Bill Text: NY S03684 | 2019-2020 | General Assembly | Introduced
Bill Title: Requires employment and consumer dispute arbitrations to be submitted to neutral third party arbitrators, and establishes prohibited arbitration agreements and provisions; requires disclosure of information by certain arbitrators.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2020-01-08 - REFERRED TO JUDICIARY [S03684 Detail]
Download: New_York-2019-S03684-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 3684 2019-2020 Regular Sessions IN SENATE February 12, 2019 ___________ Introduced by Sen. HOYLMAN -- read twice and ordered printed, and when printed to be committed to the Committee on Judiciary AN ACT to amend the civil practice law and rules, in relation to arbi- tration agreements The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Article 75 of the civil practice law and rules is amended 2 by adding a new section 7500 to read as follows: 3 § 7500. Definitions. As used in this article: 4 (a) "Arbitration" means a form of dispute resolution that is an alter- 5 native to litigation, in which the parties agree to be bound by the 6 determination of a neutral third party arbitrator. 7 (b) "Neutral third party arbitrator" means an arbitrator or panel of 8 arbitrators each of whom does not have an undisclosed known, direct or 9 material interest, including a financial or personal interest in the 10 outcome of the arbitration proceeding, or a known, existing or past 11 relationship with any of the parties to the agreement to arbitrate or 12 the arbitration proceeding, their counsel or representatives, a witness, 13 or another arbitrator. 14 (c) "Employment" means a relationship between an employer and an 15 employee as defined in section three of the Fair Labor Standards Act of 16 1938 (29 U.S.C. § 203). 17 (d) "Consumer" means a natural person residing in this state. 18 (e) "Consumer goods" means goods, wares, paid merchandise or services 19 purchased or paid for by a consumer, the intended use or benefit of 20 which is intended for the personal, family or household purposes of such 21 consumer. 22 § 2. Section 7501 of the civil practice law and rules, as amended by 23 chapter 532 of the laws of 1963, is amended to read as follows: 24 § 7501. Effect of arbitration agreement. A written agreement to 25 submit any controversy thereafter arising or any existing controversy to EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD08331-01-9S. 3684 2 1 arbitration is enforceable without regard to the justiciable character 2 of the controversy and confers jurisdiction on the courts of the state 3 to enforce it and to enter judgment on an award; provided, however, that 4 any portion of an agreement or contract requiring the controversy 5 concerning employment or the providing of consumer goods be submitted to 6 an arbitrator or arbitration organization that is not a neutral third 7 party arbitrator, shall be deemed void. The requirement that the 8 controversy be heard by a neutral third party arbitrator may not be 9 waived by a party prior to the service on such party of a demand for 10 arbitration. Upon disclosure pursuant to section seventy-five hundred 11 five-a of this article, a party shall be deemed to have waived any 12 objection to the arbitrator or composition of any arbitration panel, by 13 failing to raise same prior to the commencement of the arbitration hear- 14 ing. In determining any matter arising under this article, the court 15 shall not consider whether the claim with respect to which arbitration 16 is sought is tenable, or otherwise pass upon the merits of the dispute. 17 Arbitration of any employment or consumer dispute shall be conducted 18 by a neutral third party arbitrator. Appointment of any arbitrator 19 shall reasonably ensure the personal objectivity of the arbitrator and 20 the right of each party to present its case, to be in attendance during 21 any presentation made by the other party and to rebut or refute such 22 presentation. 23 § 3. The civil practice law and rules is amended by adding a new 24 section 7505-a to read as follows: 25 § 7505-a. Disclosure by arbitrator. (a) Before accepting appointment, 26 an individual who is requested to serve as an arbitrator, after making a 27 reasonable inquiry, shall disclose to all parties to the agreement to 28 arbitrate and the arbitration proceeding, and to any other arbitrators 29 any known facts that a reasonable person would consider likely to affect 30 the impartiality of the arbitrator in the arbitration proceeding, 31 including: 32 (1) a financial or personal interest in the outcome of the arbitration 33 proceeding; and 34 (2) an existing or past relationship with any of the parties to the 35 agreement to arbitrate or the arbitration proceeding, their counsel or 36 representatives, a witness, or another arbitrator. 37 (b) An arbitrator has a continuing obligation to disclose to all 38 parties to the agreement to arbitrate and the arbitration proceeding, 39 and to any other arbitrators any facts that the arbitrator learns after 40 accepting appointment which a reasonable person would consider likely to 41 affect the impartiality of the arbitrator. 42 (c) If an arbitrator discloses a fact required by subdivision (a) or 43 (b) of this section and a party timely objects to the appointment or 44 continued service of the arbitrator based upon the fact disclosed, the 45 objection may be a ground for vacating an award made by the arbitrator. 46 (d) If the arbitrator did not disclose a fact as required by subdivi- 47 sion (a) or (b) of this section, upon timely objection by a party, the 48 court may vacate an award based on such non-disclosure. 49 (e) An arbitrator appointed as a neutral arbitrator who does not 50 disclose a known, direct and material interest in the outcome of the 51 arbitration proceeding or a known, existing and substantial relationship 52 with a party is presumed to act with evident partiality in rendering an 53 award. 54 § 4. Section 7506 of the civil practice law and rules is amended to 55 read as follows:S. 3684 3 1 § 7506. Hearing. (a) Oath of arbitrator. Before hearing any testimony, 2 an arbitrator shall be sworn to hear and decide the controversy faith- 3 fully and fairly by an officer authorized to administer an oath. 4 (b) Time and place. The arbitrator shall appoint a time and place for 5 the hearing and notify the parties in writing personally or by regis- 6 tered or certified mail not less than eight days before the hearing. The 7 arbitrator may adjourn or postpone the hearing. The court, upon applica- 8 tion of any party, may direct the arbitrator to proceed promptly with 9 the hearing and determination of the controversy. 10 (c) Evidence. The parties are entitled to be heard, to present 11 evidence and to cross-examine witnesses. 12 (d) Postponements and adjournments. The arbitrator may for good cause 13 postpone or adjourn the hearing upon request of a party or upon the 14 arbitrator's own initiative. Notwithstanding the failure of a party duly 15 notified to appear, the arbitrator may hear and determine the controver- 16 sy upon the evidence produced. If a party to an arbitration intends to 17 present testimony from a witness at the hearing, absent good cause 18 shown, the identity of the witness must be given to all parties at least 19 seven calendar days prior to the hearing. 20 (e) Representation by attorney. A party has the right to be repres- 21 ented by an attorney and may claim such right at any time as to any part 22 of the arbitration or hearings which have not taken place. This right 23 may not be waived. If a party is represented by an attorney, papers to 24 be served on the party shall be served upon his or her attorney. It 25 shall be discretionary with the arbitrator to permit the attendance of 26 any other persons. 27 [(e)] (f) Determination by majority. The hearing shall be conducted by 28 all the arbitrators, but a majority may determine any question and 29 render an award. 30 [(f)] (g) Waiver. Except as provided in subdivision [(d)](e), a 31 requirement of this section may be waived by written consent of the 32 parties and it is waived if the parties continue with the arbitration 33 without objection. 34 § 5. Section 7507 of the civil practice law and rules, as amended by 35 chapter 952 of the laws of 1981, is amended to read as follows: 36 § 7507. Award; form; time; delivery. (a) Except as provided in 37 section 7508, the award shall be in writing, signed and affirmed by the 38 arbitrator making it within the time fixed by the agreement, or, if the 39 time is not fixed, within such time as the court orders. 40 (b) In a matter involving a consumer arbitration or an arbitration 41 between an employer and an employee, as defined in section three of the 42 Fair Labor Standards Act of 1938 (29 U.S.C. § 203), where arbitration 43 was held pursuant to a contract, the award shall state the issues in 44 dispute and shall contain the arbitrator's findings of fact and conclu- 45 sions of law. The award shall contain a decision on all issues submitted 46 to the arbitrator. 47 (c) The parties may in writing extend the time either before or after 48 its expiration. A party waives the objection that an award was not made 49 within the time required unless he or she notifies the arbitrator in 50 writing of his or her objection prior to the delivery of the award to 51 him or her. 52 (d) The arbitrator shall deliver a copy of the award to each party in 53 the manner provided in the agreement, or, if no provision is so made, 54 personally or by registered or certified mail, return receipt requested.S. 3684 4 1 § 6. Subparagraph (iv) of paragraph 1 of subdivision (b) of section 2 7511 of the civil practice law and rules is amended and a new subpara- 3 graph (v) is added to read as follows: 4 (iv) failure to follow the procedure of this article, unless the party 5 applying to vacate the award continued with the arbitration with notice 6 of the defect and without objection[.]; or 7 (v) the arbitrator evidenced a manifest disregard of the law in 8 rendering the award. 9 § 7. The civil practice law and rules is amended by adding two new 10 sections 7516 and 7517 to read as follows: 11 § 7516. Prohibited predispute arbitration agreements. (a) Defi- 12 nitions. (i) The term "consumer dispute" means a dispute between an 13 individual who seeks or acquires real or personal property, services 14 (including services relating to securities and other investments), 15 money, or credit for personal, family or household purposes and the 16 seller or provider of such property, services, money or credit. 17 (ii) The term "employment dispute" means a dispute between an employer 18 and employee arising out of the relationship of employer and employee as 19 defined in section three of the Fair Labor Standards Act of 1938 (29 20 U.S.C. § 203). 21 (iii) The term "predispute arbitration agreement" means any agreement 22 to arbitrate a dispute that had not yet arisen at the time of the making 23 of the agreement. 24 (b) Prohibition. Notwithstanding any other provision of this article, 25 no predispute arbitration agreement shall be valid or enforceable if it 26 requires arbitration of an employment dispute or consumer dispute. 27 § 7517. Prohibited provisions. (a) Prohibition of effect of certain 28 arbitration clauses or agreements. Mandatory arbitration clauses or 29 agreements covering consumers and employees are contrary to the estab- 30 lished public policy of this state. Because employees and consumers are 31 forced to assent to these agreements as a condition of being an employee 32 or consumer before any dispute has arisen with the employer or merchant, 33 these agreements do not offer employees and consumers a meaningful 34 choice about how to resolve their disputes with the employer or 35 merchant. In addition, mandatory arbitration agreements prevent employ- 36 ees and consumers from effectively vindicating their rights under state 37 law. For these reasons, except when inconsistent with federal law, the 38 state prohibits the formation and enforcement of mandatory arbitration 39 agreements in employment and consumer contracts. 40 (b) Prohibition of arbitration clauses in employment contracts for 41 workers exempted from the Federal Arbitration Act. A mandatory arbi- 42 tration agreement within or part of any written contract of employment 43 of seamen, railroad employees or any other class of workers engaged in 44 foreign or interstate commerce is unenforceable and void. Any such arbi- 45 tration agreement shall be considered severable, and all other 46 provisions of the employment contract shall remain in effect and given 47 full force. 48 (c) Prohibition of arbitration clauses that are not governed by feder- 49 al law. Any mandatory arbitration agreement, or portion thereof, in an 50 employment or consumer contract is invalid, unenforceable and void, when 51 the enforceability of such arbitration agreement, or the portion at 52 issue, is governed by state law. Any such arbitration agreement shall be 53 considered severable, and all other provisions of the employment 54 contract shall remain in effect and given full force.S. 3684 5 1 (d) Exclusion. The provisions of this section shall not apply to 2 agreements negotiated with any labor union through collective bargain- 3 ing. 4 § 8. Enforcement. Any private person and any enforcement agency or 5 official responsible for enforcing the provisions of this act may bring 6 suit for injunctive relief against an entity that violates such 7 provisions, and may recover reasonable attorney fees and other costs if 8 an injunction or equivalent relief is awarded. Injunctive relief shall 9 be the only relief available in a suit arising from failure to comply 10 with this act. 11 § 9. Severability. If any provision of this act or the application 12 thereof to any person or circumstance is held invalid, such invalidity 13 shall not affect other provisions or applications of this act that can 14 be given effect without the invalid provision or application, and to 15 that end the provisions of this act are declared to be severable. 16 § 10. This act shall take effect on the first of January next succeed- 17 ing the date on which it shall have become a law.
