Adr Update: Dealing With Ab 2617

• Publication year: 2015
• Citation: Vol. 28 No. 1
• Author: By Paul Dubow

ADR Update: Dealing with AB 2617

By Paul Dubow

Paul Dubow

While the United States Supreme Court has recently broadened the scope of arbitration agreements, AT&T Mobility LLC v. Concepcion (2011)___U.S.___, 131 S.Ct. 1740, the California Legislature has limited them, at least in one instance. During its 2014 session, the Legislature passed AB 2617, amending Civil Code sections 51.7, 52, and 52.1. These three statutes protect California citizens from violence or threat of violence because of political affiliation, position in a labor dispute, or sex, race, color, religion, ancestry, national origin, disability, or medical condition, and would not ordinarily be considered the subject of an arbitration agreement. But the Legislature apparently thought so, and it is now quite likely that we will see causes of action based on these statutes where the parties have entered into an arbitration agreement and one of them wants to avoid arbitration.

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The bill prohibits a person from requiring a waiver of the right to pursue a civil action as a condition of entering into a contract for the provision of goods and services, and also provides that any waiver of its protections must be knowing and voluntary, and in writing, and expressly not made as a condition of entering into the contract.

The word "arbitration" does not appear anywhere in the bill and, given that it affects contracts generally, it would appear on its face not to be preempted by the Federal Arbitration Act (FAA). But a reading of the report of the Assembly Judiciary Committee makes clear that the bill was directed at arbitration provisions. For example, the report notes that "[s]upporters argue that hate crimes are fundamentally different types of wrongs than the kind of commercial disputes that may be appropriate for contractual private arbitration or other waiver agreements...[and that]...[o]pponents..focus their arguments on the claimed benefits of private arbitration...." (Emphasis added.) This language has caused some arbitration adherents to believe that the bill is preempted by the FAA.

The bill has the salutary aim of encouraging voluntary arbitration agreements, rather than the mandatory agreements frequently entered into by consumers and employees, often unknowingly on account of a failure to read the agreement. On the other hand, arbitration, even though it is now regularly accompanied by the same discovery and motion practice that we see in litigation, is still faster than a trial...