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S03123 Summary:

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.
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S03123 Actions:

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S03123 Text:

                STATE OF NEW YORK
                               2021-2022 Regular Sessions
                    IN SENATE
                                    January 27, 2021
        Introduced  by Sen. KAVANAGH -- read twice and ordered printed, and when
          printed to be committed to the Committee on Consumer Protection
        AN ACT to amend the general business law,  in  relation  to  arbitration
          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
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        S. 3123                             2
     1  one  hundred  thousand  dollars,  one  hundred  thousand  dollars to two
     2  hundred fifty thousand dollars, inclusive, and over  two  hundred  fifty
     3  thousand dollars;
     4    (4) Whether the consumer was the prevailing party;
     5    (5)  On  how many occasions, if any, the non-consumer party has previ-
     6  ously been a party in an arbitration or mediation  administered  by  the
     7  private arbitration organization;
     8    (6)  Whether the consumer party was represented by an attorney and, if
     9  so, the identifying information for that attorney, including the  attor-
    10  ney's  name,  the name of the attorney's firm, and the city in which the
    11  attorney's office is located;
    12    (7) The date the private arbitration organization received the  demand
    13  for  arbitration, the date the arbitrator was appointed, and the date of
    14  disposition by the arbitrator or private arbitration organization;
    15    (8) The type of disposition of the dispute, if known, including  with-
    16  drawal,  abandonment,  settlement,  award  after  hearing, award without
    17  hearing, default, or dismissal without hearing;
    18    (9) The amount of the claim, the amount of any  award  or  settlement,
    19  and any other relief granted; and
    20    (10)  The  name  of the arbitrator, the arbitrator's total fee for the
    21  case, and the percentage of  the  arbitrator's  fee  allocated  to  each
    22  party.
    23    b.  If  the information required by paragraph a of this subdivision is
    24  provided by the private arbitration organization in a  computer-searcha-
    25  ble  format at the organization's internet website and may be downloaded
    26  without any fee, the organization may charge the actual cost of  copying
    27  to  any person who requests the information on paper. If the information
    28  required by paragraph a of this subdivision is  not  accessible  through
    29  the use of the internet, the organization shall provide that information
    30  without charge to any person who requests the information on paper.
    31    c.  This subdivision shall apply to any consumer arbitration commenced
    32  on or after January first, two thousand twenty-three.
    33    d. This subdivision shall not apply to arbitrations involving disputes
    34  between consumers.
    35    e. The provisions of this subdivision shall not  apply  to  agreements
    36  negotiated with any labor union through collective bargaining.
    37    4.  a.  No  private arbitration organization may administer a consumer
    38  arbitration to be conducted in this state, or provide any other services
    39  related to a consumer arbitration, if:
    40    (1) the organization has, or within the  preceding  year  has  had,  a
    41  financial interest in any party or attorney for a party; or
    42    (2)  any  party  or  attorney for a party has, or within the preceding
    43  year has had, any type of financial interest in the private  arbitration
    44  organization.
    45    b.  This  subdivision  shall  operate  only prospectively so as not to
    46  prohibit the administration of consumer arbitrations  on  the  basis  of
    47  financial  interests  held  prior to January first, two thousand twenty-
    48  three.
    49    c. For the purposes of this subdivision, the term "financial interest"
    50  means ownership of more than a one percent legal or  equitable  interest
    51  in a party, or a legal or equitable interest in a party of a fair market
    52  value  in excess of one thousand five hundred dollars, or a relationship
    53  as director, advisor or other active participant in  the  affairs  of  a
    54  party, except as follows:

        S. 3123                             3
     1    (1) Ownership in a mutual or common investment fund that holds securi-
     2  ties  is not a "financial interest" in those securities unless the arbi-
     3  trator participates in the management of the fund.
     4    (2)  An office in an educational, religious, charitable, fraternal, or
     5  civic organization is not a "financial interest" in securities  held  by
     6  the organization.
     7    (3)  The  proprietary interest of a policyholder in a mutual insurance
     8  organization, or a depositor in a mutual savings association, or a simi-
     9  lar proprietary interest, is a "financial interest" in the  organization
    10  only  if  the  outcome  of the proceeding could substantially affect the
    11  value of the interest.
    12    5. a.  Whenever there shall be a violation of this section, an  appli-
    13  cation  may be made by the attorney general in the name of the people of
    14  the state of New York to a court or justice  having  jurisdiction  by  a
    15  special  proceeding  to  issue  an  injunction,  and  upon notice to the
    16  defendant of not less than five days, to enjoin and restrain the contin-
    17  uance of such violation; and if it shall appear to the  satisfaction  of
    18  the  court  or  justice  that  the defendant has, in fact, violated this
    19  section, an injunction may be issued by such court or justice, enjoining
    20  and restraining any further violation, without requiring proof that  any
    21  person  has,  in  fact,  been  injured  or  damaged thereby. In any such
    22  proceeding, the court may make allowances to  the  attorney  general  as
    23  provided  in  paragraph  six  of subdivision (a) of section eighty-three
    24  hundred three of the civil practice law and rules, and  direct  restitu-
    25  tion.    In  connection with any such proposed application, the attorney
    26  general is authorized to take proof and  make  a  determination  of  the
    27  relevant facts and to issue subpoenas in accordance with the civil prac-
    28  tice law and rules.
    29    b. Notwithstanding any right of action granted to the attorney general
    30  pursuant to this section, any person who has been injured by reason of a
    31  violation  of this section may bring an action in his or her own name to
    32  enjoin such unlawful act, an action to recover his or her actual damages
    33  or both such actions. The court may award reasonable attorney's fees  to
    34  a prevailing plaintiff.
    35    c.    Whenever  the  court  shall  determine  that a violation of this
    36  section has occurred, the court may impose a civil penalty of  not  more
    37  than two thousand dollars for such violation.
    38    d.  Each  written  contract offered by a non-consumer party and subse-
    39  quently entered into in violation of subdivision  two  of  this  section
    40  shall constitute a separate violation.
    41    § 3. This act shall take effect on the one hundred eightieth day after
    42  it shall have become a law.
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