Recently, the United States District Court for the Northern District of California issued an important opinion in the case of Bell Prods. v. Hosp. Bldg. & Equip. Co. The court ruled that the Federal Arbitration Act (FAA) preempts a California state statute that requires that arbitration proceedings must remain in state. The decision could potentially have significant ramifications for California businesses and contractors who deal with out of state firms.
According to a report from the Los Angeles Times, Southern California Edison, the single largest subsidiary company of the Edison Corporation, has been awarded $125 million by a three-person arbitration panel. Originally, the company and its business partners were seeking more than $7 billion in damages from Mitsubishi Heavy Industries. While the arbitration panel agreed that additional financial damage occurred, a liability cap in the underlying contract limited the recovery.
A new California law which went into effect on January 1st, 2017 adds a new section (Section 925) to the California Labor Code and it restricts some employer rights. Employers are now no longer able to require out-of-state adjudication or arbitration in employment contracts. This applies to the contracts of all employees who reside primarily within the state of California. Employers with questions about the effects of this new law should consult with an experienced San Jose business law attorney to ensure that their firm is always in full compliance.
In today's world, business or contract disputes arise in a variety of forms. Business disputes can range from unfair competition to violations of trade secrets. Contract disputes often involve breach of contract, rescission, reformation and even subrogation, among others issues. But many businesses are unaware of the several alternatives to filing a lawsuit to settle such a dispute.