Chapter 3 Alternative and Online Dispute Resolution. §1: Search for Alternatives to Litigation. Trials are a means of dispute resolution that are very expensive and sometimes take many months to resolve.
§1: Search for Alternatives to Litigation • Trials are a means of dispute resolution that are very expensive and sometimes take many months to resolve. • There are “alternative dispute resolution” (ADR) methods to resolve disputes that are inexpensive, relatively quick and leave more control with the parties involved.
ADR • ADR describes any procedure or device for resolving disputes other than the traditional judicial process. • Unless court-ordered, there is no record which is an important factor in commercial litigation due to trade secrets. • Most common: negotiation, mediation, arbitration.
§2: Negotiation and Mediation • Less than 10% of cases reach trial. • Negotiation is informal discussion of the parties, sometimes without attorneys, where differences are aired with the goal of coming to a “meeting of the minds” in resolving the case. • Successful negotiation involves thorough preparation, from a position of strength.
Assisted Negotiation • Mini-Trial: Attorneys for each side informally present their case before a mutually agreed-upon neutral 3rd party (e.g., a retired judge) who renders a non-binding “verdict.” This facilitates further discussion and settlement. • Expert evaluations. • Conciliation: 3rd party assists in reconciling differences.
Mediation • Involves a neutral 3rd party (mediator). • Mediator talks face-to-face with parties (who typically are in different adjoining rooms) to determine “common ground.” • Advantages: few rules, customize process, parties control results (win-win). • Disadvantages: mediator fees, no sanctions or deadlines.
§ 3: Arbitration • Many labor contracts have binding arbitration clauses. • Settling of a dispute by a neutral 3rd party (arbitrator) who renders a legally-binding decision; usually an expert or well-respected government official.
Federal Arbitration Act • Provides for means of enforcing the arbitration procedures established by the parties. • Section 4: federal court can enforce arbitration clause. • Section 9: arbitrator’s decision confirmed in federal court. • Case 3.1:Hooters of America, Inc. v. Phillips (1999).
Arbitration Process • Case begins with a submission to an arbitrator. Next comes the hearing where parties present evidence and arguments. Finally, the arbitrator renders an award. • Courts are not involved in arbitration unless an arbitration clause in a contract needs enforcement.
Enforcement of Agreements to Submit to Arbitration • Arbitrability: whether the issue must be resolved with arbitration. • Mandatory arbitration in employment.
Setting Aside an Arbitration Award • Loosing party may appeal the decision to a court. • Winning party may ask a court to enforce the award. • Court’s role is limited to determining whether a valid award exists • Facts and legal conclusions are usually final. • Case 3.2:Orlando v. Interstate Container Corp. (1996).
Setting Aside an Award • 1. Award result of fraud or corruption. • 2. Arbitrator bias. • 3. Arbitrator abuse of discretion. • 4. Arbitrator exceeded powers. • Case 3.3:Major League Baseball Players Association v. Garvey (2001).
Arbitration Disadvantages • Results may be unpredictable because arbitrators do not have to follow precedent or rules of procedure or evidence. • Arbitrators do not have to issue written opinions. • Generally, no discovery available.
§ 4: Integration of ADR and Formal Court Procedures • Many states require some ADR before trial. • Court-annexed Arbitration. • Finality of awards. • Role of the Arbitrator. • Waiver and Choice of Rules. • Court-Related Mediation. • Summary Jury Trials. • Case 3.4:In re Atlantic Pipe Corp. (2002).
§ 5: ADR Forums and Services • Non-profit organizations: • American Arbitration Association. • Better Business Bureau. • For Profit: • JAMS-ADR.com(Flash enabled).
§ 6: Online Dispute Resolution • Also called ODR. • Uses the Internet to resolve disputes. • Still in its infancy but is gaining momentum. • See, e.g.,www.cybersettle.com . • Arbitration Programs. • ICANN to resolved domain name disputes.
§ 7: International Dispute Resolution • Forum Selection and Choice-of-Law clauses in contracts govern the transaction. • Arbitration clauses are generally incorporated into international contracts.
Law on the Web • American Arbitration Association. • ODR: Clicknsettle.com, Cybersettle.com, Squaretrade.com • Legal Research Exercises on the Web.