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Gov. Jerry Brown (D) would consider the bill, after passage by both houses of the Democratic-led Legislature.

California state capitol photo courtesy: Wikipedia

(WASHINGTON D.C.) - A coalition of California industry groups is railing against “job killer” legislation they argue would weaken pre-dispute arbitration agreements and more broadly, slow the state’s economic recovery.

Assembly Bill 1062, specifically, would end the current right to appeal trial-court decisions not to enforce arbitration agreements. Instead, those judicial decisions would be subject to review by writ of mandate — at the end of trial.

The legislation, as written, would apply to arbitration matters in disputes over the terms of a public- or private-sector collective bargaining agreement or memorandum of understanding, including consumer contracts.

The bill would reserve parties’ right to ask for review if a motion to compel arbitration is denied or appeal judgment, at the end of trial.

A.B. 1062 is awaiting a vote by the full Senate. The measure, as passed in the state Assembly, is here.

The Assembly passed the bill by a 42-29 vote in May. If passed in the Senate, the bill would return to the Assembly for a concurrence vote on Senate amendments.

Gov. Jerry Brown (D) would consider the bill, after passage by both houses of the Democratic-led Legislature.

Industry’s Opposition

The Association of California Insurance Companies (ACIC), California Chamber of Commerce, Civil Justice Association of California (CJAC), California Building Industry Association and the California Association of Grocers are among a litany of trade groups opposing A.B. 1062.

The proposal, they say, would allow aggrieved parties who voluntarily agreed to pre-dispute binding arbitration agreements to instead litigate a controversy.

Proponents of arbitration say the process benefits both parties, noting it’s a less-costly alternative to litigation in the state’s overburdened civil court system.

“Employers, plaintiffs and taxpayers all benefit from use of arbitration, as it saves money and provides  faster relief while still protecting consumer and employee rights,” a coalition of opponents said in a July 1 letter, decrying the A.B.1062 as a “job killer.”

The California Chamber of Commerce warned that increased employer litigation costs resulting from A.B. 1062 enactment would leave companies less resources to hire and retain workers. Additionally, increased liability costs would discourage economic development in the Golden State, CalChamber has told lawmakers.

Trial Attorney Support

On the other side of the issue, plaintiffs’ attorneys and some consumer advocates say arbitration provides little opportunity for review of decisions. Moreover, people often agree to binding-arbitration clauses without understanding the agreement’s legal significance, they argue.

Assemblyman Roger Dickinson (D-Sacramento) introduced the measure, co-sponsored by the state’s trial bar, Consumer Attorneys of California (CAOC), and the California Employment Lawyers Association (CELA).

Dickinson, a member of the Assembly Judiciary Committee, said A.B. 1062 would eliminate an “anomaly” in current law that allows appeal of orders denying a petition to compel arbitration. The status quo, he said, violates the legal principle that appeals are taken after final judgment in a trial is rendered.

“The existence of this anomaly has been exploited by parties to unnecessarily delay the judicial process, causing great harm to aggrieved parties,” he said.

Among groups lobbying for passage of A.B. 1062 is the Congress of California Seniors, Consumer Federation of California, California Advocates for Nursing Home Reform and the Legal Aid Society-Employment Law Center.

A.B. 1062 would amend Section 1294 of the California Code of Civil Procedure (Civ. Proc. § 1294).

Dickinson is a former legal staffer at the California Department of Consumer Affairs. Previous, he co-founded the now-dissolved law firm of Kemnitzer, Dickinson, Anderson & Barron, which emphasized in cases involving automobile warranty and sales misrepresentation, according to the assemblyman’s biography.

Existing Law

The Federal Arbitration Act (FAA) is at Title 9, Sections 1-14 of the United States Code (9 U.S.C. §§ 1 et. seq.). California statutes on arbitration are codified at Civ. Proc. §§ 1280 et. seq.

Currently, state law provides that a written valid arbitration agreement is enforceable and irrevocable (Civ. Proc. § 1281).

California law, additionally, provides that a party has an immediate right to appeal from an order denying a petition to compel arbitration. Meanwhile, there is no immediate right to appeal from an order granting a petition to compel arbitration (Civ. Proc. § 1294).

In court, if a defendant’s motion to compel arbitration is denied, the party may either file a discretionary writ of mandate or file an appeal to the California Court of Appeal, which must be heard as a matter of right.

Related:  On April 27, the U.S. Supreme Court ruled 5-4 that the FAA Savings Clause preempts any state law that would require consumer contracts including arbitration agreements to make class arbitration available (AT&T Mobility LLC v. Concepcion, No. 09-893).

The decision invalidated a 2005 holding by the California Supreme Court that placing a class-action waiver in an arbitration agreement was unconscionable under California law (Discover Bank v. Superior Court, S113725, 2005).

From Business Law Daily: Reach staff writer Chris Rizo at rizo@legalnewsgroup.com.

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