Bills to make arbitration fairer for consumers, employees advance in California Senate

Consumers and employees would not be forced to travel out of state to represent themselves in binding arbitration; could have a court reporter present

April 26, 2016

Sacramento – Californians forced to resolve a dispute through private, binding arbitration would no longer be additionally forced by a corporation to travel out of state to represent themselves, under a bill by State Senator Bob Wieckowski (D-Fremont) that was approved today by the Senate Judiciary Committee.

Consumers and employees are increasingly forced to sign arbitration agreements that limit or deny their day in court or prohibit their ability to file class-action lawsuits, just to get a job, or receive basic services or products, such as a credit card or cell phone.  But they can also be compelled to travel across the country at their own expense to represent themselves in arbitration cases.

“In this private, for-profit justice system the deck is stacked against consumers and employees who simply cannot afford to dig into their pockets to fly across the country to New York or whatever jurisdiction the corporation picks,” said Wieckowski, a member of the Judiciary Committee.  “My bill makes clear if you are a California consumer and you purchase goods and services from a California company, or you are a Californian working for a company doing business in our state, the arbitration must take place in California.  Forcing someone to travel out of state has a chilling effect on their ability to receive justice.”

Tara Zoumer testified in support of Wieckowski’s bill.  She filed a wrongful termination suit against her California employer.  She was let go by the company after refusing to sign an arbitration agreement.  She filed suit in San Francisco Superior Court, but is now being forced to go through arbitration in New York.     

The committee also approved another Wieckowski bill, SB 1007, affirming a person has the right to a certified court reporter in private arbitration.  

“Without a court reporter creating a record of the proceedings, a consumer often lacks the documentation to support claims of misconduct, or fraud in the arbitration process,” Wieckowski said.

The Consumer Financial Protection Bureau (CFPB) completed the most exhaustive study done on arbitration in the United States.  The CFPB found 92 percent of prepaid card agreements and 88 percent of mobile wireless providers who authorize third parties to charge consumers for services include arbitration clauses.  Similarly high arbitration percentages were found in other industries reviewed by the federal CFPB.