1. Chapter 4 Alternative Dispute Resolution Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

2. 4-2 Chapter 4 Case Hypothetical and Ethical Dilemma Todd Elgin was a quality control supervisor, with the emphasis on was. Last month, his employer, Synergy Mechanical Controls, Inc. had terminated his employment due to Todd’s violation of the company’s attendance policy. With no employment prospects on the horizon, Todd has considered bringing a wrongful termination action against his former employer. By his own admission, Todd had indeed violated the company’s attendance policy, but there were at least six co-workers within his own department who had done the same. All of his co-workers still had their jobs. Last week, Todd called Synergy’s human resource department, stating he would bring a civil action for wrongful termination of employment if the company failed to reinstate him. Synergy’s human resource manager, Keith Martin, told Todd the company would not reinstate him, and that he could not pursue a civil action against the company, since all employees (including Todd) were required to sign a binding arbitration agreement as a condition of employment. Mr. Martin informed Todd that the original, signed arbitration agreement was in his employment file. Todd is frustrated. He would like to pursue a civil action, and does not believe the binding arbitration agreement is enforceable, since he believes he was coerced into signing it. After all, the company would have refused to hire him had he not signed the agreement. Further, Todd is skeptical concerning the fairness of binding arbitration. As part of the arbitration agreement, the company had reserved the right to select the arbitrator, and would compensate the arbitrator for his services. What likelihood would the arbitrator find in his favor, given the fact that the arbitrator’s check for services rendered would come from Synergy? Advise Todd Elgin on the enforceability of his binding arbitration agreement with Synergy Mechanical Controls, Inc.

3. 4-3 Chapter 4 Case Hypothetical and Ethical Dilemma Ted Henry, trial court administrator of the Ticonderoga County, New York court system, has grown tired of all of the relatively trivial cases plaguing his county’s court dockets. In Ted’s opinion, everyone wants to exercise their “uniquely American” right to sue these days, even when the amount in controversy is comparatively trivial; in Ticonderoga County, for example, the number of cases valued at less than $10,000 has doubled in the past ten (10) years. Ted blames the increase in “low-value” litigation on our litigious culture. He firmly believes that after having watched an overabundance of legal melodramas on television, every American either wants to be a lawyer, or get a lawyer. As a trial court administrator, Ted has been especially affected by the increase in litigation. Ticonderoga County’s financial resources are limited, especially during difficult economic times. For Ted, it has become increasingly challenging for him to manage the trial court docket each week with only a limited number of judges, bailiffs, trial transcriptionists, and other key court personnel available. Ted knows that when it comes to the courtroom, time is definitely money, and local taxpayers have not exactly “warmed up” to the idea of hiring more judges and other court personnel to respond to the onslaught of increased litigation. Ted has what he believes to be a “modest proposal.” In Ticonderoga County, he would like to implement binding arbitration for each case involving an amount in controversy of less than $10,000 (In binding arbitration, the arbitrator’s decision is final and non-appealable). As part of his proposal, the parties involved in the litigation (plaintiff and defendant) would pay for the expenses of arbitration, and select the arbitrator. In law school, Ted’s first-year torts professor had told his class that there was no guarantee of justice in the courtroom, and based on his experience, Ted believed that his professor had been correct in that assessment; after all, there were too many contingencies and variables in the courtroom to guarantee justice, including the effectiveness of legal counsel, the proclivities of the judge presiding over the case, and the makeup of the jury. In Ted’s view, who is to say that justice would not be better served in a case if a neutral, experienced arbitrator was involved in the dispute resolution, as opposed to a judge and jury in a traditional courtroom? Ted is excited about his proposal, since (if implemented) it would reduce dramatically the number of cases processed through the regular Ticonderoga County judicial system, thereby saving the taxpayers money, and Ted’s sanity! Is Ted Henry’s proposal, for binding arbitration in all civil cases involving less than $10,000 in controversy, legal? Is it ethical?

4. 4-4 Chapter 4 Case Hypothetical John Wilson, owner of Wilson Construction Company, and Andrew Carrigan, owner of Carrigan Brick and Masonry, Inc., are at odds regarding a construction contract between the two companies. Wilson claims that Carrigan breached the contract due to non-performance of certain masonry work; Carrigan defends on the basis that Wilson did not permit him adequate access to the work site in order to complete the work by the designated contract deadline. Wilson claims liquidated damages as a result of the breach; the contract stipulates that upon breach, the non-breaching party is entitled to $1,000 in damages for every day the work is not performed beyond the contract deadline. Wilson is considering mediation or arbitration as an alternative to civil litigation, but he is concerned that “justice may not be served” if he submits to a method of alternative dispute resolution. Are his concerns justified? Is justice better guaranteed if Wilson and Carrigan litigate their case? Is mediation or arbitration actually preferable to civil litigation? Regardless of what disputing parties prefer, should court systems require that plaintiffs and defendants submit to arbitration or meditation before being entitled to their “day in court?”

5. Alternative Dispute Resolution Definition: The resolution of legal disputes through methods other than litigation, such as negotiation, mediation, arbitration, summary jury trials, mini- trials, neutral case evaluations, and private trials 4-5

6. 4-6 Questions to Ask When Selecting a Dispute Resolution Method How concerned am I about keeping costs low? How concerned am I about keeping costs low? How quickly do I want to resolve the dispute? How quickly do I want to resolve the dispute? Do I want to keep the dispute private? Do I want to keep the dispute private? Do I want to protect the relationship between the disputing parties? Do I want to protect the relationship between the disputing parties? Am I concerned about vindication? Am I concerned about vindication? Do I want to set a precedent with the resolution of my disputes? Do I want to set a precedent with the resolution of my disputes?

7. 4-7 Primary Forms of Alternative Dispute Resolution Negotiation Negotiation Mediation Mediation Arbitration Arbitration

8. 4-8 Advantages of Arbitration More efficient than litigation More efficient than litigation Less expensive than litigation Less expensive than litigation Parties have more control over the process of dispute resolution (parties choose the arbitrator and determine how formal the process will be) Parties have more control over the process of dispute resolution (parties choose the arbitrator and determine how formal the process will be)

9. 4-9 Disadvantages of Arbitration Scheduling difficulties and costs associated with arbitration panels (versus the use of one arbitrator) Scheduling difficulties and costs associated with arbitration panels (versus the use of one arbitrator) Difficulty of appealing an arbitration award Difficulty of appealing an arbitration award Loss of civil rights and remedies available through litigation Loss of civil rights and remedies available through litigation Trend toward arbitration may reduce its efficiency Trend toward arbitration may reduce its efficiency Companies and employers may effectively “hide” their disputes through arbitration (non-public nature of arbitration versus public trial) Companies and employers may effectively “hide” their disputes through arbitration (non-public nature of arbitration versus public trial)

10. 4-10 Tips for Creating a Binding Arbitration Clause Be clear and unmistakable Be clear and unmistakable Ensure that the arbitration clause is bilateral Ensure that the arbitration clause is bilateral State explicitly which party will pay the arbitrator’s fees, and make sure that it will not cost the employee more to arbitrate than it would have cost to litigate State explicitly which party will pay the arbitrator’s fees, and make sure that it will not cost the employee more to arbitrate than it would have cost to litigate Specify how the arbitrator will be selected Specify how the arbitrator will be selected Specify the costs associated with the arbitration Specify the costs associated with the arbitration Avoid limitations on the remedies available to the parties Avoid limitations on the remedies available to the parties Consider other potential parties when determining where to hold the arbitration Consider other potential parties when determining where to hold the arbitration

11. 4-11 Other Alternative Dispute Resolution Methods Mediation-Arbitration (“Med-Arb”) Mediation-Arbitration (“Med-Arb”) Summary Jury Trial Summary Jury Trial Mini-Trial Mini-Trial Early Neutral Case Evaluation Early Neutral Case Evaluation Private Trials Private Trials

12. 4-12 Court-Annexed Alternative Dispute Resolution

13. 4-13 Use of Alternative Dispute Resolution in International Disputes