to extensive disclosure requirements and prohibitions. Moreover, arbitrators themselves became subject to the most rigorous and technical disclosure requirements trumping already existing federal and state requirements. Ethical goals were now written into rules, and failure to follow them would result in vacature of an arbitration award and possible retaliation against the arbitrator and provider. As the CDRC warned, this has happened since the implementation of these Ethics Standards.
Meanwhile in Sacramento, Donne Brownsey and Ruth Glick worked hard communicating to legislators and their staff not to create an inordinate amount of new reform legislation that would be so unreasonable that providers would discontinue providing arbitration services in California. Some initial legislative drafts were extraordinary in their lack of understanding. For example, one piece of legislation sought to treat arbitrators who served in more than five consumer arbitrations a year as arbitration providers themselves, thereby requiring quarterly global reports. CDRC was able to discourage its passage.
Of six new arbitration bills passed by the Legislature, the Governor signed five into law. CDRC actively worked with the legislature and the Governor’s office to make the bills reasonable for compliance. Taking notice of the potential for unintended consequences pointed out by CDRC, the Governor vetoed AB 3029, the sixth bill which would have caused significant problems in its application.
During the same year the Judicial Council also developed the Rules of Conduct for Mediators in Court-Connected Mediation Programs in Civil Cases, rules which were not as controversial as the arbitration ethics standards. CDRC members Ellen Miller, Mickey Katz, Lee Jay Berman and others carefully crafted comments to these new rules.
For the first time in 2002, CDRC was able to implement mass emails to members. This allowed for timely communication in a cost efficient manner. In addition, the electronic newsletter made its first appearance that year, courtesy of Dick Bayer.
CDRC also weighed in on an extraordinarily important appellate court decision, Rojas v. Los Angeles County Superior Court (2002) 126 Cal.Rptr.2d 97. Because the case had significant implications for mediation confidentiality, CDRC submitted a letter requesting the Court de-publish the case, or in the alternative, review the ruling (see 2004 for a review of the Supreme Court’s decision in Rojas and CDRC’s position.)
The annual conference was held at Loyola Law School with well over 100 people attending. Blue Ribbon Panel Chair, Dean Jay Folberg and State Senator Sheila Kuehl were part of an exciting lineup of speakers.
Members’ enthusiasm and level of interest was extraordinarily high in 2002. It was a very important year for CDRC’s role in shaping ADR in California.
2004: A Year of Transition
As Tom Reese became President in 2004, John Blackman and Nancy Warren, on behalf of CDRC, were intensely working with Bob Barrett from the Leo McCarthy Center at USF to produce a computation and analysis of consumer arbitration cases required by CCP 1281.96 from six large arbitration services providers.
Rojas v. Superior Court 33 Cal.4th 407 (2004) was decided by the California Supreme Court with the aid of the Amicus Curiae brief prepared by CDRC’s Public Policy Committee under Jim Madison urging the position eventually taken by the Court.
CDRC also sponsored 11 Dialogues with local Bar Associations, the Mediation Society, and other ADR interest organizations throughout the State to flush out what mediation users were experiencing from mediation providers. This was in response to the growing discussion about further regulating, and possibly credentialing, mediators.
In addition, CDRC focused on community mediation in California. Donne Brownsey, CDRC’s legislative analyst, worked closely with the Judicial Council and the Court Fees Working Group to protect the portion of the court filing fee that was directed to community programs through the Dispute Resolution Programs Act. CDRC also sponsored and assisted in the creation of the California Coalition for Community Mediation (CCCM) with special membership fees, meetings as part of CDRC’s Annual Conference, the ability of community practitioners (and others) to obtain E &O insurance, and representation in Sacramento through CDRC.
CDRC also initiated the annual MCLE presentation at the State Bar Conference on “ADR Happenings in 2004” featuring a panel of current officers of CDRC.
The year ended with a celebratory Tenth Anniversary Gala at the Los Angeles Athletic Club honoring founding Board members, the LA Bar Association’s Dispute Resolution Service, San Mateo’s PCRC, San Diego’s NCRC, the Contractor’s State Licensing Board and Richard Chernick for the standards of excellence they set in the provision of neutral services. Dick Bayer, Don Fobian, Amy Johnsgard and Gerald Phillips were responsible for this highly successful and nationally remarkable occasion.
2005: Working the Edges
Dick Bayer became President in 2005 and oversaw a year of transition in partnering relationships. CDRC marked the beginning of its expanded collaboration with the many ADR member organizations in the State.
The Board elected at the annual meeting was the first board with policy level members from the most important sectors of the California ADR landscape, including representation from JAMS, AAA, NAF, the Straus Institute at Pepperdine, court connected programs, and community programs, as well as independent mediators and arbitrators. CDRC strengthened its alliance with the newly created California Coalition for Community Mediation.
In Sacramento, CDRC sponsored legislation to delete the sunset provisions of Code of Civil Procedure §1282.4, allowing parties in arbitration to be represented by out-of-state counsel. CDRC also worked with the Law Revision Commission on its proposal for a State Ombudsperson for Home Owner Associations in California.
In the courts, CDRC filed an amicus brief arguing strongly for arbitral immunity for both the arbitrator and his sponsoring organization in a case involving damage claims against the arbitrator based on the claimed non-disclosure of involvement in a case more than twenty years old. That case settled in April.
Once the Rojas decision was announced in December, 2004, articles appeared within the next week authored by various trial attorneys around the state criticizing the ruling. There were calls for the Consumer Attorneys of California to draft legislation to overturn Rojas and weaken the confidentiality statute. CDRC met with the CAOC to ensure that no such legislative action would be forthcoming in 2005 and none was. CDRC committed to work alongside CAOC to address confidentiality concerns as well as cooperate with CAOC on access to justice issues.
The State Bar of California introduced a seemingly benign proposal that all attorneys performing ADR services must maintain "active" status with the State Bar, even if they no longer practice law. CDRC argued that this would unwittingly help establish that acting as a third party neutral in mediation and arbitration constitutes the "practice of law." CDRC filed a strong statement in opposition to the rule resulting in the Bar amending its proposal (CDRC continued to challenge the less heinous but nonetheless dangerous attempt to include alternative dispute resolution within the compass of the Bar.)
The Judicial Council proposed rule changes to California Rules of Court 1620, 1621 and 1622, including a new complaint procedure against mediators in court connected programs. CDRC took a very strong position that welcomed review of mediator services but found Rule 1622 an over-reaction to what appeared to be a very small problem. The Judicial Council withdrew Form ADR108 that contained a confidentiality waiver tied to a complicated complaint procedure.
CDRC also weighed in on the issue of free mediation services in connection with the Los Angeles Superior Court mediation program and voiced its opinion that the program ran afoul of some of CDRC’s announced principles, including the concept that parties should pay for mediation services when they can afford them. CDRC later sponsored a dialogue in Pasadena to address concerns with court-connected programs. CDRC was included in the small circle of individuals and organizations looking into that issue with the Los Angeles Superior Court.
2006: A Year of Coming of Age
In 2006, John Blackman took the helm of CDRC. In many respects, 2006 was a year when the CDRC rose to a new level of prominence on the ADR scene as people across the country recognized the ground-breaking ADR work that takes place in California. For example, CDRC was consulted by members of the U.S. Congress concerning mediation language pending in several congressional bills, It was only fitting that at its January board meeting in San Diego in 2006, CDRC changed its slogan from “The Voice of ADR in Sacramento” to “The Voice of ADR in California.”
As in past years, CDRC once again weighed in on a myriad of issues. CDRC members provided public comment to proposed changes in arbitrator disclosure rules, and continued working with the California Law Revision Commission concerning dispute resolution procedures for common interest developments.
Again, by working the stakeholders behind the scenes, CDRC successfully guided the issue of ‘pro hac vice’ status (allowing out-of-state lawyers to participate in arbitration proceedings in California) into a process that works for everyone. CDRC also weighed in as a major stakeholder in the continuing saga of the first legislation governing the important and innovative new ADR technique known as “Collaborative Law” – initially designed for use in the family law field, but almost certainly destined to reach other areas of dispute resolution as well. As a small example of the tremendous amount of volunteer work CDRC does, the Board considered 14 separate pieces of proposed legislation affecting ADR at its July Board meeting alone.
CDRC board members Jennifer Bullock and Elizabeth Strickland continued their pioneering work leading the California Coalition of Community Mediators (“CCCM”), a unique networking clearing-house for all things important to community mediation in California. The success of this CDRC-nurtured offshoot should remind everyone of the deep roots CDRC has in community mediation programs, highlighting once again that CDRC is not just another trade organization promoting the ‘business’ of ADR, but rather it is a guardian of ADR principles, promoting the principles that make ADR an essential component of our society’s system of justice.
Early in 2006, CDRC began a lengthy project, capably headed by board member Steve Dinkin of San Diego’s National Conflict Resolution Center, to determine if a set of principles or minimum standards could be developed for mediation training programs.
In 2006 CDRC continued to struggle with the State Bar’s interpretation of Section 2 of the State Bar Act, which they contend prohibits lawyers from acting as ADR neutrals while on inactive status. The implication of this position is that providing ADR services constitutes the practice of law – a concept that someday could be used to attempt to prohibit non-lawyers from being arbitrators or mediators. The final chapter has yet to be written as to whether lawyers and the court system get to control the field of ADR, or whether ADR extends beyond lawyers and the courts. But CDRC will continue the fight.
As always, CDRC continued to file amicus letters or briefs in the more important appellate cases involving ADR issues. Members of CDRC weighed in on the difficult cases of In re the Marriage of Kieturakis 138 Cal.App.4th 56 (2006) (mediation confidentiality upheld), and Gentry v. Superior Court (later to become a California Supreme Court case in 2007, at 42 Cal.4th 443) (class action rights not waivable in arbitration), among others.
The ADR scene was active right up until the end of the year, with the California Supreme court issuing the landmark ADR case of Fair v. Bhaktiari in mid-December. But the most significant case of the year also came out around this same time, from the Second District Court of Appeal – Simmons v. Ghaderi. This is a very problematic case which created broad exceptions to mediation confidentiality. Jim Madison and John Blackman, former presidents of CDRC, wrote an amicus letter to the California Supreme Court urging that it accept the case for review and that it reverse the appellate court. On December 20, 2006, the Supreme Court did accept the case, and as we all know, that paved the way for the Supreme Court’s eventual ruling, which followed CDRC’s Dispute Resolution Principles and maintained strict mediation confidentiality.
CDRC also weighed in on an important proposed change to the Professional Rules of Conduct for lawyers. We provided public comment (and expertise behind the scenes) concerning proposed new rule 1-720 (or Rule 2.4 under the proposed re-numbering to track with the ABA Model Rules), which also could have been interpreted to say that the practice of ADR was the practice of law, and thus reserved for lawyers. Fortunately, CDRC and other ADR organizations kept the most offensive provisions out of the draft that will eventually be sent to the full Judicial Council and Supreme Court for approval.
On another front, the CDRC was successful in fending off another Judicial Council attempt to “over-legalize” the mediation process, when it was able to overcome features of proposed Rule of Court 1634 from coming into effect. Among other things, this rule could have been interpreted to provide the courts with authority to order parties to mediation against their will, and to sanction them if they failed to participate.
This year also saw continued work on revisions to CDRC’s Dispute Resolution Principles. After its first posting in 2005, a second proposed revised version of this document was posted on the internet for public comment.
Finally, a busy year came to a very satisfying close with the 13th Annual ADR Policy Conference, held at Loyola Law School in Los Angeles. CDRC proudly made the first presentation of its “California Dispute Resolution Council Award” in 2006, to be presented annually to a Straus Institute student for excellence in ADR scholarship.
But the real shining moment of the 2006 Annual ADR Conference was the Gala Awards Dinner held at the Los Angeles Athletic Club in downtown Los Angeles. Tom Stipanowich, then newly minted as the Academic Director and Professor of Law at the Straus Institute for Dispute Resolution at Pepperdine School of Law in Malibu, and CDRC Board Member Peter Robinson accepted CDRC’s highest honor, the Don Weckstein Award, on behalf of the Straus Institute. Also honored at the dinner was CDRC’s own inimitable “Ambassador of ADR” and longtime stalwart of the ADR community, not just in California, but nationwide – Mr. Gerry Phillips of Beverly Hills. If there are a handful of people whose very lives reflect the tremendous commitment to ADR principles that CDRC stands for, Gerry Phillips is one of them. CDRC and the entire California ADR community were truly blessed in 2006 to benefit from his tireless work.
2007: A Year of Reconnection
Don Fobian became president of CDRC in 2007. Don and immediate past-president, John Blackman, traveled to Sacramento, where they met with Larry Doyle and Saul Bercovitch of the State Bar; Kate Howard and Dan Pone of the Judicial Council; Eric Cizmar, Legislative Deputy for the Governor; Assembly Judiciary Committee Chair, Dave Jones, and Assembly Committee staff attorney, Kevin Baker; Senate Judiciary Committee Vice Chair, Tom Harmon; and Gene Wong, Chief Counsel to the Senate Judiciary Committee. Don and board member Elizabeth Strickland also traveled to Los Angeles to meet with Judge Helen Bendix and Julie Bronson, court administrator of the Los Angeles Superior Court mediation program.
CDRC was also honored to be one of the co-sponsors of the World Forum 2007 conference entitled “Justice, Religion and Conflict Resolution” hosted by the Rock Rose Institute (whose founders include CDRC members). Participants came from around the world and the conference featured prominent speakers Archbishop Desmond Tutu and former Secretary of State, Madeline Albright.
In 2007, CDRC and other organizations joined together in protest of changes in the State Bar Rules Revision Commission’s proposal that would have given jurisdiction to the Bar to discipline mediators and arbitrators based upon violations of standards that were never meant to form the basis for discipline. Specifically: the draft rules transmuted aspirational standards in court-related mediation programs and arbitrator ethics standards for contractual arbitrations into disciplinary grounds. CDRC and its organizational allies were able to thwart the efforts of the RRC.
The amicus curiae brief that was authored by Jim Madison and John Blackman as a response to the Simmons v. Ghaderi case which was a challenge to mediation confidentiality proved to be successful. CDRC has been a very effective advocate for such cases throughout its history.
Federal Magistrate Wayne Brazil was 2007 keynote speaker and recipient of the Don Weckstein Award at CDRC’s Annual Meeting and Policy Conference in Foster City.
2008 A Year of Vetoes
Paul Dubow, who had been chair of the Legislative Committee, became president in 2008.
CDRC was a major sponsor of SB 1177, which was designed to increase the revenue provided under the Dispute Resolution Program Act (“DRPA”) to community mediation organizations. The existing DRPA legislation permitted each county to divert up to $8 from each civil filing fee for use by community mediation organizations in the county. The combination of inflation and reduced civil filings made it necessary to increase the maximum amount that could be diverted and SB 1177 would have raised that amount to $12. Senator Mark Ridley-Thomas carried the bill. We faced an initial roadblock when Senator Perata, the president pro tempore of the Senate, introduced a bill that would divert $35 from the filing fee for the reconstruction of county courthouses. After much discussion, Senator Perata agreed that $3 could be used as DRPA funds, which would have increased the amount available under DRPA to $11. The bill passed both houses. Governor Schwarznegger’s staff initially indicated that he would sign the bill but, to everybody’s surprise, he vetoed it. CDRC would not let this DRPA issue drop, and decided to start again in 2009.
During the course of the year, two bills were introduced in the Legislature with worthy motives that would have had a negative impact on arbitration generally. The bills were AB 2359, which was designed to eliminate practices that negatively affected consumers who entered into sub-prime mortgages and AB 2947, designed to prohibit residential care facilities from requiring patients to waive certain legal rights as a condition of admission or continued care.
Among other things, both bills would have prevented lenders and residential care facilities from requiring their customers and patients to enter into certain types of pre dispute agreements. It is one of the guiding principles of CDRC to oppose pre dispute agreements imposed upon consumers through adhesion contracts. Both of these bills provided for a new Section 1281(b) of the California Arbitration Act. This section was so broad that it would have also barred arbitration agreements that were not unconscionable and, as a result, the bill was likely to be preempted by the Federal Arbitration Act. Thus, the bills would not have accomplished their purpose and would have led to extensive litigation over the issue of preemption.
CDRC met with the authors of the two bills and, as a consequence, both legislators agreed to eliminate Section 1281(b). In addition, a new section was added to AB 2947 which specifically stated that the bill did not affect otherwise enforceable arbitration agreements. Both bills were passed by the Legislature, but they were vetoed by the Governor.
Two bills (S. 1782 and S. 2554) were proposed in Congress that would have substantially restricted the ability of vendors and employers to impose arbitration agreements upon consumers as a condition of doing business or on employees as a condition of employment. The purpose of both bills was salutary, but CDRC believed that they were so broad that they would restrict access to justice for consumers and employees. CDRC expressed its views in a letter authored by Paul Dubow. Neither bill reached the floor of the Senate.
The Administrative Office of the Courts (“AOC”) proposed new guidelines for mediators in court connected mediations. Courts would not be required to adopt the guidelines. Rather, they would serve as minimum standards for mediators in court connected mediations. CDRC supported the proposal in principle, but sent a letter to the AOC in July suggesting some amendments. The guidelines were still under discussion at year end.
The California Supreme Court reaffirmed its support of mediation confidentiality by reversing the decision of the Court of Appeal in Simmons v Ghaderi. CDRC filed an amicus curiae brief in the case, authored by Jim Madison, the chair of the Public Policy Committee, urging that the lower court’s ruling that a mediation party could be estopped from asserting mediation confidentiality be reversed on the ground that estoppel was not an exception to the statutory scheme that created mediation confidentiality. Many of the arguments that were raised in CDRC’s brief were contained approvingly in the Supreme Court’s decision.
Our year concluded with the annual conference, held this year in Los Angeles. Ester Soriano was the recipient of the Don Weckstein Award. Ms. Soriano had passed away earlier in the year and so the award was presented to members of her family. She earned the award because of her dedication to and support of community mediation in California during her lifetime.
In further recognition of Ms. Soriano’s service, CDRC established an award in her name which would be given annually to an individual who demonstrated a long term commitment to and advocacy for community mediation in California. Senator Mark Ridley-Thomas was the first recipient of the award. He was recognized because of his magnificent effort to obtain the legislature’s passage of SB 1177.
2009 - A Turn to Washington
Maurice Zilber became President in January 2009. Because of the budget crisis, there was relatively little legislative activity in Sacramento affecting neutrals, but there was much activity in Washington affecting arbitration that CDRC monitored and commented on.
CDRC supported two bills in California introduced by Assembly Member Monning: AB 1 would have added conflict resolution training to the list of subjects for which teachers could gain credentialing credit. The bill passed the legislature but was vetoed by the Governor. AB 1090 made non-waivable certain ethics requirements and standards for arbitrators. It became Chapter 133 the Statutes of 2009.
CDRC also supported, if they were amended, several other California bills relating to construction contracts with the University of California and employment contracts arising out of employment or conduct in California. These were either vetoed or failed to pass.
While CDRC remained concerned about funding for DRPA programs, we were advised by our lobbyist to wait until 2010 to renew that effort.
CDRC provided comments to legislative staff on AB 1588 which would establish a monitored mortgage workout program. Our comments along with others have been taken into account in a redraft of the bill, which was expected to be released in February 2010.
CDRC is concerned with legislative or administrative initiatives that affect Alternative Dispute Resolution processes in California wherever they may be introduced. Therefore, CDRC followed with interest and concern three bills introduced in Congress: Arbitration Fairness Act of 2009, H.R. 1020; Fairness in Nursing Home Arbitration Act of 2009, H.R. 1237; and Consumer Fairness Act of 2009, H.R. 991. These bills, if enacted, would invalidate any pre-dispute arbitration clause in employment, consumer, franchise or nursing home agreements. CDRC's Dispute Resolution Principles provide that arbitration should be voluntary, so unless a pre-dispute agreement is entered into voluntarily, the arbitration clause should not be binding. Thus, we supported the underlying purpose of this proposed legislation to the extent that it prohibits one-sided or compulsory arbitration agreements. Nevertheless, aspects of the proposed legislation are troublesome, particularly language that could be interpreted to upset settled law relating to commercial arbitration. We submitted comments to Congress in the Spring and re-sent comments to staff members of the House Sub-committee considering the Bills reiterating CDRC’s willingness to assist in crafting language for an opt-in provision for consumers, employees, and franchisees as part of our concern that an absolute ban on pre-dispute arbitration clauses would diminish access to justice for the very class sought to be protected by the legislation. We also suggested that the Subcommittee consider adding a ban on class action waivers in arbitration.
In mid-summer we added a new benefit for our members. CDRC became an Affiliated Organization with the American Institute of Mediation (“AIM”), a recently formed independent organization for the training of mediators. CDRC members are entitled to 10% off all AIM courses and 10% off all books, materials, and other items in the AIM bookstore.
In October we had a very successful well-attended annual conference. For the first time we teamed up with the U. C. Hastings Center for Negotiation and Conflict Resolution, which provided us with superb accommodations. Assembly Member Bill Monning, who had a distinguished career in dispute resolution before running for the State Assembly, presented our keynote address. Assembly Member Monning outlined the background of the State’s budget problems and some suggestions going forward to attempt to correct the legislative impasse of recent years. Donne Brownsey, as always, gave a witty and cogent view of the legislative year. There were excellent panels on methods to make arbitration faster and cheaper, neuro-science and mediation, trends in collaborative law, the use of mediation in non-litigation settings, arbitration in the motion picture industry and an exploration of the analytical framework parties, counsel and mediators bring to the mediation process.
The Don Weckstein Memorial Award was presented to Jim Madison in recognition of his work on the State Bar ADR Committee, as chair of CDRC’s Public Policy Committee, including his many effective amicus briefs to the California Supreme Court, and his widespread teaching and lecturing activities on ADR topics. The Ester Soriano Award for Excellence in Community Mediation was presented to the San Francisco Community Boards, which is recognized as a pioneer in the field of community mediation and a model for many non-profit mediation programs across the country. Awards were also presented to the winner of the annual Strauss Award for the best paper on ADR written by a Strauss Institute student in the past year and to the Hastings Mediation Team. AIM sponsored a wine and cheese reception that attendees appreciated very much.
Karen Smith was elected president of CDRC.
Assemblymember Feuer, the chair of the Assembly Judiciary Committee, announced that he was considering introducing a bill which would impose a fee on ADR professionals. He believed that the reduction of court funding caused more disputants to seek resolution of their disputes through ADR and thus ADR professionals benefited from this development and should return some of these benefits to the state. CDRC disagreed with Assemblymember Feuer. There was no evidence that the business of ADR had increased because of the courts' reduced funding. Further, ADR professionals already contributed to the court system through their pro bono participation in court connected mediation. Assemblymember Feuer ultimately abandoned the plan in 2011.
AB 1639 would have created a program wherein lenders and borrowers could restructure mortgages through mediation and thus terminate foreclosure proceedings. The author accepted several amendments proposed by CDRC and, as a consequence, CDRC supported the bill. CDRC’s proposed amendments included 1) elimination of the requirement that the mediator file a report to the administrator stating whether the parties acted in good faith by submitting the documents required by the statute and advising the administrator of the terms of the settlement; 2) providing that the parties submit the required documents in advance to the administrator rather than the mediator; 3) a statement that the mediation confidentiality provisions set out in Evidence Code Sections 1115 et seq would apply to the process; 4) a provision that the mediator’s fee be deposited in advance; and 5) elimination of the requirement that the mediator practice in the county in which the real property was located. The bill was passed by the Assembly, but defeated in the Senate.
Assemblymember Saldana introduced AB 1680, which provided that parties could not waive the provisions of Civil Code Section 51.7 as a condition of entering into a contract. Civil Code Section 51.7 provides that all persons in California have the right to be free from any violence or intimidation by virtue of their sex, race, color, religion, ancestry, national origin, disability, medical condition, marital status, sexual orientation, or political affiliation. Civil Code Section 52 provides that a person who alleges a violation of Section 51.7 is entitled to a jury trial and can be awarded compensatory and exemplary damages and a civil penalty of $25,000. The bill arose from a case where a student enrolled at a private school sued the school because he was intimidated by articles in the school newspaper alluding to his presumed sexual orientation, but was obliged to arbitrate the dispute because of a clause in his enrollment contract. CDRC supported the bill after the author, at CDRC’s request, amended it to include a provision that knowing waivers, including knowing agreements to arbitrate, were permissible. The author, again at CDRC’s request, also caused a “fact sheet” to be revised so that it no longer demonized arbitration. The bill passed the assembly by a 44-27 vote and the CDRC support letter was read on the assembly floor during the debate on the bill. The bill also passed the Senate but was vetoed by the Governor.
Assemblymember Beall introduced AB 2475, which was designed to end mediator immunity. The author apparently was irked by the existing ability of psychologists who were designated as “mediators” in family court but who, unlike true mediators, issued reports to the court making recommendations that were ultimately imposed on the parties. CDRC opposed the bill. Two amendments made the bill less onerous but still unacceptable to CDRC. CDRC's lobbying efforts proved to be successful. The bill failed to get a single vote in the Assembly Judiciary Committee. It was replaced by a bill (AB 939) that changed the name of these “mediators” to “child custody recommendation counselors” and created a statewide complaint procedure. which provided for an expedited procedure designed to ensure procedural fairness in hearings before these “counselors”. The bill was enacted.
CDRC once again attempted to end the sunset on Code of Civil Procedure 1282.4, enacted in 1998 largely at CDRC's request, which permitted attorneys not admitted in California to represent parties in California domestic arbitrations provided that they comply with certain conditions, including a requirement that they document that they were not practicing law in California on a regular basis. The statute was to sunset on January 1, 2011. CDRC sponsored SB 877, which eliminated the sunset. The bill passed the Senate without opposition. However, the bill ran into a problem in the Assembly because Assemblymember Feuer, the chair of the Assembly Judiciary Committee, amended the bill during final reading in the Assembly so that pro hac vice fees imposed on out of state counsel in arbitrations be collected by the arbitrator who in turn would report the collection to the Judicial Council. There was no rational reason for this other than that this might be the first step by the Legislature to regulate arbitrators which in turn could lead to the imposition of fees upon them. The author of SB 877 viewed this action as an unfriendly amendment and complained. A compromise, brokered by the CDRC, was reached in which the requirement that the arbitrator collect the fees was withdrawn, but another sunset, this time to January 1, 2013, was added. The bill, as amended by the compromise, was enacted.
Assemblymember Monning, the keynote speaker at the CDRC 2009 annual meeting, introduced AB 1718 at CDRC’s request. The bill would have raised the portion of complaint filing fees could be used for the support of programs under the Dispute Resolution Procedures Act (“DRPA”) from a maximum of $8 to a maximum of $13, effective January 1, 2012. However, the bill was abandoned because of the $300 million deficit in the courts’ budget after the most recent budget proposal.
John Horn was elected president of CDRC.
AB 267 provided that 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 was void and unenforceable as against public policy. CDRC supported the bill. It passed the Legislature but was vetoed by the Governor.
Assemblymember Wieckowski introduced AB 506. designed to limit the ability of municipalities to declare bankruptcy by requiring the municipality and its creditors to first mediate in an attempt first to reorganize the municipality's debt. The original bill required the mediator certify that the municipality participated in the mediation in good faith. Mediators are prohibited from making such reports. See Foxgate Homeowners Association v Bramalea California, Inc., (2001) 26 Cal 4th 1. It also required the mediator to make a "determination" that solvency or effective debt reduction could be achieved through "further mediation". Mediators do not make determinations and it was unclear what was meant by "further mediation". 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 would be designated as a "neutral evaluator". CDRC therefore agreed 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 withdrew the bill and reintroduced an amended version. Although the bill retained CDRC's recommendations, it defined "neutral evaluation" as "a form of mandatory mediation". This language was of concern to CDRC because mediation should not be mandatory. The bill passed and was chaptered.
AB 646, amending the Meyers-Milias-Brown Act, was introduced. That act covers collective bargaining for employees of public agencies. The statute permitted the agency to implement its last best offer if negotiations failed. AB 646 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 not have that authority. The bill was then further amended by providing 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.
The Consumer Attorneys of California (CAOC) sponsored AB 1062, which 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 of appeals arising from collective bargaining agreements or unless the appellant was over 65 years old or a dependent adult as defined by Section 15610.23 of the Welfare and Institutions Code. CAOC reasoned that since Section 1294 did not provide for appeals from the grant of a petition to compel arbitration, fairness dictated 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 (FAA) permitted 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, if the bill were enacted, an out of state party to an arbitration agreement could have preserved its right to appeal, provided that the suit met the $75,000 jurisdictional threshold, by filing the petition in federal court, an avenue which would have been denied to a California citizen unless its adversary were from out of state. For this reason, CDRC opposed the bill. In order to meet the fairness argument, CDRC proposed to CAOC 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, but CAOC decided not to do this, and CDRC maintained its opposition. Although the bill passed the Assembly, it failed in the Senate by a vote of 21-15.
AB 1208 permitted courts to use funds allocated to them by the state for any purpose. Presumably this would include DRPA funds and this led CDRC to oppose it. The bill failed.
SB 684 was introduced 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 at CDRC’s request, CDRC supported the bill. The amended bill provided that if an insurer intended to use a dispute resolution or arbitration agreement to resolve disputes arising in California out of a workers' compensation insurance policy or endorsement issued to a California employer, and the agreement provided for choice of law and choice of venue outside of California, the insurer was required to notify the employer in writing that these terms were negotiable between the employer and the insurer. Failure to adhere to this requirement would 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 SB 731 pertained to court connected non binding arbitrations that are held pursuant to Code of Civil Procedure Sections 1141.10 et seq. It amended Sections 1141.20(a) and 1141.23 so that a disappointed party to the arbitration would have 60 days, not 30 days, to request a trial de novo. CDRC supported the bill. The bill passed the Legislature and was chaptered.
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. But 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 supported the concept of a uniform reporting procedure but suggested deletion of the portion of the revised form that required that, if a mediation did 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 believed that this provision conflicted 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., (2001) 163 Cal App 4th 1, 17.
Doug Noll was elected president of CDRC.
Assemblymember Wagner (on behalf of Assemblymember Gorell, who was on military duty in Afghanistan) introduced AB 2025, which was designed to negate Cassel v. Superior Court, (2011) 51 Cal. 4th 113, which held that Evidence Code 1119 rendered inadmissible communications between an attorney and a client made during a mediation and a pre-mediation session. The decision arose from a suit brought by a client against his attorneys alleging that the attorneys committed malpractice during the mediation. The bill amended Evidence Code 1120 by allowing for the admission of communications between an attorney and client made during a mediation in a malpractice suit filed against the attorney arising out of the mediation and in State Bar disciplinary proceedings. Communications that occurred in the mediation that emanated from or to the other mediation participants would remain inadmissible. CDRC opposed the bill because an attorney would not be able to present a defense to a mediation malpractice suit other than his or her own testimony because the testimony of all other percipient witnesses to the mediation continued to be inadmissible. In essence, the bill created an inequity while trying to correct an inequity. After much negotiation, Assemblymember Gorell introduced a resolution that referred the problem to the California Law Revision Commission (CLRC). CDRC supported the amendment and the CLRC began a study that was to last five years.
CDRC was finally able to remove the sunset on Code of Civil Procedure Section 1282.4, which permitted out of state attorneys to appear in domestic arbitrations in California under certain conditions. It co-sponsored AB 1631, which eliminated the sunset. On April 10, the Assembly Judiciary Committee unanimously approved the bill. On April 17, it passed the Assembly by a vote of 77-0. On June 18, it passed the Senate unanimously and was signed by the Governor.
During the 2011 session, Assemblymember Wieckowski introduced AB 506, which set forth certain requirements that a municipality needed to meet before it could file a bankruptcy petition. The bill initially provided for an ADR procedure that was designated as "mandatory mediation". CDRC worked with Assemblymember Wieckowski's staff and the mandatory procedure was redesignated as "neutral evaluation" and the "mediator" became a "neutral evaluator". CDRC supported the bill and it was passed by the Assembly. However, the Senate reinserted the phrase "mandatory mediation" and the bill was enacted in that form. In the 2012 session, AB 1692 was introduced by Assemblymember Wieckowski to again insert the phrase "neutral evaluation" into the statute. CDRC supported the bill. The bill passed the Assembly by a vote of 41-24, but it failed in the Senate because of strenuous opposition by cities and counties.
SB 491 added Section 1589.5 to the Civil Code. It provided that any term in a contract of adhesion that waived the right to join or consolidate claims, or bring a class action, or waive the right to act as a private attorney general under certain California statutes was void. CDRC believed that consumers and employees should have the right to bring class actions, where appropriate, and supported the bill. It failed by one vote in the Assembly Judiciary Committee.
CDRC held its 18th annual policy conference at Golden Gate School of Law on November 3. The keynote was a conversation between Justice Anthony Kline, who had many doubts about arbitration, and Richard Collier, a CDRC board member, entitled The Dark Side of ADR. It was followed by three breakout sessions. These were What Murderers Can Teach Peacemakers: Lessons from the Prison of Peace Project led by CDRC president Doug Noll; Why is There So Much Litigation About Arbitration? led by Professor Jon Sylvester of Golden Gate University Law School; and Are We Really Neutral: Unconscious Bias in Mediation led by mediator Claudia Viera. In the afternoon there was a presentation about what CDRC does. The panelists were president Doug Noll, CDRC lobbyist Donne Brownsey, and CDRC legislative chair Paul Dubow. Another set of breakout sessions followed. They were Making Peace on the Web: Online Dispute Resolution and the Future of the Internet led by online mediator Colin Rule; Top Ten Tips for Managing Arbitrations led by board members Reg Holmes and Mike Powell; and The Psychology of Litigants: A National Study of How Litigants Evaluate Dispute Resolution Procedures led by Professor Donna Shestowsky.
Assemblymember Wieckowski introduced AB 802, which amended Code of Civil Procedure Section 1281.96, a provision that imposed certain reporting requirements on arbitration providers. Assemblymember Wieckowski was concerned because he had discovered that some arbitration providers did not file reports whatsoever and that the providers who did file reports did not completely adhere to the statute's requirements. On May 13, the bill was amended. Some of the amendments were inconsequential. Some were draconian, such as giving any consumer or public prosecutor the right to bring suit under Section 17204 of the Business and Professions Code for any violation of the statute, thereby entitling the plaintiff to attorney fees for even an insignificant violation. Some were impractical, such as a requirement that the provider report defaults, when there is no such procedure in arbitration, or a provision that required the provider to first supply the information to be reported to the parties in the arbitration within 30 days after the arbitration was completed and to correct any errors noted by a party, when in fact the parties might not agree on the nature of the error or if the alleged error was in fact an error. CDRC opposed the bill unless it were amended to eliminate the draconian and impractical requirements. After CDRC raised its opposition, the bill was amended slightly to limit the private right of action to material violations but this was not enough to gain CDRC support. CDRC opposed the bill on the Assembly floor and garnered enough opposition votes to induce the author to withdraw it and make it into a two year bill.
CDRC continued to monitor the CLRC study of mediation confidentiality by regularly attending and speaking at the Commission’s quarterly meetings.
CDRC filed an amicus letter with the California Supreme Court asking that it grant review of Mount Holyoke Homes LP v Jeffer Mangels Butler & Mitchell LLP (2013), 219 Cal. App. 4th 1299. The letter was written by board member Jim Madison. In Mount Holyoke, a party lost an arbitration wherein it alleged that the respondent law firm had committed malpractice and then made an internet search and discovered that, ten years before, a partner in the respondent law firm had written a reference letter on behalf of the arbitrator. The trial court denied the petitioner’s motion to vacate, but the Court of Appeal reversed. It rejected the law firm’s argument that the petitioner could have obtained this information by making an internet search before the arbitration commenced, ruling that the petitioner had no such obligation, rather it was the obligation of the arbitrator to make this disclosure. CDRC noted in its amicus letter that it was important for the Supreme Court, in this internet age, to make a definitive ruling whether a party to an arbitration had a duty to make the search. The Court declined review.
Reg Holmes was elected president of CDRC.
Assemblymember Wieckowski reintroduced AB 802 after his staff and CDRC entered into negotiations which led to the drafting of a bill which properly addressed the situation of failed reports. The author wanted to add an enforcement mechanism to the bill but CDRC opposed it because it believed that the reports were not the best way for arbitration participants to obtain information about arbitrators. The bill was enacted without an enforcement mechanism and without any of the original draconian provisions. This was a major victory for CDRC and the arbitration community.
AB 2617 amended Civil Code Sections 51.7, 52, and 52.1 (the Ralph Civil Rights Act and the Tom Banes Civil Rights Act) by, inter alia, prohibiting a person from requiring a waiver of the right to pursue a civil action as a condition of entering into a contract for the provision of goods and services. Any waiver of this right would have to be knowing and voluntary and the burden of proving that the waiver was voluntary and not as a condition for the provision of goods and services would fall upon the person seeking to enforce the waiver. CDRC supports voluntary, as opposed to mandatory, arbitration and thus supported the basic purpose of the bill. However, CDRC believed that the proposed legislation was preempted by the FAA and that it might lead to extensive litigation over the issue of whether the waiver was knowing. Consequently, CDRC took no position on the bill. The bill was enacted. CDRC’s analysis proved true when the Court of Appeal ruled that the amendments were preempted by the FAA, Saheli v. White Memorial Center, (2018) 21 Cal. App. 5th 308.
Code of Civil Procedure Section 1297 et seq., known as the International Commercial Arbitration and Conciliation Act, provided that a person representing or assisting a party in a conciliation proceeding covering an international commercial dispute need not be a member of the legal profession or a member of the California bar. However, it was unclear whether this proviso extended to a person representing or assisting a party in an arbitration proceeding covering an international commercial dispute. As a consequence, many international arbitration proceedings which might otherwise be conducted in California were conducted in other jurisdictions, even where at least one of the parties was a California domiciliary, because many individuals who normally represented or assisted parties in international arbitrations were not licensed to practice law in California. In order to cure this problem, Senator Monning introduced SB 907, which recasted the provision regarding representation and assistance of parties, thus making the provision applicable to both arbitration and conciliation proceedings that were conducted pursuant to the statutory provisions that govern arbitration and conciliation of international commercial disputes. CDRC supported the bill. The bill also stated that it was the intent of the Legislature that these statutory provisions be broadly construed so as to promote California's interest in becoming a major center for international commercial arbitrations. The bill was approved by the Senate without a dissenting vote, but the author withdrew it before it reached the Assembly, in part because of judicial opposition. The judiciary apparently was concerned about a lack of an adequate pro hac vice procedure in the bill.
CDRC continued to attend and speak at the quarterly meetings of the CLRC where the Commission’s study of mediation confidentiality was discussed.
Mike Powell was elected president of CDRC.
Assemblymember Hernandez introduced AB 465 which provided that "a person shall not require another person to waive any legal right.....as a condition of employment....including the right to file and pursue a civil action...." It further stated that if a waiver occured, it must be "knowing and voluntary and in writing, and expressly not made as a condition of employment" and that the burden to prove that a waiver was knowing and voluntary is on the person seeking to enforce the waiver. The bill made no mention of the word “arbitration”, presumably to avoid preemption by the FAA, but the fact sheet that accompanied it stated that the sole purpose of the bill was to render unenforceable arbitration agreements that employees were required to enter into as a condition of employment. Although CDRC supported the underlying purpose of the bill because of its policy of opposing mandatory arbitration agreements, it concluded that, given the language of the fact sheet, the bill was preempted by the FAA and that it would lead to extensive litigation over the issue of preemption as well as the issue of whether a waiver was knowing and that this would be detrimental to the ability of employees to enforce their claims. CDRC proposed alternate language designed to avoid FAA preemption, but it was rejected by Assemblymember Hernandez. The bill was passed by the Legislature. After legislative committee members Paul Dubow and John Warnlof discussed their preemption concerns with a member of Governor Brown’s staff, he vetoed the bill because of the preemption issue.
Assemblymember Mayes, at the behest of the County of San Bernardino, introduced AB 1123, which would permit a county that had established and was operating a dispute resolution program (known colloquially as community mediation) to contract with the superior court of the county to transfer operation of the program to the court. DRPA, which was strongly supported by CDRC when it was enacted two decades before, was designed to keep DRPA funds in the community mediation programs. Hence, this bill was deemed to be contrary to the basic tenets of DRPA and was opposed by CDRC. Although the bill was approved by the Assembly Judiciary Committee, CDRC (and other opponents) successfully induced the Assembly Appropriations Committee to defer action on the bill and the author subsequently decided to convert the bill to a two year bill.
SB 217 was introduced to eliminate the tension between Evidence Code Section 1119 and Family Code Section 2105. Family Code Section 2105 requires that each party in a marital dispute must disclose, under oath, the valuation of any assets owned by such party or the community. Tension between these statutes arises when the declaration required by Section 2105 was also prepared for the mediation of a dispute. Some family law mediators believed that in such a case, the declaration was protected by the confidentiality provisions of Section 1119. Other family law mediators believed that Evidence Code 1120(c) excluded such declarations from confidentiality. In Lappe v Superior Court (2015), 232 Cal. App. 4th 774, the Court of Appeal agreed with the latter interpretation. SB 217 codified the Lappe decision and was supported by CDRC. The bill was passed by the Legislature and signed by the Governor.
CDRC continued to monitor the CLRA’s study of mediation confidentiality and attended and spoke at all of its quarterly meetings.
John Warnlof was elected president of CDRC.
Senator Monning introduced SB 1065 which required the court of appeal, in an appeal of an order dismissing or denying a petition to compel arbitration involving a claim under the Elder and Dependent Adult Civil Protection Act in which a party had been granted a court preference, to issue its decision no later than 100 days after the notice of appeal was filed. This bill also required the Judicial Council, no later than July 1, 2017, to adopt rules implementing this provision and shortening the time within which a party may file a notice of appeal in these cases. The bill passed both houses and was chaptered as Code of Civil Procedure Section 1294.4. CDRC supported the bill.
A horrendous anti-arbitration bill, SB 1078, was introduced by Senator Jackson. It had three parts. First, it prohibited arbitrators from entertaining offers of employment including offers to serve as an arbitrator or mediator, from parties or lawyers in a pending arbitration while the arbitration was pending unless the parties and lawyers, prior to selecting the arbitrator, agreed otherwise. Second, it prohibited arbitration providers from soliciting parties or lawyers in a pending arbitration while the arbitration was pending. This provision was so broad that it would include a phone call from a New York attorney inquiring about the provider’s panelists if a California partner of the attorney was trying a matter before the provider. Third, it required a provider or arbitrator to return his or her compensation to all parties if an award by the arbitrator were vacated for any reason other than exceeding powers or failure to postpone a hearing. After vigorous opposition by CDRC, Senator Jackson withdrew the third provision but declined to withdraw or amend the other two provisions. CDRC consequently persisted in its opposition. Although the bill was passed by both houses, CDRC president John Warnlof and legislative chair Paul Dubow met with a member of the Governor Brown’s staff and, ultimately, the Governor vetoed the bill.
Senator Wieckowski introduced SB 1241 which prohibited an employer from requiring an employee who primarily resided and worked in California, as a condition of employment, to agree to a provision that would require the employee to adjudicate in a court or arbitration proceeding outside of California a claim arising in California or deprive the employee of the substantive protection of California law with respect to a controversy arising in California. The bill made any provision of a contract that violated these prohibitions voidable, upon request of the employee, and required that a dispute over a voided provision be adjudicated in California under California law. The bill specified that injunctive relief was available and authorized a court to award reasonable attorney’s fees. The bill did not apply to a contract where the employee was represented by legal counsel. CDRC supported the bill. It passed both houses and was chaptered as Labor Code Section 925.
CDRC representatives continued to attend and speak at the quarterly meetings of the CLRC in connection with its study of mediation confidentiality.
Senator Dodd introduced SB 33 in response to a Wells Fargo incentive compensation program that included the opening of over two million checking and credit card accounts using customer information without their knowledge or consent and to a United States District Court decision that held that the aggrieved customers had waived their right to sue in court when they previously opened legitimate accounts containing a mandatory arbitration provision. Although CDRC supported SB 33’s basic goal of protecting consumers from fraud and identity theft, it determined that it could not support the bill because it would allow a party to an arbitration agreement to avoid arbitration simply by alleging fraud in its court complaint. After CDRC negotiated with Senator Dodd’s staff, the bill was substantially narrowed by limiting it to the type of fraud that allegedly was committed by Wells Fargo. It barred the grant of a petition to compel arbitration where the petitioner was a federally or state chartered depository institution that was seeking to apply a written arbitration agreement to a purported contractual relationship with a consumer that was created fraudulently by the petitioner without the consumer’s knowledge. CDRC supported the amended bill and it was enacted.
The CLRC issued its final report on mediation confidentiality. It proposed an amendment to the Evidence Code which rendered all communications in a mediation, except those to and from the mediator, admissible in a malpractice suit brought by a client against his or her attorney. Adverse parties, who had no interest in the malpractice suit, would be required to testify in the malpractice suit. Thus, the proposed bill was even broader than AB 2025, which begat the Commission study. CDRC representatives met with other opponents of the proposal to determine a strategy if the bill were introduced in the Legislature in2018.
Charles Pereyra-Suarez was elected president of CDRC.
Proponents were finally successful in making California a hospitable venue for international arbitration. SB 766, introduced by Senator Monning, overcame objections by the judiciary and the bill was passed unanimously by both houses and signed by Governor Brown. SB 766 will permit an individual who is not admitted to practice law in California but who is a member in good standing of a recognized legal profession in the United States or a foreign jurisdiction and who is subject to effective regulation and discipline by a duly constituted professional body or public authority to provide legal services in an international commercial arbitration or related proceeding in California. Such individual, however, would also be subject to the disciplinary jurisdiction of the California State Bar. CDRC supported the bill.
CDRC, joined by a broad array of organizations such as the Judicial Council, the California Judges Association, CAOC, and the California Defense Counsel, lobbied the Legislature about the flaws in the CLRC’s proposal to amend the Evidence Code and allow communications between and testimony by all participants in a mediation, except the mediator, to be admissible in a malpractice suit brought by one party in the mediation against his or her attorney. As a consequence, not a single legislator was willing to introduce the proposal in the 2018 legislative session. Nevertheless, a concern remained that a client might not be aware of the difficulties that might be faced if the client were dissatisfied by the outcome of the mediation and concluded that his or her attorney committed malpractice. SB 954, introduced by Senator Wieckowski, was designed to alert the client to this problem. It created Section 1129 of the Evidence Code. Section 1129(a) required an attorney representing a client participating in a mediation or a mediation consultation to provide the client, as soon as reasonably possible after the client agreed to participate in the mediation or mediation consultation, with a written disclosure containing the confidentiality restrictions that are set forth in Section 1119 and obtain a written acknowledgment signed by the client stating that he or she read and understood the confidentiality restrictions. Section 1129(b) required that the written disclosure 1) be printed in the preferred language of the client in at least 12 point font, 2) be printed on a single page that was not attached to any other document provided to the client; and 3) include the names of the attorney and the client and be signed by the attorney and the client. Section 1129(c) contains language (largely prepared by CDRC board member John Warnlof) for the written disclosure which, if used by the attorney, would provide a safe harbor for the attorney if the disclosure otherwise complied with subsection (b). CDRC supported the bill and played a significant role in the draft of its final language. The bill was passed by the Legislature and signed by the Governor.
For the third time in four years, a bill, AB 3080, designed to put an end to mandatory arbitration was introduced, notwithstanding that Governor Brown had vetoed one of the bills and the other was thrown out by the Court of Appeal because it was limited to arbitration and hence preempted by the FAA. Like the bill’s two predecessors, it did not mention the word “arbitration” but the fact sheet that accompanied it did so. Although CDRC opposes mandatory arbitration, it recognized that the bill’s emphasis on arbitration caused it to be preempted. CDRC representatives Paul Dubow and John Warnlof met with Assemblymember Gonzalez-Fletcher, the bill’s author, and proposed an amendment which would avoid preemption, but she declined to accept it. The bill was passed by both houses and, as predicted by CDRC, it was vetoed by the Governor.