NY State Senate Bill 2017-S7146

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 03, 2018	referred to consumer protection

2017-S7146 (ACTIVE) - Details

See Assembly Version of this Bill:: A9769
Current Committee:: Senate Consumer Protection
Law Section:: General Business Law
Laws Affected:: Amd §399-c, Gen Bus L
Versions Introduced in Other Legislative Sessions:: 2011-2012: A8431
2013-2014: A604
2015-2016: A108
2019-2020: S2895, A7438
2021-2022: S3123, A3297
2023-2024: S2083, A2118
2025-2026: S926, A3318

2017-S7146 (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.

2017-S7146 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S7146

SPONSOR: KAVANAGH
 
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:

2016: A00108D (Dinowitz) - On the Floor
2015: A00108 (Dinowitz) - On the Floor
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.

2017-S7146 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7146
 
                             I N  S E N A T E
 
                                (PREFILED)
 
                              January 3, 2018
                                ___________
 
 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
   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"  SHALL MEAN AN ASSOCIATION,
 AGENCY, BOARD, COMMISSION, OR OTHER ENTITY THAT IS  NEUTRAL  AND  INITI-
 ATES,  SPONSORS, OR ADMINISTERS AN ARBITRATION PROCEEDING OR IS INVOLVED
 IN THE APPOINTMENT OF AN ARBITRATOR UNLESS SUCH INVOLVEMENT  IS  LIMITED
 TO A CONTRACTUAL RELATIONSHIP THAT AUTHORIZES THE USE OF ARBITRATION.
   §  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 STATE AND ZIP CODE IN WHICH THE CONSUMER PARTY RESIDED AT  THE
 TIME OF ARBITRATION;
   (3) 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
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets

                       [ ] is old law to be omitted.
                                                            LBD03177-02-7

 S. 7146                             2
 
 HUNDRED FIFTY THOUSAND DOLLARS, INCLUSIVE, AND OVER  TWO  HUNDRED  FIFTY
 THOUSAND DOLLARS;
   (4) WHETHER THE CONSUMER WAS THE PREVAILING PARTY;
   (5)  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;
   (6)  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;
   (7) 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;
   (8) 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;
   (9) THE AMOUNT OF THE CLAIM, THE AMOUNT OF ANY  AWARD  OR  SETTLEMENT,
 AND ANY OTHER RELIEF GRANTED; AND
   (10)  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 NINETEEN.
   D. THIS SUBDIVISION SHALL NOT APPLY TO ARBITRATIONS INVOLVING DISPUTES
 BETWEEN CONSUMERS.
   E. THE PROVISIONS OF THIS SUBDIVISION SHALL NOT  APPLY  TO  AGREEMENTS
 NEGOTIATED WITH ANY LABOR UNION THROUGH COLLECTIVE BARGAINING.
   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 NINETEEN.
   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  ARBI-
 TRATOR PARTICIPATES IN THE MANAGEMENT OF THE FUND.

 S. 7146                             3
 
   (2)  AN OFFICE IN AN EDUCATIONAL, RELIGIOUS, CHARITABLE, FRATERNAL, OR
 CIVIC ORGANIZATION IS NOT A "FINANCIAL INTEREST" IN SECURITIES  HELD  BY
 THE ORGANIZATION.
   (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. A.  WHENEVER THERE SHALL BE A VIOLATION OF THIS SECTION, AN  APPLI-
 CATION  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 CONTIN-
 UANCE 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.    IN  CONNECTION WITH ANY SUCH PROPOSED APPLICATION, THE ATTORNEY
 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.
   B. NOTWITHSTANDING ANY RIGHT OF ACTION GRANTED TO THE ATTORNEY GENERAL
 PURSUANT TO THIS SECTION, ANY PERSON WHO HAS BEEN INJURED BY REASON OF A
 VIOLATION  OF THIS SECTION MAY BRING AN ACTION IN HIS OR HER OWN NAME TO
 ENJOIN SUCH UNLAWFUL ACT, AN ACTION TO RECOVER HIS OR HER ACTUAL DAMAGES
 OR BOTH SUCH ACTIONS. THE COURT MAY AWARD REASONABLE ATTORNEY'S FEES  TO
 A PREVAILING PLAINTIFF.
   C.    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.
   D.  EACH  WRITTEN  CONTRACT OFFERED BY A NON-CONSUMER PARTY AND SUBSE-
 QUENTLY ENTERED INTO IN VIOLATION OF SUBDIVISION  TWO  OF  THIS  SECTION
 SHALL CONSTITUTE A SEPARATE VIOLATION.
   § 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 S7146

Sponsored By

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

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2017-S7146 (ACTIVE) - Details

2017-S7146 (ACTIVE) - Summary

2017-S7146 (ACTIVE) - Sponsor Memo

2017-S7146 (ACTIVE) - Bill Text download pdf

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Sponsored By

Brian Kavanagh

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

Actions

2017-S7146 (ACTIVE) - Details

2017-S7146 (ACTIVE) - Summary

2017-S7146 (ACTIVE) - Sponsor Memo

2017-S7146 (ACTIVE) - Bill Text download pdf

Comments