Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Consumer advocates who want to shed light on the state’s consumer arbitration process scored a victory Monday as Gov. Gray Davis signed legislation requiring more disclosure by private arbitration providers. Written by Assemblywoman Ellen Corbett, D-San Leandro, AB 2656 requires that arbitrators begin posting information about consumer cases on the Internet starting Jan. 1. The bill is one of six that crossed the governor’s desk this session that deal with regulating consumer arbitration providers. On Monday, the last day of the session, Davis signed five of the bills and pocket-vetoed the sixth. Opposed by arbitrators, AB 2656 was considered the most important of the bills by consumer advocates. It requires private arbitration providers to disclose basic information — including which side won the arbitration and the amount of the award, as well as the number of cases the arbitrator has handled for a party. Arbitration providers will be required to post the information in a computer-searchable format on their Web sites. Davis also signed AB 3030 late Monday, which sets penalties for arbitrators who flout the new regulations. “California is the first state in the nation to recognize the need to regulate these private judging companies,” said Kevin Baker, counsel for the Assembly Judiciary Committee. “It was time to implement some basic protections and obligations on the part of these companies. It’s an important first step.” But consumer advocates didn’t get everything they wanted. In a win for private arbitration providers, the governor did not sign AB 3029, written by Assemblyman Darrell Steinberg, D-Sacramento, which sought to give consumers a choice in choosing a private arbitrator — even if the consumer entered into a contractual agreement to use a particular provider’s services. “This bill would cast too wide a net and could have the unintended consequences of making California’s arbitration provisions so complex that national companies would not be willing to provide services in our state,” Davis wrote in a letter to the Assembly explaining his decision. The passage of AB 2656, or “the data bill,” has some private arbitration providers steamed. India Johnson, senior vice president of the American Arbitration Association — which arbitrates between 700 and 800 consumer cases in California every year — said the bill hinders an arbitrator’s ability to do business in the state and is a violation of client privacy. “We’ve always valued confidentiality and the privacy of our clients — we don’t give a hoot whether the parties walk out the door and plaster the information about their case on the wall. They can do what they want — but you’re supposed to respect their privacy.” Gail Hillenbrand, senior attorney at the Consumers Union, a proponent of the legislation, said the new bills do protect the privacy of individuals. “Although some of the facts of their cases will be disclosed, individual names are not released,” she said. Of the three bills the governor signed early Monday, the most significant, AB 2574, sponsored by Assemblyman Tom Harman, R-Huntington Beach, requires arbitrators and their clients to cease their relationship if they had financial dealings with each other. “When you have a hidden financial arrangement you have worries about that influencing other conduct,” said Hillenbrand. Arbitration companies spent significant time and money lobbying against the six-bill arbitration legislation. In fact, Johnson said, the AAA hired the first lobbyist in its history to challenge the six bills. Their efforts were partially successful; and they were able to change language in some of the other bills. Johnson said AAA will not have problems complying with the other bills passed, but that the data bill, AB 2656, went too far. “For a small provider, they can comply and carry on, but for a large association with 200,000 filings per year, it’s onerous,” she said. “It is physically and financially unfeasible.”

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.