Existing law prohibits a court from ordering a case into mediation where the amount in controversy exceeds $50,000, as specified.

This bill would instead prescribe the following requirements that must be met before a court may order a case to mediation: (1) the amount in controversy must does not exceed $150,000, (2) the case has been set for trial, (3) at least one party has notified the court of its interest in mediation, (4) counsel attending the mediation must have full authority to settle the case, and (5) and (4) the parties have been notified of their option to stipulate to a mutually agreeable mediator. The bill would provide that require the court to select a mediator, at no cost to the parties, if the parties do not stipulate to a mutually agreeable mediator, as specified, then the court must select a mediator at no cost to the parties. mediator. The bill would require all parties and counsel attending the mediation to comply with specified attendance provisions set forth in the California Rules of Court. The bill would require the mediation to conclude no later than 120 days before the trial date. The bill would provide that determination and any stipulation of the amount in controversy shall be without prejudice as to any finding on the value of the case by a mediator or in a subsequent trial.

Existing law prohibits a court from ordering a case into mediation where the amount in controversy exceeds $50,000, as specified.

This bill would increase that amount to $150,000. instead prescribe the following requirements that must be met before a court may order a case to mediation: (1) the amount in controversy must not exceed $150,000, (2) the case has been set for trial, (3) at least one party has notified the court of its interest in mediation, (4) counsel attending the mediation must have full authority to settle the case, and (5) the parties have been notified of their option to stipulate to a mutually agreeable mediator. The bill would provide that if the parties do not stipulate to a mutually agreeable mediator, as specified, then the court must select a mediator at no cost to the parties. The bill would require the mediation to conclude no later than 120 days before the trial date. The bill would provide that determination and any stipulation of the amount in controversy shall be without prejudice as to any finding on the value of the case by a mediator or in a subsequent trial.

Existing law prohibits a court from ordering a case into mediation where the amount in controversy exceeds $50,000, as specified.

This bill would increase that amount to $150,000.

Date of Hearing: July 2, 2024

ASSEMBLY COMMITTEE ON JUDICIARY

Ash Kalra, Chair

SBPCA Bill Id:SB 1141

Author:(Niello) – As Amended Ver:June 5, 2024

SENATE VOTE: 38-0

SUBJECT: Mediation: amount in controversy

KEY ISSUES:

1. Should the maximum amount in controversy for court ordered mediation be increased from $50,000 to $150,000?
2. to ensure that the new amount in controversy level for court ordered mediation does not needlessly hinder access to justice for litigants, SHOULD IMPORTANT PROCEDURAL SAFEGUARDS BE ADOPTED TO ENSURE A FAIR ADJUDICATION OF CLAIMS in the mediation process?
3. Notwithstanding the safeguards presently in the bill, are more safeguards needed to truly protect vulnerable litigants from being denied their day in court?

SYNOPSIS

Civil litigation can be a costly and contentious undertaking. When conducted properly and commenced with buy-in from all parties, mediation can be a useful tool to resolving civil actions without the need for protracted litigation. However, when mediation is foisted upon parties to a civil action without adequately considering the likelihood that mediation will actually produce a compromise, then the exercise does little more than increase costs and delay an inevitable trial, thus delaying justice for all parties. Recognizing that many cases are not appropriate for court-ordered mediation, the existing law prohibits a court from ordering parties into mediation any time a civil action’s amount in controversy exceeds 50,000 dollars.

In the wake of last year’s successful effort to modestly increase the amount in controversy level of unlimited civil cases by ten thousand dollars, this bill seeks to increase the amount in controversy cap for ordering a case into mediation by 100,000 dollars. Recognizing that this bill will dramatically expand the use of court-ordered mediation, the bill adopts a number of procedural safeguards in acknowledgement of some of the pitfalls of mediation discovered during the 30 years that court ordered mediation has been used in California.

This bill is sponsored by the California Conference of Bar Association and is supported by several other civil justice stakeholders and California’s courts. The proponents of this measure simply argue that it is time to increase the amount in controversy cap to reflect inflation, despite the fact that raising the cap will subject significantly more complex cases to the mediation process. This bill is opposed, unless amended, by the Consumer Attorneys of California and the California Employment Lawyers Association. The opposition proposes a sunset of the new amount in controversy levels and an accompanying study of the impact of the new limit in order for the Legislature to better assess this bill’s impact on the civil justice system. The opposition also suggests amendments to include three additional, common sense, procedural safeguards on the mediation process. While, unfortunately, the stakeholders involved with this bill have not been able to agree on these amendments, the amendments are modest and reasonable. Accordingly, the Committee may wish to consider adopting the amendments proposed by the opposition, and discussed in this analysis, as a means of ensuring that this bill does not unnecessarily harm litigants and so that this bill may progress through the remainder of the legislative process without significant opposition.

SUMMARY: Increases the amount in controversy limit for court ordered mediation in civil actions to $150,000 and adopts procedural guidelines regarding when a matter can be referred to mediation. Specifically, this bill:

1. Prohibits a court from ordering a civil action into mediation unless all of the following conditions are met:
   1. The amount in controversy does not exceed one hundred fifty thousand dollars ($150,000), as specified;
   2. The case has been set for trial;
   3. At least one party has notified the court of its interest in mediation; and
   4. The parties have been notified of their option to stipulate to a mutually agreeable mediator.
2. Requires, if the parties do not stipulate to a mutually agreeable mediator within 15 days of the date the case is submitted to mediation, the court to select a mediator in accordance with the standards adopted by the Judicial Council of California.
3. Requires parties, counsel, and other specified stakeholders involved in the mediation to comply with the attendance requirements set for in the California Rules of Court.
4. Requires any mediation mandated in 1) to conclude, with or without an agreement or proposed settlement, no later than 120 days before the trial date.
5. Requires that the determination and any stipulation of the amount in controversy is to be without prejudice as to any finding on the value of the case in a subsequent trial.

EXISTING LAW:

1. Prohibits a court from ordering a civil action into mediation when the amount in controversy exceeds $50,000. (Code of Civil Procedure Section 1775.5.)
2. Defines “mediation” as a process in which a neutral person or persons facilitate communication between the disputants to assist them in reaching a mutually acceptable agreement. (Code of Civil Procedure Section 1775.1.)
3. Provides that a court’s determination of an amount in controversy is to be based on the total amount of damages, and that the judge may not consider questions of liability or comparative negligence or any other defense when making such a determination. (Code of Civil Procedure Section 1141.16.)
4. Authorizes the courts of the County of Los Angeles and in other courts that elect to utilize mediation procedures for all civil actions in which arbitration is otherwise required, whether or not the action includes a prayer for equitable relief, to submit the action to mediation by the presiding judge as an alternative to judicial arbitration. (Code of Civil Procedure Section 1775.3.)
5. Requires, when a court forces an action into mediation, a mediator to be selected for the action within 30 days of its submission to mediation, and if the parties cannot mutually agree on a mediator to oversee the action the court to select a mediator pursuant to rules adopted by the Judicial Council of California. (Code of Civil Procedure Section 1775.6.)
6. Requires all parties and attorneys of record to attend all mediation sessions in person unless excused or permitted to attend by telephone, and that if any party is insured under a policy of insurance that provides or may provide coverage for a claim that is a subject of the action, a representative of the insurer with authority to settle or recommend settlement of the claim must attend all mediation sessions in person. (California Rules of Court, Rule 3.894.)

FISCAL EFFECT: As currently in print this bill is keyed non-fiscal.

COMMENTS: Court-ordered mediation is the process whereby the judge overseeing a civil action sends the dispute to a neutral person or facilitator before trial seeking to facilitate communication between the disputants to assist them in reaching a mutually acceptable agreement. Existing law permits a judge to order matters to pre-trial mediation for any case with an amount in controversy of $50,000 or less. In the wake of last year’s increase in the amount in controversy level for unlimited civil cases, SB 71 (Umberg) Chap. 861, Stats. 2032, the author of this measure believes it is time to raise the amount in controversy level for mandatory mediation. In support of raising the amount in controversy level to $150,000 for mandatory mediation in civil cases, the author states:

Mediation can be a successful tool for both the stakeholders seeking justice in the courts and the courts themselves by reducing court congestion. SB 1141 seeks to promote mediation by allowing courts to require mediation when the amount in controversy does not exceed $150,000.

Under the correct circumstances, mediation can facilitate the resolution of a civil dispute without a trial. For 30 years, California’s civil courts have had the ability to direct some civil actions to mediation before a case proceeds to trial. The mediation process is designed to force all of the parties to a civil action to work with a trained mediator to see if a mutually agreeable solution to the dispute can be reached. When all of the parties to a matter are open to mediation, the process can be successful. However, given the potentially contentious nature of litigation, frequently the parties are not prepared to amicably resolve their differences, especially if mediation is ordered before all discovery has been conducted and if other procedural disputes are still playing out. In cases in which the parties are not amenable to mediation, the process simply serves as a waste of time that delays the inevitable trial.

While the proponents of this bill claim that mediation is a highly success and useful tool, unfortunately, little data (outside a 20 year old study cited by the proponents of this bill) exists regarding the success of court ordered mediation. While the Judicial Council of California tracks when civil cases are disposed of, and reports that 80 percent of unlimited cases in 2022 and 2023 were disposed of before trial, the Council does not specify how pretrial resolutions were reached. (2024 Court Statistics Report, Judicial Council of California (2024) at p. 51.) Accordingly, the 80 percent of cases resolved before trial may have been settled without mediation, dismissed for lack of evidence, or otherwise resolved. Consequently, there is little more than anecdotal evidence to support the proponents claims regarding the widespread popularity and success of mediation.

This bill builds on the author and proponents belief that mediation amount in controversy limits need to be increased because they have not changed in 30 years. They also contend that the $10 thousand increase in the unlimited civil case amount in controversy level necessitates a $100 thousand increase in the court ordered mediation amount in controversy level. To that end this bill would increase the court ordered mediation amount in controversy level from $50 thousand to $150 thousand dollars. The bill also adopts several procedural safeguards to the mediation process. In order for a case to be ordered to mediation it must be set for trial, have at least one party expressing interest in mediation, and comply with the California Rules of Court regarding settlement authority in mediation. Finally, the bill also clarifies that the amount in controversy level regarding mediation is not to have any bearing on the value of the case should it go to trial.

Opponents note that without adequate safeguards the bill denies injured parties their day in court. While the proponents of this measure are contending that mediation is a useful tool in litigation, not all parties to litigation see significant benefits in meditating a given matter. Indeed, the California Employment Lawyers Association and the Consumer Attorneys of California object to this measure fearing that mediation, along with the now-ubiquitous use of binding arbitration, are denying Californians the right to have their civil matters adjudicated in court. The opponents to this bill jointly note:

The mediation regime has grown out of control. Mediation can now be mandated by forced arbitration/mediation agreements. Increasing the ability of courts to order mediation pushes the ADR regime in the direction of it becoming a substitute for civil justice. That’s the wrong direction.

The opposition to this measure also notes that mediation can delay a trial date, and when ordered prematurely can force settlements based on disputed or incomplete evidentiary records. They note the new amount in controversy level is particularly troublesome as it will almost certainly capture many workplace-based discrimination matters not currently subject to mediation. The opposition contends that many of the cases that would now be subject to mediation are too complex for an alternative dispute resolution process.

The opposition shared with this Committee the story of a recent case handled by one of its members who was forced into mediation to demonstrate the problems with the bill in print. In the case, a woman of color was subjected to rampant workplace sexual and racial harassment. Due to the intersectional nature of the harassment, expert witnesses on the topic were needed, causing inevitable discovery disputes regarding the expert witnesses. Nonetheless, the case was forced into mediation without a full resolution of the discovery issues. Compounding the problem was the difficulty both parties had in finding a mediator skilled in labor issues that could quickly facilitate the dispute resolution. As a result of the delays caused by the basic scheduling difficulties, the proposed trial date was delayed. When the mediation failed, perhaps due to the ongoing evidentiary dispute, the case was forced to trial. The delayed trial date not only denied the victim her day in court, but exacerbated attorney costs and fees for all parties as the attorneys were forced to prepare for a mediation that appeared doomed to fail from the start.

The opposition is further correct in noting that the dramatic expansion of mediation envisioned by this bill will exacerbate the above-mentioned issues regarding access to available mediators. Thus, this well-intentioned bill may, inadvertently, delay both mediations and trials. Seeking to better understand just how this bill may impact the civil justice system, the opposition prudently requests that the bill be amended to sunset the expanded amount in controversy level after 2027 and have the Judicial Council of California study how the new amount in controversy impacts civil case outcomes. Indeed, the study and sunset would enable the Legislature to better evaluate the impact of this bill on litigants, case processing timelines, and case dispositions. The sunset will permit the Legislature to adjust the underlying court ordered mediation statute if necessary.

While this bill adopts several critical safeguards to protect parties in litigation, more are needed to ensure fairness in the mediation process. To their credit, the author and proponents of this bill recognized that additional procedural constraints may be needed in order for the expanded amount in controversy level for mediation to achieve the success they envision. Many of the procedural safeguards in the bill in print arise from practitioner’s experience with the potential pitfalls of mediation over the past 30 years. To that end, the bill now contains the following procedural safeguards:

• The case must be set for trial. This lessens the potential for a mediation to fail as the result of it occurring too early in the litigation process.
• At least one party must express an interest in mediating the matter. This provision ensures that cases in which neither side believes a non-litigated resolution is possible is not pointlessly submitted to mediation that is doomed to fail.
• The mediation must be attended by persons with the ability to approve settlements, including insurance adjusters and other similarly situated parties. This provision ensures that mediations that do reach an amicable agreement are not nonetheless unsuccessful due to the lack of participation by a critical player in the case.
• Mediation must cease, with or without a resolution, 120 days prior to a trial date. This ensures that mediation cannot delay a trial.
• The mediation amount in controversy is separated from the finding of the value of the case. This ensures that a mediation determination does not undermine any ultimate financial decisions made in a matter.

The opposition to this measure agrees that the above-described procedural safeguards represent a significant improvement over the existing statute regarding court ordered mediation. They believe this language will benefit all litigants and reduce the amount of cases sent to mediation that have little hope for a mediated resolution. This is why the opposition to this measure suggests these reforms remain in place, even if the sunset to the increase in the amount in controversy level they seek were to be triggered. Furthermore, the opposition proposes three additional safeguards to make the processes even more beneficial to litigants. First, they seek clarity that the amount in controversy level not include attorney costs and fees. Second, to address the discovery issues raised in the example discussed above, the opposition would like to see amendments taken to clarify that mediation cannot be ordered if there are ongoing discovery disputes in the matter. Finally, the opposition suggests that mediation follow the trend in the broader legal industry following the pandemic and authorize mediations to occur using remote technology.

Potential amendments should address opposition concerns. Despite discussions between stakeholders, there has yet to be an agreement reached to address the legitimate concerns raised by the opposition. The opposition has provided this Committee a reasonable set of amendments to address their concerns. Synthesizing the above discussed concerns, the opposition seeks a sunset to the amount in controversy level, a study by the Judicial Council on the success or failure of the increased limit, and the addition of three relatively minor procedural safeguards designed to facilitate successful mediations. Unfortunately, particularly as it relates to keeping the common sense procedural safeguards proposed by this bill after the amount in controversy sunset expires, the author and sponsors of this bill have been unwilling to accept these suggestions.

Given that the opposition raises legitimate concerns with the bill in print, and proposes a reasonable set of solutions to address these concerns, the Committee should strongly consider adopting the following amendments to this measure:

SECTION 1. Section 1775.5 of the Code of Civil Procedure is amended to read:

1775.5. (a) The court shall not order a case into mediation unless all of the following conditions are met:

(1) The amount in controversy, exclusive of attorney’s fees and costs, does not exceed one hundred fifty thousand dollars ($150,000). The determination of the amount in controversy shall be made in the same manner as provided in Section 1141.16 and, in making this determination, the court shall not consider the merits of questions of liability, defenses, or comparative negligence.

(2) The case has been set for trial.

(3) At least one party has notified the court of its interest in mediation.

(4) There are no ongoing discovery disputes impacting the case.

(5) (4) The parties have been notified of their option to stipulate to a mutually agreeable mediator.

(6) The parties have the ability to mediate through the use of remote technology upon the stipulation of all parties.

(b) If the parties do not stipulate to a mutually agreeable mediator within 15 days of the date the case is submitted to mediation, the court shall select a mediator, at no cost to the parties, pursuant to standards adopted by the Judicial Council.

(c) All parties and counsel attending the mediation shall comply with subdivision (a) of Rule 3.894 of the California Rules of Court.

(d) Mediation ordered pursuant to subdivision (a) shall conclude in the form of a mutually acceptable agreement or statement of nonagreement, as described in Section 1775.9, no later than 120 days before the trial date described in paragraph (2) of subdivision (a). Any mediation shall not delay the trial date described in paragraph (2) of subdivision (a).

(e) The determination and any stipulation of the amount in controversy shall be without prejudice as to any finding on the value of the case. in a subsequent trial.

(f) On or before March 1, 2027 the Judicial Council shall transmit to the Legislature a report detailing the following:

(1) To the extent the data is available, the number of cases ordered into mediation for the years of 2023 and 2024.

(2) The number of cases ordered into mediation in 2025 and 2026.

(3) The data required by paragraphs (1) and (2) shall be provided on a county-by-county basis.

(g) This section shall remain in effect until January 1, 2028 and is of that date repealed.

SECTION 2 Section 1775.5 of the Code of Civil Procedure is added to read:

1775.5. (a) The court shall not order a case into mediation unless all of the following conditions are met:

(1) The amount in controversy, exclusive of attorney’s fees and costs, does not exceed fifty thousand dollars ($50,000). The determination of the amount in controversy shall be made in the same manner as provided in Section 1141.16 and, in making this determination, the court shall not consider the merits of questions of liability, defenses, or comparative negligence.

(2) The case has been set for trial.

(3) At least one party has notified the court of its interest in mediation.

(4) There are no ongoing discovery disputes impacting the case.

(5) The parties have been notified of their option to stipulate to a mutually agreeable mediator.

(6) The parties have the ability to mediate through the use of remote technology upon the stipulation of all parties.

(b) If the parties do not stipulate to a mutually agreeable mediator within 15 days of the date the case is submitted to mediation, the court shall select a mediator, at no cost to the parties, pursuant to standards adopted by the Judicial Council.

(c) All parties and counsel attending the mediation shall comply with subdivision (a) of Rule 3.894 of the California Rules of Court.

(d) Mediation ordered pursuant to subdivision (a) shall conclude in the form of a mutually acceptable agreement or statement of nonagreement, as described in Section 1775.9, no later than 120 days before the trial date described in paragraph (2) of subdivision (a). Any mediation shall not delay the trial date described in paragraph (2) of subdivision (a).

(e) The determination and any stipulation of the amount in controversy shall be without prejudice as to any finding on the value of the case.

(f) This section take effect January 1, 2028.

Given the oppositions’ “oppose unless amended” position, adopting these amendments would almost certainly result in this measure being unopposed.

ARGUMENTS IN SUPPORT: This measure is sponsored by the California Conference of Bar Associations and is supported by a coalition of civil justice stakeholders ranging from the Judicial Council of California to the Civil Justice Association of California. In support of the measure the California Conference of Bar Associations writes:

According to a 1999 report by the California Judicial Council, alternate dispute resolution (ADR), which includes mediation, can provide a greater choice of ways to resolve disputes; has the potential for earlier, faster resolution than with traditional litigation; has the potential for less costly means for resolving disputes; and has the potential for greater satisfaction with the dispute resolution process and outcome than with traditional litigation.

In addition, a 2004 report by the California Judicial Council, about five mediation pilot programs in Fresno, Los Angeles, San Diego, Contra Costa and Sonoma counties, showed that the programs resulted in “substantial benefits to both litigants and the courts.” The report also stated: “These benefits included reductions in trial rates, case disposition time, and the courts’ workload, increases in litigant satisfaction with the court’s services, and decreases in litigant costs in cases that resolved at mediation in some or all of the participating courts.”

SB 1141 is needed because increased mediation use will help alleviate court backlogs and promote timely court adjudication. SB 1141 is also needed because the $50,000 amount in Code of Civil Procedure Section 1775.5 has not been adjusted for inflation since 1993. Further, the goal to encourage more mediation is consistent with the Trial Court Delay Reduction Act

ARGUMENTS IN OPPOSITION: As noted this measure is opposed, unless amended, by the Consumer Attorneys of California and the California Employment Lawyers Association. In opposition to the bill in print, the opposition jointly writes:

Private mediation can be costly, may not be beneficial in all circumstances, and should be voluntary unless necessary safeguards are enacted to ensure mediation is ripe and meaningful.

Mandated mediation conflicts with the basic premise of mediation – two parties voluntarily coming together seeking to come to a resolution on a case. Further, for mediation to lead to a resolution of a case, both parties must be willing to mediate. Most plaintiff lawyers and their clients voluntarily mediate when it’s suggested by the defense. In most cases an order to mediate comes only after the parties have decided that, in their case, there’s no chance of settlement.

Courts can and often do already order mandatory settlement conferences prior to assigning a trial date. These mandatory settlement conferences then often get continued three, four, five times and more, further pushing back the trial date. SB 1141 will exacerbate this current problem by creating another barrier and expense to obtaining justice for injured consumers and workers in California.

As amended, SB 1141 contains necessary safeguards and protections; however, CAOC premised our removal of opposition on adding a sunset to ensure that the protections are working as intended. Second, CAOC urges the author and sponsor to include a requirement that the parties with authority to settle the case attend the mediation. CELA aligns themselves with the above two concerns and also seeks assurances that the court resolve pending discovery disputes prior to ordering a case to mediation to ensure that the case is ripe and that settlement discussions can be productive. CAOC supports the resolution of this concern.

REGISTERED SUPPORT / OPPOSITION:

Support

California Conference of Bar Associations (sponsor)

California Chamber of Commerce
Civil Justice Association of California
Judicial Council of California
Orange County Bar Association
Superior Court of Los Angeles County

Opposition

California Employment Lawyers Association (unless amended)
Consumer Attorneys of California (unless amended)

Analysis Prepared by: Nicholas Liedtke / JUD. / (916) 319-2334

 THIRD READING  

Bill No: SB 1141

Author: Niello (R)

Amended: 5/6/24

Vote: 21

SENATE JUDICIARY COMMITTEE: 11-0, 4/30/24

AYES: Umberg, Wilk, Allen, Blakespear, Caballero, Dodd, Durazo, Laird, Min, Niello, Wiener

SUBJECT: Mediation: amount in controversy

SOURCE: California Conference of Bar Associations

DIGEST:

This bill raises the threshold under which a court may order a case into mediation from $50,000 to $150,000 and establishes a series of criteria before such mediation can be required.

ANALYSIS:

Existing law:

1. Defines “mediation” as a process in which a neutral person or persons facilitate communication between the disputants to assist them in reaching a mutually acceptable agreement. (Code Civ. Proc. § 1775.1.)
2. Prohibits the court from ordering a case into mediation where the amount in controversy exceeds $50,000. The determination of the amount in controversy shall be made in the same manner as provided in Section 1141.16 and, in making this determination, the court shall not consider the merits of questions of liability, defenses, or comparative negligence. (Code Civ. Proc. § 1775.5.)
3. Provides that the determination of the amount in controversy shall be made by the court and the case referred to arbitration after all named parties have appeared or defaulted. The determination shall be made at a case management conference or based upon review of the written submissions of the parties, as provided in rules adopted by the Judicial Council. The determination shall be based on the total amount of damages, and the judge may not consider questions of liability or comparative negligence or any other defense. At that time the court shall also make a determination whether any prayer for equitable relief is frivolous or insubstantial. The determination of the amount in controversy and whether any prayer for equitable relief is frivolous or insubstantial may not be appealable. No determination pursuant to this section shall be made if all parties stipulate in writing that the amount in controversy exceeds the amount specified. The determination and any stipulation of the amount in controversy shall be without prejudice to any finding on the value of the case by an arbitrator or in a subsequent trial de novo. (Code Civ. Proc. § 1141.16.)
4. Provides that in the courts of the County of Los Angeles and in other courts that elect to apply this section of law, all at-issue civil actions in which arbitration is otherwise required, whether or not the action includes a prayer for equitable relief, may be submitted to mediation by the presiding judge as an alternative to judicial arbitration. Any civil action otherwise within the scope of this title in which a party to the action is a public agency or public entity may be submitted to mediation. (Code Civ. Proc. Code § 1775.3.)
5. Requires a mediator to be selected for the action within 30 days of its submission to mediation. The method of selection and qualification of the mediator shall be as the parties determine. If the parties are unable to agree on a mediator within 15 days of the date of submission of the action to mediation, the court may select a mediator pursuant to standards adopted by the Judicial Council. (Code Civ. Proc. Code § 1775.6.)

This bill:

1. Raises the threshold at which a court may not order a case into mediation to an amount in controversy exceeding $150,000. The determination of the amount in controversy shall be made in the same manner as provided in Section 1141.16 of the Code of Civil Procedure and, in making this determination, the court shall not consider the merits of questions of liability, defenses, or comparative negligence. The determination and any stipulation of the amount in controversy shall be without prejudice as to any finding on the value of the case by a mediator or in a subsequent trial de novo.
2. Established the following prerequisites for mandatory mediation:
   1. The case has been set for trial.
   2. At least one party has notified the court of its interest in mediation.
   3. Counsel attending the mediation have full authority to settle the matter on behalf of their respective clients
   4. The parties have been notified of their option to stipulate to a mutually agreeable mediator.
3. Provides that if the parties do not stipulate to a mutually agreeable mediator within 15 days of the date the case is submitted to mediation, the court shall select a mediator, at no cost to the parties, pursuant to standards adopted by the Judicial Council.
4. Requires such mediation to conclude in the form of a mutually acceptable ageement or statement of nonagreement, as described, no later than 120 days before the trial date.
5. Prohibits mandatory mediation from delaying the trial date.

Background

“Mediation” means a process in which a neutral person or persons facilitate communication between the disputants to assist them in reaching a mutually acceptable agreement. Generally, mediation is entered into voluntarily by the parties to a dispute. However, the law provides a limited authorization for courts to order the parties to an action into mediation. Courts may not order a case into mediation if the amount in controversy exceeds $50,000.

This bill raises that threshold to $150,000 and established various criteria that must be met before mediation can be ordered, including that a trial date has been set and that the parties representatives have full authority to settle the matter.

This bill is sponsored by the California Conference of Bar Associations. It is supported by various entities and associations, including the Civil Justice Association of California and the Judicial Council of California. It is opposed by the Consumer Attorneys of California and the California Employment Lawyers Association.

Comments

Author’s statement. According to the author:

Mediation can be a successful tool for both the stakeholders seeking justice in the courts and the courts themselves by reducing court congestion. SB 1141 seeks to promote mediation by allowing courts to require mediation when the amount in controversy does not exceed $150,000.

Mandatory mediation “Mediation” is the process in which a neutral person or persons facilitate communication between the disputants to assist them in reaching a mutually acceptable agreement. (Code Civ. Proc. § 1775.1.) The law currently provides a narrow authorization for courts to force a case into mediation without the parties consent. The law provides that in the courts of the County of Los Angeles and in other courts that elect to do so, specified civil actions may be submitted to mediation, as provided. (Code Civ. Proc. Code § 1775.3.)

A mediator must be selected for the action within 30 days of its submission to mediation. The method of selection and qualification of the mediator shall be as the parties determine. If the parties are unable to agree on a mediator within 15 days of the date of submission of the action to mediation, the court may select a mediator pursuant to standards adopted by the Judicial Council. (Code Civ. Proc. Code § 1775.6.)

However, currently the law prohibits the court from ordering a case into mediation where the amount in controversy exceeds $50,000. (Code Civ. Proc. § 1775.5.)

This bill raises the threshold at which a court may not order a case into mediation to an amount in controversy exceeding $150,000. Given the expanded scope, the bill also establishes a number of prerequisites for mandatory mediation:

• The trial date must be set and mediation must happen at least 120 days before that date and not cause that date to be delayed.
• At least one party to the mandatory mediation must indicate they are interested in mediation.
• Counsel for each party attending the mediation must have full authority to settle the matter.
• The mandate of mediation cannot be dispositive of the case value.
• Parties to the mediation must be given the option to stipulate to their own chosen mediator. However, the court must provide and pay for a mediator should the parties not stipulate otherwise.

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT: (Verified 5/7/24)

California Conference of Bar Associations (source)
California Chamber of Commerce

California Conference of Bar Associations

Civil Justice Association of California

Judicial Council of California

Orange County Bar Association

Superior Court of Los Angeles County

OPPOSITION: (Verified 5/7/24)

California Employment Lawyers Association

Consumer Attorneys of California

ARGUMENTS IN SUPPORT: The California Conference of Bar Associations, the sponsor of this bill, write:

According to a 1999 report by the California Judicial Council, alternate dispute resolution (ADR), which includes mediation, can provide a greater choice of ways to resolve disputes; has the potential for earlier, faster resolution than with traditional litigation; has the potential for less costly means for resolving disputes; and has the potential for greater satisfaction with the dispute resolution process and outcome than with traditional litigation

In addition, a 2004 report by the California Judicial Council, about five mediation pilot programs in Fresno, Los Angeles, San Diego, Contra Costa and Sonoma counties, showed that the programs resulted in “substantial benefits to both litigants and the courts.” The report also stated: “These benefits included reductions in trial rates, case disposition time, and the courts’ workload, increases in litigant satisfaction with the court’s services, and decreases in litigant costs in cases that resolved at mediation in some or all of the participating courts.”

SB 1141 is needed because increased mediation use will help alleviate court backlogs and promote timely court adjudication. SB 1141 is also needed because the $50,000 amount in Code of Civil Procedure Section 1775.5 has not been adjusted for inflation since 1993. Further, the goal to encourage more mediation is consistent with the Trial Court Delay Reduction Act.

ARGUMENTS IN OPPOSITION: The Consumer Attorneys of California assert:

Mandated mediation conflicts with the basic premise of mediation – two parties voluntarily coming together seeking to come to a resolution on a case. Further, for mediation to lead to a resolution of a case, both parties must be willing to mediate. Most plaintiff lawyers and their clients voluntarily mediate when it’s suggested by the defense. In most cases an order to mediate comes only after the parties have decided that, in their case, there’s no chance of settlement.

The mediation regime has grown out of control. Mediation can now be mandated by forced arbitration/mediation agreements. Increasing the ability of courts to order mediation pushes the ADR regime in the direction of it becoming a substitute for civil justice. That’s the wrong direction.

Courts can and often do already order mandatory settlement conferences prior to assigning a trial date. These mandatory settlement conferences then often get continued three, four, five times and more, further pushing back the trial date. SB 1141 will exacerbate this current problem by creating another barrier and expense to obtaining justice for injured consumers and workers in California.

Prepared by: Christian Kurpiewski / JUD. / (916) 651-4113

5/8/24 10:48:55

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SENATE JUDICIARY COMMITTEE

Senator Thomas Umberg, Chair

2023-2024 Regular Session

Bill No: SB 1141 (Author:Niello)

Version: February 14, 2024

Hearing Date: April 30, 2024

Fiscal: No

Urgency: No

Consultant: CK

SUBJECT

Mediation: amount in controversy

DIGEST

This bill raises the threshold under which a court may order a case into mediation from $50,000 to $150,000.

EXECUTIVE SUMMARY

“Mediation” means a process in which a neutral person or persons facilitate communication between the disputants to assist them in reaching a mutually acceptable agreement. Generally, mediation is entered into voluntarily by the parties to a dispute. However, the law provides a limited authorization for courts to order the parties to an action into mediation. Courts may not order a case into mediation if the amount in controversy exceeds $50,000.

This bill raises that threshold to $150,000. The author and sponsor argue that required mediation will provide benefits both to the parties but also the courts, which are facing increased congestion.

This bill is sponsored by the California Conference of Bar Associations. It is supported by various entities and associations, including the Civil Justice Association of California and the Judicial Council of California. It is opposed by the Consumer Attorneys of California.

PROPOSED CHANGES TO THE LAW

Existing law:

1. Defines “mediation” as a process in which a neutral person or persons facilitate communication between the disputants to assist them in reaching a mutually acceptable agreement. (Code Civ. Proc. § 1775.1.)
2. Prohibits the court from ordering a case into mediation where the amount in controversy exceeds $50,000. The determination of the amount in controversy shall be made in the same manner as provided in Section 1141.16 and, in making this determination, the court shall not consider the merits of questions of liability, defenses, or comparative negligence. (Code Civ. Proc. § 1775.5.)
3. Provides that the determination of the amount in controversy shall be made by the court and the case referred to arbitration after all named parties have appeared or defaulted. The determination shall be made at a case management conference or based upon review of the written submissions of the parties, as provided in rules adopted by the Judicial Council. The determination shall be based on the total amount of damages, and the judge may not consider questions of liability or comparative negligence or any other defense. At that time the court shall also make a determination whether any prayer for equitable relief is frivolous or insubstantial. The determination of the amount in controversy and whether any prayer for equitable relief is frivolous or insubstantial may not be appealable. No determination pursuant to this section shall be made if all parties stipulate in writing that the amount in controversy exceeds the amount specified. The determination and any stipulation of the amount in controversy shall be without prejudice to any finding on the value of the case by an arbitrator or in a subsequent trial de novo. (Code Civ. Proc. § 1141.16.)
4. Provides that in the courts of the County of Los Angeles and in other courts that elect to apply this section of law, all at-issue civil actions in which arbitration is otherwise required, whether or not the action includes a prayer for equitable relief, may be submitted to mediation by the presiding judge as an alternative to judicial arbitration. Any civil action otherwise within the scope of this title in which a party to the action is a public agency or public entity may be submitted to mediation. (Code Civ. Proc. Code § 1775.3.)
5. Requires a mediator to be selected for the action within 30 days of its submission to mediation. The method of selection and qualification of the mediator shall be as the parties determine. If the parties are unable to agree on a mediator within 15 days of the date of submission of the action to mediation, the court may select a mediator pursuant to standards adopted by the Judicial Council. (Code Civ. Proc. Code § 1775.6.)

This bill raises the threshold at which a court may not order a case into mediation to an amount in controversy exceeding $150,000.

COMMENTS

1. Stated intent of the bill

According to the author:

Mediation can be a successful tool for both the stakeholders seeking justice in the courts and the courts themselves by reducing court congestion. SB 1141 seeks to promote mediation by allowing courts to require mediation when the amount in controversy does not exceed $150,000.

1. Mandatory mediation

“Mediation” is the process in which a neutral person or persons facilitate communication between the disputants to assist them in reaching a mutually acceptable agreement. (Code Civ. Proc. § 1775.1.) The law currently provides a narrow authorization for courts to force a case into mediation without the parties consent. The law provides that in the courts of the County of Los Angeles and in other courts that elect to do so, specified civil actions may be submitted to mediation, as provided. (Code Civ. Proc. Code § 1775.3.)

A mediator must be selected for the action within 30 days of its submission to mediation. The method of selection and qualification of the mediator shall be as the parties determine. If the parties are unable to agree on a mediator within 15 days of the date of submission of the action to mediation, the court may select a mediator pursuant to standards adopted by the Judicial Council. (Code Civ. Proc. Code § 1775.6.)

However, currently the law prohibits the court from ordering a case into mediation where the amount in controversy exceeds $50,000. (Code Civ. Proc. § 1775.5.)

This bill raises the threshold at which a court may not order a case into mediation to an amount in controversy exceeding $150,000.

1. Stakeholder positions

The California Conference of Bar Associations, the sponsor of this bill, argue:

According to a 1999 report by the California Judicial Council, alternate dispute resolution (ADR), which includes mediation, can provide a greater choice of ways to resolve disputes; has the potential for earlier, faster resolution than with traditional litigation; has the potential for less costly means for resolving disputes; and has the potential for greater satisfaction with the dispute resolution process and outcome than with traditional litigation

In addition, a 2004 report by the California Judicial Council, about five mediation pilot programs in Fresno, Los Angeles, San Diego, Contra Costa and Sonoma counties, showed that the programs resulted in “substantial benefits to both litigants and the courts.” The report also stated: “These benefits included reductions in trial rates, case disposition time, and the courts’ workload, increases in litigant satisfaction with the court’s services, and decreases in litigant costs in cases that resolved at mediation in some or all of the participating courts.”

SB 1141 is needed because increased mediation use will help alleviate court backlogs and promote timely court adjudication. SB 1141 is also needed because the $50,000 amount in Code of Civil Procedure Section 1775.5 has not been adjusted for inflation since 1993. Further, the goal to encourage more mediation is consistent with the Trial Court Delay Reduction Act.

Writing in opposition, the Consumer Attorneys of California assert:

Mandated mediation conflicts with the basic premise of mediation – two parties voluntarily coming together seeking to come to a resolution on a case. Further, for mediation to lead to a resolution of a case, both parties must be willing to mediate. Most plaintiff lawyers and their clients voluntarily mediate when it’s suggested by the defense. In most cases an order to mediate comes only after the parties have decided that, in their case, there’s no chance of settlement.

The mediation regime has grown out of control. Mediation can now be mandated by forced arbitration/mediation agreements. Increasing the ability of courts to order mediation pushes the ADR regime in the direction of it becoming a substitute for civil justice. That’s the wrong direction.

Courts can and often do already order mandatory settlement conferences prior to assigning a trial date. These mandatory settlement conferences then often get continued three, four, five times and more, further pushing back the trial date. SB 1141 will exacerbate this current problem by creating another barrier and expense to obtaining justice for injured consumers and workers in California.

Writing in support, the Civil Justice Association of California makes the case:

By tripling the amount in controversy for courts to send cases to mediation, SB 1141 promotes a cost-effective way to resolve disputes. In mediation, parties often share the cost of the mediator, which is generally less expensive than hiring attorneys for a full-blown court case. Legal fees in litigation can quickly accumulate due to various factors like attorney hourly rates, court fees, expert witness fees, and other expenses associated with preparing for trial. Mediation reduces these expenses substantially.

The Judicial Council of California explains their support:

The Judicial Council supported the original legislation Senate Bill 401 [(Lockyer, Ch. 1261, Stats. 1993)] that created the court-ordered mediation provisions to resolve cases in a cost-effective manner. SB 1141 ameliorates the urgent problem of court backlog by updating this 30-year-old statute to a figure slightly above the inflation-adjusted cap and aligns with the increase in the limited civil jurisdictional threshold enacted last year by Senate Bill 71 [(Umberg, Ch. 861, Stats. 2023)]. Under current law, court ordered mediation is only allowed for unlimited civil matters, so the current $50,000 limit is very narrow and would only allow for this service to be provided when the amount in controversy is between $35,000 and $50,000.

1. Amendments

In response to concerns that mandatory mediation will unnecessarily delay trial dates for litigants and impose unreasonable costs for potentially unwilling participants, the author has agreed to the following amendments:

• Trial date must be set and mediation must happen at least 120 days before that date and not cause that date to be delayed.
• At least one party to the mandatory mediation must indicate they are interested in mediation.
• Counsel for each party attending the mediation must have full authority to settle the matter.
• The mandate of mediation cannot be dispositive of the case value (i.e. mandating mediation cannot limit amount in controversy to under $150,000).
• Parties to the mediation must be given the option to stipulate to their own chosen mediator. However, the court must provide and pay for a mediator should the parties not stipulate otherwise.

This would apply to all mandatory mediation pursuant to Section 1775.5.

SUPPORT

California Conference of Bar Associations (sponsor)
California Chamber of Commerce

California Conference of Bar Associations

Civil Justice Association of California

Judicial Council of California

Superior Court of Los Angeles County

OPPOSITION

Consumer Attorneys of California

RELATED LEGISLATION

Pending Legislation:

SB 940 (Umberg, 2024) prohibits an arbitrator from entertaining or accepting, from the time of appointment until the conclusion of the arbitration, either of the following: (1) any offers of employment or new professional relationships as a lawyer, expert witness, or consultant from a party or lawyer for a party in the pending arbitration; or (2) any offers of employment as a dispute resolution neutral in another case involving a party or lawyer for a party in the pending arbitration without the prior written consent of the parties, as specified. SB 940 also prohibits sellers from requiring a consumer, as a condition of entering into a contract, to agree to a provision that would require the consumer to adjudicate outside of California a claim arising in California or deprive the consumer of the substantive protection of California law with respect to a controversy arising in California, as specified. SB 940 allows consumers the option to have a dispute adjudicated pursuant to the Small Claims Act instead of through arbitration, as specified. It authorizes the State Bar to create a program to certify alternative dispute resolutions firms, as provided. SB 940 is currently in this Committee.

AB 924 (Gabriel, 2023) requires a dispute resolution neutral, like a mediator or arbitrator, to provide the State Bar with a copy of a written complaint made against the neutral during an alternative dispute resolution proceeding and to provide information to the complainant about how to submit a complaint directly to the State Bar. AB 924 is currently in this Committee.

Prior Legislation: SB 401 (Lockyer, Ch. 1261, Stats. 1993) required the courts in Los Angeles County and authorized others to implement a prescribed program of mediation of specified civil matters, where the amount in controversy does not exceed $50,000.

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