SB 940

Bill Subjects

Abstract

(1) Existing law, the Consumer Contract Awareness Act of 1990, defines a consumer contract as a writing prepared by a seller that provides for the sale or lease of goods or services or the extension of credit, as specified, for personal, family, or household purposes, among other provisions. The act requires a seller to deliver a copy of a consumer contract to the consumer at the time the contract is signed, and prohibits the waiver of any provisions of the act. Existing law prohibits an employer from requiring specified employees, as a condition of employment, to agree to a provision that would require the employee to adjudicate outside of California a claim arising in California or deprive the employee of the substantive protection of California law with respect to a controversy arising in California, as specified. This bill, for contracts entered into, modified, or extended on or after January 1, 2025, would prohibit a seller from requiring a consumer, as a condition of entering into a contract, to agree to a provision that would require the consumer to arbitrate outside of California a claim arising in California or to arbitrate a controversy arising in California under the substantive law of a state other than California, as specified. Existing law, the Small Claims Act, requires each superior court to have a small claims division, and provides that the small claims court has jurisdiction over specified actions. This bill would give consumers the option to have a dispute adjudicated pursuant to the Small Claims Act if a consumer contract requires a dispute under the contract to be arbitrated and the dispute may be adjudicated pursuant to the Small Claims Act. (2) Existing law, the California Arbitration Act, provides a statutory framework for the enforcement of contractual arbitration under California law. The act establishes that a written agreement to submit a present or future controversy to arbitration is valid, enforceable, and irrevocable, except to the extent that the contract could otherwise be revoked under general contract law principles. The act defines a neutral arbitrator as one who is selected jointly by the parties or by the parties' arbitrators, or is appointed by the court if the parties or their arbitrators cannot jointly select an arbitrator. The act requires a person selected to serve as a neutral arbitrator to disclose all matters that could cause a person aware of the facts to reasonably entertain a doubt as to the proposed neutral arbitrator's impartiality. The act requires the disclosure to include, among other things, whether or not the proposed neutral arbitrator has a current arrangement concerning prospective employment or other compensated service as a dispute resolution neutral with a party to the proceeding, or is participating in, or has participated within the last 2 years in, discussions regarding such prospective employment or service. This bill, in a consumer arbitration case, would, except as specified, require the disclosure of any solicitation, as defined, made after January 1, 2025, and within the last 2 years by, or at the direction of, a private arbitration company to a party or lawyer for a party. The bill would prohibit the solicitation of a party or lawyer for a party during the pendency of the arbitration. The act authorizes depositions to be taken and discovery obtained in arbitration proceedings, as specified. The act deems those deposition and discovery provisions to be incorporated into every agreement to arbitrate specified disputes and provides that those provisions are incorporated into other disputes only if the agreement so provides. This bill would repeal the provisions deeming those deposition and discovery provisions to be incorporated into every agreement to arbitrate specified disputes and providing that those provisions are incorporated into other disputes only if the agreement so provides. The bill would make conforming changes. (3) Existing law, the State Bar Act, provides for the licensure and regulation of attorneys by the State Bar of California, a public corporation governed by a board of trustees comprised of appointed and elected members. Existing law authorizes a law corporation to practice law if certain conditions are met. This bill would require the State Bar to create a program to certify alternative dispute resolution firms, providers, or practitioners that includes specified components, including procedures for a firm, provider, or practitioner to become a certified alternative dispute resolution firm, provider, or practitioner, as specified, and different levels of tiers for certification, as specified. The bill would authorize the State Bar to charge a fee to cover the reasonable costs of administering the program, as specified.