McGeorge Adjunct Professor Chris Micheli

Senate Bill 707 by Senator Bob Wieckowski was signed on October the 13th as Chapter 870. The new law deals with arbitration agreements.

Section 1 of the bill notes that it is the intent of the Legislature to affirm three different state court decisions regarding a company’s failure to pay arbitration fees that constitute a breach of the arbitration agreement. There are also six legislative findings and declarations in Section 1 of SB 707.

Section 2 of this bill amends Section 1280 of the Code of Civil Procedure by adding three definitions for consumer, drafting party, and employee. Section 3 of the bill amends Section 1281.96 of the Code of Civil Procedure to add specified information that needs to be collected. Under existing law, a private arbitration company that administers or is otherwise involved in a consumer arbitration must collect and publish at least quarterly and make available to the public on its internet website a single cumulative report that contains specified information regarding each consumer arbitration within the preceding five years. SB 707 adds a twelfth category of specified information.

Section 4 of the bill adds Section 1281.97 to the Code of Civil Procedure. It says that either employment or consumer arbitrations that require the drafting party to pay certain fees and costs before the arbitration can proceed, that the drafting parties deem to be a material breach of the agreement is in default and thereby waives its rights to compel arbitration if the fees or costs to initiate an arbitration are not paid within 30 days after their due date. If the drafting party materially breaches the agreement and is in default then the consumer or the employee can either withdraw the claim from arbitration or they can proceed to civil court, or they can compel arbitration, in which case the drafting party must pay all the fees and costs. Section 5 adds Section 1281.98 to the Code of Civil Procedure and is similar to Section 4.

Section 6 of the bill adds new Code of Civil Procedure section 1281.99. This new section requires a court to impose a monetary sanction against a drafting party that materially breaches an arbitration agreement.

You can find a full transcript of today’s podcast here.