H. B. 3210
(By Delegates Miley, Caputo, Manchin,
Staggers and Stephens)
[Introduced January 11
, 2012; referred to the
Committee on Energy, Industry and Labor, Economic Development and Small Business then the Judiciary.]
A BILL to amend the Code of West Virginia, 1931, as amended, by adding thereto a new article, designated §55-10A-1, §55-10A-2, §55-10A-3, §55-10A-4, §55-10A-5, §55-10A-6, §55-10A-7, §55-10A-8, §55-10A-9 and §55-10A-10, all relating to creating the Consumer and Employee Arbitration Fairness Act; specifying certain arbitration agreements are void and unenforceable; requiring certain information to be disclosed; providing duties for arbitration service providers; requiring notice to Attorney General; requiring disclosure of certain information by arbitrators; addressing appointment of arbitrators; prohibiting the limiting the right to remedies; and including provisions permitting the vacating of an award under specified circumstances.
Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended by adding thereto a new article, designated §55-10A-1, §55-10A-2, §55-10A-3, §55-10A-4, §55-10A-5, §55-10A-6, §55-10A-7, §55-10A-8, §55-10A-9 and §55-10A-10, all to read as follows:
ARTICLE 10A. CONSUMER AND EMPLOYEE ARBITRATION FAIRNESS ACT.
§55-10A-1. Title and findings.
(a) This article may be known and cited as the “Consumer and Employee Arbitration Fairness Act”. It is remedial in nature and shall be liberally construed to affect its purposes.
(b) The Legislature finds that arbitration agreements are commonly entered into in form contracts between consumers and large businesses and between employees and employers which do not adequately disclose either the benefits of the civil justice system which are being waived by the consumers and employees or the costs of the arbitration proceedings.
(c) The Legislature finds that arbitration agreements commonly entered into in form contracts between consumers and large businesses and employees and employers designate arbitration service providers to perform any arbitration called for under the agreement without fully disclosing to the consumers, the employees or the public relevant relationships between the arbitration service provider and the business party selecting the provider.
(d) The Legislature finds that arbitration service providers or the arbitrators who hear these cases are paid on a per case basis. This arrangement results in incentives or perceived incentives on the part of the arbitration service provider and the arbitrator to rule in favor of the businesses selecting the arbitrator and the arbitration service provider as the business is a repeat customer while the consumer or employee likely are not.
(e) The Legislature finds that due process and fundamental fairness require that dispute resolution providers, such as arbitrators, taking the place of impartial judges and juries in civil disputes be fair and impartial in practice and have the appearance of fairness and impartiality. Publicly disclosed information regarding arbitration service providers and arbitrators, and their relationships with the businesses who select them, will help assure that any arbitration conducted is both fair and impartial and has the appearance of fairness and impartiality.
(a) “Consumer” means an individual who uses, purchases, acquires, attempts to purchase or acquire, or is offered or furnished goods or services, other than insurance, for personal, family or household purposes or for a “small business” which is defined as any business entity with less than $1,000,000 of gross sales in any calendar year or fiscal year.
(b) “Consumer arbitration agreement” means a form or standard contract, not specifically negotiated with a consumer concerning the use of, purchase of, acquisition of, attempt to purchase or acquire, offer of or furnishing of goods or services, other than insurance, for personal, family, or household purposes, or for a “small business” which is defined as any business entity with less than $1,000,000 of gross sales in any calendar year or fiscal year.
(c) “Employee” means a person permitted or suffered to work in the State of West Virginia.
(d) “Employer” means one or more individuals or businesses, including sole proprietorships, partnerships, associations, organizations, cooperatives, limited liability companies, corporations or unincorporated companies who suffer or permit one or more employees to work.
(e) “Employee arbitration agreement” means a form or standard contract, not specifically negotiated with an employee, concerning the compensation, hire, tenure, terms, conditions or privileges of employment. It does not include a collective bargaining agreement.
(f) “Provider” means any arbitration service provider, arbitrator or any entity providing arbitration services to a consumer or employee arbitration.
§55-10A-3. Consumer and employee arbitration agreements.
(a) An arbitration agreement which is oppressive or unconscionable is void and unenforceable.
(b) In a provider's initial notice or communication to a consumer or an employee, the provider shall clearly and conspicuously disclose, in type larger than any other provisions of the contract, the estimated expenses of any arbitration, including:
(1) The filing fee;
(2) The average daily cost for an arbitrator and hearing room;
(3) Any other charge that an arbitrator or provider may assess; and
(4) The proportion of expenses listed under this subsection borne by each party if the consumer or employee prevails and if the consumer or employee does not prevail.
An expense required to be disclosed under this subsection does not include attorney's fees. A business or employer required to disclose an expense under this subsection does not violate this subsection when an actual expense exceeds an estimate if the estimate was reasonable and made in good faith.
(c) A violation of subsection (b) of this section creates a rebuttable presumption that the arbitration agreement is unenforceable and may be considered by a court in a determination of whether the agreement is unconscionable or otherwise unenforceable under general contract law. If a provider violates subsection (b) of this section, a person or the Attorney General may request a court of competent jurisdiction to enjoin the provider in violation from violating subsection (b) of this section in the current arbitration or a subsequent arbitration. A provider found to be in violation of this section, or that conforms to this section only after an action is commenced, is liable for the court costs and reasonable attorney's fees of the party bringing the action.
§55-10A-4. Details of arbitration to be in contracts.
In every consumer or employment arbitration contract, the following shall be disclosed and failure to provide the information renders the arbitration void:
(1) The entire arbitration provision must be set forth in complete form in the contract and may not be incorporated by reference;
(2) The arbitration provision to be included, as required in subdivision (1) of this section, shall state the manner in which arbitration is initiated, the cost to the consumer or employee, the method of selecting an arbitrator or arbitrators, the location of the arbitration, the procedures for conducting the arbitration, including the types of discovery available to the consumer or employee and the location at which the consumer or employee may access the information required to be maintained in section six of this article.
§55-10A-5. Arbitration service providers.
(a) Beginning thirty days after the effective date of this article, a provider shall collect, publish at least quarterly and make available to the public in a computer-searchable format which is available on the publicly accessible web site of the provider, if any, and on paper upon request, all of the following information for each consumer or employee arbitration with which the provider was involved:
(1) The name of the nonconsumer or nonemployee party, if the nonconsumer or nonemployee party is a corporation or other business entity;
(2) The type of dispute involved, such as goods, banking, wireless communications, debt collection or employment;
(3) If the dispute involved employment, the amount of the employee's annual wage divided into the following ranges:
(A) Less than $100,000;
(B) From $100,000 to $250,000; or
(C) More than $250,000;
(4) Whether the consumer or employer was the prevailing party;
(5) The number of times a business that is a party to the arbitration had previously been a party to a mediation or arbitration in which the provider was involved;
(6) Whether the consumer or employee was represented by an attorney;
(7) The dates the provider received the demand for arbitration, the arbitrator was appointed and the disposition of the arbitration was rendered;
(8) The type of disposition of the arbitration, including withdrawal, abandonment, settlement, award after hearing, award without hearing, default or dismissal without hearing;
(9) The amount of the claim and the amount of any award or relief granted;
(10) The name of the arbitrator, the amount of the arbitrator's fee for the arbitration and the percentage of the arbitrator's fee allocated to each party; and
(11) Whether the provider has, or within the preceding year had, a financial interest in a party or the legal representation of a party in the arbitration, or whether a party or legal representative of a party in the arbitration has, or within the preceding year had, a financial interest in the provider.
Once the information is published and made available, it must remain available for at least five years. If the information required by this subsection is available in a computer-searchable format and downloadable for free on the provider's publicly accessible website, the provider may charge a requestor a reasonable amount for the actual cost of copying the information on paper. If the information required by this subsection is not available for free on the provider's publicly accessible website, the provider may not charge a requestor for the information in paper form.
(b) A provider that provides arbitration services in this state shall notify the Consumer Protection Division of the Office of the Attorney General of this state, in writing, of any website upon which the information required under subsection (a) of this section is posted. The provider shall inform the Consumer Protection Division of the Office of the Attorney General if it discontinues the use of any website previously reported. The Attorney General shall include the links to the providers websites on the Attorney General's publicly accessible website.
§55-10A-6. Disclosure by arbitrators.
(a) (1) Beginning thirty days after the effective date of this article, a person who has been proposed, nominated, or appointed as a neutral arbitrator pursuant to a consumer or employee arbitration agreement, other than one contained in a collective bargaining agreement, shall comply with the requirements of this section.
(2) A person who has been proposed, nominated, or appointed as a neutral arbitrator for an arbitration proceeding shall disclose to each party all matters that could cause a person aware of the facts underlying a potential conflict of interest to have a reasonable doubt that the person would be able to act as a neutral or impartial arbitrator.
(3) In addition to any matters disclosed pursuant to subdivision (2) of this subsection, the person proposed, nominated, or appointed shall disclose:
(A) The existence, regarding the person, of any ground specified in Canon 3 of the Code of Judicial Conduct for disqualification of a judge;
(B) Whether the person has been employed by a party to the arbitration proceeding within the last five years; and
(C) The names of the parties to arbitration proceedings, within the last five years, other than the pending proceeding, in which the person served or is serving as a party arbitrator for any party to that proceeding or who has been an attorney for a party to the pending arbitration; and
(D) Beginning thirty days after the effective date of this article, the names of the parties to all current arbitration proceedings and those prior arbitration proceedings, other than the pending proceeding, within the last five years in which the person served or is serving as a party selected arbitrator, and not a neutral arbitrator, for any party to that proceeding, or who has been an attorney for a party to the arbitration.
(b) The information to be disclosed pursuant to paragraph (C), subdivision (3), subsection (a) of this section includes:
(1) The names of the parties to all prior or current arbitration proceedings, other than the pending proceeding, within the last five years in which the person served or is serving as a neutral arbitrator and the results of each of those proceedings that were arbitrated to conclusion;
(2) The date of the arbitration award;
(3) The identification of the prevailing party;
(4) The identification of the person and the party who selected the person to serve as a neutral arbitrator, if any;
(5) The names of the parties' attorneys;
(6) The amount of monetary damages awarded, if any; and
(7) Any attorney-client relationship the person has or has had with a party or an attorney for a party to the arbitration proceeding within the last five years.
(c) In order to preserve confidentiality, it is sufficient for the purposes of paragraphs (C) and (D), subdivision (3), subsection (a) of this section, for the person to identify any party who is not a party to the pending arbitration proceeding as “claimant” or “respondent” if that party is or was an individual or a small business as defined in this article.
(d) The person proposed, nominated, or appointed as a neutral arbitrator shall make the disclosures required by this section in writing to all parties by serving a disclosure upon the parties within ten days of any notice of the person's proposal, nomination, or appointment, which ever first occurs. The disclosure shall be served in accordance with Rule 5 of the West Virginia Rules of Civil Procedure.
§55-10A-7. Appointment of arbitrators; conflict of interest provisions applicable.
Except as provided in this article, if the arbitration agreement provides a method of appointment of arbitrators, then this method must be followed. If a method is not provided, the agreed method fails or for any reason cannot be followed, or an appointed arbitrator fails or is unable to act and a successor has not been appointed, then the circuit court, upon application of a party, shall appoint one or more arbitrators. An arbitrator so appointed has all of the powers of one specifically named in the agreement. A neutral arbitrator appointed by the circuit court shall comply with the disclosure provisions of this article.
§55-10A-8. Vacating an award.
(a) Upon the application of a party, the circuit court shall vacate an award if:
(1) The award was procured by corruption, fraud, or other undue means;
(2) There was evident partiality by an arbitrator appointed as a neutral arbitrator or corruption in any of the arbitrators or misconduct prejudicing the rights of any party;
(3) The arbitrators exceeded their powers;
(4) The arbitrators refused to postpone the hearing upon sufficient cause being shown or refused to hear evidence material to the controversy or otherwise conducted the hearing, contrary to the provisions of the law, in a manner that substantially prejudiced the rights of any party;
(5) There was no arbitration agreement and the party preserved the party's objection to the proceeding being held in the absence of an agreement, regardless of whether the party then participated in the proceeding; or
(6) A neutral arbitrator failed to make a material disclosure required by this article.
(b) The fact that the relief could not or would not be granted by a court of law or equity is not grounds for vacating or refusing to confirm the award.
(c) An application for vacation of an award under this section shall be made within ninety days after delivery of a copy of the award to the applicant, except that, if it is predicated upon corruption, fraud, or other undue means, then the application shall be made within ninety days after the grounds for the vacation are known or should have been known by the party.
(d) In vacating the award on grounds other than those stated in subsection (a) of this section, the court may order a rehearing before new arbitrators are chosen, as provided in the agreement or, if the agreement does not provide a method of selection, then by the court in accordance with this article or, if the award is vacated on grounds set forth in subdivisions (3) or (4), subsection (a) of this section, the court may order a rehearing before the arbitrators who made the award or their successors.
(e) If the application to vacate is denied and a motion to modify or correct the award is not pending, the court shall confirm the award.
§55-10A-9. No limitation of legal remedies.
No consumer or employee arbitration agreement may attempt to limit or otherwise restrict an individual’s right to all remedies available under the common law or statutes of this state, nor may it attempt to restrict a consumer's or employee's right to participate in a class action method of recovery.
Any provision of this article found to be unlawful does not prevent any other provisions from being enforced as each section is severable.
NOTE: The purpose of this bill is to create the Consumer and Employee Arbitration Fairness Act.
This article is new; therefore, it has been completely underscored.