As San Diego personal injury lawyers, we often rely on arbitration to resolve
injury cases. Arbitration is often an attractive alternative to trial
because it is faster and less expensive. For corporations, hospitals,
and other entities accused of negligence, arbitration is preferable because
proceedings are largely confidential. As a result, the public is often
unaware of their misdeeds, such as elder abuse,
medical malpractice or product safety violations, and how often they may occur.
California Code of Civil Procedure Section 1281.96
To improve arbitration transparency, California enacted a law in 2003 that
requires "any private arbitration company that administers or is
otherwise involved in consumer arbitration" to collect and publish
certain data. Pursuant to
California Code of Civil Procedure Section 1281.96, the report must contain the following information regarding each consumer
arbitration within the preceding five years (among other data):
- Whether arbitration was demanded pursuant to a pre-dispute arbitration
clause and, if so, whether the pre-dispute arbitration clause designated
the administering private arbitration company.
- The name of the non-consumer party, if the non-consumer party is a corporation
or other business entity, and whether the non-consumer party was the initiating
party or the responding party, if known.
- The nature of the dispute involved, i.e. goods; credit; other banking or
finance; insurance; healthcare; construction; real estate; telecommunications;
debt collection; personal injury; employment; or other.
- Whether the consumer or non-consumer party was the prevailing party.
- The total number of occasions, if any, the non-consumer party has previously
been a party in an arbitration or mediation administered by the private
- The type of disposition of the dispute, including: withdrawal, abandonment,
settlement, award after hearing, award without hearing, default, or dismissal
- The amount of the claim, whether equitable relief was requested or awarded,
the amount of any monetary award, the amount of any attorney fees awarded,
and any other relief granted.
- The name of the arbitrator, his or her total fee for the case, the percentage
of the arbitrator's fee allocated to each party, whether a waiver
of any fees was granted, and, if so, the amount of the waiver.
The law requires California arbitration companies to publish the data at
least quarterly. They must also make the information available to the
public via their websites. Section 1281.96 further stipulates that the
data must be published in a format that allows the public to search and
sort the information using readily available software.
Arbitration Firms Fail to Comply with Disclosure Requirements
Public Law Institute of the UC Hastings College of the Law recently analyzed
compliance with Section 1281.96. It revealed that many California arbitration companies are not fulfilling
their obligations. Several of the arbitration companies we work with are
on the list, including OIA, JAMS, AAA, and Judicate West.
The Public Law Institute identified 32 private companies that appear to
be involved in consumer arbitrations in California. Of those, only 11
complied with the substantive requirements of §1281.96(a). The report
further concluded that only three firms "can be said to evidence
robust and full compliance with the statutory regime, including §1281.96(b)'s
formal requirements as to format, timing and depth of reporting."
Below are several other key findings:
- No firm made all the required disclosures for all its cases.
- Nine arbitration firms do not provide any data at all, claiming they are
not subject to the law. However, at least one of those companies promotes
its arbitration services on its website.
- The American Arbitration Association failed to provide required information
about the prevailing party in most cases where there was a hearing and
an award, reporting the prevailing party in only 46% of such cases.
- ARC Services had a 0% compliance rate as to reporting repeat arbitration
customers, even when its disclosures show identical named parties.
- Kaiser's Office of the Independent Administrator (OIA) reported 98
cases with a prevailing party; 92 of those cases were resolved in favor
of the non-consumer party (94%).
- The time between filing and final disposition varied widely, from 150 days
to more than 350 days.
California Code of Civil Procedure Section 1281.96 has the potential to
provide valuable information to California consumers, including victims
of medical malpractice. Unfortunately, the disclosure law is only useful
if arbitration firms provide reliable and comprehensive data.