Assembly Bill 2574 led to the California Code of Civil Procedure Section 1281.92; this became California law January 1, 2003. It became law with a few other Assembly Bills which also added codifications regarding arbitrations between consumers and big business.
Four and a half years later, it is worth taking a look at what has happened.
The Bill Topic is defined as "Conflicts of Interest" and reviewing the
April 23, 2002 Hearing summary reveals these findings in the California capital:
KEY ISSUES : SHOULD PRIVATE JUDGING COMPANIES BE TREATED
CONSISTENTLY WITH JUDGES, ARBITRATORS AND OTHER PERSONS
PERFORMING PUBLIC FUNCTIONS IN KEEPING AN ARM'S-LENGTH DISTANCE
FROM PARTIES TO CONSUMER ARBITRATIONS?
It's obvious from the passage of this bill (30 ayes and 2 noes) that the California legislature deemed the answer a resounding "YES".
Consistently with the other bills the Committee is hearing
regarding consumer arbitration, this bill would address
egregious conflict of interest problems in consumer arbitrations
by prohibiting private judging companies from administering the
consumer arbitrations of parties with whom they have significant
financial investments and other financial relationships.
The legislature clearly recognized the justice may very well be sold.....
The legislative analysis furthers the need for REGULATORY ACTION:
Those firms that choose to handle mandatory consumer arbitrations have a
particular obligation to be worthy of public confidence.
Is the Judge that is hearing MBNA or FIA Card Services Motion to Compel Arbitration, a so-called 'neutral' (nomenclature used by the National Arbitration Forum in their compliance filings) working FOR the NATIONAL ARBITRATION FORUM?
Remarkably, however, despite their power,
prominence and need for independence, private judging companies
are not yet constrained against cozy relationships with the
parties before them.
and within, a quote from Consumer's Union (partially here)
As long as the law permits consumers to be relegated to a private
system of justice, these restrictions are needed to remove
financial conflicts of interest likely to tilt that system
against consumers.
4 YEARS LATER, HAS THE PRIVATE SYSTEM OF JUSTICE CALLED ARBITRATION TILTED AGAINST CONSUMERS?
HOW MUCH OF IT IS WRONGFUL ARBITRATION?
It is further noted toward the hearing close:
Moreover, there is no existing model for disclosure and disqualification of private
judging companies, and it may be difficult and cumbersome to
develop a sufficiently protective process.
What is it going to take to take on Wrongful Arbitration?
CALIFORNIA 1281.96 REPORTING ANALYSIS