CDRC NEWSLETTER
Vol. 2, no. 2
Six members of the Board journeyed to Sacramento on April 23 and met with staffers of legislators who serve on the Senate and Assembly Judiciary Committees. Prior to the meeting, we prepared a pamphlet about how arbitration and mediation work in order to dispel the misconceptions that some legislators have about the process. The pamphlet was distributed to each staffer with whom we spoke as well as several other staffers and legislators. Each of our meetings went well and we are optimistic that we will continue to enjoy a good relationship with most members of the Legislature and their staffs.
We also said goodbye to Board member Jan Schau. Jan was elected to be the vice president of the International Association of Mediators and her duties there will preclude her from devoting significant time to the Board. We will miss Jan and we wish her well.
AB 1523
This bill was introduced by all of the members of the Assembly Judiciary Committee. It creates new Code of Civil Procedure section 1775.5 and its purpose is to increase the amount in controversy of cases ordered to mediation by the courts under Code of Civil Procedure section 1775 from $50,000 to $75,000. The bill also imposes additional requirements before a court may order a civil action into mediation. The requirements include that there be no ongoing discovery disputes, the trial date has been set, and at least one party has notified the court of an interest in mediation. If the parties do not stipulate to a mutually agreeable mediator, the bill requires the court to select a mediator, at no cost to the parties.
CDRC supported the general concept of the bill but it had some concerns. Its main concern was that the new threshold is too low and that it should be $100,000 or even $150,000 so that more cases could be mediated. Further, given that some cases are ripe for mediation not long after filing, it believed that the requirement that there be a trial setting should be eliminated. However, it became clear that neither of our concerns would be accepted by the Committee and since we supported the bill’s concept, we filed a support letter that did not include our proposed amendments.
We did believe that two technical amendments were necessary in order to make the bill effective and we have included those amendments in our support letter.
First, new section 1775.5 does not grant the Superior Court with authority to order mediation. It merely sets new conditions. The authority to order mediation is found in existing section 1775.3(a), which provides that “all at issue causes of action in which arbitration is otherwise required pursuant to Section 1141.11….may be submitted to mediation”. Section 1141.11 states that cases may be submitted to arbitration “if the amount in controversy, in the opinion of the court, will not exceed $50,000 for each plaintiff”. Thus, while section 1775.5 increases the amount in controversy for cases ordered to mediation to $75,000, existing section 1775.3, through its reference to section 1141.11, still limits the amount in controversy to $50,000. CDRC has recommended that the problem be solved by amending section 1141.11 to increase the amount in controversy therein to $75,000.
Second, new section 1775.5(b), which deals with the failure of the parties to agree on a mediator, provides that in such a situation the court will appoint a mediator at no cost to the parties. But section 1775.8(a) states that the compensation of court appointed mediators shall be the same as arbitrators “pursuant to section 1141.18”. Section 1141.18 states that court appointed arbitrators shall be compensated at $150 per case or $150 per plaintiff, whichever is greater. CDRC has recommended that section 1141.18 be amended to provide an exception for mediations covered by section 1775.8(a)
SB 82
This bill was introduced by Senator Tom Umberg, chair of the Senate Judiciary Committee. It creates new Civil Code section 1670.15, Subsection (b) of the proposed statute provides:
“Dispute resolution terms and conditions of a consumer use agreement shall be limited to the use, payment, or provision of the goods, service, money, or credit provided by that consumer use agreement.”
Apparently, creation of the bill was triggered by an event where a constituent of Senator Umberg filed a personal injury claim against a retailer, who attempted to arbitrate the dispute, citing an arbitration agreement in a purchase contract that had nothing to do with the injury.
Although CDRC had no problem with the intent of the bill, it noted that similar cases had been adjudicated by the appellate courts and, in each case, the vendor’s attempt to arbitrate was rejected. See Revitch v. DirecTV LLC, 977 F. 3d 717 (9th Cir. 2020); Johnson v. Walmart, Inc., 57 F. 4th 677 (9th Cir. 2023); Perez v. Discover Bank, 74 F. 4th 1003 (9th Cir. 2023); and Vazquez v. SaniSure, Inc., 101 Cal. App. 5th 139 (2024). Consequently, CDRC did not take a position on the bill, It passed the Senate and CDRC expects that it will be passed by the Assembly.
State Bar Working Group on ADR Certification
SB 940, which was passed by the Legislature last year, requires the State Bar to create a program to certify ADR professionals. It also provides that there be different levels of certification, described in the bill as tiers.
Accordingly, the State Bar created a working group consisting of members who represent various ADR entities. CDRC was one of the entities permitted to nominate a member to represent it and it selected Diana Kruze. In addition, board member Paul Dubow was appointed to the working group as the CLA representative and former board members Dana Curtis and Ron Kelly have also been appointed.
At the March19 meeting, a non-binding straw poll was taken and the vote was 13-6 in favor of limiting certification to the criteria in the statute, to wit, whether the neutral agreed to adhere to ethical standards, had an adequate complaint procedure, and a method to remedy conduct that gave rise to the complaint.
Criteria for tiers was not resolved. However, Judge Rise Pichon, who is the chair of the group, appointed an arbitration subcommittee and a mediation subcommittee to suggest tier criteria. The subcommittees are expected to have a report at the next meeting, scheduled for June 18.
Judge Pichon also appointed a complaints subcommittee to determine how to handle complaints against ADR professionals. Dr. Jack Goetz, the chair of the subcommittee, presented its report at the April 23 meeting. The subcommittee recommended that complaints either be administered by the State Bar or an organization designated by the State Bar. The subcommittee members believed that if providers administered complaints directed against them or neutrals on their rosters, the procedure would not be perceived by the public to be independent, while individual neutrals would have no practical way of creating (and paying for) an independent complaint review panel. Dr. Goetz’ report was adopted by the working group without opposition and with two abstentions.