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F I S C A L I M P A C T R E P O R T

SPONSOR Martinez

DATE TYPED 2/21/05

HB 770

SHORT TITLE Alternative Dispute Resolution Procedure Act

SB

ANALYST Wilson

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

See Narrative

Duplicates SB 656 & SB 683

SOURCES OF INFORMATION

LFC Files

Responses Received From

Administrative Office of the Courts (AOC)

Attorney General’s Office (AGO)

General Services Department (GSD)

SUMMARY

Synopsis of Bill

House Bill 770

enacts the Alternative Dispute Resolution Procedures Act to provide for the con-

fidentiality of all mediation communications, except as otherwise provided in the bill or by ap-

plicable judicial court rules. The bill provides that specified institutions, when conducting a

mediation, may order that different or additional rules of confidentiality shall apply to the media-

tion. The bill further provides that mediation parties may agree in writing to additional or differ-

ent confidentiality protections prior to the mediation, subject to provisions of the act.

The bill applies to all mediators, nonparty participants, mediation parties and a mediation that is

statutorily, judicially or administratively required, undertaken after court, administrative agency

or arbitrator referral, or agreed upon by the mediation parties and the mediator. The act does not

apply to a mediation relating to the establishment, negotiation, administration or termination of a

collective bargaining relationship, a mediation relating to a dispute that is pending pursuant to or

is part of the processes established by a collective bargaining agreement, or a mediation that is

conducted by a judge who might make a ruling on the case.

House Bill 770 -- Page 2

The bill provides that if parties to mediation reach a settlement agreement in a pending proceed-

ing and the agreement is evidenced by a record signed by the mediation parties, the agreement is

enforceable in the same manner as any other written contract. The act further provides that the

agreement shall not affect any outstanding court order unless the terms of the agreement are in-

corporated into a subsequent order. The bill also provides that a court, administrative agency or

arbitrator has the discretion to incorporate the terms of the agreement in the order or other docu-

ment disposing of the matter.

Significant Issues

The proposed legislation creates confidentiality regarding statements and information presented

in the mediation setting; and shields mediators from being called to testify regarding mediation

proceedings.

Providing for confidentiality will encourage the use of mediation. Mediation is a proven effec-

tive means for resolving conflicts before they lead to grievances, appeals, discrimination com-

plaints and litigation, and as a means of settling cases once they have reached the formal stage.

GSD states the provisions for alternative dispute resolution contained in this bill will reinforce

and enhance GSD’s efforts to develop a network of trained mediators in state government and to

promote the use of mediation to resolve personnel issues and other disputes involving state agen-

cies.

The AGO supports this bill enacting into law a broad umbrella of confidentiality for mediation

proceedings and participants yet provides both fixed and flexible exceptions which appear ap-

propriate. It is consistent with the existing view of persons engaging in mediation of disputes

that confidentiality is a requisite in order to achieve a full and frank exchange of views, at least

between the mediator and the parties, in order to improve the chances of achieving a mediated

resolution of the dispute. It should be stated that attempts have been made to disclose mediation

proceedings in the AGO’s Consumer Division mediation and this will assist in the protection of

that process.

FISCAL IMPLICATIONS

GSD notes measures fostering the use of mediation will reduce administrative expenses, defense

costs, and payout of judgments for claims which are insured by the Risk Management Division

of GSD if they involve formal proceedings.

The AOC believes there will be a minimal administrative cost for statewide update, distribution,

and documentation of statutory changes.

ADMINISTRATIVE IMPLICATIONS

GSD anticipates a reduction of administrative costs is anticipated by reducing formal claims and

by earlier settlement of claims.

DUPLICATION

HB 770 duplicates SB 656 & SB 683

House Bill 770 -- Page 3

TECHNICAL ISSUES

The AGO believes section 5.A.(1) is unclear and should be deleted. If it refers to a final agree-

ment, to the extent it is incorporated in a court order or judgment pursuant to section 6.B. it be-

comes a public document. Otherwise, we see no need for disclosure of a final agreement or any

intermediate agreement, particularly it is not clear how may “parts” of the agreement can be des-

ignated as confidential.

DW/lg