Calif. Civil Procedure Code §1281.2
Amended by S. B. 33
Effective date: January 1, 2018

A court may refuse to compel arbitration when:

  • an arbitration agreement is based on a contract between a state- or federally chartered bank and a consumer; and
  • the contract was entered into by unlawful use of the consumer’s personal information.

Read the bill text.

Editor’s note — This bill was drafted in response to the scandal involving Wells Fargo employees opening bank accounts for consumers without authorization. Wells Fargo responded to the slew of lawsuits from consumers by compelling arbitration — based on the terms of the fraudulently opened accounts!

Arbitration is often touted as quicker and cheaper than litigation. However, arbitration often results in misinterpretation of the law and erroneous awards which are legally binding and final.  

first tuesday is decidedly anti-arbitration. See our published pieces about arbitration agreements here and here.