ADR - Lorino Schutt

8/3/2019 ADR - Lorino Schutt

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Alternative Dispute ResolutionSimpson Fall 2009

Christina Lorino SchuttThis outline is meant to be an overview and not a substitute for attending class.

Class attendance and notes is VERY important in this class.I. ARBITRATION

Binding arbitration is simply aprivate dispute resolution.

This happens all the time. E.g., parent resolving problem between children

Federal Arbitration Act (based on the New YorkStateArbitration Act)Enacted 1925/26 (has evolved over the years)

American law is based on English Common law, which was hostile to arbitrationagreements.

Before the FAA (1925), many state laws did not recognize the enforceability of written

arbitration agreements. The aim of the FAA was to abolish the judicial hostility towardagreements to arbitrate and toplace arbitration agreements on the same level as allother contractual agreements (no higher, no lower). Today, arbitration agreements areno more or less enforceable that other types of contracts.

The FAA isproceduralandsubstantive.o Procedural : The FAA provides ways to enforce arbitration agreements.

o Prior to the FAA if someone refused to honor the arbitration agreement it was

difficult to get relief because the arbitration agreement wasnt specificallyenforceable.

o Today, under most state law, a motion to compel arbitration is in the nature

of aspecific performance action.

Legal damages or inadequate, so reliance is placed on equity principlesand specific performance for the beach of the arbitration agreement.

The FAA provides a direct mechanism for this, but there may still be roomfor state law.

Congresss authority to pass the FAA: Commerce Clauseo The FAA applies in any transaction where commerce is affected. If commerce

is involved or affected there can be an enforceable arbitration agreement.o Jurisdiction : Today the FAA may be applied in federal AND state courts.

At first, the FAA only applied infederal courtif there wasfederalquestion jurisdiction.

Then, it was expanded to apply in diversity of citizenship jurisdiction casesin federal court.

Later in the 1980s, the FAA was interpreted to apply instate courts.o The modern understanding (1990s): Doesnt mater what court, the

question is whether the dispute involves or affects interstate commerce.


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Political Dimension of Arbitration: a statement that the court system did or will do them wrong;a type of contractual tort reform.FAA Provisions:

1. [Subject Matter Applied To] The FAA only applies to commerce transactions but nottransportation workers (movers, railroad workers, airline employees, etc.)

2. Written and Assented (not necessarily signed) if involving maritime or commerceagreement if valid, irrevocable and unenforceable.o An arbitration agreement is just as enforceable as any other contract.

Writing/Doesnt have to be signed/Just as enforceable as any other contract/Just aschallengeable as any other contract

3. [Stay of proceedings] This occurs when case is already in court (pending) and someonehas ignored the arbitration agreement and a party wants to compel arbitration4. [Cause of Action for Petition to U.S. court to Compel Jurisdiction] Five day notice ofdefault, right to jury trial of issue, this is used when no suit is pending.

o Filing an original complaint and asking for a declaratory judgment to arbitrate

5. [Naming of Arbitrator] If the method for determining the arbitrator is in the agreement

that method will be used, unless otherwise agreed single arbitrator that court may appoint.o AAA, NAF, JAMS; go to court and ask a judge to pick one.

7. [Discovery] Arbitrator may summon anyone and to bring with them any book, record, etc., ifrefused then arbitrator may petition court to compel attendance, very limited discovery. TheFRCP dont apply, parties usually agree to their own terms of discovery.

9. [Confirming an Arbitration Awards] if parties agreed that judgment of courts shall be enteredupon the award than any party may, within 1 year, apply to court for confirmation of award

o Simple : liable or not liable

o Reasoned : sets forth certain findings and liable or not liable, may not want to use

in insurance10. [Vacation of Award] Award may be set aside if: corruption, fraud, undue means, evident

partiality or corruption, refusing to hear evidence pertinent, exceeded their powers,imperfectly executed award

o To win on appeal:

record from arbitrator

court reporter transcript

reasoned awardo Record on appeal for court is kept in circuit clerks office and record on appeal

from arbitration is kept at AAA office; note that any party has a right to bring courtreporter to arbitration hearing

11. [Modification or Correction of Award] occurs where there was an evident mistake ormiscalculation, arbitrator issued award on matter not submitted to them unless it does not

affect merits of decision, award is imperfect in matter of form not affecting the merits of thecontroversy

o functus officio: as soon as arbitrator enters award, his office and power ends

16. [Appeals] Three typeso direct appeal :

refusing stay of any action under 3, denying petition under 4, denyingapplication to compel arbitration, modifying, correcting, or vacating an award


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o interlocutory :

permissive right to appeal order granting or continuing arbitration

Alabama: allows appeals from granting or denying arbitrationThere are analogs to the FAA in most states.

Uniform Arbitration Act/Reformed Uniform Arbitration Act

Alabama : only state that has the common law hostility to arbitration

Kulukundis Shipping Co. v. Amtrog Trading Corp. 126 F.2d 978 (2d Cir. 1942)

Who decides what?Court: If theres an agreement to arbitrate, some defenses, and whether interstatecommerce is involved.If there is commerce sufficient under the commerce clause and an agreement to arbitratewithout a defense, then the Arbitrator decides everything else.

History of Arbitration:

English Common Law: Judges were paid according to how many cases they handled so theywere hostile toward arbitration. Judges said arbitration was bad, but really just wanted to getpaid. Focus: Competition with arbitrators over who would get paid to decide cases.

The issue of payment the reason for hostility toward arbitration went away, but people forgotwhy there was the hostility, but the sentiment that arbitration is bad continued.

Doctrine of Revocability considered arbitration agreements executory meaning that they wererevocable by either party for any reason or no reason before the arbitrator made his decision .

Arbitration agreement was executory until the arbitrator ruled. Courts invented this

doctrine, so a party could revoke their acceptance to the arbitration agreement so long asit was before the arbitrators final decision.

Then the FAA was passed, in an attempt to abandon the hostility and put down in writing thatarbitration is a matter of contract: equal footing with other contracts.

Essentially codified customs and practices as law: NY merchants, experts made betterdecisions.

Put arbitration agreements on thesame levelas other contracts.

For the Final:

o Doctrine of Revocability

o Ancient Hostility toward Arbitration why judges had a financial incentive and itsrole

o How the aim of the act was to make arbitration equally enforceable as other

contracts (no more, no less)


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Discovery in Arbitration

Sometime people arbitrate willing; but there tends to be fights with trial lawyers or when juries

can be dangerous. E.g., employment, class-actions, nursing homes disputes, etc.

When arbitration agreements are not honored, the parties to go to court.

Common Law: lawyers direct discoveryCivil Law: judges direct discovery (this is more like arbitration)

1. Before arbitration in court, where the fight is over the enforceability of the arbitrationagreement:

a. When FRCP Discovery Rules Can be Used: Court should tailor and limitdiscovery to the issues: whether there is an arbitration agreement, interstate

commerce was involved or affected, and whether certain defenses apply.i. Whether there is an arbitration agreement;ii. Whether interstate commerce was involved or affected; and

iii. Whether certain defenses apply (to either agreement or commerce)b. If youre the person who starts to litigate, you may waive your right to arbitrate.

2. In arbitration:a. Arbitrator directs discovery.

i. Administrated Arbitrations: (Most) One whether the parties agreementpicks an organization to arbitrate that has rule. So discovery is governedby the applicable rules (e.g., FAA, NAF, JAMS). These rules only applyas between the parties; nonparties are not bound by the rule. Discoveryrules are part of these organizations overall rules; extremely abbreviated.

ii. Unadministrated Arbitrations: If the arbitration agreement doesnt appointan arbitration organization then theres an arbitrator appointed, but there isno set of rules. Arbitrator would have almost absolute discretion. Partiesmay agreement to use an arbitration organizations rules, but they donthave to at this point.

b. FAA 7: Non-Paritesi. Arbitrator has subpoena power over non-party, but only to final hearing,

and make then bring their records. Arbitrator can issue subpoena, but verylittle authority to enforce it.

ii. Doesnt say anything about before the final hearing: case law hasliberalized this.

iii. Four Circuits have interpreted the application of 7 discovery rule to non-parties:

See Simpson Article, Assignment 1

Sixth Circuit : Compel product of records either before or during ahearing


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Eight Circuit : There must be an intricate relationship between thenonparty and the arbitration to require him or her to producerecords/documents before the arbitration hearing.

Fourth Circuit : Cannot subpoena a nonparty to a deposition or to produce records before an arbitration hearing without a showing of

a special need for hardship by the party seeking discovery Third Circuit : An arbitrator does not have the power to requirenon-parties only to attend the arbitration hearing, produce records andtestify during the hearing. Prehearing discovery is foreclosed.

Solution: theres nothing that says an arbitrator can only have on hearing. A casecan be broken up into many hearings. Ask arbitrator through motion for an early

limited hearing to take testimony from that witness. A pause, then a finalhearing that is rescheduled once the parties can digest that testimony.

If a nonparty defies an arbitration order you have to go to a court and get a judge to enforce it.

Enforce of Arbitrator Discovery Orders (against a party)a. Negative inference against a party who refuses to produce records

- The arbitrator will assume that everything that is not produced goes against theparty not offering it.

b. In extreme cases, an arbitrator has the power to strike a partys claims or defenses.c. There is some authority that an arbitrator may award monetary sanctions for discovery

abuses.

3. After the arbitrator has issued an order and award:a. An arbitration award must be converted into a judgment by a court:

FAA 9, 10, 11 9: Confirmation of Arbitration Award

10: Vacation of Arbitration Award

11: Modification Clerical Error: seek modification by the court.(NOTE: technically, an arbitrator cannot fix their own reward under thedoctrine of functus officio function of the office when the arbitratordecides the case his power expires, he has discharged the function of hisoffice. Theoretically, arbitrators are not allowed to alter their awards.)

b. Trial After Trial : What happens if you think something crooked went on duringthe arbitration.

Ninth Circuit:Andros

Post-award discovery is generally not favored. RULE: No discoveryunless you can show the judge that there is clear evidence of impropriety.

Why? Discovery is limited on purpose in arbitration a trial after thearbitration would defeat the purpose.

For the Final:

o The arbitrator directs discovery, not parties and lawyers

o What kind of discovery is allowed before arbitration?


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i. whether there is an arbitration agreement; ii. whether interstate commerce isinvolved for affected; and iii. whether certain defenses apply

o In arbitration: What kind of discovery is allow toward parties (arbitrator discretion

and rules); non-parties FAA 7 and the four circuit split.

o How to enforce the discovery rule of the arbitrator? (parties and non-parties)

o In a post-award setting in court, am I permitted discovery, under whatcircumstances?

What do you need to vacate an arbitrator award?10 (a):

1) Where the award was procured by corruption fraud or undue means;2) Where there was evident partiality or corruption in the arbitrators, or either of them;3) Where the arbitrator were guilty of misconduct in refusing to postpone the hearing, upon

sufficient cause shown, or in refusing to hear evidence pertinent and material to thecontroversy; and of any other misbehavior by which the rights of any part have beenprejudiced; or

4) Where the arbitrator exceeded their powers, or so imperfectly executed them that amutual, final, and definite award upon the subject matter submitted was not made.

Abuse of discretion, legal error, misapplication of law is NOT on this list and theres nothing youcan do about.

Trial in a Court Arbitration

File a Complaint(Notice Pleading)

Demand for Arbitration(No Standard its ok to plead very basicallyand summarily)

File an Answer Answer Statement(If you dont file one and youre under AAA,theyll assume you deny all the claims)

Plaintiff Claimant

Defendant Respondent

Court Tribunal

Evidence(FRE or State)

None*10(a)(3) refusal to hear pertinent andmaterial to the controversy is a ground forvacation why would the arbitrator refuse tohear anything if not hearing it is why an order

may be set aside . . . ReliabilityProcedure(FRCP or State)

Administered: Rules of the AdministrationUnadministered: No procedural rules, whateverthe arbitrator says (discretion)

Motion/Brief Practice No(Very informal, e.g., email but must copy theadministrative organization is there is one andthe other party: no ex parte communication.


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Discovery(R. 26-37, 45)

Administration rules if it is administered andFAA 7

Judgment Award(Then you try to convert it to a judgment underFAA 9)

Statutes (Alabama)Ala. Code 6-6-1 to 16 and 8-1-41(written in the 1800s some similarities to the FAA, but not a close analog)

8-1-41: The following obligations cannot be specifically enforced:(3) An agreement to submit a controversy to arbitration.

but . . .

6-6-1 to 16 provide rules for arbitration

How are these Alabama statutes reconciled?

ANSWER:How do harmonize these:

Pre-Dispute (Biding)Arbitration Agreements: an agreement to arbitrate you enterinto before the problem happens

Post-Dispute Arbitration Agreements: an agreement to arbitrate entered into afterthe dispute or problem has occurred.

Ala. Code 8-1-41: Has been held to only apply to Pre-Dispute Arbitration Agreements

How are Ala. arbitration statutes harmonized?

6-6-1 to 16 (arbitration rules): only apply in settings where there are post-dispute (binding)arbitration agreements. Pre-dispute arbitrations agreements are unenforceable in Alabama under8-1-41; of course unless they are preempted by federal law.

In Alabama, an (pre-dispute) arbitration agreement is not specifically enforceable. (Ancienthostility to arbitration the only state which still has an anti-arbitration policy.)

However, when federal and state law conflict, the Federal law is supreme. So cases can bearbitrated in AL, so long as federal law is the basis.

FAA can be applied when interstate commerce is involved or affected. This is where Congressgets its power to pass the FAA, the commerce clause.

The reach of the FAA is coextensive with the Commerce Clause.ALSO NOTE:


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Certain things the law cannot provide a remedy for, certain breaches of contract entitle the partyto an equitable outcome and specific performance.

Arbitration agreement breached: FAAs purpose was to create statutory mechanism to deal withthis (you get a complaint, but you signed an arbitration agreement). Under FAA 3 and 4

motion to compel arbitration. Before the FAA there as limited remedies to enforce an arbitrationagreement, some states usedspecific performance to enforce arbitration agreements. Action forspecific performance on an arbitration agreement and a summary judgment.

Prior to FAA, Motion for summary judgment on an action for specific performance was

how an arbitration agreement was enforced.

Today:

3 and 4 motion to compel arbitration mechanisms; ANDSJ for an action for specific performance of the contact (arbitration agreement)

When does the FAA apply?

Rule:FAA applies every where there is interstate commerce. Most states have a very similar statute.Alabama does not its cooky! It has some statutory methods but it only applies to post-disputearbitration agreements. In fact Alabama has anti-arbitration statute, it does not enforce pre-dispute arbitration agreements so theyre not enforced if they do not involved instate commerceand fall under the FAA.

Post-Dispute Binding Arbitration Agreement: SUBMISSION

FAA 1: It applies it certain settings (maritime) and whenevercommerce is involved or affect.

Dobson (1995)

One of the first consumer arbitration agreements being challenged in Alabama

F: Pest-control/termite contract contained an arbitration clause.P: Ala. Sup. Ct.: the parties did not contemplate an interstate commerce connection, thiswas a local thing so they affirmed the denial of the motion to compel arbitration.

AL: gives damages for mental anguish (really without any proof), generally whythere is arbitration agreements with everything (contractual tort reform)

Plaintiffs argued that there wasnt interstate commerce, so the FAA couldnt apply, thenAla. Code 8-1-41 would apply = no arbitrationAlabama had adopted the contemplation of the parties test if at the times parties signedthe contract they didnt contemplate interstate commerce then it didnt apply.Other states: commerce in factI: How should this question be phrased? How do we determine if interstate commerce isaffect?H: Commerce in fact is the test. (Not whether the parties contemplated it.)


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Show this in affidavit with motion to compel: chemicals are from state X,truck is from country Y interstate and international facts

Sisters of the Visitation case b/t nuns in Mobile and a contractor who fought and there was adispute over the enforceability of the arbitration agreement.

Ala. Sup. Ct came up with a doctrine: coming to rest is something comes to Alabamaand rests it is magically transformed to an Alabama thing and the interstate nature goesaway. Essentially, took the commerce in fact doctrine and twisted it again to destroy theenforceability of arbitration agreements.

Alafabco (2003)

Defense to arbitration offered is that there isnt sufficient interstate commerce.Ala. Sup. Ct: citessisters of the visitation agreement itself has to have an effect oncommerce as opposed to the aggregate argumentH: Interstate commerce under the FAA is coextensive with Congress power under

the Commerce Clause (plenary full/complete).

FAA is a plenary act of power; the reach of the FAA is the same as theCommerce Clause.

1. Alafabco did this type of thing throughout the region2. The restructured debt was secured by all the Alafabcos stuff thatwas all over3. Where there was residual debt, it was to be compensated by otherdebt.

R: Congress Commerce Clause power may be exercised in individual cases without

showing any specific effect upon interstate commerce if in the aggregate the

economic activity in question would represent a general practice subject to federal

control. Only that general practice need bear on interstate commerce in a

substantial way.

After this case there isnt much interstate commerce defense to arbitration.

For the Final:

o FAA:

o Alabama Statutes: ancient hostility toward arbitration (pre/post dispute arbitration

agreements)

o FAA applies whenever interstate commerce is substantially involved or affected

o Commerce in Fact (Dobson not complation)

o What that means (Alafabco part of a larger group of economic activity,

which in the aggregate affect interstate commerce) Same as Congresssplenary commerce power

NOTE: An arbitration agreement is nothing but aspecialized forum selection clause. Inaddition to selecting the place to settle the dispute, you select specialized rules (or the absence ofrules).


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Davis v. Southern Energy Homes (11th Cir. 2002)

Federal Law v. FAA: What happens if there is a federal statute that seemingly conflictswith the FAA? (statute says you go to court, but you have an enforceable arbitrationagreement under the FAA)

F: Davis bought a mobile home and had problems. He brought suit under theMagnuson-MossWarranty-Trade Commission Actthat created a cause of action for breach of warrant.

The MMWA is a consumer protection statute designed to protect consumers inconnection with warranties. It creates a basis for federal jurisdiction (federal question

with an amount in controversy requirement of $50,000), provided for attorneys fees forconsumer lawyers, and created a ADR mechanism:prior resort mechanismthatwarrantors have the option to put a provision in warrants that says before a consumersues the warrantor/manufacturer, the consumer must notify the manufacturer and givethen an option to resolve the issue informally. The prior resort is not binding, thus theconsumer does not have to accept the informal solution. The FTC oversees this, andtheyve promulgated guidelines for ADR mechanisms that are hard, so theyve beensomewhat abandoned.

Davis signed an arbitration agreement with the warranty, but filed suit alleging that he shouldntbe bound by the arbitration agreement because it conflicts with the MMWA, that says the ADM(prior resort) mechanism cannot be binding.

Concept: The MMWA was a trade-off provided for consumer attorneys feesbut manufactures can create option ADR mechanisms (legislative quid pro quo), but theyare non-binding.

Then, Wilson v. Waverly Homes: Congresss mention of prior resort mechanisms being non-binding is a signal that binding arbitration is now allowed.

The FTC adopted this holding from Wilson into the Federal Register.

P: The district court upheld Wilson, and denied binding arbitration.

I: Whether the MMWA precludes the enforcement of a binding arbitration agreement?H:No. The MMWA passes the McMahon Test. There can be an enforceable, bindingarbitration agreement under the MMWA.

McMahon Test: How the FAA compares to other federal statutes in conflict (on exam)When determining whether a federal statute that provides for a private cause of actionand yet there is a binding arbitration agreement under the FAA a court shall look to . . .

1. The TEXT of the STATUTE


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2. The LEGISLATIVE HISTORY3. PURPOSE: whether there is an inherent conflict between arbitration and the

underlying purposes of the statute in question

R: The statute is silent as to arbitration (some argue that Congress would have included that it

didnt apply if they wanted to exclude it, but then again arbitrations werent enforceable in statecourts at this time. The legislative history in this case is ambiguous at most. There was noinherent conflict in the purpose of the MMWA with arbitration.

I(2): Whether the court should defer to the FTCs interpretation of the MMWA and its adoptionofWilson?H: No. UnderChevron Test, although Congress has not addressed the issue, the FTCsinterpretation is not reasonable.

Chevron Test: Whether a court should give deference to an agencys interpretation of thestatute it administers? The court must ask two questions:

1. Whether Congress has directly spoken to the question at issue?If so, must follow what Congress has said. If Congress has not spoken tothe issue, or if it is ambiguous . . .

2. Whether the agencys interpretation is reasonable?If it is reasonable, the court will give deference.

For the Final:

McMahon Test: in what context is it applied, and what is the substance of the testChevron Test: in what context is it applied, and what is the substance of the test

Doctors Associates, Inc. v. Casarotto, (1996)

State Law v. FAA: What do you do when the FAA conflicts with state law?

F: Doctors Associates had a franchise agreement with an arbitration agreement. The party thatdidnt want to enforce it argued that a state statute requires that an arbitration agreement be onthe first page of a contract in bold and underlined with a certain font.

NOTE: Rule embodied in FAA 2 the FAA puts arbitration agreements on equalfooting with all other contracts. As a default rule, general contract provisions do not haveto be done is a specific way.

P: Montana Supreme Court held that the arbitration agreement was not enforceable because it didnot prohibit arbitration all together.

I: Whether a state statute can require more from an arbitration agreement than the FAA?H: REVERSED. No. The arbitration agreement is enforceable.

R: Federal law is supreme to state law under the Supremacy Clause. This leads us to the conceptof Preemption!


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Preemption:

1. Express Preemption (e.g., FIFRA)2. Implied Preemption

a. Field Preemption (e.g., ERISA, Indian Tribe)

b. Conflict

State laws on arbitration lead to conflict preemption issues. Thus, state statutes that deal witharbitration are probably enforceable unless they are anti-arbitration under conflict preemptionprinciples.

NOTE APPEALING ORDERS GRANTING/DENYING ARBITRATION

FAA 16 Appeals: Pro-ArbitrationCourt Grants Motion to Arbitrate: interlocutory appeal (permissive, must request)Court Denies Motion to Arbitrate: directappeal (jurisdiction, no discretion, immediate removal)

Alabama Rule Civil Procedure 4: both are directly appealable- can you argue this is conflict preemption?

Preston v. Ferrer(2008)

Arbitration of Administrative Proceedings: What happens when an issue seemingly isreserved to an administrative law court, but the parties have entered into an arbitrationagreement?

F: Disputes with talent agents go to a California state administrative agency; however, theres anarbitration agreement in the contract.H: The arbitration agreement is enforceable. A binding arbitration agreement can dispose anadministrative law court of jurisdiction. When parties agree to arbitrate all questions arisingunder a contact, the FAA supersedes state laws lodging primary jurisdiction in another forum,whether judicial or administrative.

NOTE: you can carve out specific types of disputes from the arbitration agreement (e.g., tradesecrets, workers compensation, etc.) small claims court disputes should also be carved out they are specific, so know what you are carving out.

For the Final:

How far is the reach of the Federal Arbitration Act?1. Overrides other federal statutes (generally McMahon Test)2. Overrides conflicting state statutes (preemption)3. Disposes state administrative law agencies of exclusive jurisdiction

EMPLOYMENT LAW ARBITRATION

Circuit City Stores, Inc. v. Adams (2001)

Arbitration of Employment Disputes


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FAA 1: "Maritime transactions" and "commerce" defined; exceptions to operation of title[B]ut nothing herein contained shall apply to contracts of employment of seamen, railroademployees, or any other class of workers engaged in foreign or interstate commerce.

There is an exception to the jurisdiction of the FAA as commerce for certain classes ofemployees. This case interprets the exception.

I: Whether some or all employees are subject to the FAA?H: Section 1 of the FAA exempts transportation workersfrom the FAA.R: If purely intrastate commerce, the FAA does not apply. If its interstate commerce, the FAAdoes apply. But 1 exempts certain classes of employees.

seamen, railroad employees, or any other class of workers engaged in foreign orinterstate commerce.

If general words follow specific words in a statute the general words are construed to embrace

those objects similar in nature to those enumerated by the specific words = controlled by themeaning of the specific words.

NOTE: Where should you put the arbitration agreement in employment situations?Probably NOT in the employee handbook, its not a contract and will probably be consideredillusory.

For the Final:

Which if any employees are subject to the FAA?A: Most employees, but NOT transportation workers.

AAA Commercial Rules (www.adr.org)

Fees: the fee for arbitration will depend on the amount of the claim in the demandto arbitrate.

o The fee can be pretty high, much higher than filing a complaint in court, but the

process is expedited (limited or no discovery), so arbitrations are generallycheaper in the long run.

o If you say I dont know the amount of the claim in the demand for arbitration,

then the fee will be on the high end: $4,500.o What to include in fee amount: somewhat jurisdictional. Generally, attorneys

fees provided under contract or statute and mental anguish/soft damages are notincluded. Generally, looking at hard damages to determine fee.

o DO NOT say that you will pay the filing fee in an arbitration agreement. This canresult in filing fee blackmail. They will sue for billions with a massive filing fee,then settle for less than the fee.

o For Final: Amount of claim will vary the amount of the filing fee.

Venue: hearing locale can set the venue for later court fights


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o Remember, under AAA a respondent does not have to file an answer. A

petitioner may ask the arbitrator to require an answer, but its in the arbitratorsdiscretion. A respondent does not want to file an answer, giving away its secrets.

o After the answer stage, everyone has paid fees, and documents are filed, a hearing

locale must be determined.

o Locale is important because of the usual logistical concerns AND under the FAAany action subsequent to the arbitration must be taken in the United States courtin and for the district wherein the award was made . . . . This has beeninterpreted to mean court. So, if you are going to confirm, vacate, or even try tomodify an award it is good to know the court/judge that will hear it.

o There are potentially two options for venue after arbitration (according to the

Supreme Court):

If you start in court with a motion to compel arbitration, after arbitrationyou can go back to that court, or

The hearing locateo Note: if you dont like the outcome of the venue determination decided by

the arbitrator intake court, you can discuss it with the arbitrator.o For Final: The hearing locale for arbitration can set the venue for later

court fights.

Arbitrator Selection

o AAA will provide a list of names and each side gets a number of strikes.

However, in consumer and employment cases an arbitrator is simply appointed,but a party can object.o Once an arbitrator is selected, the arbitrator will set a hearing time and

date.

Initial Case Conference

o This is the first call and is very important. The arbitrator will do the

scheduling of the case, ask for special issues, discovery plan (which requires pre-planning on your part).

There is a case manager (like a law clerk for a judge, he or she is aclearing house for filing can email case manager to prevent ex partecommunication).

Theres the arbitrator

There are the lawyers and unrepresented partieso Everyone starts with the final hearing and then works backwards.

Everyone will discuss witnesses, discovery, possible depositions (if arbitrator willlet you have one), special issues, inspection requests, detailed expert reportsrequired (b/c no expert depositions)

Court Reporter Issue

o You can request a court reporter, but if you request one you have to pay

for it. However, be careful what you ask for. If you dont have one you cant


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appeal because there is no record; however, in special circumstances youshouldnt have a court reporter Insurance Reservation of Right Cases.

Do not create a record if its an insurance case with reservation of right.(ultimately its the clients decision)

Scheduling Ordero The arbitrator will enter a scheduling order.

o There is an option to have an Expedited Exchange Order. This gives you

the ability to write the arbitrator (copying the other side), so you dont have to gothrough AAA always agree to this.

Who are the arbitrators?

Its difficult to be selected as an AAA arbitrator.In Alabama you have to have five years experience as a lawyer or experience in another field tobe a registered arbitrator. Then, you must attend a CLE. If a judge sends a case to arbitration,you have to be registered to be selected.

NOTE: Successful arbitrators work for an organization. Arbitrators only have a 50%customer satisfaction rate. Haha

After Initial Order

o The arbitrator may or may not see or hear from you until the final hearing.

(You can ask for pre-trial briefs, but why disclose everything? A motion forsummary judgment most likely wont be granted because its discretionary, andan arbitration award can be vacated if the arbitrator doesnt hear the evidence maybe if its a purely legal argument.)

Final Hearing: Generally in a conference room, lawyers office, borrowed

courtroom, etc.

Arbitration Privacy: Arbitration is private, but not confidential.o Arbitration is private such that strangers to the proceeds cannot just walk

in. The arbitrator has the right to kick people out. He is allowed to invoke therule that witnesses cant hear other witnesses. You cant just call and get motionsfrom other trials.o However, arbitration is not confidential. Arbitration materials can be used

if captured through a transcript or other means, and they can be used in otherproceeds.o For Final: Arbitration is private, but not confidential.

Timing of Award

Continuance

Complex Commercial Rules: for big arbitrations


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Circumstances for Expedited Arbitration: option rules for emergency measures. In anemergency situation an arbitrator can be appointed very quickly.

For Final:

Questions asked conversationally: what typically happens at initial hearing?

Class Action Arbitration

History:Pre-Bazzelthe general consensus was that arbitration destroyed the potential for a class action.There is no common law right to a class action.

Concept: NEGATIVE VALUE CASES (Leonard v. Terminex) a company is cheatingeveryone out of a little bit of money and theres no provision for attorneys fees under thecontract or a statute. It would cost each individual too much to bring a law suit. The same canbe applied to arbitration it would cost more to arbitrate than can be recovered.

Green Tree Financial Corp. v. Bazzle (2002) Review this, unclear/not sure if accurateF: Based on two state cases. One involves a closing in South Carolina where the lawyer isessentially a facilitator and doesnt represent anyone specifically. A form is required if thecustomer wants a different lawyer. This customer didnt get the form.

The arbitration agreement said: all disputes, claims, and controversies arising out of thecontract.

o The agreement was silent as to class actions.

o You unagree to the FRCP in an arbitration agreement, and a class action is not a

dispute, claim, or controversy

But, plaintiffs lawyer said if theres going to be an arbitration, its going to be a class action.

NOTE: the Supreme Court had mentioned class action arbitrations twice before inpassing, but it wasnt taken seriously.

I: Whether an arbitrator has the right to inject class procedures into arbitration?H: The question of who decides the class issue is for the arbitrator, because it is aproceduralmatter. Only substantive arbitrability is for the court.

R: This should be based on contract interpretation (state law). The rules of construction (in

order) are plain meaning, parol evidence, and to construe against the drafter. Because there wasno plain meaning, parol evidence should have been allowed to show that class action arbitrationis inappropriate.

o Procedural vs substantive arbitrability:

o A matter of procedure is question for arbitrator, whereas whether there is an

agreement to arbitrate was a matter for the court

Gateway issues for court


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o Is there a written agreement to arbitrate

o What is the scope in terms of what claims are covered and what claims

are noto Does the agreement involve interstate commerce

o Simpson and 7th : believe that issue of whether you can have a class action is a matter

of state law since it is contract law and state law under ERIEo Due process doesnt apply in regular arbitration since no state action

o California / Penn : hybrid class arbitration where proceedings are bifurcated and court

retains jurisdiction but commits the merit based stuff (discovery and settlement) to thearbitrators and they can go back and forth; class action cases should probably be publicfor due process

- When you are determining whether an arbitration agreement lends itself to class actions you arereally apply state contract interpretation.- Who decides? Arbitrators are supposed to decide procedural matters of arbitrability.

Plurality:Marks DoctrineAplurality decision should be given its most NARROW construction. One should construe apluralitys decision in the most narrow way.

Class Action AAA Rules

The AAA adopted class action rules in response toBazzle. After selected, the arbitrator mustdecide clause construction does the agreement between the parties permit a class action?

This is partial and final: APPEALABLE

Theres a 30 day cooling off period.Then, class certification (looks like FRCP 23)

Then, another cooling off period.Opportunity for another appeal

FinalOpportunity for a third appeal

Take Away: In the AAA Class Action Rules there is a clause construction award

that ispresumably appealable AND a class certification order that is also appealable.

NOTE: The FAA itself is not a basis for federal jurisdiction, it is procedural. The default is

to go to state court. There must be an independent basis for federal jurisdiction.

Separability Doctrine (NOT sever . . .)

Prima Paint Corp. Flood & Conklin Mfg. Co. (1967)

F: There is a contract for one company to buy another. The purchaser defaulted, and the sellerfiles for arbitration. Purchaser motions to enjoin arbitration, alleging fraudulent inducement.*The arbitration agreement is in the overall contract that is being challenged on fraudulentinducement grounds.


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I: Under a contract governed by the U.S. Arbitration Act, whether the federal court or anarbitrator is to resolve a claim of fraudulent inducement, where there is no evidence that thecontracting parties intended to withhold the issue from arbitration?

Separability Doctrine. When an arbitration agreement is attacked by a defense against

the contract as a whole, the ARBITRATOR gets to decide. The arbitration agreement isseparated out and is enforced, irrespective of whether the defense is proven.

Three Similar Situations:

Challenge to a contract as a whole when the arbitration agreement is just part of it

ARBITRATOR gets to decide. Even if the contract is invalid, the arbitrationagreement stands.

If there is a freestanding arbitration agreement that is challenged, it is a question for theCOURT.

An attack SOLELY on an arbitration agreement (E.g., video of lawyer misrepresenting

what the arbitration agreement really means) COURT decides.

Lesson: if you want to avoid arbitration you have to attack the arbitration agreement itself, NOTthe entire contract.

SCOTUS: Irrespective of whether the contract is void or voidable, if youre attacking thecontract as a whole, the issue goes to the ARBITRATOR.

Defenses to Arbitration: every defense to an ordinary contract is a defense to arbitration butthis above determines who gets to decide. REVIEW:

o Free-Standing Arbitration Agreement: COURT

o Only Attacks Arbitration Agreement: COURTo Overall Contract: ARBITRATOR

Defenses to Arbitration: Federal Statutory Cases/Prohibitive Costs

Randolph v. GreenTree: Supreme Court There was an arbitration agreement for mobile homesales that provided for arguably high fees. The petitioners urged the court to set aside thearbitration agreement on the grounds that they were prohibitively high and foreclosed the clientsright to assert a federal statutory claim (TILA truth in lending). There is a federal right here tobring a claim, but it arguably being denied because of prohibitive expenses in the arbitrationagreement. Randolph Doctrine: this is a possibility!

Bradford v. Rockwell Smiconductor Systems, Inc. (4th Cir. 2001)

F: Bradford worked for a company that was acquired by Rockwell. He was sent an arbitrationagreement that said fees would be split equally. When he was later told that he wouldnt workfor them he asserted age discrimination. Bradford filed to arbitrate, but it was dismissed. Hethen filed a claim in federal court that was dismissed.


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He wanted the court to say that fee splitting is pre se unconscionable because, in an employmentsetting, fee splitting prohibits the out of work employee from exercising his right to bring afederal claim.

H: TheRandolph Doctrine allows a person to avoid arbitration if fees are prohibitively high.

Argument: The party asserting this can provide evidence that he cant pay (hes broke!). Theother side will ask for the plaintiffs lawyers contingency agreement, generally says that theattorney will pay the fees. If youre the plaintiffs lawyer the contingency fee agreement shouldsay that the attorney should pay for all fees exceptarbitration.Also Note: Arbitration as a whole is less expensive than litigation.

Arbitration in Labor Disputes

United States Steelworkers of America v. Enterprise Wheel & Car Co. (1960)

F: Union and Enterprise entered into a collective bargaining agreement with an arbitrationclause. After a dispute, the company complained that the arbitrator gave damages beyond his

authority. Difference between Commercial and Labor Arbitrators : Labor arbitrations are conducted

pursuant to labor law there are other sources for arbitration besides the FAA. In labordisputes the law of the shop (the customary practice in the industry) is important. It isa distillation of custom and practice and what is right and wrong. One main reasonpeople choose arbitration for labor disputes is because the arbitrators have familiaritywith the law of the shop. A collective bargaining agreement will not contain everythingthat could happen, so the arbitrator will use the law of the shop.

A fundamental difference between commercial and labor arbitrators is POWER.

LABOR: A labor arbitrator is allow to draw on more than the law to make his decision,

but this power cannot be illusory, it must have limits. COMMERCIAL: In a commercial arbitration, the arbitration agreement should be

considered a complete distillation of the agreement of the parties. The arbitrator is onlysupposed to apply the law.

Section 10(a)(4) states that an arbitrator may not exceed his powers. But this does NOT apply inthe LABOR context.

Rule: Standard in a Labor Arbitration Essence Test: the award has to draw its essence fromthe collective bargaining agreement. So long as the arbiter in a labor case issues an award thatdraws its essence from the collective bargaining agreement it cannot be set aside or modified by

a court.

*Although courts tend to mix up arbitration law (labor with others), you shouldnt. Although thelaw is mixed because of this, you should start with the premise that they are not analogous.

For Final:In a labor case with a collective bargaining agreement, the arbitrators award has to draw

its essence from the agreement. This isfurtherthan the reach of a commercial arbitrator


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subject tot the FAA because it comes from the agreement and there is no law of the shop to

gap fill in commercial arbitrations.

Q: If I want to set aside a labor arbitrator award under a collective bargaining agreement what isthe applicable standard?

A: TheEssence Test!

Appealing an Arbitration Award

Hall Street Assoc. v. Mattel, Inc. (2008)

F: There was a lease dispute between Hall (landlord) and Mattel (lessee). The lease agreementprovided that Mattel would indemnify landlord for any and all environmental damage from thebeginning of time. Of course, there was a problem from the predecessors. The parties thenagreed to arbitrate (post-dispute). They agree that the award can be vacated or modified by acourt if it is not supported by substantial evidence or not supported by conclusions of law(sounds like a court, huh?).

The arbitrator held for Mattel for some weird reason not really based on law. The district courtset it aside. Appealed to the Supreme Court

Background Rules: The FAA allows for arbitration with certain rules and remedies. Here, theycontracted for more appellate review. The FAA provides four grounds to set aside an awardunder 10:

1.

What about manifest disregard for the law the arbitrator knew the appropriate standard orrule of law, but plainly did not apply it. (not just misapplied)

This is NOT mentioned in the FAA.Wilco was a 1950s securities claim arbitration case that talked about vacating awards based onmanifest disregard for the law. This had been a common law vacatar ground. This passingreference was interpreted to mean the FAA grounds for appeal were nonexclusive.

H: This is NOT what Wilco means. If you appeal an arbitration award under the FAA, the FAA10 grounds are the ONLY grounds available. You cant contract to add more and courts cantmake them up!

NOTE: The FAA is only one basis to vacate an arbitration award. There are others such ascommon law for vacatar and state law arbitration acts with grounds for vacating.

RESULT: If you are choosing the FAA for vacator, thats all you have, manifest

disregard for the law CANNOT be a ground. Congress makes the law NOT thecourts. But always remember there are other grounds to vacate: common law and statearbitration states

Alabama Rules of Appellate/Civil Procedure: Arbitration


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Generally, an appeal may be taken from:

A grant of motion to compel arbitration

A denial of a motion to compel arbitration

An order confirming, or vacating an award or modifying or correcting an award

Ala. R. App. P. 4(d) Alabamas appellate rule re: arbitration

(d) Appeals from Orders Granting or Denying Motions to Compel Arbitration.An order granting or denying a motion to compel arbitration is appealable as a matter of right,and any appeal from such an order must be taken within 42 days (6 weeks) of the date of entry ofthe order, or with the time allowed by an extension pursuant to Rule 77(d), Ala. R. Civ. P.(e) Appeals from Orders Granting or Denying to Set Aside or Vacate Arbitration Awards.An order granting or denying a motion to set aside or vacate an arbitration award filed inaccordance with Rule 59 Ala. R. Civ. P. is appealable as a matter of right.

THUS: Under Ala. R. App. P 4(d):

An ordergranting or denyinga motion to compel arbitration is appealable as a matter ofright! (Direct Appeal for both grants and denials of arbitration in Alabama!)

o Remember how this is different from FAA 16 (appeal from grant of arbitration is

interlocutory and appeal of denial of arbitration is direct)

So, HOW do you do this?

In Alabama, you used to have to file a writ of mandamus. The Alabama Supreme Court hasstruggled with the procedures to go from arbitration to a court. Before these rules, the courtsused to borrow from the Alabama Arbitration Act.

Ala. R. Civ. P. 71C: How to get from arbitration to a courtTiming: Notice of award served, then there is 30 days to seek enforcement of the award. Youhave to get the circuit clerk to enroll it as a judgment. After its a judgment the court hasjurisdiction. Then, parties may move to confirm of vacate under FAA.

Local rules will provide how to get to court, timing, and procedure. Then, parties can argueunder the FAA about what to do.

Q: If you were going to determine in Alabama what rules to apply to get from arbitration to thecourt house, youd look to A: The Alabama Rules of Civil Procedure

Q: How do the right to an appeal differ under Alabama law and the FAA?A: Alabama: appeals are bilateral (both direct), but under the FAA the appeal right is not equal(appeal from denial of arbitration = direct; appeal from grant of arbitration = interlocutory).

Lecture on How to Draft a Consumer Arbitration Agreement


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Settling a Case: See HandoutGeneral Release of All Claims and Confidentiality AgreementJoint Stipulation for Dismissal

Evaluating a Case

Ladder of Inferenceo Start: all facts (P and D have different relevant facts; discovery, find out the facts the

other party has)o Go down to: relevant facts

o Analysis applied (may not be same thing in say way)

o Conclusions

Generally why different conclusions are reached.

Mediator: wants other side to learn what the other side knows, to reach somewhere in the middle(information sharing) Point: get them in the middle.

Take Away:o Case evaluation is an art not a science, there is no right number. When talking to clients,

explain how different outcomes could result. Do you need more facts?

Waverly Homes, Inc. v. McMichael(Ala. 2003): Arbitrator Ethics

One ground to vacate an arbitration award: Statutory ground that this interprets is 10(a)(2).Evident Partiality: (analog: appearance of impropriety relationships blood or marriage,business relationships, owning stock or financial interests) Appearance of impropriety is aloser/easier standards than evident partiality.

To establish evident partiality must have evidence that is direct, definite, and capable ofdemonstration, rather than mere appearance of remote, uncertain, and speculative bias.

Mediation

Mediation is a structured settlement negotiation with a facilitator, called the mediator. When themediator delivers counter-arguments, etc. its not as confrontational.

Process of Mediation:

WHEN: A dispute can be mediated at any time, but most are filed lawsuits or arbitrationproceedings. These are generally not mediated right at first and not right before trial.

One Force: Dont want to mediate too early, b/c case evaluation depends a lot oninformation; if too early, you want have the necessary facts to have discussions

(sufficient discovery so parties are in posture to evaluate the case). Another Force: Mediating too late in the process can have its own difficulties,

mostly regarding fees; the value of the case too close to trial will be unnaturalskewed based on costs lawyers have expended).

Must learn to recognize the appropriate

Rule: You can mediate anything at any time; theres doesnt have to be a filed lawsuit.(There can even be mediation after a judgment, called appellate mediation.)


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HOW: Mediation can be ordered by court or statute or a party can move to compel mediation.Ordered by Court: Judges can do this sua sponte in Alabama. If the judge does this theparties share in the cost of mediation, either pro rata or per capita.Party Compels: This makes it more difficult to mediate because it is not voluntary and the

party who moves to compel must pay for the mediation.

WHERE: Mediation usually occurs on neutral ground, like the mediators office, but it doesnthave to. Its best to have three separate conferences rooms. Its always advisable to have afavorable climate for mediation.

START: Mediation generally begins before the parties arrive. The mediator will want the partiesto supply aposition statement.

1. Position Statement: Generally a letter that both sides submit to the mediation. The

position statement is intended to give the mediator information and is a tool to preparethe mediator for the mediation.

2. Day of Mediation

a. First session is the General Caucus: Everyone sits around the table and talks tostart things off. (Caucus Room Dynamics: where to sit, see notes)

(i) Introductory Remarks by Mediator: The discussion usually starts with themediator giving a speech. He welcomes everyone and lays out the ground

rules.

Rule: Statutory confidentiality privilege attaches to mediation,including what the parties say individually to the mediator

Statement of the Problem by the Parties(ii) The plaintiff lawyer generally speaks next and presents what he wants to

accomplish.

Cant come out too strong; may want to tell your client why you are notbeing aggressive

Do you let your client speak?Generally, you dont want your client to speak unless you are sure

of what they will say and it will help you.

(iii) The defense lawyer speaks next.

He doesnt have to say anything. Sometimes its good enough to saythat both sides arguments have merit and reserve argument for

private caucus.

Power of Apology: An apology in mediation may go a long way. Thiswill be confidential (also, not an admission against interest).

Compliments and humility also go a long way.


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Ventilation: People want their day in court to tell their side. This is called ventilating in theworld of mediation. Mediation is a process, it takes hours. One thing youre accomplishing isletting clients ventilate let emotion run out then make more of a business decision.

This may involve engaging the other side

b. Information Gathering: The mediator will then separate the groups.

(i) The mediator usually goes in with the plaintiff first. He will figure out their initialdemand and what they want.(ii) Then the mediator will go into the defendants room and figure out where they stand.

This will go back and forth.

Problem IdentificationProblem Solving: Generating Options and Bargaining

The parties WILL NOT LEAVE for lunch. Food is brought in.

At some point, people become so invested, that they make moves they wouldnt havemade in the beginning.

3. End of Mediation: Written Agreement (or not)If the parties agree on a solution, the mediator makes the parties say and complete awritten settlement agreement. The mediation agreement is not formal, its generally justskeletal.

The result is usually reported to the court.

Mediator Privilege: if the other party invokes privilege, theres a rule of evidence that gives anegative inference for invoking privilege.

Goal of Mediation: shift from hard position bargaining to collaborative bargaining (me and youagainst the problem)

Position v. Interest: Can mediate based on interest, although position isnt covered

I need a safe home for my family = interest

I need $500,000 to fix my home = position

History of Mediation

Labor disputes were the first significant area in which mediation was routinely used in thiscountry. Then, in most jurisdictions, family law mediation was next. Civil law was last formediation.

AL: Labor, civil law, then family law.

Mediators: Mediators must be registered, trained, and certified. This involves a CLE-typetraining, then application to be listed on the state roster. (Its not very difficult to be a mediator.)


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Two Styles of Mediation:

Facilitative : Mediator asks a lot of questions, doesnt give a lot of opinion.Mediator acts as a message taker and a go-between

Evaluative : Mediator provides an evaluation of the caseBest Style: somewhere in between

RULE: Mediator cannot offer evaluation in a pro se mediation.

NOTE: The modern ADR movement: Mid-1970s CJ Burger gives speech on dissatisfaction oflitigation

Victim/Offender Mediation: Over 45 states have implemented victim-offender mediationprograms in their criminal justice system. Violent crimes are usually not eligible for theseprograms. Mediation takes place with the victim sitting across the table from the offender. Theprograms are usually used for property crimes or minor assaults, most frequently being found injuvenile courts, law enforcement agencies, probation departments, corrections agencies, and

victim assistance programs. An objective is to confront the offender with his crime and hold himdirectly accountable. An object is to enter a restitution agreement, which may be monetary, mayinvolve the offender doing some work for the victim, or may simply be symbolic.

Criticism of victim-offender programs have focused on whether victims should be pressured tomediate with their offenders. Such programs attempt to make participation by victims entirelyvoluntary, but concerns as to their privacy and future security continue to be raised.

Voluntariness is the key to mediation. A judge can force you to mediate, but cant force you tosettle.

RULE: Standard for mediation participation measured: GOOD FAITH mediation!

Show up Stay a reasonable amount of time

Get person with settlement authority (in person or on the phone)

However, confidentiality provisions may prevent any evidence of bad faith frombeing offered.

RULE: No such thing as a contingency mediation.

Settlement will NOT be forced in mediation.

RULE: Mediators are NOT permitted to advertise their success rates.75-85% of mediations settle during or because of mediation (appellate mediation is less)

Special Issues in Family Law Mediation:Sometimes there is a bad guy. This crease a different dynamic in family law the blame gamematters. Thus, family law mediators need more training.

Different strategies for mediations:When the parties will only deal with that lawyer/client once there are different mediationstrategies than when the clients will have a future relationship or lawyers have more cases.


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Parties will probably need to be more collaborative, use less hard positional bargaining, whenthey will have future relationships.

University Commons-Urbana, Ltd. v. Universal Constructors, Inc. (11th Cir. 2002)

Arbitrator Ethics

Rules to Know: Arbitrator Conflicts1. The duty to disclose conflicts for an arbitrator never ends until the case is over. The fact

that disclosures are made on the front end does not insulate from subsequent contacts thatmay trigger new conflicts

2. Disclosures must be complete; a partial disclosure will not suffice.

3. Conflicts can be waived in most cases.AAA: arbitrator talks to the case manager, he writes a full disclosure up, then thecase manager sends it to the parties and has a conference with them without thearbitrator

Mediation:

Confidentiality in Mediation in Alabama (privileges are a creature of state law) You cannot repeat what is said in mediation. However, things that are otherwise

discoverable i.e. learn about some documents then thats not confidential.

The fact that it exists it discoverable later (apologize without reference to

documents)

Styles of Mediation (On Exam)Facilitative:someone who enhances communicationsEvaluative: also aid the parties in understanding the potential outcome of the case

If the party is pro se, the mediator cannot offer evaluations (TEST QUESTION)

Transformative Mediation (p. 384)Mediator that offers an opportunity to transform the parties by engendering moral growth andseek particularly to affect on-going relationships

Collaborative Law: Parties and attorneys work to a settlement out of court and go to the judge toget it approved.

(p. 404 STEPS) Test Question

Steps in the collaborative law process:1. Commitment to Settlement: parties commit to working together to resolve issues and

to reach agreements that are beneficial to everyone involved. If an agreement is notreached or the agreement is not honored, the attorneys and any experts are all


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disqualified from proceeding further on a litigation basis, as the parties must seekother counsel.

2. Respectful Communication: The parties agree to remain civil and respectful with oneanother throughout the process. Opportunities for practicing new communicationskills are encouraged, setting aside the tendency to blame and rehash the past and

allowing for a more healthful environment for the parties and for their children.3. Information Exchange: The parties also agree to honestly and voluntarily disclose allpertinent information and documentation. Tricks, hidden agendas, and covertbehavior are not tolerated.

4. Experts: The parties jointly choose, hire and use experts such as financial advisors,appraisers, counselors, personal coaches, and realtors, thus keeping better control oftheir expenses.

5. Negotiation: The process includes a series of four way conferences, with attorneysand clients present, to resolve all of the parties issues, including parenting decisionsand division of marital property. This process allows fore more flexibility andcreativity in designing solutions with a custom fit to meet the parties needs, fit their

schedules and adapt to their circumstances.

Advising a Client About ADRLawyers today clearly fail to meet their professional obligations if they do not advise their clientsas to the availability of ADR procedures.

Arbitration: early in every case obligation to explore whether theres an arbitrationagreement

Mediation: generally all civil cases have a time for mediation,

Simpson: would be aggressive in depositions, most cases settle and what to have a goodposition early and not save it for later which might not happen

Talk to client about ADR because it can change the way you will handle a case.

Before Mediation with Client (407)Dont lock down on a certain number information you receive may change your opinion.

BATNA best alternative to a negotiated agreement(ON EXAM)If you cant reach a settlement, whats the next best thing? You cant know what youwant until you figure this out. Know alternatives to settlement so you know what youwant in settlement.

WIN: bringing in the case for more/less than what its worth (depending on the side youre on)

Caucuses: one of the most critical elements of many mediations, and an attorney needs to havegiven careful thought to how she will conduct herself and advise her client to act in the caucus.

Pro Tanto partial settlement (less than all parties or less than all claims)

mediation doesnt have to be structured; can be creative


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Impass = mediations usually end one of two ways: a settlement or an impass

430: lawyer as acting as mediator between two clientsWhy would you do that? Its ok, just not a good business idea

VIDEO: Mediation

Styles: Hard-Positional Bargaining asserting legal claims and positions, highdemands or low offers, small moves, generally an oppositional atmosphere(confrontational),

when youre negotiating against a person like this, the only way to respond is to beone yourself

Collaborative Bargainer things both sides can come away with something of value

Want to shift from hard-positional bargaining to collaborative bargaining:How to do this?

Mediator asked for the clients business perspective, what he wanted to get out of this asked about partys INTEREST (not position)!

Shifting from position to interests

Can entertain ideas that courts cant do

Position: I want $1 million

Interest: I want to establish markets for my products in South America

Entering the phase of the process where we generate options Then road-blocks

Mediator: Reality Testing How long trial is going to last and appeal how much does that cost - no guarantee of

success

Create Risks: show the lawyers and parties they have something to lose if they dontsettle

Mediator can take ownership of an idea and offer (of a party and present it as his own) helpsthings by being less adversarial

Mediator Evaluation: generally with the flow, doesnt really break

Dont tell the mediator how much you can settle for! He cant tell the other, but he can use itagainst you!!!!

Round Numbers arent real (seem plucked out of the air)

Does a mediator have an ethical duty to have a fair result?

RULENo. No fairness requirement for mediators they only facilitate

Labels for Exam:


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1. Reality Testing 2. Position and interest negotiation difference3. Hard bargaining v. Collaborative bargaining

Notes from October 22, 2009IMPORTANT!!!

Alabama Code of Mediator Ethics

1. General

(a) Integrity, Impartiality, and Professional Competence. Integrity, impartiality, andprofessional competence are essential qualifications of any mediator. Professional competencemeans the knowledge, skill, and thoroughness reasonably necessary for the mediation.

(1) A mediator shall not accept any engagement, perform any service, or undertake anyact that would compromise the mediator's integrity.

(2) A mediator shall maintain professional competence in mediation skills. This includes,but is not limited to:(A) Staying informed of, and abiding by, all statutes, rules, and administrative

orders relevant to the practice of mediation; and(B) Regularly engaging in educational activities promoting professional growth.

(3) If the mediator decides that a case is beyond the mediator's competence, the mediatorshall decline appointment, withdraw, or request technical assistance.

(b) Concurrent Standards. Nothing contained herein shall replace, eliminate, or renderinapplicable relevant ethical standards not in conflict with these rules that may be imposed uponany mediator by virtue of the mediator's profession.

2. Responsibilities to Courts

A mediator shall be candid, accurate, and fully responsive to a court concerning the mediator'squalifications, availability, and other matters pertinent to his or her being selected to mediate. Amediator shall observe all administrative policies, procedural rules, and statutes that apply tomediation. A mediator shall refrain from any activity that has the appearance of improperlyinfluencing a court to secure placement on a roster of mediators or appointment to a case.

3. The Mediation Process

(a) Orientation Session. In order for parties to exercise self-determination they must understandthe mediation process. At the beginning of the mediation session, the mediator should explain themediation process. This explanation should include:

(1) The role of the mediator as a neutral party who will facilitate the discussion betweenthe disputing parties but who will not decide the outcome of the dispute;(2) The procedure that will be followed during the mediation session or sessions;(3) The pledge of confidentiality that applies to the mediation process;(4) The fact that the mediator does not represent either party and will not giveprofessional advice in the absence of a party's attorney and that, if expert advice isneeded, the parties will be expected to consult with experts other than the mediator; and


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(5) The fact that the mediation can be terminated at any time by the mediator or by any ofthe parties.

Further, in the event a party is not represented by an attorney, the mediator should explain:(1) That the parties are free to consult legal counsel at any time and are encouraged tohave any settlement agreement resulting from the mediation process reviewed by counsel

before they sign it; and(2) That a mediated agreement, once signed, is binding and can have a significant effectupon the rights of the parties and upon the status of the case.

(b) Continuing Mediation. A mediator shall withdraw from a mediation if the mediator believesthe mediation is being used to further illegal conduct. A mediator may withdraw if the mediatorbelieves any agreement reached would be the result of fraud, duress, overreaching, the absenceof bargaining ability, or unconscionability. A mediator shall not prolong a mediation session if itbecomes apparent that the case is unsuitable for mediation or if one or more of the parties isunable or unwilling to participate in the mediation process in a meaningful manner.(c) Avoidance of Delay. A mediator shall perform mediation services in a timely andexpeditious fashion, avoiding delays whenever reasonably possible. A mediator shall refrain

from accepting additional appointments when it becomes apparent that completion of mediationassignments already accepted cannot be accomplished in a timely fashion.

4. Self-Determination

(a) Parties' Right to Decide. A mediator shall assist the parties in reaching an informed andvoluntary agreement. Substantive decisions made during mediation are to be made voluntarily bythe parties.(b) Prohibition of Coercion. A mediator shall not coerce or unfairly influence a party intoentering into a settlement agreement.(c) Misrepresentation Prohibited. A mediator shall not intentionally misrepresent materialfacts or circumstances in the course of a mediation.(d) Balanced Process. A mediator shall promote a balanced process and shall encourage theparties to participate in the mediation proceedings in a nonadversarial manner.(e) Responsibility to Nonparticipating Parties. A mediator may promote consideration of theinterests of persons who may be affected by an agreement resulting from the mediation processand who are not represented in the mediation process.

5. Impartiality and Conflicts of Interest

(a) Impartiality. A mediator shall be impartial and shall advise all parties of any circumstancesthat may result in possible bias, prejudice, or impartiality on the part of the mediator. Impartialitymeans freedom from favoritism or bias in work, action, and appearance. Impartiality implies acommitment to aid all parties, as opposed to one or more specific parties, in moving toward anagreement.

(1) A mediator shall maintain impartiality while raising questions for the parties toconsider concerning the fairness, equity, and feasibility of proposed settlement options.(2) A mediator shall withdraw from mediation if the mediator believes the mediator canno longer remain impartial.

(b) Required Disclosures and Conflicts of Interest.

(1) A mediator must disclose to the disputing parties the following:


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(A) Any current or past representation of or consulting relationship with any partyor the attorney of any party involved in the mediation.(B) Any pecuniary interest the mediator may have in common with any of theparties or that may be affected by the outcome of the mediation process.(C) Known potential conflicts, including membership on a board of directors, full-

or part-time service as a representative or advocate, consultation work performedfor a fee, current stock or bond ownership other than mutual fund shares orappropriate trust arrangements, or any other form of managerial, financial, orimmediate family interest with respect to a party involved. A mediator who is amember of a law firm is obliged to disclose any representation of any of thedisputing parties by the mediator's firm or a member of that firm of which themediator is aware.(D) Any close personal relationship or other circumstance, in addition to thosespecifically mentioned in this Standard, that might reasonably raise a question asto the mediator's impartiality.

(2) Mediators establish personal relationships with many representatives, attorneys, other

mediators, and members of various other professional associations. Mediators should notbe secretive about such friendships or acquaintances, but disclosure of these relationshipsis not necessary unless that relationship is one of those mentioned in this Standard orsome feature of a particular relationship might reasonably appear to impair impartiality.(3) Prior service as a mediator in a mediation involving a party or an attorney for a partydoes not constitute representation of the party or consultation work for the party.However, mediators are strongly encouraged to disclose such prior relationships.Mediators must disclose any ongoing relationship with a party or an attorney for a partyinvolved in a mediation, including membership on a panel of persons providingmediation, arbitration, or other alternative dispute resolution services to that party orattorney.(4) A mediator shall not provide counseling or therapy to any party during the mediationprocess, and a mediator who is a lawyer shall not represent a party in any matter duringthe mediation.(5) All disclosures required by this Standard shall be made as soon as practicable after themediator becomes aware of the interest or the relationship.(6) The burden of disclosure rests on the mediator and continues throughout themediation process. After appropriate disclosure, the mediator may mediate the dispute ifall parties to the mediation agree to the mediator's participation and that agreement isreduced to writing. If the mediator believes that the relationship or interest would affectthe mediator's impartiality, he or she should withdraw, irrespective of the expresseddesires of the parties.(7) A mediator shall not use the mediation process to solicit any party to the mediationconcerning future professional services.(8) A mediator must avoid the appearance of a conflict of interest both during and afterthe mediation. Without the consent of all parties, a mediator shall not subsequentlyestablish a professional relationship with one of the parties in a substantially relatedmatter.

6. Confidentiality


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(a) Confidentiality. A mediator shall preserve and maintain the confidentiality of all mediationproceedings except where required by law to disclose information gathered during the mediation.(b) Records and Research Data. A mediator shall store and dispose of records relating tomediation proceedings in a confidential manner and shall ensure that all identifying informationis removed and the anonymity of the parties is protected when materials included in those

records are used for research, training, or statistical compilations.

7. Professional Advice

(a) Generally. A mediator shall not provide information the mediator is not qualified by trainingor experience to provide.(b) Independent Legal Advice. When a mediator believes a party does not understand orappreciate how a potential agreement reached through the mediation process may adverselyaffect the party's legal rights or obligations, the mediator should advise the participants to seekindependent legal advice.(c) Absent Party. If one of the parties is unable to participate in the mediation process forpsychological or physical reasons, a mediator should postpone or cancel mediation until such

time as all parties are able to participate.(d) Personal or Professional Opinion. A mediator may discuss possible outcomes of a case, buta mediator may not offer a personal or professional opinion regarding the likelihood of anyspecific outcome except in the presence of the attorney for the party to whom the opinion isgiven.

8. Fees and Expenses; Pro Bono Service

(a) General Requirements. A mediator occupies a position of trust with respect to the partiesand the court system. In charging for services and expenses, the mediator must be governed bythe same high standards of honor and integrity that apply to all other phases of the mediator'swork. A mediator shall be scrupulous and honest in billing and must avoid charging excessivefees and expenses for mediation services.(b) Records. A mediator shall maintain adequate records to support charges for services andexpenses and shall make an accounting to the parties or to the court upon request.(c) Referrals. No commissions, rebates, or similar remuneration shall be given to or received bya mediator for referral of persons for mediation or related services.(d) Contingent Fees. A mediator shall not charge or accept a contingent fee or base a fee in anymanner on the outcome of the mediation process.(e) Minimum Fees. A mediator may specify in advance minimum charges for scheduling orconducting a mediation session without violating this Standard.(f) Disclosure of Fees. When a mediator is contacted directly by the parties for mediationservices, the mediator has a professional responsibility to respond to questions regarding fees byproviding a copy of the basis for charges for fees and expenses.(g) Pro Bono Service. Mediators have a professional responsibility to provide competentservices to persons seeking their assistance, including those unable to pay for their services. As ameans of meeting the needs of the those who are unable to pay, a mediator should providemediation services pro bono or at a reduced rate of compensation whenever appropriate.

9. Training and Education


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(a) Training. A mediator is obligated to acquire knowledge and training in the mediationprocess, including an understanding of appropriate professional ethics, standards, andresponsibilities. Upon request, a mediator is required to disclose the extent and nature of themediator's education, training, and experience.(b) Continuing Education. It is important that mediators continue their professional education

as long as they are actively serving as mediators. A mediator shall be personally responsible forongoing professional growth, including participation in such continuing education as may berequired by law or rule of an appropriate authority.(c) New Mediator Training. An experienced mediator should cooperate in the training of newmediators, including serving as a mentor.

10. Advertising

Advertising or any other communication with the public concerning mediation services offeredby the mediator or regarding the education, training, and expertise of the mediator shall betruthful. Mediators shall refrain from making promises and guarantees of results.

11. Prohibited AgreementsA mediator shall not enter into a partnership or employment agreement that restricts the rights ofthe mediator to mediate after the relationship forming the basis of the agreement is terminated,except that a mediator may enter into an agreement concerning benefits upon retirement.

12. Advancement of Mediation

A mediator should support the advancement of mediation by encouraging and participating inresearch, evaluation, or other forms of professional development and public education.

A mediator should NOT get a contingency fee.

Why Pays for the Mediator?Judge Ordered Mediation whoever he says

Who is the Mediator?Judge Ordered Mediation - if judge picks a mediator its from a list of registeredmediatorsParties choose to Mediate parties choose whoever they want to mediate;

Requirements -Mediator: just have to say thats what you are; no formal requirementRegistered Mediator: registration requirements

Mediator Confidentiality

The mediator cant share anything with the other party that you tell him if you tell him you dontwant it to be told. You must be candid to reach a solution.

Why do we have mediator confidentiality?

Parties will not speak freely if confidentiality is not guaranteed


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Independence of the mediator would be undermined if she could be required to testifyabout the mediation

Evidence: Alabama recognizes a mediation privilegeAlabama Mediation Rules a mediator may not be compelled to divulge mediation

documents, that the documents exist, or to testify regarding the mediation.

Mediator Contract: Should include a provision that the parties have the responsibility toindemnify the mediator for any legal fees or costs associated with quashing a subpoena that asksthe mediator to testify.

FRE 408:

p. 439 - #2: still have something to argue

Judicially Created Privilege

Conditions which should be met in creating a privilege -1. The communication must originate in confidence that they will not be disclosed;2. This element of confidentiality must be essential to the full and satisfactory maintenance

of the relationship between the parties;3. The relationship must be one which is the option of the community ought to be

sedulously fostered;4. The injury that would inure to the relationship by the disclosure of the communications

must be greater than the benefit thereby gained fo the current disposal of the litigation.

What does the mediation agreement mean?Courts treat settlement agreements like CONTRACTS. Whatever the contract law of the

jurisdiction is will be applied to the agreement.

Ambiguity look to the rules of contract lawContract defenses apply to settlement agreements

Mediators should NOT draft the settlement agreement.

A malpractice suit = no privilege

Privilege is a matter of common law as they have been interpreted by the courts. In federalcases, these are determined by state law.

Simpsons Speech Mediation neutral dispute resolutionCan occur whenever, even on appeal (appellate mediation)1976- American mediation (cj burger) dissatisfaction with litigation (pound conference)Most civil cases filed are settlement and many of mediated.Appellate mediation new (federal system 1994)Alabama appellate mediation rules borrowed from FL


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Federal Rules of Appellate Procedure 33: Appeal ConferencesThe court may direct the attorneys-and, when appropriate, the parties-to participate in one ormore conferences to address any matter that may aid in disposing of the proceedings, includingsimplifying the issues and discussing settlement. A judge or other person designated by the court

may preside over the conference, which may be conducted in person or by telephone. Before asettlement conference, the attorneys must consult with their clients and obtain as much authorityas feasible to settle the case. The court may, as a result of the conference, enter an ordercontrolling the course of the proceedings or implementing any settlement agreement.

Eleventh Circuit Rule: 33-1

11th Cir. R. 33-1 Kinnard Mediation Center.

(a) Filing Civil Appeal Statement.A Civil Appeal Statement is required in all civil appeals, except as provided in section (a)(3)below.

(1) Civil appeals from United States district courts. When notice of the filing of a noticeof appeal is served pursuant to FRAP 3(d), the clerk of the district court shall notify theappellant(s) (and cross-appellant(s)) that a Civil Appeal Statement form is available asprovided in section (a)(4) below. The appellant(s) (and cross-appellant(s)) shall file withthe clerk of the court of appeals, with service on all other parties, an original and onecopy of a completed Civil Appeal Statement within 10 days after filing the notice ofappeal in the district court. The completed Civil Appeal Statement shall set forthinformation necessary for an understanding of the nature of the appeal and shall beaccompanied by the portion of the district court record described in 11th Cir. R. 33-1(b)(1). Any appellee may file an original and one copy of a response with the court ofappeals within seven days of the receipt of the completed Civil Appeal Statement andshall serve a copy of the response on all other parties.

(2) Review of administrative agency orders and appeals from the United States TaxCourt. When the clerk of the court of appeals notifies the parties that an appeal orpetition has been docketed, the clerk shall also notify the appellant(s)/petitioner(s) (andcross-appellant(s)/crosspetitioner(s)) that a Civil Appeal Statement form is available asprovided in section (a)(4) below. The appellant(s)/petitioner(s) (and cross-appellant(s)/cross-petitioner(s)) shall file with the clerk of the court of appeals, withservice on all other parties, an original and one copy of a completed Civil AppealStatement within 10 days from the date the notice was transmitted by the clerk of thecourt of appeals. The completed Civil Appeal Statement shall set forth informationnecessary for an understanding of the nature of the appeal or petition and shall beaccompanied by the portion of the record described in 11th Cir. R. 33-1(b). Anyappellee/respondent may file an original and one copy of a response with the court ofappeals within seven days of the receipt of the completed Civil Appeal Statement andshall serve a copy of the response on all other parties.

(3) A Civil Appeal Statement is not required to be filed in (1) appeals or petitions inwhich any party is proceeding without the assistance of counsel or in which any party is


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incarcerated; (2) appeals from habeas corpus actions filed under 28 U.S.C. 2241,2254, and 2255; and (3) immigration appeals.

(4) Availability of Civil Appeal Statement forms. The Civil Appeal Statement form isavailable on the Internet at www.ca11.uscourts.gov. Copies may also be obtained from

the clerk of the court of appeals and from the clerk of each district court within theEleventh Circuit.(b) Portions of Record to Accompany Completed Civil Appeal Statement.

(1) Civil appeals from United States district courts and the United States Tax Court. Theappellant shall file with each completed Civil Appeal Statement the following portions ofthe district court or tax court record:

(i) the judgment or order appealed from;(ii) any other order or orders sought to be reviewed, including, in bankruptcyappeals, the order(s) of the bankruptcy court appealed to the district court;(iii) any supporting opinion, findings of fact, and conclusions of law filed by thecourt;

(iv) the magistrate judge's report and recommendation, when appealing a courtorder adopting same in whole or in part; and(v) findings and conclusions of an administrative law judge, when appealing acourt order reviewing an administrative agency determination involving same.

(2) Review of adm

Documents

ADR - Lorino Schutt