Chapter 3. Arbitration of California Labor Code >> Division 2. >> Part 11. >> Chapter 3.

The commissioner shall establish, in accordance with the provisions of this chapter, procedures for mandatory arbitration of pricing and product quality disputes arising out of written contracts between manufacturers and contractors.

Upon the written request of any manufacturer or contractor, the California State Mediation and Conciliation Service shall notify the other party to the dispute of the request for arbitration and shall, within seven days of receipt of the request, appoint an arbitration panel to hear and render a decision regarding the dispute. The panel shall be constituted as follows:
  (a) A management level representative from a manufacturer in the general geographic area in which the dispute arises, provided that insofar as possible the manufacturer shall not be a direct competitor of the manufacturer involved in the dispute to be arbitrated. This panel member also shall be selected in accordance with the terms of the written contract.
  (b) A representative from the contractors' association whose membership encompasses the general geographic area in which the dispute arises. This panel member also shall be selected in accordance with the terms of the written contract.
  (c) A third party to be chosen and agreed upon by the first two parties to the dispute from a list of arbitrators provided by the American Arbitration Association. This party shall act as chairperson of the panel.

Within seven days of appointment, the chairperson of the panel shall notify the parties in writing of the date, time, and location of the hearing before the panel. The hearing date shall be scheduled no later than 21 days after the filing of the request for arbitration, provided, however, that each party shall have no less than five days notice prior to the hearing date.

On the date and time specified in the hearing notice, the chairperson shall convene the hearing and shall determine whether each party is represented. If neither party is represented, the arbitration shall be terminated, with costs assigned to the party requesting arbitration, and the parties shall forfeit any further rights under this section relating to the dispute for which arbitration was requested. In the event only one party is in attendance, the arbitration shall proceed and the panel shall make its award based upon the evidence presented. Appearance at the hearing by a party shall be deemed to waive any alleged defect in notice.

To facilitate the conduct of the hearing, the following procedures shall govern:
  (a) Upon good cause shown by a party, the chairperson shall be empowered to issue subpoenae duces tecum and ad testificandum.
  (b) Each party may be represented by an attorney at the party's own expense.
  (c) The formal rules of evidence shall not be applicable, but any relevant evidence shall be admitted if it is evidence upon which responsible persons would rely in the conduct of serious business affairs.
  (d) All testimony shall be taken under oath.
  (e) No formal written records shall be kept unless one or both parties agree to employ at their own expense a qualified court reporter for that purpose. In such case, a copy of the record shall be provided to the panel and a copy shall be made available to the other party at the standard cost for such additional copies.
  (f) Those in attendance at the hearing shall be limited to the panel, the parties and their counsel, a court reporter, interpreters when requested by a party or the panel, and witnesses while testifying.
  (g) Upon the request of a panel member, the panel may allow a period, not to exceed three days following the conclusion of the hearing, during which time a party may submit otherwise admissible evidence not available during the course of the hearing.

Within 15 days after the conclusion of the hearing, the panel shall make a written award, which shall determine all questions submitted for arbitration. All decisions of the panel shall be by majority vote and the award shall be signed by the members concurring therein. The panel immediately shall provide written notice of the award to the parties and to the commissioner.

Within 10 days of receipt of notice of the award, the party or parties who are required to comply with the terms of the award shall so comply and file proof of such compliance with the commissioner or shall file a notice of appeal with the superior court for the county in which the hearing was held. Upon the filing of such an appeal, a trial de novo shall be held, provided, however, that the decision reached by the panel as stated in the award shall be received as evidence by the trial court.

The basic costs of the arbitration proceeding, including interpreters requested by the panel, shall be borne equally by all parties to the proceeding, provided, however, that the panel may as a part of its award impose all such costs on the party requesting arbitration if a majority of the panel determines that the matter brought before it was frivolous. In addition, in the case of a frivolous claim the panel may impose upon the party requesting arbitration the costs of translators, court reporters, and reasonable attorneys fees incurred by the other party.