CDRC NEWSLETTERS
Volume 3, No. 1
State Bar is to construct 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 Diane Barron. In addition, board member Rex Parris was appointed to the working group as the CJA representative and former board member Diane Curio and Ron Kelly have also been appointed.
At the March 19 meeting, a formatting vote was taken and the vote was 13-0 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 for keeping census that gave rise to the complaint.
Criteria for tiers was not resolved. However, Judge Rex Nichols, 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.
Criteria for tiers was not resolved. However, Judge Rex Nichols, 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.
AB 1123
This bill was introduced by all of the members of the Assembly Judiciary Committee. It creates new Code of Civil Procedure section 1775.2 and proposes to: 1) increase the amount in controversy of cases ordered to mediation by the court 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 to mediation. The requirements include that there be no ongoing discovery disputes, that 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 had some concerns. Its main concern was that the cost threshold was low and that it should be $100,000 or even $150,000 so that more cases could be mediated. Further, since many cases settle in mediation weeks or 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 1775.2 does not grant the Superior Court with authority to order mediation, it merely sets forth new conditions. The authority to order mediation is found in existing section 1775.3(a), which provides that “all of those 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 1775.2 increases the amount in controversy for cases ordered to mediation to $75,000, existing section 1775.3, through its reference to section 1141.11, will limit 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 1775.2(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 mediators created by section 1775.2(b).
SB 117
This bill was introduced by Senator Tom Umberg, chair of the Senate Judiciary Committee. It creates new Civil Code section 1670.10. Subsection (a) of the proposed section provides:
Dispute resolution terms and conditions of a consumer use agreement shall be limited to the use, payment, of provision of the goods, services, money, or credit, provided by the 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 solved recently by appellate courts and, in each case, the courts’ consensus was to refuse to enforce. See Block v. Corev-TV, LLC, 107 F. App'x 594 (2d. 2023), Johnson v. Walmart, Inc., 17 F. 4th 817 (8th Cir. 2022), Perez v. Discover Bank, 78 F. 4th 1002 (9th Cir. 2023), and Vasquez v. Sempra., Inc., 112 Cal. App. 5th 121 (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.
AB 615
In 1988, the Legislature enacted the California International Arbitration and Conciliation Act (CIACA). It was based on the model law proposed by the United Nations Commission on International Trade Law (UNCITRAL). This model law was amended in 2006, but no action was taken in California to similarly amend CIACA and thus California law was no longer in sync with the rest of the Model Law. AB 615 remedied this anomaly. CDRC supported the bill. The Assembly passed the bill without opposition. However, the Senate Appropriations Committee placed it in the suspense file because of a belief that the bill would impose additional costs on the California courts, a larger number of bills than usual have been placed in the suspense file this year because of the State’s $31.5 billion deficit. AB 615 is now a two-year bill and CDRC expects that the author will reintroduce it in 2024.
AB 886
This bill created the California Journalism Preservation and Protection Act. It would direct digital advertising companies to pay news outlets a "user-driven usage fee" when they sell advertising alongside news content. Digital platform publishers target 70% of news flows to personalize journalism use in California. It also contained an arbitration provision which permitted journalism providers to initiate a final offer arbitration before a three-member American Arbitration Association panel to determine the percentage of the covered platform's advertising revenue that needs to be distributed to the journalism providers. CDRC did not take a position on the bill.
The bill passed the Assembly with bipartisan support, June 1 and moved on to the State Senate. A hearing was initially scheduled for July 11, but before it could be held, the author committed it to a two-year bill and announced that she would reintroduce it in 2024. In the interim, the Senate will hold an informational hearing this fall to further explore issues, the bill attempts to address and tech companies' economic degradation of local newspapers, other media outlets.
SB 40
This bill required a licensee of the State Bar who knew that another licensee engaged in professional misconduct to file, itemize or clarify information that raised a substantial question about that licensee's honesty, trustworthiness, or ability to perform legal services with competence, to inform the State Bar. The bill also required a licensee to inform the State Bar if the licensee knew that another licensee had conspired or engage in, or has engaged in, treason, sedition, or insurrection against the State of California or the United States. CDRC opposed the bill because it did not make an exception for mediation confidentiality. The author withdrew the bill after the State Bar prepared a similar rule which also contains an exception for mediation confidentiality.
SB 42
This bill was very similar to SB 40. However, it contained two exceptions, to wit, information otherwise protected by the attorney-client privilege and information gained by a licensee while participating in the Attorney Diversion and Assistance Program. By specifically including two exceptions, it would appear that no other exception was considered by the Legislature. Hence, the bill would have superseded the mediation confidentiality provisions set forth in Evidence Code Section 1119 and this caused CDRC to oppose the bill. The author withdrew the bill after he amended SB 40, which previously was a spot bill.