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Lawmakers Pass Arbitration Bill on Party-Line Vote
By KENNETH OFGANG, Staff Writer
Legislation that would toll contractual time limits on arbitration during the pendency of a lawsuit regarding the same dispute has passed the state Assembly.
Lawmakers Monday approved AB 1553 by Assemblywoman Noreen Evans, D-Santa Rosa, by a vote of 45-33. Forty-five Democrats voted for the bill, 33 Republicans voted against, and two Democrats were absent.
The bill provides that where suit is filed within the time limit for requesting arbitration, that time limit is tolled until 30 days after arbitration is ordered by the court or 30 days after the civil action is terminated, whichever occurs first.
The bill, which now goes to the Senate, is backed by the State Bar’s Committee on Alternative Dispute Resolution. Supporters argued that the bill would eliminate the need for duplicative proceedings in cases where the enforceability of an arbitration clause is in dispute.
According to an Assembly analysis, “this bill is intended only to provide assurance on the running of the statute of limitations, and is not intended to alter the law governing other consequences that may flow from a party’s decision to file and otherwise pursue a claim in court as opposed to initiating arbitration, such as the possible waiver or forfeiture of contractual arbitration rights that may arise as a result of the plaintiff’s conduct.”
The bill is opposed by State Farm Insurance Company, which told Assembly members that the proposed legislation would “undermine arbitration agreements by encouraging litigation, including class action lawsuits, in situations where parties have an arbitration agreement in place.”
State Farm argued that the bill would undermine arbitration agreements by “allowing parties to forestall their agreement to arbitrate while filing suit against the very party with whom they have agreed to arbitrate and on an issue they have agreed shall be resolved through arbitration.”
Copyright 2005, Metropolitan News Company