California's Senate Bill 940 (SB 940), which was signed into law at the end of 2024 and introduces new requirements for arbitration agreements in consumer contracts, amends the California Code of Civil Procedure § 1283.05 (CCP § 1283.05) to expand discovery rights in arbitrations. The amendment gives parties to an arbitration the right to take depositions and obtain discovery regarding the subject matter of the arbitration. The law now allows arbitrators to issue subpoenas for discovery in California arbitration, which is a significant departure from prior law which limited such broad discovery rights.

The fallout from this decision is significant because arbitration agreements that apply California law (or that fall under the California Arbitration Act (CAA)) will now, unless otherwise constrained, permit depositions, third-party subpoenas, full discovery akin to a civil case in superior court. This expands the burden, cost and complexity. 

If you have an arbitration agreement governed by California law, assume far broader discovery rights by a party than under prior practice. Revisit your existing arbitration provisions, including in any consumer-facing website terms of use, and revise to prohibit discovery in arbitration when disputes are governed by the American Arbitration Association’s procedural rules which are designed to stay compliant with the FAA.

To read the amended CCP § 1283.05, please click here.