Governor Newsom Signs Senator Wiener’s Bill to Clamp Down on Corporate Abuse of Forced Arbitration

October 10, 2023

SACRAMENTO – Governor Newsom signed Senator Scott Wiener’s (D-San Francisco) Senate Bill 365, which levels the legal playing field for workers and consumers with respect to forced arbitration. 

“Workers should have a level playing field with corporations in our justice system,” said Senator Wiener. “This bill does that by ending a loophole that allowed corporations to tie up even frivolous disputes in endless process. This is a win for good government, and I thank the Governor for his signature.”

Under current California law, corporations are able to abuse arbitration provisions to delay court actions by workers and consumers for years through the appeals process. When a court denies a defendant’s petition to compel a case to private arbitration, current law allows corporations in many cases to halt proceedings by filing an appeal that can take months or years to be heard. Meanwhile, workers and consumers are forced to wait as the harms they face go unaddressed.

These delays can directly undermine civil cases brought against a corporation as key witnesses may lose important documents, forget the facts of a case, or move away. In contrast, corporations have the time and resources to wait out lengthy appeals processes, while workers and consumers typically do not, and may choose to settle rather than delay resolution while the years-long appeals process plays out. These years-long appeals can happen even in extreme cases where the arbitration clauses are clearly unenforceable.

SB 365 would prevent injustice by providing courts with the discretion to decide whether a case  can proceed while an appeal is heard. The bill establishes that an appeal of a court’s decision denying a corporation’s motion to compel arbitration will not automatically stay the consumer or worker’s court proceedings in the trial court while the appeal is pending. More than half of America’s workforce has been bound by forced arbitration clauses as a condition of employment, and such clauses are a common feature of consumer agreements as well. 

SB 365 is co-sponsored by Attorney General Bonta, the California Employment Lawyers Association (CELA) and Consumer Attorneys of California (CAOC).