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Connecticut Law Tribune: ADR: Too Much Like Litigation? Do Something About It | Law.com

June 18, 2011 By Leave a Comment

It is all the rage these days to complain that arbitration has become too much like litigation. Arbitration takes too long. It is too expensive. It involves too much discovery. It requires too many briefs. It takes too much time to schedule a hearing and too much time to get a decision. It has acquired all the detriments of court litigation but without the right to appeal. Complaints of this sort abound.

In many respects, such complaints are valid. At least they accurately reflect the reality of how many arbitrations are conducted these days, under the governance of various sets of rules used by many arbitration providers.

But those rules are creatures of contract. They apply only because the arbitration covenant in the parties’ underlying agreement – or the arbitration covenant upon with the parties agreed after the dispute arose – say they shall apply.

Parties are free to agree on different rules. There are actually many options in the marketplace for streamlined or modified rules that eliminate many of these problems. Further, the parties are free to modify any set of arbitration rules in a way that eliminates unwanted elements. The parties’ arbitration agreement, whatever its particulars, must be enforced as written.

via Connecticut Law Tribune: ADR: Too Much Like Litigation? Do Something About It.

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Supreme Court Justices Consider Courts’ Role in Arbitration | National Law Journal

April 27, 2010 By Leave a Comment

The U.S. Supreme Court’s pro-arbitration trend appears intact after oral arguments Monday in a key case asking whether it should be courts or arbitrators themselves who rule on the enforceability of an arbitration agreement.

Consumer groups say the outcome of the case, Rent-A-Center, West v. Jackson, could determine whether courts have any role in overseeing arbitration clauses in labor agreements, which they see as biased toward employers. Business groups, for their part, don’t want courts second-guessing what they see as validly agreed-upon arbitration agreements.

“If companies win, this really will be a watershed case,” said Deepak Gupta, an attorney for Public Citizen, which asserts that arbitrators rule against consumers 94 percent of the time.

During the past two decades, the high court has generally ruled to strengthen the enforceability of arbitration agreements. On Monday, few justices appeared eager to change that trend, though several seemed to believe that courts should play some role in checking especially egregious agreements. Dallas lawyer Robert Friedman of Littler Mendelson, representing the business side of the case, urged the Court to continue its practice of “sending very, very complicated matters to the arbitrator” rather than the courts

via Law.com – Supreme Court Justices Consider Courts’ Role in Arbitration.

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Commentary: Will the Supreme Court let corporate America judge itself? | McClatchy

April 12, 2010 By Leave a Comment

Suppose you buy a new house that turns out to be plagued by toxic mold. The home builder refuses to make repairs. You want to sue, but you learn that the fine print of your purchase contract requires you to arbitrate your dispute.

It also requires you to cough up an enormous fee – let’s say $50,000 – before going to arbitration. And, worst of all, it turns out that the arbitrator works for the local association of home builders. He gets paid by the home builders and he relies on their repeat business. The deck is stacked against you.

Outrageous, right? Under current law, consumers and workers can go to court and ask a judge to find the arbitration agreement “unconscionable” and therefore unenforceable.

But depending how the U.S. Supreme Court rules in Rent-A-Center v. Jackson, which it hears April 26, consumers and workers might not have that option much longer. Instead, guess who would rule on whether the arbitration clause was too outrageous to enforce?

The company’s arbitrator.

That's right. The question presented to the Supreme Court in Rent-A-Center is, essentially: Can a corporation’s hand-picked arbitrator decide whether it is fair for the company to hand-pick its arbitrator?

A conflict of interest? You bet. And given that research shows arbitration overwhelmingly favors the company over the consumer, this tightening of the rules would give Corporate America yet another advantage over consumers, employees, franchisees and others who sign arbitration clauses, often without even realizing it. Citizens would have no other place to turn.

Recently, in Citizens United v. Federal Election Commission, the Supreme Court dramatically expanded corporate rights. In decreeing that corporations have a First Amendment right to spend unlimited amounts of money to influence elections, the court in January upended a century of precedent and gave corporations a much bigger voice in government than “We, the People.”

Now, in Rent-A-Center, the court could again stack the deck in the battle between average citizens and powerful corporations. The court is expected to issue a decision by the end of June.

Many others are concerned about the outcome of this case; a broad coalition of civil rights groups, labor unions and consumer advocacy organizations – everything from Lawyers’ Committee for Civil Rights Under Law and the National Women’s Law Center to Consumer Action) – have filed friend-of-the-court briefs. Even 23 prominent professional arbitrators and arbitration scholars, including arbitrators for Major League Baseball and the National Basketball Association, agree that arbitrators shouldn’t decide whether the arbitration process itself is fair. Instead, they say, courts must step in to prevent abuses.

via Commentary: Will the Supreme Court let corporate America judge itself? | McClatchy.

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Defining Discovery In Arbitration | Alternative Resource Centers

April 11, 2010 By

Arbitration is a type of dispute resolution – specifically, the private, judicial determination of a dispute by an independent third party. Arbitration proceedings are generally adversarial in nature, but are less formal than a court proceeding. The primary objective of arbitration is to resolve legal disputes quickly, efficiently, and privately. Arbitration is particularly useful where parties would otherwise incur substantial discovery costs, such as in cases requiring the production and examination of electronic information. If properly staffed, an arbitration panel can greatly reduce the inefficiencies associated with the litigation of cases involving electronic disclosure.

One of the key aspects of arbitration is its flexibility. As part of this, arbitration panels are often relieved of all judicial formalities, and expressly informed they may abstain from following the strict rules of law or the strict rules of evidence that bind courts. Panels are usually given this leeway, either as part of the underlying arbitration agreement between the parties or as part of the bylaws of the arbitration agency itself, for two reasons. First, historically, arbitration has been used not solely as a means of enforcing strict legal obligations, but as an honorable engagement intended to effectuate the general purpose of the parties' agreement in a reasonable manner. Second, the members of the panel are usually not legal professionals. Rather, they are lay people with knowledge or expertise in the relevant field that forms the backdrop to the dispute. For example, insurance contract arbitration provisions usually require that all arbitrators be executive officers or former executive officers of insurance companies, or insurance brokers not under the control of either party.

While the panel is usually relieved from following the formal judicial rules of evidence, the panel still must provide the parties with an appropriate set of evidentiary and procedural rules that will govern the arbitration proceeding. In arbitration involving the discovery of electronic information, determining the rules related to digital evidence can be overwhelming to an arbitration panel due to the complexity of information systems and the pervasiveness of digital evidence. To effectively arbitrate such a case, an arbitration panel must be able to adequately define the scope of the electronic disclosure and apply an appropriate procedural framework for the controversy considering the parties' needs and available resources.

The problem is, of course, that while the panel may contain experts in the relevant business field – e.g., insurance, manufacturing, or finance – the arbitration panel will likely fail to include anyone with detailed knowledge of the information systems where documentary evidence key to resolving the dispute may be located. In the absence of such information system expertise, the arbitration panel members will be challenged simply to accurately and reasonably define the scope of discovery, let alone properly apply the principle of proportionality to electronic disclosure or set rules related to meta data. An arbitration panel lacking an electronic discovery expert is a recipe for lengthier hearings, pointless discovery disputes, and the waste of scarce financial resources.

Conversely, a panel containing, or consulting with, an electronic discovery expert possessing both legal and technological expertise will be ready to reasonably define the scope of electronic production, properly balance the cost of discovery against its prospective benefits, and save the parties time and money. Most importantly, an arbitration panel containing an electronic discovery expert will be able to fashion a discovery plan tailored to the parties' information systems early in the litigationproceeding at the meet and confer stage that:

1. Defines the scope of discovery;

2. Defines the permissible set of accessible electronic data;

3. Defines the sources to be searched in the production;

4. Defines the manner in which parties will preserve electronically store information;

5. Defines the format of data production;

6. Defines the procedures and protocols for electronic disclosure (e.g., the role of meta-data);

7. Addresses privilege issues (e.g., the scope of any claw-back provision governing inadvertently produced privileged documents); and

8. Defines party obligations and expectations.

via Defining Discovery In Arbitration.

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Limiting Discovery in Arbitration : California Employment Law

February 13, 2010 By Leave a Comment

Those of us who arbitrate employment disputes know that the limits on discovery vary from arbitrator to arbitrator.  Some allow interrogatories, some don't.  Some limit the number and length of depositions, some don’t.  The American Arbitration Association's Employment Arbitration Rules don’t provide much guidance, saying simply that:

The arbitrator shall have authority to order such discovery, by way of deposition, interrogatory, document production, or otherwise, as the arbitrator considers necessary to a full and fair exploration of the issues in dispute, consistent with the expedited nature of arbitration.”

Contrast that with the 70 pages or so of the California Code of Civil Procedure devoted to discovery and you can see how much flexibility and discretion arbitrators have in this area.

According to a California court of appeal decision published last week, Dotson v. Amgen, limits on discovery can be included in the arbitration agreement, itself.  In that case, the agreement stated:

Each party shall have the right to take the deposition of one individual and any expert witness designated by another party. . . .  Additional discovery may be had where the arbitrator selected pursuant to this agreement so orders, upon a showing of need.

The trial court found the provision unconscionable and refused to enforce the arbitration agreement.  But the appellate court disagreed.  It recognized that “arbitration is meant to be a streamlined procedure” and that the only way to achieve that streamlining is by limiting discovery.

via Limiting Discovery in Arbitration : California Employment Law.

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