Is this “mediation?” Foster parents beware

While reviewing upcoming legislation, we stumbled upon Georgia S.B. 188, amending the 2004 Foster Parent’s Bill of Rights, O.C.G.A. § 49-5-14. Notably, the bill would make the grievance procedure no longer the exclusive remedy for a violation of the article; however, our attention was drawn to the grievance procedure itself, which was created by a committee empowered by the act to “develop a grievance procedure, including a mediation procedure, to be published in departmental policy manuals and the Foster Parent Handbook” within a year. The resulting “mediation” procedure shows a complete ignorance of the process and an utter disregard for the intent of the original legislation. Far from providing mediation, the grievance procedure creates a “State Mediation Committee” (SMC) that engages in an investigatory, fact-finding process, after which it issues recommendations. The findings and recommendations are sent to the Division Director, who issues a response. The SMC report and the DFCS response are final and determinative. Read more!

Legislation expanding workers’ compensation mediation program

Georgia HB 661, amending O.C.G.A. 33, Chap. 9, includes a provision that refer disputes between health care insurers and workers comp insurers to the Alternative Dispute Resolution Division of the State Board of Workers' Compensation. Although the act is stated in the mandatory, i.e., “the entity´s right to reimbursement shall be resolved by referral,” the health care insurer has the choice of initiating the mediation. Reflecting an obvious misunderstanding of mediation, the act provides that the “losing party” pay the cost of the mediation. To confuse things further, despite the fact that the ADR Division is already operational and that the “loser” covers the costs, the act shall become effective only if funds are specifically appropriated and become available for expenditure. Read more!

Proposed Legislation Banning Consumer Arbitration Agreements

The Consumer Fairness Act of 2007, H.R. 1443, introduced March 9, would amend the Consumer Credit Protection Act, 15 U.S.C. §§ 1601 et seq., to bar the use of mandatory pre-dispute arbitration clauses in most consumer contracts. Basically, a binding arbitration agreement in a consumer contract would be unenforceable and deemed “an unfair and deceptive trade act or practice under Federal or State law." For purposes of the act, a "consumer contract" is "any written, standardized form contract between the parties to a consumer transaction." A “consumer transaction” means "the sale or rental of goods, services or real property, including an extension of credit or the provision of any other financial product or service to an individual entered into primarily for personal, family, or household purposes." Submissions to arbitrate existing disputes are enforceable under the act.

Previous attempts to legislate in this arena haven’t made it out of committee; however, with Democratic and presumably a more consumer-friendly House, the likelihood of passage is much better. If this bill passes, it is likely that similar legislation addressing pre-dispute arbitration agreements in employment will be proffered.

Thanks to John Allgood and ADR World for the “heads-up” on this. Read more!

Proposed revision to the GAC

Continuing the theme of arbitration under fire, the Consumer Law Section of the Georgia Bar has requested Bar support for the "Transparency in Arbitration Costs Act." As of last week, I did not see this as a bill in the current session; however, it raises some serious questions. It requires the drafter of a consumer arbitration agreement to "disclose" the cost and fees that may be associated with any future "in-person" arbitration hearing at the time of entering into the agreement. How would a drafter be able to know exactly what fees and costs would be involved at some unknown point in the future with an unknown arbitrator? The provision allows for a good faith estimate. Failure to comply with this requirement would not in itself make the agreement unenforceable. Instead, it could be used to establish the unconscionability of the agreement. In addition, failure to comply gives the Attorney General (and anyone else) the power to sue and enjoin future violations of the act. For a pdf of the memo to the Bar and the proposed, click HERE.


Admirable as the intent is (making consumers more aware of the possible costs associated with arbitration), the provision tries to avoid running afoul of the FAA, which happens to preempt any state law that treats arbitration provisions differently than other contracts, by changing the state law on unconscionability. Federal law differs to state law as the general enforcement of contracts; however, this provision does not apply to all contracts in the state, just arbitration agreements. Additionally, the provision giving persons the power to sue and enjoin the drafter's failure to comply in the future forces, in essence, a unique requirement on arbitration contracts. Therefore, my opinion is that it runs afoul of the FAA regardless.

Some other problems: "Consumer" as defined includes employees who enter into an arbitration agreement with employers. Also, it requires disclosires on costs and fees, but it doesn't educate the consumer as to the possible costs and fees associated with litigation. As most arbitrators will tell you, an expensive arbitration is more often the result of the parties' and their attorneys' own failure to take advantage of the cost savings possible in the process. Moreover, court costs can appear relatively cheap, but the undisclosed costs are the attorneys' fees.

Here again, perhaps the lesson is for drafters of consumer and employment arbitration agreements to go ahead and commit upfront to paying all costs and fees of the arbitration. What say you?
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Email Subscription

After further research on blog subscriptions, I have found a way to subscribe by email to post updates.To subscribe to email updates, just use the email subscription bar located in the right, lower side bar of this blog. Sorry for any confusion as to feed aggregators, etc. It turns out that feed aggregators can be very confusing, time comsuming, and generally not to be used by the general Web users. Once again, sorry for any time this misdirection may have cost you. Read more!