SB 42

 

This bill was filed by Senator Tom Umberg and requires an attorney who knows that another attorney “has engaged in professional misconduct that raises a substantial question as to the attorney’s honesty, trustworthiness, or fitness as an attorney in other respects” to inform the State Bar about said misconduct. The bill contains two exceptions, neither of which pertains to mediation confidentiality.  CDRC asked Senator Umberg to amend the bill to insert an exception for mediation confidentiality. Unfortunately, Senator Umberg chose not to accept CDRC’s recommendation. In fact, when he presented the bill to the Senate Judiciary Committee, he stated that an exception for mediation confidentiality would enable attorneys and mediators to escape the consequences of any criminal conduct admitted or committed during the mediation. That would not be the case if the admission or conduct led to a prosecution because mediation confidentiality only applies to noncriminal proceedings.

 

Because the bill has a worthy objective, to wit, it was introduced in reaction to a series of articles in the Los Angeles Times that detailed the massive fraud engaged in by attorney Tom Girardi with respect to settlement funds and the presumed complicity in the theft by three retired judges, it passed the Senate unanimously.

 

The bill is now before the Assembly Judiciary Committee. In order to assuage Senator Umberg’s concerns, CDRC has proposed an additional amendment. It has suggested that a new subsection (d) be added to Evidence Code 1119 which specifically states that mediation confidentiality does not cover evidence of criminal conduct.

 

AB 924

 

This bill was introduced by Assembly Member Jesse Gabriel. It provides that “a dispute resolution neutral who, in the course of presiding over an alternate dispute resolution proceeding, receives a complaint against them [sic] alleging that they [sic] violated a provision of the State Bar Act and the California Rules of Professional Conduct and any other applicable rule of conduct shall report the complaint to the State Bar” within thirty days of receipt of the complaint. The “applicable rule of conduct” currently includes the California Rules of Professional Conduct, the Judicial Council’s Ethical Standards for Neutral Arbitrators and a number of rules that were adopted by entities other than the Legislature or Judicial Council. However, a proposed amendment will limit the acts giving rise to the complaint to the Rules of Professional Conduct and the State Bar. The proposed amendment will also limit the bill’s scope to dispute resolution professionals who are licensed California attorneys since the State Bar does not have jurisdiction over non-attorney neutrals.

 

The proposed amendment will also require the neutral to fill out the State Bar’s attorney misconduct form and forward it to the State Bar with the actual complaint as well as a summary of the complaint and the name and contact information of any attorney participating in the proceeding. The attorney misconduct form is designed to be filled out by the complainant and so it may be difficult for the targeted neutral to adhere to it.

 

The bill contains no exceptions and so, presumably, the neutral must send the complaint to the State Bar even if the complaint violates mediation confidentiality,

 

The bill is also a reaction to the Girardi scandal but, ironically, it would have no effect on the type of activity engaged in by Girardi because neither he nor the judges named in the articles were acting as dispute resolution neutrals nor did their conduct occur “in the course of presiding over an alternate dispute resolution proceeding”.  In fact, the activities had no connection to alternate dispute resolution whatsoever.

 

CDRC brought its concerns to the attention of Assembly Member Gabriel’s staff, but the staff declined to make any amendments at that time. The bill subsequently passed the Assembly unanimously.

 

CDRC consequently formed a coalition with the Consumer Attorneys of California, the California Employment Lawyers Association, the California Judges Association, and the California Defense Counsel to amend the bill and eliminate its flaws. The amendment 1) specifically provides that it does not contradict Evidence Code 1115 et. seq. in any manner; 2) eliminates the self-reporting requirement and 3) limits the rules of conduct that could be the subject of the complaint to the California Rule of Professional Conduct and Judicial Council Ethical Standards for Neutral Arbitrators. On June 8, the coalition met with Amanda Mattson, counsel to the Senate Judiciary Committee and discussed the amendment. Ms. Mattson appeared to be receptive to the coalition’s suggestions. The coalition has also met with Assembly Member Gabriel.

 

Ron Kelly, a former CDRC board member, also has been instrumental in organizing opposition to the bill. Because of his efforts, over 75 opposition letters have been filed with the Legislature. In addition, board members John Warnlof and Paul Dubow played a significant role in the decision by the Litigation Section of the California Lawyers Association to oppose the bill.

 

Other bills

 

There are two other bills in the Legislature that affect ADR.

 

AB 615, sponsored by Assembly Member Brian Maienschein, the chair of the Assembly Judiciary Committee, was developed through the efforts of a subcommittee consisting of members of the ADR and International Law Committees of the California Lawyers Association. It amends the California International Arbitration and Conciliation Act (CIAC) so that it conforms with the Model Law of the United Nations Commission on International Trade Law (UNCITRAL) and makes California a more hospitable place for international arbitration. When CIAC was initially enacted, it conformed with the UNCITRAL rules, but it has failed to keep up with subsequent amendments to the UNCITRAL rules. CDRC supports the bill, and it passed the Assembly unanimously.  We expect a similar result in the Senate.

 

AB 886 is entitled the California Journalism Preservation Act. It was introduced by Assembly Member Buffy Wicks. Its purpose is to allow newspapers to obtain usage fees when their content is published on digital platforms. It also provides that if there is a dispute concerning the amount of the usage fee or if the newspaper is entitled to the usage fee, the dispute will be adjudicated by a three-person panel convened by the American Arbitration Association. A party dissatisfied by the panel’s decision may appeal “on the grounds of a procedural irregularity”. And so the bill provides some more opportunities for arbitrators!

 

Please renew your membership

 

In previous issues of this newsletter, we made a plea for membership renewals. We have indeed received some renewals as a result. Nevertheless, we need lots more. Our opposition to AB 924 on your behalf  has taken much of our lobbyist’s time and that, in turn, has led to an increase of his fees. If you haven’t done so yet, please renew as soon as you can. You may do so by going to the CDRC website at www.cdrc.net and hit the membership icon. Dues are $150 and are good for one year from the date you sign up. You are of course free to pay any sum above $150 if you care to do so.