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Justice Moreno: Arbitration becoming 'judicialized'

By Chris Rizo | Feb 18, 2010

Carlos Moreno

SAN FRANCISCO (Legal Newsline)-Arbitration could be on its way to becoming a more expensive venue for resolving consumer disputes, California Supreme Court Justice Carlos Moreno told Legal Newsline.

"The nature of arbitration as a dispute resolution mechanism is evolving," Moreno said in an interview. "Arbitration is intended to be an efficient and fair and inexpensive avenue for resolving complex disputes but I've seen a trend lately where it is becoming 'judicialized,' with the courts getting more and more involved."

Moreno explained that over the past six years he has noticed that California courts are increasingly involved in hearing arbitration-related cases.

"I don't know if this signals a definite turn in making arbitration proceedings more complicated and thus more expensive," Moreno said.

He urged the state Legislature to consult with business groups and consumer interests to determine whether arbitration is fulfilling its intended purpose.

"It may be time to examine arbitration's role in our current legal system," said Moreno, a former consumer attorney.

Tom Scott, executive director of California Citizens Against Lawsuit Abuse, said arbitration takes pressure off of the state's overloaded civil docket.

"The point of arbitration is to resolve legal issues outside of the courtroom in an effort to avoid the time and expense involved in the court process. It's often faster and fairer and saves time, money and stress for everyone involved," Scott said. "The biggest critics of arbitration are often the personal injury bar, because it eliminates their chances at walking away with millions in attorney fees."

Since his time on the high court, Moreno has had a chance to weigh in on arbitration-related matters. For instance, in a 2008 dissenting opinion, Moreno decried the high court's 5-2 majority's reasoning behind allowing for expanded judges' power to review arbitration decisions.

"The majority decision would allow parties to fundamentally refashion arbitration from being a means of binding dispute resolution to being essentially a preliminary fact-finding procedure, with trial and appellate courts required to settle decisive legal questions," Moreno wrote. "The majority believes this change to be for the good. Whether or not this is so is open to question. Arguably this rule will burden the courts with the minutiae of arbitration disputes, thereby negating whatever benefits arbitration may have had in conserving judicial resources."

The original case was filed by retailers who had contracted with DIRECTV Inc. to provide customers with equipment to receive the company's satellite signal. The plaintiffs claimed DIRECTV withheld their firms' commissions and assessed improper charges.

The case went into arbitration, where arbiters ruled that the contract permitted class arbitration. Los Angeles County Superior Court Judge Judith Chirlin reversed the panel's decision. The 2nd District Court of Appeals then ruled that the judge overstepped her bounds by questioning the arbiters' decision.

Before being appointed to the seven-member California Supreme Court in 2001 by then-Democratic Gov. Gray Davis, Moreno sat on the U.S. District Court for the Central District of California.

Last year, he was considered to be a leading candidate to replace retiring U.S. Supreme Court Justice David Souter.

From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.

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