Arbitration Results Will Stay Secret, for Now
State legislation aimed at forcing private arbitration companies to follow transparency laws has stalled in the California Assembly, but will be re-introduced next year.
A state Assembly bill that would have given arbitration providers stiff penalties for violating transparency laws has stalled, and won’t be reintroduced until next year.
We looked at the secretive world of private arbitration in an investigative series in May. The second story in the series examined the requirement for arbitration providers to make basic details about all their cases public:
Concerned about the growing ubiquity of mandatory arbitration, the state Assembly’s Judiciary Committee put together an aggressive, bipartisan package of legislation aimed at protecting consumers. One of the key bills to come out of that effort in 2002 required arbitration providers to make public key information about the thousands of cases being heard by their private judges.
If arbitration was to become widespread, lawmakers at least wanted the process to be transparent.
But a decade later, as arbitration has expanded into almost every corner of Californians’ lives, this private world of justice remains as secretive as ever. Many of the providers of arbitration in the state have paid little or no attention to the legal requirement to provide data about their cases, and when companies do provide information, it’s almost always unwieldy and hard to find.
That’s prompted the Judiciary Committee to take a fresh look at its efforts to regulate arbitration. After a March hearing in which the committee learned that arbitration firms are frequently ignoring the law, the committee chairman introduced a new bill AB 802 proposing hefty fines for violations.
The recent bill, AB 802, came under heavy attack from the arbitration and alternative dispute resolution industries. Lobbyists wrote several letters to lawmakers urging them to drop the bill and warning that if it proceeded, the industry would take its business out of California.
Eventually, Assemblyman Bob Wieckowski, who introduced the bill, decided to put it on hold and bring it back next year.
“It was a bigger fight than we expected given the mild nature of the bill,” said Heather Falkenthal, a legislative assistant in Wieckowski’s office. “It’s not dead, but it’s not happening this year.”
Falkenthal said Wieckowski plans to rewrite the bill so that it still addresses the central issue of arbitration providers not following the law. She said it will be reintroduced next year.