NY State Senate Bill 2009-S5473

Archive: Last Bill Status - In Senate Committee Consumer Protection Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 06, 2010	referred to consumer protection
Jun 02, 2009	reported and committed to finance
May 08, 2009	referred to consumer protection

2009-S5473 (ACTIVE) - Details

Current Committee:: Senate Consumer Protection
Law Section:: General Business Law
Laws Affected:: Amd §399-c, Gen Bus L

2009-S5473 (ACTIVE) - Summary

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.

2009-S5473 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S5473

 TITLE OF BILL :
An act to amend the general business law, in relation to arbitration
organizations


 PURPOSE OR GENERAL IDEA OF BILL :
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 SPECIFIC PROVISIONS :
This bill would require private arbitration organizations involved in
consumer arbitration cases 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; whether the consumer was the prevailing party; and on how
many occasions, if any, the non-consumer party has previously been a
party in an arbitration administered by the private arbitration
organization. No private arbitration organization would have any
liability for collecting, publishing, 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
constitute a separate violation.

 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 arbitration proceedings. Many advocates maintain
that consumers may not be able to get a fair hearing since arbitrators
have 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 ninety-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
arbitration 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 - 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
organization entered awards in favor of a large national bank and
other lenders against identity theft victims who did not, in fact, owe
any debts; and

* 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 arbitrations. 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 consumer forced into arbitration pursuant to a contract containing
a binding mandatory arbitration clause.

 PRIOR LEGISLATIVE HISTORY :
New bill.

 FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS :
None.

 EFFECTIVE DATE :
180 days after enactment.

2009-S5473 (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  5473

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                               May 8, 2009
                               ___________

Introduced  by  Sen.  MONSERRATE  -- 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
  organizations

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subdivision 1 of section 399-c of the general business  law
is amended by adding a new paragraph e to read as follows:
  E.  THE  TERM "ARBITRATION ORGANIZATION" MEANS AN ASSOCIATION, AGENCY,
BOARD, COMMISSION, OR OTHER ENTITY THAT IS NEUTRAL AND INITIATES,  SPON-
SORS,  OR  ADMINISTERS  AN  ARBITRATION PROCEEDING OR IS INVOLVED IN THE
APPOINTMENT OF AN ARBITRATOR.
  S 2. Section 399-c of the general business law is  amended  by  adding
three new subdivisions 3, 4 and 5 to read as follows:
  3.  A.  ANY  PRIVATE  ARBITRATION  ORGANIZATION THAT ADMINISTERS OR IS
OTHERWISE INVOLVED IN FIFTY OR MORE CONSUMER ARBITRATIONS A  YEAR  SHALL
COLLECT, PUBLISH AT LEAST QUARTERLY, AND MAKE AVAILABLE TO THE PUBLIC IN
A  COMPUTER-SEARCHABLE  DATABASE  THAT  PERMITS  SEARCHING WITH MULTIPLE
SEARCH TERMS IN THE SAME SEARCH, WHICH SHALL BE ACCESSIBLE AT THE INTER-
NET WEBSITE OF THE PRIVATE ARBITRATION  ORGANIZATION,  IF  ANY,  AND  ON
PAPER  UPON  REQUEST,  ALL  OF  THE FOLLOWING INFORMATION REGARDING EACH
CONSUMER ARBITRATION IT HAS ADMINISTERED OR OTHERWISE BEEN  INVOLVED  IN
WITHIN THE PRECEDING FIVE YEARS:
  (1) THE NAME OF THE NON-CONSUMER PARTY, IF THE NON-CONSUMER PARTY IS A
CORPORATION OR OTHER BUSINESS ENTITY;
  (2) THE TYPE OF DISPUTE INVOLVED, INCLUDING GOODS, BANKING, INSURANCE,
HEALTH  CARE,  EMPLOYMENT, AND, IF IT INVOLVES EMPLOYMENT, THE AMOUNT OF
THE EMPLOYEE'S ANNUAL WAGE DIVIDED INTO THE FOLLOWING RANGES: LESS  THAN
ONE  HUNDRED  THOUSAND  DOLLARS,  ONE  HUNDRED  THOUSAND  DOLLARS TO TWO
HUNDRED FIFTY THOUSAND DOLLARS, INCLUSIVE, AND OVER  TWO  HUNDRED  FIFTY
THOUSAND DOLLARS;

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11224-01-9

S. 5473                             2

  (3) WHETHER THE CONSUMER WAS THE PREVAILING PARTY;
  (4)  ON  HOW MANY OCCASIONS, IF ANY, THE NON-CONSUMER PARTY HAS PREVI-
OUSLY BEEN A PARTY IN AN ARBITRATION OR MEDIATION  ADMINISTERED  BY  THE
PRIVATE ARBITRATION ORGANIZATION;
  (5)  WHETHER THE CONSUMER PARTY WAS REPRESENTED BY AN ATTORNEY AND, IF
SO, THE IDENTIFYING INFORMATION FOR THAT ATTORNEY, INCLUDING THE  ATTOR-
NEY'S  NAME,  THE NAME OF THE ATTORNEY'S FIRM, AND THE CITY IN WHICH THE
ATTORNEY'S OFFICE IS LOCATED;
  (6) THE DATE THE PRIVATE ARBITRATION ORGANIZATION RECEIVED THE  DEMAND
FOR  ARBITRATION, THE DATE THE ARBITRATOR WAS APPOINTED, AND THE DATE OF
DISPOSITION BY THE ARBITRATOR OR PRIVATE ARBITRATION ORGANIZATION;
  (7) THE TYPE OF DISPOSITION OF THE DISPUTE, IF KNOWN, INCLUDING  WITH-
DRAWAL,  ABANDONMENT,  SETTLEMENT,  AWARD  AFTER  HEARING, AWARD WITHOUT
HEARING, DEFAULT, OR DISMISSAL WITHOUT HEARING;
  (8) THE AMOUNT OF THE CLAIM, THE AMOUNT OF THE AWARD,  AND  ANY  OTHER
RELIEF GRANTED, IF ANY; AND
  (9)  THE  NAME  OF  THE ARBITRATOR, THE ARBITRATOR'S TOTAL FEE FOR THE
CASE, AND THE PERCENTAGE OF  THE  ARBITRATOR'S  FEE  ALLOCATED  TO  EACH
PARTY.
  B.  IF  THE INFORMATION REQUIRED BY PARAGRAPH A OF THIS SUBDIVISION IS
PROVIDED BY THE PRIVATE ARBITRATION ORGANIZATION IN A  COMPUTER-SEARCHA-
BLE  FORMAT AT THE ORGANIZATION'S INTERNET WEBSITE AND MAY BE DOWNLOADED
WITHOUT ANY FEE, THE ORGANIZATION MAY CHARGE THE ACTUAL COST OF  COPYING
TO  ANY PERSON WHO REQUESTS THE INFORMATION ON PAPER. IF THE INFORMATION
REQUIRED BY PARAGRAPH A OF THIS SUBDIVISION IS  NOT  ACCESSIBLE  THROUGH
THE USE OF THE INTERNET, THE ORGANIZATION SHALL PROVIDE THAT INFORMATION
WITHOUT CHARGE TO ANY PERSON WHO REQUESTS THE INFORMATION ON PAPER.
  C.  THIS SUBDIVISION SHALL APPLY TO ANY CONSUMER ARBITRATION COMMENCED
ON OR AFTER JANUARY FIRST, TWO THOUSAND TEN.
  D. NO PRIVATE ARBITRATION ORGANIZATION SHALL HAVE  ANY  LIABILITY  FOR
COLLECTING,  PUBLISHING OR DISTRIBUTING THE INFORMATION REQUIRED BY THIS
SUBDIVISION.
  4. A. NO PRIVATE ARBITRATION ORGANIZATION MAY  ADMINISTER  A  CONSUMER
ARBITRATION TO BE CONDUCTED IN THIS STATE, OR PROVIDE ANY OTHER SERVICES
RELATED TO A CONSUMER ARBITRATION, IF:
  (1)  THE  ORGANIZATION  HAS,  OR  WITHIN THE PRECEDING YEAR HAS HAD, A
FINANCIAL INTEREST IN ANY PARTY OR ATTORNEY FOR A PARTY; OR
  (2) ANY PARTY OR ATTORNEY FOR A PARTY HAS,  OR  WITHIN  THE  PRECEDING
YEAR  HAS HAD, ANY TYPE OF FINANCIAL INTEREST IN THE PRIVATE ARBITRATION
ORGANIZATION.
  B. THIS SUBDIVISION SHALL OPERATE ONLY  PROSPECTIVELY  SO  AS  NOT  TO
PROHIBIT  THE  ADMINISTRATION  OF  CONSUMER ARBITRATIONS ON THE BASIS OF
FINANCIAL INTERESTS HELD PRIOR TO JANUARY FIRST, TWO THOUSAND TEN.
  C. FOR THE PURPOSES OF THIS SUBDIVISION, THE TERM "FINANCIAL INTEREST"
MEANS OWNERSHIP OF MORE THAN A ONE PERCENT LEGAL OR  EQUITABLE  INTEREST
IN A PARTY, OR A LEGAL OR EQUITABLE INTEREST IN A PARTY OF A FAIR MARKET
VALUE  IN EXCESS OF ONE THOUSAND FIVE HUNDRED DOLLARS, OR A RELATIONSHIP
AS DIRECTOR, ADVISOR OR OTHER ACTIVE PARTICIPANT IN  THE  AFFAIRS  OF  A
PARTY, EXCEPT AS FOLLOWS:
  (1) OWNERSHIP IN A MUTUAL OR COMMON INVESTMENT FUND THAT HOLDS SECURI-
TIES  IS NOT A "FINANCIAL INTEREST" IN THOSE SECURITIES UNLESS THE JUDGE
PARTICIPATES IN THE MANAGEMENT OF THE FUND.
  (2) AN OFFICE IN AN EDUCATIONAL, RELIGIOUS, CHARITABLE, FRATERNAL,  OR
CIVIC  ORGANIZATION  IS NOT A "FINANCIAL INTEREST" IN SECURITIES HELD BY
THE ORGANIZATION.

S. 5473                             3

  (3) THE PROPRIETARY INTEREST OF A POLICYHOLDER IN A  MUTUAL  INSURANCE
ORGANIZATION, OR A DEPOSITOR IN A MUTUAL SAVINGS ASSOCIATION, OR A SIMI-
LAR  PROPRIETARY INTEREST, IS A "FINANCIAL INTEREST" IN THE ORGANIZATION
ONLY IF THE OUTCOME OF THE PROCEEDING  COULD  SUBSTANTIALLY  AFFECT  THE
VALUE OF THE INTEREST.
  5. WHENEVER THERE SHALL BE A VIOLATION OF THIS SECTION, AN APPLICATION
MAY  BE  MADE  BY  THE ATTORNEY GENERAL IN THE NAME OF THE PEOPLE OF THE
STATE OF NEW YORK TO A COURT OR JUSTICE HAVING JURISDICTION BY A SPECIAL
PROCEEDING TO ISSUE AN INJUNCTION, AND UPON NOTICE TO THE  DEFENDANT  OF
NOT  LESS THAN FIVE DAYS, TO ENJOIN AND RESTRAIN THE CONTINUANCE OF SUCH
VIOLATION; AND IF IT SHALL APPEAR TO THE SATISFACTION OF  THE  COURT  OR
JUSTICE  THAT  THE  DEFENDANT  HAS,  IN  FACT, VIOLATED THIS SECTION, AN
INJUNCTION MAY BE  ISSUED  BY  SUCH  COURT  OR  JUSTICE,  ENJOINING  AND
RESTRAINING  ANY  FURTHER  VIOLATION,  WITHOUT  REQUIRING PROOF THAT ANY
PERSON HAS, IN FACT, BEEN  INJURED  OR  DAMAGED  THEREBY.  IN  ANY  SUCH
PROCEEDING,  THE  COURT  MAY  MAKE ALLOWANCES TO THE ATTORNEY GENERAL AS
PROVIDED IN PARAGRAPH SIX OF SUBDIVISION  (A)  OF  SECTION  EIGHTY-THREE
HUNDRED  THREE  OF THE CIVIL PRACTICE LAW AND RULES, AND DIRECT RESTITU-
TION. WHENEVER THE COURT  SHALL  DETERMINE  THAT  A  VIOLATION  OF  THIS
SECTION  HAS  OCCURRED, THE COURT MAY IMPOSE A CIVIL PENALTY OF NOT MORE
THAN TWO THOUSAND DOLLARS FOR  SUCH  VIOLATION.  EACH  WRITTEN  CONTRACT
OFFERED  BY  A  NON-CONSUMER  PARTY  AND  SUBSEQUENTLY  ENTERED  INTO IN
VIOLATION OF SUBDIVISION TWO OF THIS SECTION SHALL CONSTITUTE A SEPARATE
VIOLATION.  IN CONNECTION WITH ANY SUCH PROPOSED APPLICATION, THE ATTOR-
NEY GENERAL IS AUTHORIZED TO TAKE PROOF AND MAKE A DETERMINATION OF  THE
RELEVANT FACTS AND TO ISSUE SUBPOENAS IN ACCORDANCE WITH THE CIVIL PRAC-
TICE LAW AND RULES.
  S 3. This act shall take effect on the one hundred eightieth day after
it shall have become a law.

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Senate Bill S5473

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Archive: Last Bill Status - In Senate Committee Consumer Protection Committee

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2009-S5473 (ACTIVE) - Details

2009-S5473 (ACTIVE) - Summary

2009-S5473 (ACTIVE) - Sponsor Memo

2009-S5473 (ACTIVE) - Bill Text download pdf

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Sponsored By

Hiram Monserrate

Archive: Last Bill Status - In Senate Committee Consumer Protection Committee

Actions

2009-S5473 (ACTIVE) - Details

2009-S5473 (ACTIVE) - Summary

2009-S5473 (ACTIVE) - Sponsor Memo

2009-S5473 (ACTIVE) - Bill Text download pdf

Comments