1. Alternative Dispute Resolution
Chapter 4
Chapter 4: Alternative Dispute Resolution
Alternative Dispute Resolution
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2. Overview
LO4-1: What are the primary forms of alternative dispute resolution (ADR)?
LO4-2: What are other ADR methods?
LO4-3: What is court-annexed ADR?
LO4-4: How is ADR used in international disputes?

3. Chapter 4 Hypothetical Case 1
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 Elgin'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, Elgin 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, Elgin called Synergy's human resources department, stating he would bring a civil action for wrongful termination of employment if the company failed to reinstate him. Synergy's human resources manager, Keith Martin, told Elgin the company would not reinstate him, and that he could not pursue a civil action against the company, since all employees (including Elgin) were required to sign a binding arbitration agreement as a condition of employment. Martin informed Todd that the original, signed arbitration agreement was in his employment file. Elgin 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, Elgin 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 is the likelihood that the arbitrator would find in his favor, given the fact that the arbitrator's check for services rendered would come from Synergy? Advise Elgin on the enforceability of his binding arbitration agreement with Synergy.
Chapter 4 Hypothetical Case 1: 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 Elgin'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, Elgin 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, Elgin called Synergy's human resources department, stating he would bring a civil action for wrongful termination of employment if the company failed to reinstate him. Synergy's human resources manager, Keith Martin, told Elgin the company would not reinstate him, and that he could not pursue a civil action against the company, since all employees (including Elgin) were required to sign a binding arbitration agreement as a condition of employment. Martin informed Todd that the original, signed arbitration agreement was in his employment file. Elgin 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, Elgin 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 is the likelihood that the arbitrator would find in his favor, given the fact that the arbitrator's check for services rendered would come from Synergy? Advise Elgin on the enforceability of his binding arbitration agreement with Synergy.
[Instructor: See Primary Forms of Alternative Dispute Resolution in Chapter 4]

4. Chapter 4 Hypothetical Case 2
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 Henry's opinion, everyone wants to exercise their right to sue these days, even when the amount in controversy is comparatively trivial; in Ticonderoga County, the number of cases valued at less than $10,000 has doubled in the past ten years.
As a trial court administrator, Henry has been especially affected by the increase in litigation. The county's financial resources are limited. It has become increasingly challenging for Henry to manage the trial court docket each week with only a limited number of judges, bailiffs, trial transcriptionists, and other key court personnel available. Henry knows that when it comes to the courtroom, time is definitely money, and local taxpayers have not warmed to the idea of hiring more judges and other court personnel to respond to the onslaught of increased litigation. Henry has what he believes to be a "modest proposal." 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 would pay for the expenses of arbitration, and select the arbitrator. In law school, Henry's first-year torts professor had told his class that there was no guarantee of justice in the courtroom. Henry 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 Henry'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? Henry is excited about his proposal, since (if implemented) it would dramatically reduce the number of cases processed through the Ticonderoga County judicial system, thereby saving the taxpayers' money, and Henry's sanity!
Is Henry's proposal, for binding arbitration in all civil cases involving less than $10,000 in controversy, legal? Is it ethical?
Chapter 4 Hypothetical Case 2: 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 Henry's opinion, everyone wants to exercise their right to sue these days, even when the amount in controversy is comparatively trivial; in Ticonderoga County, the number of cases valued at less than $10,000 has doubled in the past ten years.
As a trial court administrator, Henry has been especially affected by the increase in litigation. The county's financial resources are limited. It has become increasingly challenging for Henry to manage the trial court docket each week with only a limited number of judges, bailiffs, trial transcriptionists, and other key court personnel available. Henry knows that when it comes to the courtroom, time is definitely money, and local taxpayers have not warmed to the idea of hiring more judges and other court personnel to respond to the onslaught of increased litigation. Henry has what he believes to be a "modest proposal." 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 would pay for the expenses of arbitration, and select the arbitrator. In law school, Henry's first-year torts professor had told his class that there was no guarantee of justice in the courtroom. Henry 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 Henry'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? Henry is excited about his proposal, since (if implemented) it would dramatically reduce the number of cases processed through the Ticonderoga County judicial system, thereby saving the taxpayers' money, and Henry's sanity!
Is Henry's proposal, for binding arbitration in all civil cases involving less than $10,000 in controversy, legal? Is it ethical?
[Instructor: See Court-Annexed ADR in Chapter 4]

5. Alternative Dispute Resolution (ADR)
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
Alternative dispute resolution involves 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.

6. Questions to Ask When Selecting a Dispute Resolution Method
How concerned am I about keeping costs low?
How quickly do I want to resolve the dispute?
Do I want to keep the dispute private?
Do I want to protect the relationship between the disputing parties?
Am I concerned about vindication?
Do I want to set a precedent with the resolution of my dispute?
There are several questions to address when selecting a dispute resolution method, including: How concerned am I about keeping costs low?; How quickly do I want to resolve the dispute?; Do I want to keep the dispute private?; Do I want to protect the relationship between the disputing parties?; Am I concerned about vindication?; and Do I want to set a precedent with the resolution of my dispute?

7. Primary Forms of ADR Negotiation Mediation Arbitration
The primary forms of alternative dispute resolution are negotiation, mediation, and arbitration.

8. Advantages of Arbitration
More efficient 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)
The arbitrator has greater flexibility in decision making than a judge has.
There are several advantages to arbitration as a form of alternative dispute resolution. Advantages include greater efficiency when compared to litigation, less expense than litigation, and the fact that the parties have greater control over the dispute resolution process, since the parties choose the arbitrator and determine how formal the process will be, and that he arbitrator has greater flexibility in decision making than a judge has.

9. Disadvantages of Arbitration
Scheduling difficulties and costs associated with arbitration panels (versus the use of one arbitrator)
Difficulty of appealing an arbitration award
Loss of civil rights and remedies available through litigation
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)
There are disadvantages to arbitration as well. These include scheduling difficulties and costs associated with arbitration panels (versus the use of one arbitrator), the difficulty in appealing an arbitration award, the loss of civil rights and remedies available through litigation, reduced efficiency as the trend toward arbitration continues, and the fact that companies and employers may effectively "hide" their disputes through arbitration, given the non-public nature of arbitration versus a public trial.

10. Tips for Creating a Binding Arbitration Clause
Be clear and unmistakable
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
Specify how the arbitrator will be selected
Specify the costs associated with the arbitration
Avoid limitations on the remedies available to the parties
Consider other potential parties when determining where to hold the arbitration
In order to establish a binding and enforceable arbitration clause, use clear and unmistakable contract language requiring arbitration in the event of a dispute, make the arbitration clause bilateral, state explicitly which party will pay the arbitrator's fees, and make sure it will not cost an employee more to arbitrate than it would to litigate. Also, indicate how the arbitrator will be selected, specify the arbitration costs, avoid limitations on remedies available to the arbitrating parties, and consider the needs of other parties in determining where to hold the arbitration.

11. Other ADR Methods Mediation-arbitration (med-arb) Summary jury trial
Minitrial
Early neutral evaluation
Private trials
Other alternative dispute resolution methods include mediation-arbitration (also known as med-arb), summary jury trials, minitrials, early neutral evaluations, and private trials.

12. Court-Annexed ADR District courts can decide whether to require ADR
Some mandate it, others make it voluntary
Some refer almost all civil cases to ADR
Mediation: Primary ADR process in federal district courts
Judges or lawyers are mediators
ADR may be used to resolve particular disputes within cases
Appellate courts use it to resolve issues on appeal
Each district court can decide whether to require ADR. Some courts mandate certain forms of ADR, while other courts make ADR completely voluntary. Some simply mandate that all potential litigants be informed about alternatives to litigation. Some courts refer almost all civil cases to ADR, while others refer cases according to subject matter.
Mediation is the primary ADR process used in federal district courts. In the federal system, most of the district courts and almost all the circuit courts have mediation programs using judges or lawyers as mediators. Some courts use ADR to resolve particular disputes within a case. Appellate courts have created programs to help parties resolve issues on appeal.

13. ADR's Use in International Disputes
Litigation challenges in international disputes
What should the venue be?
Who should decide the case?
What types of awards should be given?
ADR is preferred
Litigation is very difficult in international disputes. Where should the case be heard? Who should decide the case? What kinds of awards should be offered? Because these questions are difficult to answer in the global context, ADR is favored over litigation.

14. Chapter 4 Hypothetical Case 3
Law student and New York resident Cecilia Newcomb found herself frustrated when she tried to transfer Broadway show tickets she'd purchased electronically from ticketing giant Top Ticket to a friend. The theater in question, Broadway West, had listed the tickets as non-transferrable, and so Newcomb's tickets went unused, and she was out $500.
Newcomb decided to file suit against Broadway West, as she believed that the non-transferrable rule was a violation of the New York Arts and Cultural Affairs law, which prevents venues from selling electronic tickets that cannot be transferred to other holders. Broadway West argued that since the tickets were sold by Top Ticket, which in its Terms of Use agreement requires all ticket purchasers to agree to binding arbitration, Newcomb's beef was with Top Ticket, not Broadway West—and that she should seek redress from Top Ticket through arbitration.
Do you believe that Newcomb has a case? Research the New York Arts and Cultural Affairs law. If you think that either Broadway West or Top Ticket is in violation of the law, which—or both—are at fault? Why? Does Broadway West have a reasonable case that Newcomb should abide by the Top Ticket Terms of Use? Last, why did Newcomb opt for a lawsuit over binding arbitration, no matter which company she brought the complaint against? Would you make the same decision? Why or why not?
Chapter 4 Hypothetical Case 3: Law student and New York resident Cecilia Newcomb found herself frustrated when she tried to transfer Broadway show tickets she'd purchased electronically from ticketing giant Top Ticket to a friend. The theater in question, Broadway West, had listed the tickets as non-transferrable, and so Newcomb's tickets went unused, and she was out $500.
Newcomb decided to file suit against Broadway West, as she believed that the non-transferrable rule was a violation of the New York Arts and Cultural Affairs law, which prevents venues from selling electronic tickets that cannot be transferred to other holders. Broadway West argued that since the tickets were sold by Top Ticket, which in its Terms of Use agreement requires all ticket purchasers to agree to binding arbitration, Newcomb's beef was with Top Ticket, not Broadway West—and that she should seek redress from Top Ticket through arbitration.
Do you believe that Newcomb has a case? Research the New York Arts and Cultural Affairs law. If you think that either Broadway West or Top Ticket is in violation of the law, which—or both—are at fault? Why? Does Broadway West have a reasonable case that Newcomb should abide by the Top Ticket Terms of Use? Last, why did Newcomb opt for a lawsuit over binding arbitration, no matter which company she brought the complaint against? Would you make the same decision? Why or why not?
[Instructor: See Primary Forms of Alternative Dispute Resolution in Chapter 4]

15. Chapter 4 Hypothetical Case 4
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?
Chapter 4 Hypothetical Case 4: 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?
[Instructor: See Primary Forms of Alternative Dispute Resolution in Chapter 4]