|SAME AS||SAME AS S07146|
|COSPNSR||Seawright, D'Urso, Abinanti|
|Amd §399-c, Gen Bus L|
|Relates to arbitration organizations; requires private arbitration organizations involved in fifty or more consumer arbitrations per year to collect, publish at least quarterly, and make available to the public in a computer-searchable database certain information relating to such arbitrations; prohibits financial conflicts of interest.|
|02/06/2018||referred to consumer affairs and protection|
|03/06/2018||reported referred to codes|
|04/19/2018||advanced to third reading cal.762|
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NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A9769 SPONSOR: Titone
TITLE OF BILL: An act to amend the general business law, in relation to arbitration organizations   PURPOSE: The purpose of this bill is to ensure fairness and accountability in arbitration proceedings conducted by private arbitration organizations and further protect consumers from unfair mandatory arbitration clauses.   SUMMARY OF PROVISIONS: This bill would require private arbitration organizations involved in consumer arbitration cases, excepting those businesses whose only relationship to arbitration is a contract clause authorizing arbi- tration, to make certain information regarding those cases available to the public on its website and on paper upon request. The information required to be disclosed for each consumer arbitration would include: the name of the non-consumer party; the type of dispute involved; wheth- er the consumer was the prevailing party; and on how many occasions, if any, the non-consumer party has previously been a party in arbitration administered by the private arbitration organization. No private arbi- tration organization would have any liability for collecting, publish- ing, or distributing such information. The bill would provide for enforcement by the Attorney General of the arbitration information disclosure provisions, as well as the existing prohibition against the inclusion of mandatory arbitration clauses in certain consumer contracts. The Attorney General would be empowered to seek an injunction against violators and/or a civil penalty of up to $2,000 for each violation. Each contract offered and entered into in violation of the mandatory arbitration clause prohibition would consti- tute a separate violation. This bill also provides for a right of action to any person who has been injured by reason of a violation of the section provided in the bill.   JUSTIFICATION: The proliferation of binding mandatory arbitration clauses in consumer contracts, including contracts for credit cards; telephone service; home loans; health care; and consumer goods, over the past twenty years has led to a significant increase in the number of consumer disputes referred to arbitration. The vast majority of these proceedings are handled by arbitrators working for private organizations that administer arbitration programs for private businesses. In recent years, consumer advocates have raised concerns regarding the fairness of private arbi- tration proceedings. Many advocates maintain that consumers may not be able to get a fair hearing since an arbitrator has a financial incentive to rule in favor of the businesses paying for his or her services. According to a 2007 report issued by Public Citizen, between January 1, 2003 and March 31, 2007, arbitrators working for one of the largest private arbitration organizations ruled in favor of businesses in nine- ty-four percent of the cases involving California residents that it examined. The report also found that: -In one fiscal quarter, an arbitrator working for a large private arbi- tration organization handled eighty cases brought by banks against consumers, and ruled for the bank in all eighty cases. In all of the cases, except two, she gave the bank one hundred percent of the amount it claimed. -Another arbitrator working for a large private arbitration organization handled sixty-eight cases in a single day for an average of one every seven minutes, assuming an eight-hour day-and ruled for the business in every case, awarding one hundred percent of the claim. According to Public Citizen, the same arbitrator is an attorney with his own practice serving business and corporate clients. -In several cases, arbitrators from a large private arbitration organ- ization entered awards in favor of a large national bank and other lend- ers against identity theft victims who did not, in fact, owe any debts. -Arbitrators who rule against businesses and in favor of consumers have been known to be blackballed from serving as arbitrators in future cases. This bill would shed light on the private arbitration industry and provide for greater accountability for private arbitration organizations by requiring such organizations to collect and make available to the public basic data regarding the nature and outcome of consumer arbi- trations. This would ensure that consumers who are given the choice of pursuing a claim in the courts or in arbitration are able to obtain access to relevant information, such as the number of cases a private arbitration organization has handled for a particular business and whether the business or the consumer won most of those cases. The bill would also help to improve fairness in arbitrations for consumers forced into arbitration pursuant to a contract containing a mandatory arbi- tration clause.   FISCAL IMPACT ON THE STATE: None.   FISCAL IMPACT ON LOCALITIES: None.   IMPACT ON REGULATION OF BUSINESSES AND INDIVIDUALS: Would impose new requirements, described above, on arbitration organiza- tions.   IMPACT ON FINES, IMPRISONMENT, FORFEITURE OF RIGHTS, OR OTHER PENAL SANCTIONS: None.   PRIOR LEGISLATIVE HISTORY: 2017: A07175 (Kavanagh) - Third Reading 2016: A00108D (Dinowitz) - Third Reading 2015: A00108 (Dinowitz) - Third Reading 2014: A00604A (Dinowitz) - Passed Assembly 2013: A00604A (Dinowitz) - Passed Assembly 2012: A08431 (Dinowitz) - Passed Assembly 2011: A08431 (Dinowitz) - Consumer Affairs and Protection 2010: A7943B (Pheffer) - Passed Assembly 2009: A7943 (Pheffer) -Consumer Affairs and Protection   EFFECTIVE DATE: This act shall take effect on the one hundredth and eightieth day after it shall have become a law.
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STATE OF NEW YORK ________________________________________________________________________ 9769 IN ASSEMBLY February 6, 2018 ___________ Introduced by M. of A. TITONE -- read once and referred to the Committee on Consumer Affairs and Protection AN ACT to amend the general business law, in relation to arbitration organizations The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Subdivision 1 of section 399-c of the general business law 2 is amended by adding a new paragraph e to read as follows: 3 e. The term "arbitration organization" shall mean an association, 4 agency, board, commission, or other entity that is neutral and initi- 5 ates, sponsors, or administers an arbitration proceeding or is involved 6 in the appointment of an arbitrator unless such involvement is limited 7 to a contractual relationship that authorizes the use of arbitration. 8 § 2. Section 399-c of the general business law is amended by adding 9 three new subdivisions 3, 4 and 5 to read as follows: 10 3. a. Any private arbitration organization that administers or is 11 otherwise involved in fifty or more consumer arbitrations a year shall 12 collect, publish at least quarterly, and make available to the public in 13 a computer-searchable database that permits searching with multiple 14 search terms in the same search, which shall be accessible at the inter- 15 net website of the private arbitration organization, if any, and on 16 paper upon request, all of the following information regarding each 17 consumer arbitration it has administered or otherwise been involved in 18 within the preceding five years: 19 (1) The name of the non-consumer party, if the non-consumer party is a 20 corporation or other business entity; 21 (2) The state and zip code in which the consumer party resided at the 22 time of arbitration; 23 (3) The type of dispute involved, including goods, banking, insurance, 24 health care, employment, and, if it involves employment, the amount of 25 the employee's annual wage divided into the following ranges: less than 26 one hundred thousand dollars, one hundred thousand dollars to two 27 hundred fifty thousand dollars, inclusive, and over two hundred fifty 28 thousand dollars; EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD03177-02-7A. 9769 2 1 (4) Whether the consumer was the prevailing party; 2 (5) On how many occasions, if any, the non-consumer party has previ- 3 ously been a party in an arbitration or mediation administered by the 4 private arbitration organization; 5 (6) Whether the consumer party was represented by an attorney and, if 6 so, the identifying information for that attorney, including the attor- 7 ney's name, the name of the attorney's firm, and the city in which the 8 attorney's office is located; 9 (7) The date the private arbitration organization received the demand 10 for arbitration, the date the arbitrator was appointed, and the date of 11 disposition by the arbitrator or private arbitration organization; 12 (8) The type of disposition of the dispute, if known, including with- 13 drawal, abandonment, settlement, award after hearing, award without 14 hearing, default, or dismissal without hearing; 15 (9) The amount of the claim, the amount of any award or settlement, 16 and any other relief granted; and 17 (10) The name of the arbitrator, the arbitrator's total fee for the 18 case, and the percentage of the arbitrator's fee allocated to each 19 party. 20 b. If the information required by paragraph a of this subdivision is 21 provided by the private arbitration organization in a computer-searcha- 22 ble format at the organization's internet website and may be downloaded 23 without any fee, the organization may charge the actual cost of copying 24 to any person who requests the information on paper. If the information 25 required by paragraph a of this subdivision is not accessible through 26 the use of the internet, the organization shall provide that information 27 without charge to any person who requests the information on paper. 28 c. This subdivision shall apply to any consumer arbitration commenced 29 on or after January first, two thousand nineteen. 30 d. This subdivision shall not apply to arbitrations involving disputes 31 between consumers. 32 e. The provisions of this subdivision shall not apply to agreements 33 negotiated with any labor union through collective bargaining. 34 4. a. No private arbitration organization may administer a consumer 35 arbitration to be conducted in this state, or provide any other services 36 related to a consumer arbitration, if: 37 (1) the organization has, or within the preceding year has had, a 38 financial interest in any party or attorney for a party; or 39 (2) any party or attorney for a party has, or within the preceding 40 year has had, any type of financial interest in the private arbitration 41 organization. 42 b. This subdivision shall operate only prospectively so as not to 43 prohibit the administration of consumer arbitrations on the basis of 44 financial interests held prior to January first, two thousand nineteen. 45 c. For the purposes of this subdivision, the term "financial interest" 46 means ownership of more than a one percent legal or equitable interest 47 in a party, or a legal or equitable interest in a party of a fair market 48 value in excess of one thousand five hundred dollars, or a relationship 49 as director, advisor or other active participant in the affairs of a 50 party, except as follows: 51 (1) Ownership in a mutual or common investment fund that holds securi- 52 ties is not a "financial interest" in those securities unless the arbi- 53 trator participates in the management of the fund. 54 (2) An office in an educational, religious, charitable, fraternal, or 55 civic organization is not a "financial interest" in securities held by 56 the organization.A. 9769 3 1 (3) The proprietary interest of a policyholder in a mutual insurance 2 organization, or a depositor in a mutual savings association, or a simi- 3 lar proprietary interest, is a "financial interest" in the organization 4 only if the outcome of the proceeding could substantially affect the 5 value of the interest. 6 5. a. Whenever there shall be a violation of this section, an appli- 7 cation may be made by the attorney general in the name of the people of 8 the state of New York to a court or justice having jurisdiction by a 9 special proceeding to issue an injunction, and upon notice to the 10 defendant of not less than five days, to enjoin and restrain the contin- 11 uance of such violation; and if it shall appear to the satisfaction of 12 the court or justice that the defendant has, in fact, violated this 13 section, an injunction may be issued by such court or justice, enjoining 14 and restraining any further violation, without requiring proof that any 15 person has, in fact, been injured or damaged thereby. In any such 16 proceeding, the court may make allowances to the attorney general as 17 provided in paragraph six of subdivision (a) of section eighty-three 18 hundred three of the civil practice law and rules, and direct restitu- 19 tion. In connection with any such proposed application, the attorney 20 general is authorized to take proof and make a determination of the 21 relevant facts and to issue subpoenas in accordance with the civil prac- 22 tice law and rules. 23 b. Notwithstanding any right of action granted to the attorney general 24 pursuant to this section, any person who has been injured by reason of a 25 violation of this section may bring an action in his or her own name to 26 enjoin such unlawful act, an action to recover his or her actual damages 27 or both such actions. The court may award reasonable attorney's fees to 28 a prevailing plaintiff. 29 c. Whenever the court shall determine that a violation of this 30 section has occurred, the court may impose a civil penalty of not more 31 than two thousand dollars for such violation. 32 d. Each written contract offered by a non-consumer party and subse- 33 quently entered into in violation of subdivision two of this section 34 shall constitute a separate violation. 35 § 3. This act shall take effect on the one hundred eightieth day after 36 it shall have become a law.