Alternative Dispute Resolution

Simpson Fall 2009 Christina Lorino Schutt

This 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 a private dispute resolution. This happens all the time. E.g., parent resolving problem between children Federal Arbitration Act (based on the New York State Arbitration Act) Enacted 1925/26 (has evolved over the years) American law is based on English Common law, which was hostile to arbitration agreements. 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 toward agreements to arbitrate and to place arbitration agreements on the same level as all other contractual agreements (no higher, no lower). Today, arbitration agreements are no more or less enforceable that other types of contracts. The FAA is procedural and substantive. 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 specifically enforceable. o Today, under most state law, a motion to compel arbitration is in the nature of a specific performance action. Legal damages or inadequate, so reliance is placed on equity principles and specific performance for the beach of the arbitration agreement. The FAA provides a direct mechanism for this, but there may still be room for state law. Congresss authority to pass the FAA: Commerce Clause o 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 in federal court if there was federal question jurisdiction. Then, it was expanded to apply in diversity of citizenship jurisdiction cases in federal court. Later in the 1980s, the FAA was interpreted to apply in state courts. o The modern understanding (1990s): Doesnt mater what court, the question is whether the dispute involves or affects interstate commerce.

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 not transportation workers (movers, railroad workers, airline employees, etc.) 2. Written and Assented (not necessarily signed) if involving maritime or commerce agreement 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 as challengeable as any other contract 3. [Stay of proceedings] This occurs when case is already in court (pending) and someone has ignored the arbitration agreement and a party wants to compel arbitration 4. [Cause of Action for Petition to U.S. court to Compel Jurisdiction] Five day notice of default, 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., if refused then arbitrator may petition court to compel attendance, very limited discovery. The FRCP 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 entered upon 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 insurance 10. [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 award o 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 court reporter to arbitration hearing 11. [Modification or Correction of Award] occurs where there was an evident mistake or miscalculation, 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 the controversy o functus officio: as soon as arbitrator enters award, his office and power ends 16. [Appeals] Three types o direct appeal: refusing stay of any action under 3, denying petition under 4, denying application to compel arbitration, modifying, correcting, or vacating an award

o interlocutory: permissive right to appeal order granting or continuing arbitration Alabama: allows appeals from granting or denying arbitration There 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 interstate commerce is involved. If there is commerce sufficient under the commerce clause and an agreement to arbitrate without 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 they were hostile toward arbitration. Judges said arbitration was bad, but really just wanted to get paid. 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 forgot why there was the hostility, but the sentiment that arbitration is bad continued. Doctrine of Revocability considered arbitration agreements executory meaning that they were revocable 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 as it was before the arbitrators final decision. Then the FAA was passed, in an attempt to abandon the hostility and put down in writing that arbitration is a matter of contract: equal footing with other contracts. Essentially codified customs and practices as law: NY merchants, experts made better decisions. Put arbitration agreements on the same level as other contracts. For the Final: o Doctrine of Revocability o Ancient Hostility toward Arbitration why judges had a financial incentive and its role o How the aim of the act was to make arbitration equally enforceable as other contracts (no more, no less)

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 discovery Civil Law: judges direct discovery (this is more like arbitration) 1. Before arbitration in court, where the fight is over the enforceability of the arbitration agreement: a. When FRCP Discovery Rules Can be Used: Court should tailor and limit discovery 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 agreement picks an organization to arbitrate that has rule. So discovery is governed by the applicable rules (e.g., FAA, NAF, JAMS). These rules only apply as between the parties; nonparties are not bound by the rule. Discovery rules are part of these organizations overall rules; extremely abbreviated. ii. Unadministrated Arbitrations: If the arbitration agreement doesnt appoint an arbitration organization then theres an arbitrator appointed, but there is no set of rules. Arbitrator would have almost absolute discretion. Parties may agreement to use an arbitration organizations rules, but they dont have to at this point. b. FAA 7: Non-Parites i. Arbitrator has subpoena power over non-party, but only to final hearing, and make then bring their records. Arbitrator can issue subpoena, but very little authority to enforce it. ii. Doesnt say anything about before the final hearing: case law has liberalized this. iii. Four Circuits have interpreted the application of 7 discovery rule to nonparties: See Simpson Article, Assignment 1 Sixth Circuit: Compel product of records either before or during a hearing

 Eight Circuit: There must be an intricate relationship between the nonparty and the arbitration to require him or her to produce records/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 require non-parties only to attend the arbitration hearing, produce records and testify during the hearing. Prehearing discovery is foreclosed. Solution: theres nothing that says an arbitrator can only have on hearing. A case can 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 final hearing 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 the party 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 the doctrine of functus officio function of the office when the arbitrator decides the case his power expires, he has discharged the function of his office. Theoretically, arbitrators are not allowed to alter their awards.) b. Trial After Trial: What happens if you think something crooked went on during the arbitration. Ninth Circuit: Andros Post-award discovery is generally not favored. RULE: No discovery unless you can show the judge that there is clear evidence of impropriety. Why? Discovery is limited on purpose in arbitration a trial after the arbitration 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?

i. whether there is an arbitration agreement; ii. whether interstate commerce is involved 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 what circumstances? 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 the controversy; and of any other misbehavior by which the rights of any part have been prejudiced; or 4) Where the arbitrator exceeded their powers, or so imperfectly executed them that a mutual, 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 you can do about. Trial in a Court File a Complaint (Notice Pleading) File an Answer Plaintiff Defendant Court Evidence (FRE or State) Arbitration Demand for Arbitration (No Standard its ok to plead very basically and summarily) Answer Statement (If you dont file one and youre under AAA, theyll assume you deny all the claims) Claimant Respondent Tribunal None* 10(a)(3) refusal to hear pertinent and material to the controversy is a ground for vacation why would the arbitrator refuse to hear anything if not hearing it is why an order may be set aside . . . Reliability Administered: Rules of the Administration Unadministered: No procedural rules, whatever the arbitrator says (discretion) No (Very informal, e.g., email but must copy the administrative organization is there is one and the other party: no ex parte communication.

Procedure (FRCP or State) Motion/Brief Practice

Discovery (R. 26-37, 45) Judgment

Administration rules if it is administered and FAA 7 Award (Then you try to convert it to a judgment under FAA 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 enter into before the problem happens Post-Dispute Arbitration Agreements: an agreement to arbitrate entered into after the 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 under 8-1-41; of course unless they are preempted by federal law. In Alabama, an (pre-dispute) arbitration agreement is not specifically enforceable. (Ancient hostility 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 be arbitrated in AL, so long as federal law is the basis. FAA can be applied when interstate commerce is involved or affected. This is where Congress gets its power to pass the FAA, the commerce clause. The reach of the FAA is coextensive with the Commerce Clause. ALSO NOTE:

Certain things the law cannot provide a remedy for, certain breaches of contract entitle the party to an equitable outcome and specific performance. Arbitration agreement breached: FAAs purpose was to create statutory mechanism to deal with this (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 arbitration agreement, some states used specific performance to enforce arbitration agreements. Action for specific 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; AND SJ 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-dispute arbitration agreements. In fact Alabama has anti-arbitration statute, it does not enforce predispute arbitration agreements so theyre not enforced if they do not involved instate commerce and fall under the FAA. Post-Dispute Binding Arbitration Agreement: SUBMISSION FAA 1: It applies it certain settings (maritime) and whenever commerce 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, this was 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 why there is arbitration agreements with everything (contractual tort reform) Plaintiffs argued that there wasnt interstate commerce, so the FAA couldnt apply, then Ala. Code 8-1-41 would apply = no arbitration Alabama had adopted the contemplation of the parties test if at the times parties signed the contract they didnt contemplate interstate commerce then it didnt apply. Other states: commerce in fact I: How should this question be phrased? How do we determine if interstate commerce is affect? H: Commerce in fact is the test. (Not whether the parties contemplated it.)

 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 a dispute over the enforceability of the arbitration agreement. Ala. Sup. Ct came up with a doctrine: coming to rest is something comes to Alabama and rests it is magically transformed to an Alabama thing and the interstate nature goes away. Essentially, took the commerce in fact doctrine and twisted it again to destroy the enforceability of arbitration agreements. Alafabco (2003) Defense to arbitration offered is that there isnt sufficient interstate commerce. Ala. Sup. Ct: cites sisters of the visitation agreement itself has to have an effect on commerce as opposed to the aggregate argument H: 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 the Commerce Clause. 1. Alafabco did this type of thing throughout the region 2. The restructured debt was secured by all the Alafabcos stuff that was all over 3. Where there was residual debt, it was to be compensated by other debt. 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 Congresss plenary commerce power

NOTE: An arbitration agreement is nothing but a specialized forum selection clause. In addition to selecting the place to settle the dispute, you select specialized rules (or the absence of rules).

Davis v. Southern Energy Homes (11th Cir. 2002) Federal Law v. FAA: What happens if there is a federal statute that seemingly conflicts with the FAA? (statute says you go to court, but you have an enforceable arbitration agreement under the FAA) F: Davis bought a mobile home and had problems. He brought suit under the Magnuson-Moss Warranty-Trade Commission Act that created a cause of action for breach of warrant. The MMWA is a consumer protection statute designed to protect consumers in connection with warranties. It creates a basis for federal jurisdiction (federal question with an amount in controversy requirement of $50,000), provided for attorneys fees for consumer lawyers, and created a ADR mechanism: prior resort mechanism that warrantors have the option to put a provision in warrants that says before a consumer sues the warrantor/manufacturer, the consumer must notify the manufacturer and give then an option to resolve the issue informally. The prior resort is not binding, thus the consumer does not have to accept the informal solution. The FTC oversees this, and theyve promulgated guidelines for ADR mechanisms that are hard, so theyve been somewhat abandoned. Davis signed an arbitration agreement with the warranty, but filed suit alleging that he shouldnt be 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 fees but manufactures can create option ADR mechanisms (legislative quid pro quo), but they are non-binding. Then, Wilson v. Waverly Homes: Congresss mention of prior resort mechanisms being nonbinding 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, binding arbitration 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 action and yet there is a binding arbitration agreement under the FAA a court shall look to . . . 1. The TEXT of the STATUTE

2. The LEGISLATIVE HISTORY 3. 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 state courts at this time. The legislative history in this case is ambiguous at most. There was no inherent 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 adoption of Wilson? H: No. Under Chevron Test, although Congress has not addressed the issue, the FTCs interpretation is not reasonable. Chevron Test: Whether a court should give deference to an agencys interpretation of the statute 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 to the 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 test Chevron 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 that didnt want to enforce it argued that a state statute requires that an arbitration agreement be on the 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 equal footing with all other contracts. As a default rule, general contract provisions do not have to be done is a specific way. P: Montana Supreme Court held that the arbitration agreement was not enforceable because it did not 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 concept of Preemption!

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 with arbitration are probably enforceable unless they are anti-arbitration under conflict preemption principles. NOTE APPEALING ORDERS GRANTING/DENYING ARBITRATION FAA 16 Appeals: Pro-Arbitration Court Grants Motion to Arbitrate: interlocutory appeal (permissive, must request) Court Denies Motion to Arbitrate: direct appeal (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 is reserved to an administrative law court, but the parties have entered into an arbitration agreement? F: Disputes with talent agents go to a California state administrative agency; however, theres an arbitration agreement in the contract. H: The arbitration agreement is enforceable. A binding arbitration agreement can dispose an administrative law court of jurisdiction. When parties agree to arbitrate all questions arising under 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., trade secrets, 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

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, railroad employees, 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 of employees. This case interprets the exception. I: Whether some or all employees are subject to the FAA? H: Section 1 of the FAA exempts transportation workers from the FAA. R: If purely intrastate commerce, the FAA does not apply. If its interstate commerce, the FAA does apply. But 1 exempts certain classes of employees. seamen, railroad employees, or any other class of workers engaged in foreign or interstate 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 the meaning 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 considered illusory. 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 demand to 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 generally cheaper 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 not included. Generally, looking at hard damages to determine fee. o DO NOT say that you will pay the filing fee in an arbitration agreement. This can result 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

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 arbitrators discretion. 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 FAA any action subsequent to the arbitration must be taken in the United States court in and for the district wherein the award was made . . . . This has been interpreted to mean court. So, if you are going to confirm, vacate, or even try to modify 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 arbitration you can go back to that court, or The hearing locate o 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 preplanning on your part). There is a case manager (like a law clerk for a judge, he or she is a clearing house for filing can email case manager to prevent ex parte communication). Theres the arbitrator There are the lawyers and unrepresented parties o Everyone starts with the final hearing and then works backwards. Everyone will discuss witnesses, discovery, possible depositions (if arbitrator will let you have one), special issues, inspection requests, detailed expert reports required (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

appeal because there is no record; however, in special circumstances you shouldnt 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 Order o 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 go through 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 to be 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 for summary judgment most likely wont be granted because its discretionary, and an 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 the rule that witnesses cant hear other witnesses. You cant just call and get motions from 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 other proceeds. o For Final: Arbitration is private, but not confidential.

Timing of Award Continuance

Complex Commercial Rules: for big arbitrations

Circumstances for Expedited Arbitration: option rules for emergency measures. In an emergency situation an arbitrator can be appointed very quickly. For Final: Questions asked conversationally: what typically happens at initial hearing? Class Action Arbitration History: Pre-Bazzel the 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 cheating everyone out of a little bit of money and theres no provision for attorneys fees under the contract or a statute. It would cost each individual too much to bring a law suit. The same can be 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 accurate F: Based on two state cases. One involves a closing in South Carolina where the lawyer is essentially a facilitator and doesnt represent anyone specifically. A form is required if the customer wants a different lawyer. This customer didnt get the form. The arbitration agreement said: all disputes, claims, and controversies arising out of the contract. 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 in passing, 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 a procedural matter. 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 was no plain meaning, parol evidence should have been allowed to show that class action arbitration is 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

o Is there a written agreement to arbitrate o What is the scope in terms of what claims are covered and what claims are not o 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 ERIE o 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 the arbitrators and they can go back and forth; class action cases should probably be public for due process - When you are determining whether an arbitration agreement lends itself to class actions you are really apply state contract interpretation. - Who decides? Arbitrators are supposed to decide procedural matters of arbitrability. Plurality: Marks Doctrine A plurality decision should be given its most NARROW construction. One should construe a pluralitys decision in the most narrow way. Class Action AAA Rules The AAA adopted class action rules in response to Bazzle. After selected, the arbitrator must decide 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 Final Opportunity for a third appeal Take Away: In the AAA Class Action Rules there is a clause construction award that is presumably 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 seller files for arbitration. Purchaser motions to enjoin arbitration, alleging fraudulent inducement. *The arbitration agreement is in the overall contract that is being challenged on fraudulent inducement grounds.

I: Under a contract governed by the U.S. Arbitration Act, whether the federal court or an arbitrator is to resolve a claim of fraudulent inducement, where there is no evidence that the contracting 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 is separated 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 arbitration agreement stands. If there is a freestanding arbitration agreement that is challenged, it is a question for the COURT. 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, NOT the entire contract. SCOTUS: Irrespective of whether the contract is void or voidable, if youre attacking the contract as a whole, the issue goes to the ARBITRATOR. Defenses to Arbitration: every defense to an ordinary contract is a defense to arbitration but this above determines who gets to decide. REVIEW: o Free-Standing Arbitration Agreement: COURT o Only Attacks Arbitration Agreement: COURT o Overall Contract: ARBITRATOR Defenses to Arbitration: Federal Statutory Cases/Prohibitive Costs Randolph v. GreenTree: Supreme Court There was an arbitration agreement for mobile home sales that provided for arguably high fees. The petitioners urged the court to set aside the arbitration agreement on the grounds that they were prohibitively high and foreclosed the clients right to assert a federal statutory claim (TILA truth in lending). There is a federal right here to bring a claim, but it arguably being denied because of prohibitive expenses in the arbitration agreement. 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 arbitration agreement that said fees would be split equally. When he was later told that he wouldnt work for them he asserted age discrimination. Bradford filed to arbitrate, but it was dismissed. He then filed a claim in federal court that was dismissed.

He wanted the court to say that fee splitting is pre se unconscionable because, in an employment setting, fee splitting prohibits the out of work employee from exercising his right to bring a federal claim. H: The Randolph 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!). The other side will ask for the plaintiffs lawyers contingency agreement, generally says that the attorney will pay the fees. If youre the plaintiffs lawyer the contingency fee agreement should say that the attorney should pay for all fees except arbitration. 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 arbitration clause. 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 labor disputes the law of the shop (the customary practice in the industry) is important. It is a distillation of custom and practice and what is right and wrong. One main reason people choose arbitration for labor disputes is because the arbitrators have familiarity with the law of the shop. A collective bargaining agreement will not contain everything that 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 only supposed to apply the law. Section 10(a)(4) states that an arbitrator may not exceed his powers. But this does NOT apply in the LABOR context. Rule: Standard in a Labor Arbitration Essence Test: the award has to draw its essence from the collective bargaining agreement. So long as the arbiter in a labor case issues an award that draws 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 the law 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 is further than the reach of a commercial arbitrator

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 is the applicable standard? A: The Essence 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 agreement provided that Mattel would indemnify landlord for any and all environmental damage from the beginning of time. Of course, there was a problem from the predecessors. The parties then agreed to arbitrate (post-dispute). They agree that the award can be vacated or modified by a court 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 court set it aside. Appealed to the Supreme Court Background Rules: The FAA allows for arbitration with certain rules and remedies. Here, they contracted for more appellate review. The FAA provides four grounds to set aside an award under 10: 1. What about manifest disregard for the law the arbitrator knew the appropriate standard or rule 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 on manifest disregard for the law. This had been a common law vacatar ground. This passing reference 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 FAA 10 grounds are the ONLY grounds available. You cant contract to add more and courts cant make them up! NOTE: The FAA is only one basis to vacate an arbitration award. There are others such as common 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 the courts. But always remember there are other grounds to vacate: common law and state arbitration states Alabama Rules of Appellate/Civil Procedure: Arbitration

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 of the 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 in accordance with Rule 59 Ala. R. Civ. P. is appealable as a matter of right. THUS: Under Ala. R. App. P 4(d): An order granting or denying a motion to compel arbitration is appealable as a matter of right! (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 has struggled with the procedures to go from arbitration to a court. Before these rules, the courts used to borrow from the Alabama Arbitration Act. Ala. R. Civ. P. 71C: How to get from arbitration to a court Timing: Notice of award served, then there is 30 days to seek enforcement of the award. You have to get the circuit clerk to enroll it as a judgment. After its a judgment the court has jurisdiction. 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 argue under the FAA about what to do. Q: If you were going to determine in Alabama what rules to apply to get from arbitration to the court 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

Settling a Case: See Handout General Release of All Claims and Confidentiality Agreement Joint Stipulation for Dismissal Evaluating a Case Ladder of Inference o 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 a loser/easier standards than evident partiality. To establish evident partiality must have evidence that is direct, definite, and capable of demonstration, rather than mere appearance of remote, uncertain, and speculative bias. Mediation Mediation is a structured settlement negotiation with a facilitator, called the mediator. When the mediator 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 arbitration proceedings. 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 on information; 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 unnatural skewed 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.)

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 the parties 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 doesnt have to. Its best to have three separate conferences rooms. Its always advisable to have a favorable climate for mediation. START: Mediation generally begins before the parties arrive. The mediator will want the parties to supply a position 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 prepare the mediator for the mediation. 2. Day of Mediation a. First session is the General Caucus: Everyone sits around the table and talks to start things off. (Caucus Room Dynamics: where to sit, see notes) (i) Introductory Remarks by Mediator: The discussion usually starts with the mediator 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 not being 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 say that both sides arguments have merit and reserve argument for private caucus. Power of Apology: An apology in mediation may go a long way. This will be confidential (also, not an admission against interest). Compliments and humility also go a long way.

Ventilation: People want their day in court to tell their side. This is called ventilating in the world of mediation. Mediation is a process, it takes hours. One thing youre accomplishing is letting 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 initial demand 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 Identification Problem 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 have made 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 a written settlement agreement. The mediation agreement is not formal, its generally just skeletal. The result is usually reported to the court. Mediator Privilege: if the other party invokes privilege, theres a rule of evidence that gives a negative inference for invoking privilege. Goal of Mediation: shift from hard position bargaining to collaborative bargaining (me and you against 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 this country. Then, in most jurisdictions, family law mediation was next. Civil law was last for mediation. AL: Labor, civil law, then family law. Mediators: Mediators must be registered, trained, and certified. This involves a CLE-type training, then application to be listed on the state roster. (Its not very difficult to be a mediator.)

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 case Best 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 of litigation Victim/Offender Mediation: Over 45 states have implemented victim-offender mediation programs in their criminal justice system. Violent crimes are usually not eligible for these programs. Mediation takes place with the victim sitting across the table from the offender. The programs are usually used for property crimes or minor assaults, most frequently being found in juvenile courts, law enforcement agencies, probation departments, corrections agencies, and victim assistance programs. An objective is to confront the offender with his crime and hold him directly accountable. An object is to enter a restitution agreement, which may be monetary, may involve 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 to mediate with their offenders. Such programs attempt to make participation by victims entirely voluntary, 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 to settle. 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 from being 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 game matters. 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 mediation strategies than when the clients will have a future relationship or lawyers have more cases.

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

University Commons-Urbana, Ltd. v. Universal Constructors, Inc. (11th Cir. 2002) Arbitrator Ethics Rules to Know: Arbitrator Conflicts 1. 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 that may 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 the case manager sends it to the parties and has a conference with them without the arbitrator 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 communications Evaluative: 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 and seek particularly to affect on-going relationships Collaborative Law: Parties and attorneys work to a settlement out of court and go to the judge to get 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 not reached or the agreement is not honored, the attorneys and any experts are all

2.

3. 4. 5.

disqualified from proceeding further on a litigation basis, as the parties must seek other counsel. Respectful Communication: The parties agree to remain civil and respectful with one another throughout the process. Opportunities for practicing new communication skills 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. Information Exchange: The parties also agree to honestly and voluntarily disclose all pertinent information and documentation. Tricks, hidden agendas, and covert behavior are not tolerated. Experts: The parties jointly choose, hire and use experts such as financial advisors, appraisers, counselors, personal coaches, and realtors, thus keeping better control of their expenses. Negotiation: The process includes a series of four way conferences, with attorneys and clients present, to resolve all of the parties issues, including parenting decisions and division of marital property. This process allows fore more flexibility and creativity in designing solutions with a custom fit to meet the parties needs, fit their schedules and adapt to their circumstances.

Advising a Client About ADR Lawyers today clearly fail to meet their professional obligations if they do not advise their clients as to the availability of ADR procedures. Arbitration: early in every case obligation to explore whether theres an arbitration agreement Mediation: generally all civil cases have a time for mediation, Simpson: would be aggressive in depositions, most cases settle and what to have a good position 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 you want until you figure this out. Know alternatives to settlement so you know what you want 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 have given 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

Impass = mediations usually end one of two ways: a settlement or an impass 430: lawyer as acting as mediator between two clients Why would you do that? Its ok, just not a good business idea VIDEO: Mediation Styles: Hard-Positional Bargaining asserting legal claims and positions, high demands 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 be one 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 dont settle Mediator can take ownership of an idea and offer (of a party and present it as his own) helps things 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 it against you!!!! Round Numbers arent real (seem plucked out of the air) Does a mediator have an ethical duty to have a fair result? RULE No. No fairness requirement for mediators they only facilitate Labels for Exam:

1. Reality Testing 2. Position and interest negotiation difference 3. Hard bargaining v. Collaborative bargaining

Notes from October 22, 2009 IMPORTANT!!! Alabama Code of Mediator Ethics 1. General (a) Integrity, Impartiality, and Professional Competence. Integrity, impartiality, and professional competence are essential qualifications of any mediator. Professional competence means the knowledge, skill, and thoroughness reasonably necessary for the mediation. (1) A mediator shall not accept any engagement, perform any service, or undertake any act 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 mediator shall decline appointment, withdraw, or request technical assistance. (b) Concurrent Standards. Nothing contained herein shall replace, eliminate, or render inapplicable relevant ethical standards not in conflict with these rules that may be imposed upon any 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's qualifications, availability, and other matters pertinent to his or her being selected to mediate. A mediator shall observe all administrative policies, procedural rules, and statutes that apply to mediation. A mediator shall refrain from any activity that has the appearance of improperly influencing 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 understand the mediation process. At the beginning of the mediation session, the mediator should explain the mediation process. This explanation should include: (1) The role of the mediator as a neutral party who will facilitate the discussion between the 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 give professional advice in the absence of a party's attorney and that, if expert advice is needed, the parties will be expected to consult with experts other than the mediator; and

(5) The fact that the mediation can be terminated at any time by the mediator or by any of the 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 to have 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 effect upon 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 believes the mediation is being used to further illegal conduct. A mediator may withdraw if the mediator believes any agreement reached would be the result of fraud, duress, overreaching, the absence of bargaining ability, or unconscionability. A mediator shall not prolong a mediation session if it becomes apparent that the case is unsuitable for mediation or if one or more of the parties is unable 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 and expeditious fashion, avoiding delays whenever reasonably possible. A mediator shall refrain from accepting additional appointments when it becomes apparent that completion of mediation assignments 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 and voluntary agreement. Substantive decisions made during mediation are to be made voluntarily by the parties. (b) Prohibition of Coercion. A mediator shall not coerce or unfairly influence a party into entering into a settlement agreement. (c) Misrepresentation Prohibited. A mediator shall not intentionally misrepresent material facts or circumstances in the course of a mediation. (d) Balanced Process. A mediator shall promote a balanced process and shall encourage the parties to participate in the mediation proceedings in a nonadversarial manner. (e) Responsibility to Nonparticipating Parties. A mediator may promote consideration of the interests of persons who may be affected by an agreement resulting from the mediation process and 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 circumstances that may result in possible bias, prejudice, or impartiality on the part of the mediator. Impartiality means freedom from favoritism or bias in work, action, and appearance. Impartiality implies a commitment to aid all parties, as opposed to one or more specific parties, in moving toward an agreement. (1) A mediator shall maintain impartiality while raising questions for the parties to consider concerning the fairness, equity, and feasibility of proposed settlement options. (2) A mediator shall withdraw from mediation if the mediator believes the mediator can no longer remain impartial. (b) Required Disclosures and Conflicts of Interest. (1) A mediator must disclose to the disputing parties the following:

(A) Any current or past representation of or consulting relationship with any party or the attorney of any party involved in the mediation. (B) Any pecuniary interest the mediator may have in common with any of the parties or that may be affected by the outcome of the mediation process. (C) Known potential conflicts, including membership on a board of directors, fullor part-time service as a representative or advocate, consultation work performed for a fee, current stock or bond ownership other than mutual fund shares or appropriate trust arrangements, or any other form of managerial, financial, or immediate family interest with respect to a party involved. A mediator who is a member of a law firm is obliged to disclose any representation of any of the disputing parties by the mediator's firm or a member of that firm of which the mediator is aware. (D) Any close personal relationship or other circumstance, in addition to those specifically mentioned in this Standard, that might reasonably raise a question as to the mediator's impartiality. (2) Mediators establish personal relationships with many representatives, attorneys, other mediators, and members of various other professional associations. Mediators should not be secretive about such friendships or acquaintances, but disclosure of these relationships is not necessary unless that relationship is one of those mentioned in this Standard or some 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 party does 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 party involved in a mediation, including membership on a panel of persons providing mediation, arbitration, or other alternative dispute resolution services to that party or attorney. (4) A mediator shall not provide counseling or therapy to any party during the mediation process, and a mediator who is a lawyer shall not represent a party in any matter during the mediation. (5) All disclosures required by this Standard shall be made as soon as practicable after the mediator becomes aware of the interest or the relationship. (6) The burden of disclosure rests on the mediator and continues throughout the mediation process. After appropriate disclosure, the mediator may mediate the dispute if all parties to the mediation agree to the mediator's participation and that agreement is reduced to writing. If the mediator believes that the relationship or interest would affect the mediator's impartiality, he or she should withdraw, irrespective of the expressed desires of the parties. (7) A mediator shall not use the mediation process to solicit any party to the mediation concerning future professional services. (8) A mediator must avoid the appearance of a conflict of interest both during and after the mediation. Without the consent of all parties, a mediator shall not subsequently establish a professional relationship with one of the parties in a substantially related matter. 6. Confidentiality

(a) Confidentiality. A mediator shall preserve and maintain the confidentiality of all mediation proceedings 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 to mediation proceedings in a confidential manner and shall ensure that all identifying information is 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 training or experience to provide. (b) Independent Legal Advice. When a mediator believes a party does not understand or appreciate how a potential agreement reached through the mediation process may adversely affect the party's legal rights or obligations, the mediator should advise the participants to seek independent legal advice. (c) Absent Party. If one of the parties is unable to participate in the mediation process for psychological 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, but a mediator may not offer a personal or professional opinion regarding the likelihood of any specific outcome except in the presence of the attorney for the party to whom the opinion is given. 8. Fees and Expenses; Pro Bono Service (a) General Requirements. A mediator occupies a position of trust with respect to the parties and the court system. In charging for services and expenses, the mediator must be governed by the same high standards of honor and integrity that apply to all other phases of the mediator's work. A mediator shall be scrupulous and honest in billing and must avoid charging excessive fees and expenses for mediation services. (b) Records. A mediator shall maintain adequate records to support charges for services and expenses 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 by a 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 any manner on the outcome of the mediation process. (e) Minimum Fees. A mediator may specify in advance minimum charges for scheduling or conducting a mediation session without violating this Standard. (f) Disclosure of Fees. When a mediator is contacted directly by the parties for mediation services, the mediator has a professional responsibility to respond to questions regarding fees by providing a copy of the basis for charges for fees and expenses. (g) Pro Bono Service. Mediators have a professional responsibility to provide competent services to persons seeking their assistance, including those unable to pay for their services. As a means of meeting the needs of the those who are unable to pay, a mediator should provide mediation services pro bono or at a reduced rate of compensation whenever appropriate. 9. Training and Education

(a) Training. A mediator is obligated to acquire knowledge and training in the mediation process, including an understanding of appropriate professional ethics, standards, and responsibilities. Upon request, a mediator is required to disclose the extent and nature of the mediator'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 for ongoing professional growth, including participation in such continuing education as may be required by law or rule of an appropriate authority. (c) New Mediator Training. An experienced mediator should cooperate in the training of new mediators, including serving as a mentor. 10. Advertising Advertising or any other communication with the public concerning mediation services offered by the mediator or regarding the education, training, and expertise of the mediator shall be truthful. Mediators shall refrain from making promises and guarantees of results. 11. Prohibited Agreements A mediator shall not enter into a partnership or employment agreement that restricts the rights of the 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 in research, 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 registered mediators Parties choose to Mediate parties choose whoever they want to mediate; Requirements Mediator: just have to say thats what you are; no formal requirement Registered Mediator: registration requirements Mediator Confidentiality The mediator cant share anything with the other party that you tell him if you tell him you dont want 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

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

Evidence: Alabama recognizes a mediation privilege Alabama 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 to indemnify the mediator for any legal fees or costs associated with quashing a subpoena that asks the 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 law Contract 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 federal cases, these are determined by state law. Simpsons Speech Mediation neutral dispute resolution Can 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

Federal Rules of Appellate Procedure 33: Appeal Conferences The court may direct the attorneys-and, when appropriate, the parties-to participate in one or more conferences to address any matter that may aid in disposing of the proceedings, including simplifying 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 a settlement conference, the attorneys must consult with their clients and obtain as much authority as feasible to settle the case. The court may, as a result of the conference, enter an order controlling 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 notice of appeal is served pursuant to FRAP 3(d), the clerk of the district court shall notify the appellant(s) (and cross-appellant(s)) that a Civil Appeal Statement form is available as provided in section (a)(4) below. The appellant(s) (and cross-appellant(s)) shall file with the clerk of the court of appeals, with service on all other parties, an original and one copy of a completed Civil Appeal Statement within 10 days after filing the notice of appeal in the district court. The completed Civil Appeal Statement shall set forth information necessary for an understanding of the nature of the appeal and shall be accompanied by the portion of the district court record described in 11th Cir. R. 331(b)(1). Any appellee may file an original and one copy of a response with the court of appeals within seven days of the receipt of the completed Civil Appeal Statement and shall serve a copy of the response on all other parties. (2) Review of administrative agency orders and appeals from the United States Tax Court. When the clerk of the court of appeals notifies the parties that an appeal or petition has been docketed, the clerk shall also notify the appellant(s)/petitioner(s) (and cross-appellant(s)/crosspetitioner(s)) that a Civil Appeal Statement form is available as provided in section (a)(4) below. The appellant(s)/petitioner(s) (and crossappellant(s)/cross-petitioner(s)) shall file with the clerk of the court of appeals, with service on all other parties, an original and one copy of a completed Civil Appeal Statement within 10 days from the date the notice was transmitted by the clerk of the court of appeals. The completed Civil Appeal Statement shall set forth information necessary for an understanding of the nature of the appeal or petition and shall be accompanied by the portion of the record described in 11th Cir. R. 33-1(b). Any appellee/respondent may file an original and one copy of a response with the court of appeals within seven days of the receipt of the completed Civil Appeal Statement and shall 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 in which any party is proceeding without the assistance of counsel or in which any party is

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 is available 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 the Eleventh 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. The appellant shall file with each completed Civil Appeal Statement the following portions of the 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 bankruptcy appeals, 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 the court; (iv) the magistrate judge's report and recommendation, when appealing a court order adopting same in whole or in part; and (v) findings and conclusions of an administrative law judge, when appealing a court order reviewing an administrative agency determination involving same. (2) Review of administrative agency orders. The petitioner shall file with each completed Civil Appeal Statement the following portions of the agency record: (i) the agency docket sheet, or index of documents comprising the record, if one exists; (ii) any order or orders sought to be reviewed; and (iii) any supporting opinion, findings of fact, and conclusions of law filed by the agency, board, commission, or officer. (c) Mediation. (1) An active or senior judge of the court of appeals, a panel of judges (either before or after oral argument), or the Kinnard Mediation Center, by appointment of the court, may direct counsel and parties in an appeal to participate in mediation conducted by the court's circuit mediators. Mediations are official court proceedings and the Kinnard Mediation Center circuit mediators act on behalf of the court. Counsel for any party may request mediation in an appeal in which a Civil Appeal Statement is required to be filed if he or she thinks it would be helpful. Such requests will not be disclosed by the Kinnard Mediation Center to opposing counsel without permission of the requesting party. The purposes of the mediation are to explore the possibility of settlement of the dispute, to prevent unnecessary motions or delay by attempting to resolve any procedural problems in the appeal, and to identify and clarify issues presented in the appeal. Mediation sessions are held in person or by telephone. Counsel must, except as waived by the mediator in advance of the mediation date, have the party available during the mediation. Should waiver of party availability be granted by the mediator, counsel must have the authority to respond to settlement proposals consistent with the party's interests. The mediator may require the physical presence of the party at an in-person mediation or the

telephone participation of the party in a telephone mediation. For a governmental or other entity for which settlement decisions must be made collectively, the availability, presence, or participation requirement may be satisfied by a representative authorized to negotiate on behalf of that entity and to make recommendations to it concerning settlement. (2) A judge who participates in the mediation or becomes involved in the settlement discussions pursuant to this rule will not sit on a judicial panel that deals with that appeal. (3) Communications made during the mediation and any subsequent communications related thereto shall be confidential. Such communications shall not be disclosed by any party or participant in the mediation in motions, briefs, or argument to the Eleventh Circuit Court of Appeals or to any court or adjudicative body that might address the appeal's merits, except as necessary for enforcement of Rule 33-1 under paragraph (f)(2), nor shall such communications be disclosed to anyone not involved in the mediation or otherwise not entitled to be kept informed about the mediation by reason of a position or relationship with a party unless the written consent of each mediation participant is obtained. Counsel's motions, briefs, or argument to the court shall not contain any reference to the Kinnard Mediation Center. (d) Confidential Mediation Statement. The court requires, except as waived by the circuit mediator, that counsel in appeals selected for mediation send a confidential mediation statement assessing the appeal to the Kinnard Mediation Center before the mediation. The Kinnard Mediation Center will not share the confidential mediation statement with the other side, and it will not become part of the court file. (e) Filing Deadlines. The filing of a Civil Appeal Statement or the scheduling of mediation does not extend the time for ordering any necessary transcript (pursuant to 11th Cir. R. 10-1) or for filing briefs (pursuant to 11th Cir. R. 31-1). Such time may be extended by a circuit mediator to comply with these rules if there is a substantial probability the appeal will settle and the extension will prevent the unnecessary expenditure of time and resources by counsel, the parties, and the court. (f) Noncompliance Sanctions. (1) If the appellant or petitioner has not taken the action specified in paragraph (a) of this rule within the time specified, the appeal or petition may be dismissed by the clerk of the court of appeals after appropriate notice pursuant to 11th Cir. R. 42-1. (2) Upon failure of a party or attorney to comply with the provisions of this rule or the provisions of the court's notice of mediation, the court may assess reasonable expenses caused by the failure, including attorney's fees; assess all or a portion of the appellate costs; dismiss the appeal; or take such other appropriate action as the circumstances may warrant. (g) Use of Private Mediators.

(1) Upon agreement of all parties, a private mediator may be employed by the parties, at their expense, to mediate an appeal that has been selected for mediation by the Kinnard Mediation Center. (2) Such private mediator (i) shall have been certified or registered as a mediator by either the State of Alabama, Florida, or Georgia for the preceding five years; (ii) shall have been admitted to practice law in either the State of Alabama, Florida, or Georgia for the preceding fifteen years and be currently in good standing; and (iii) shall be currently admitted to the bar of this court. (3) All persons while employed as private mediators shall follow the private mediator procedures as set forth by the Kinnard Mediation Center. (4) The provisions of this subsection (g) shall be in effect until discontinued by the Chief Circuit Mediator or by the court. Topics usually discussed in mediation: 1. Legal issues and decision making process 2. History of efforts to settle if any 3. Parties underlying interests, preferences, motivations, assumptions, and new information or other changes that may have occurred 4. Future events based upon the various outcome alternatives of the appeal 5. How resolution of the appeal impacts the underlying problem (e.g., vacate, remand) 6. Costs and time considerations 7. Procedural alternatives possibility applicable to the appeal These are not limited Sanctions are available if parties dont appear or participate in good faith. Mediation Position Statement 1. Circumstances that gave rise to the litigation 2. Present posture of the appeal 3. Any recent developments that may impact on a resolution of the appeal 4. A history of any efforts to settle the appeal including prior offers and demands 5. A summary of the partys legal positions and a candid assessment of their strengths and weaknesses. 6. Identification of individuals and counsels believed to be involved in settlement discussions 7. Description of sensitive issues that may not be apparent, but will influence settlement negotiations 8. The nature and extent of the relationship between the parties or their counsel 9. A priority of interests 10. Any suggested approach for the circuit mediator to take in an attempt to settle the appeal 11. Any suggested creative solution 12. Necessary terms in any settlement 13. Any particular concerns about confidentiality 14. Any limitations in the attorneys authority to make commitments on behalf of the client

15. Any additional information the client or a party needs to settle and whether it should be provided before the mediation. Mediator should NOT predict what will happen in court. (But, reality checking is good) Notes from October 29, 2009 Mediating the Sweet Spot When to Mediate You can mediate a case any time before filed, after filed, before or after trial, after appeal, before the final judgment is paid. Parties can also mediate more than once. Most disputes are mediated after filed, but after theyve had some time to develop. Most courts have a standing order to require mediation at some point before trial. No bright-line test for when you mediate one case. Risks of mediating too early No maximum value at the beginning, but people want to discover facts Too many undiscovered facts, facts in dispute, people dont understand case, and dont have information to make an assessment Risks of mediating too late A lot of risk is gone now for the defendant Lawyers expenses and fees can go up SIMPSON SAYS: After summary judgment, but before its been ruled on Enough discovery to evaluate case But not too much discovery where legal expense becomes a problem Need some risk for both problems, but not too much should remove some risk Defense Lawyer: 60% of money made in discovery; 40% trial prep and trial Q: Are these cases ripe for mediation? Question on the Final From This 1. Personal injury case. Car accident. Plaintiff claiming $100,000 in damages including $20,000 in medical bills. No deposition taken. Each attorney has spent about $5,000 in time and expense. Too Early not enough facts, no depositions have been taken 2. Commercial construction case. Builder defect allegations. Plaintiff/Owner seeking $500,000 to repair faulty roof construction. Parties deposition taken. No expert reports exchanged. Each attorney has about $20,000 in time and expenses. A little too early need experts in this type of case.

3. Medical malpractice case. Allegation of birth defects due to delivery complications. Plaintiff claiming $1,000,000 in damages. Case is 2 weeks from trial. All discovery compete numerous depositions. Summary judgment motion denied. Each attorney haw about $250,000 in fees and expenses. Too late. No Risk! This is past summary judgment, no one is looking for a compromise. 4. Commercial dispute. Suit to enforce a non-compete provision and for damages arising out of breach of non-compete. Plaintiff seeking injunctive relief and damages of $50,000. Parties depositions complete within 60 days of filing of compliant. Each attorney has about $17,000 in fees and expenses. Ripe to mediate - special type of case: non-compete (so only parties will testify); so the time length is different. 5. Employment discrimination case. Plaintiff seeking back wages, punitive damages, and mental anguish damages around $150,000 total. Parties depositions taken. Summary judgment motion pending. Each attorney has about $15,000 in fees and expenses. Ripe: discovery complete, risk is on peoples mind, no pre-trial work yet sweet spot. 6. Mobile home defect case. Plaintiff seeking revocation of sale and $100,000 in personal injury damages based on mold. No expert report from plaintiff. All experts have inspected home. Medical records subpoenaed, not received. Each attorney has about $7,500 in fees and expenses. Too early. This case needs expert reports and medical records at the least. III. NEGOTIATION Difficult Conversations By. Stone, Patton, and Heen of the Harvard Negotiation Project Q1: What are the three types of conversations (within a conversation)? 1. The What Happened Conversation 2. The Feelings Conversation 3. The Identity Conversation Q2: What are the five steps you should take in a difficult conversation? 1. Prepare by walking through the three conversations 2. Check you purposes and decide whether to raise it 3. Start from the third story 4. Explore their story and yours 5. Problem Solving Q3: Contribution Realizing that you are partially to blame (taking some responsibility);

Talking about this right out of the gate may not work; so wait a little while then bring this out. Blame is about judging and contribution is about understanding. Focusing on blame inhibits our ability to learn whats really causing the problem and to do anything meaningful to correct it. To move toward something else that will better serve your purpose in difficult conversation the concept of contribution. Blame leads to defensiveness and looking backwards. Contribution is related but different and looks forward. You should identify the contributions each person brought to the problems and the way in which each of your reactions are part of an overall pattern. Contribution is joint and interactive and includes inputs from both people. Q4: And Stance: and, and showing your curiosity about what the other person is Part of the stress of staying curious can be relieved by adopting the and stance dont choose between the stories, embrace them both, thats the and stance. - allows you to recognize that how you each see things matters, that how you each feel matters - the and stance is based on the assumption that the world is complex you can assert the full strength of your views and feelings without having to diminish the views and feelings of someone else. - because you may have different information or different interpretations, both stories can make sense at the same time Intentions: Assumptions of intentions shape how we feel about the what happened conversation. Intentions drive feelings When we assume what the others person intention was . . . its probably wrong. And we make their assumed intentions part of the what happened conversation. How do you get around this? Ask them what their intentions were. Dont disregard the feelings When you do something you dont give it bad intentions, but when someone else does you assign them a bad intention we give ourselves the benefit of the doubt, but not others. Naturally assign a bad intent to others when something bad happens to us. Feelings about Intent: if were going to have an impact on the feelings conversation, we have to understand the intention assignment, get pass the identity conversation, and get back to feelings. Changing the persons mind about intentions, and get over my identity there can be a meaningful impact on feelings. Then, when feelings are fixed, the what happened conversation becomes less important because everyone understands better. People lose the need to be right or wrong to find out every minute detail, because the emotion has been lessened.

Q5: The Learning Conversation (baseline) Your approach to the conversations: you want to learn their perspective, their feelings, their intentions assigned, your identity: The goal is to learn as much as you can about the conflict This is important because you have to understand why you are talking about this. Gaining perspective in a learning conversation may influence the other person. Listening well is one of the most powerful skills you can bring to a difficult conversation. Curiosity shift your goal from persuasion to learning. Thinking about what youre going to say next inhibits your ability to listen get your little voice focused on the learning conversation what the other person is saying. Skills: inquiry, paraphrasing, and acknowledgement Others Concepts Discussed that may be related: A difficult conversation can be any litany of things. Each difficult conversation is really three conversations 1. The What Happened? Conversation a. where we as lawyers spend most of our time b. whats their historical perspective c. Blame Frame: being too concerned with who is right and wrong; 2. The Feelings Conversation a. Negotiating (turning or changing) your feelings i. You can impact the feelings, by how you initiate the what happened ii. conversation. The best way to change the feelings dynamic, is not convincing them that youre version is right, you are able to express your side in such as way as to not offend them. 3. The Identity Conversation a. When you take what the other person as saying as identifying your identity: what you are bringing to the plate about yourself. b. Have a conversation with yourself about this FIRST before embarking on any of the conversations. c. Identity conversation underscores the other conversations d. Keeping your balance: all or nothing is not the answer; youre not always or never something. e. Being knocked off balance when someone calls one of your characteristics into question. f. Getting back on balance: realizing that its not all or nothing g. Point: Handling who you are while you are having the other two conversations Reality: these conversations are really meshed all into one Whether or Not to Have the Conversation: If you dont have the time or energy to engage in the conversation, it may be ok to avoid it. But the longer you avoid, the worse it gets.

Denial, Exaggeration Natural tenancy to exaggerate (always, never, etc.) because their mad Good way to call someone out on exaggeration: acknowledge the feelings, but then ease into saying that theyre exaggeration One of the key techniques placing yourself in the other persons shoes (gain perception) Who they are historically, their identity, what intention you think they are assigning you, what they are feeling, etc. Starting from the Third Story: Looking at the conversation from a third persons perspective. Listening: very important in a difficult conversation; thinking about what youre going to say next inhibits your ability to listen get your little voice focused on the learning conversation what the other person is saying. Letting Go: sometimes despite our very best efforts, nothing helps the other person doesnt say what you want them to say. You cant control how someone responses, you can only react. You must realize this. Problem Solving: Need to explore everything before you start problem solving: problem solving is at the end of the difficult conversation (after you know what happened) Should invite the other to be part of the problem solving effort interaction. Reframe, Reframe, Reframe Taking the essence of what the other person is saying and translating it into concepts that are more helpful getting the other person to play right in the conversation. Reading people: body language is important Negotiation, cont. Most books on how to negotiate effectively have come out of Harvard. Prof. Ury is the most notable professor on the topic and wrote Getting Past No. There are five things that occur in a negotiation that stand in the way to a cooperative agreement. 1. Your own reaction/emotion the baggage you bring into the negotiation 2. Their emotion 3. Their position 4. Their dissatisfaction 5. Their power Now, one of the most important things that you have to do in negotiation is prepare. Things to consider before negotiation: Yours and their interest Brainstorming options

 If there are standards (going rate) Consider your BATNA In a negotiation, people will try to (1) attack you, (2) trick you, and (3) stonewall you. There are three natural reactions that you may have a. Strike back b. Give in c. Break off But reacting introduces emotion into the equation and its not in the longer term best interest ! Five Ways of Getting Past No 1. 2. 3. 4. 5. Going to the balcony Stepping to their side Reframing Building a golden bridge Using power to educate

1. Going to the Balcony Step away from the conflict. Pause, disengage visualize yourself as a third-person observing from the balcony. 2. Stepping to Their Side Dont give in, but engage people in a way that makes them feel validated. This is done by listening actively and acknowledging their points, feelings and their competence. Pointer dont say but, say and instead. Be aware of the us and them mentality. Acknowledge this and dont assume the worst of them and the best of us. 3. Reframing This is done by asking questions, tapping the power of silence, exposing the others tricks, deflecting attacks, and reframing personal attacks as if you dont take them that way. 4. Building a Golden Bridge Make the other person like what they are getting out of the deal. Dont make them feel like they are conceding everything by addressing issues they didnt see. 5. Using Power to Educate Everyone has some power in negotiation. Use your power to bring the other side to their senses, and not their knees. State what your power is as a fact, not to intimidate them personally.

Exam: Which of the following is not a technique of getting past no? Textbook Material A. Structure of Negotiation BATNA (on exam) (by Fisher, Ury, and Patton) Best Alternative To a Negotiated Agreement - How can you negotiate if you dont know what you are likely to get otherwise? A negotiator should determine his BATNA is preparing for negotiations. Approaches for Negotiating Single Issue and Multi Issue Situations: Distributive Approach: There is a fixed amount of pie and you want a bigger piece. The more you get, the less they get. Theres no win-win, one side wins. Fixed-Pie Approach Hard to use anything other than a distributive approach in a single-issue negotiation. Integrated Approach: (opposite view) There is not a fixed pie but through collectivizing interests, negotiators can make the pie bigger. The Pie is NOT fixed Works with multiple issue negotiations where the pie can be made bigger, and interests can be fulfilled with things other than money. B. Strategy Positional Bargaining 1. High initial demand 2. Limited disclosure of information regarding facts and ones own preferences 3. Few and small concessions 4. Threats and arguments 5. Apparent commitment to positions during the negotiation process Focus on POSITION LOW degree of TRUST Sees the OTHER SIDE as the problem Collaborative Bargaining (Problem-Solving Approach): opposite of positional bargaining 1. Doesnt use threats and arguments uses brainstorming and offer options 2. Concessions can be large and frequent 3. Depends on the faithful exchange of information between negotiators Focus on INTERESTS SOME degree of TRUST needed

Sees the PROBLEM as the problem Theory Relates to Style (1) Fixed-Pie; Distributed; Single issue Positional (NEED TO BE THIS) E.g., your client got ran over by a truck and youre negotiating how much they get need to be positional One issue how much money, never going to see this person again (2) Multiple Issues; creative solutions can attack a problem; lots of cases with the other lawyer options that can lend itself to collaborative (but not always) Secret collaborative only works if the other side is collaborative. Question: Which approach is best against a hard positional bargainer? Answer: Hard positional bargaining!!!!! If theyre a hard positional bargainer and youre collaborative you will get eaten for LUNCH! First Offer Problem: Is it good or bad to make the first offer in a negotiation? Benefit: anchor for bargaining you drive the perceptions Disadvantage: exceeding their expectation or being so unrealistic that its off-putting Simpson likes to be second. How do you respond to a super high (or low) offer? 1. Blackboarding: ask the other side to show their math as to how they got to the number 2. Posturing: giving a ridiculous offer back Fairness and Norms A tool or tactic to reach a negotiated solution Sometimes it is helpful to use things outside of the negotiation to use things to show whats fair and normal. E.g., in most tort cases the plaintiff will get three times medicals Note: this is my final offer is often an arbitrary line in the sand. Be wary of these! The Prisoners Dilemma Your outcome depends on what the other person is going to do. Cooperate Defect Cooperate both get 3 years Cooperator gets none, other gets 5 years Defect Cooperator gets none, other gets 5 years both get 1 year

What should you do? Cooperate or defect? The answer: Depends on whether you want to have a relationship with the other person after this is over. How to choose a negotiation strategy: Is the negotiation, a one shot transaction or will there be future dealings over time? Is it a single issue, primarily distributive or are there multiple issues with integrative potential? Are the stakes high or low? How is the other side likely to act? Do they have a reputation for being a hard bargainer? Have you seen them negotiate in similar situations? What would you do if you were in their shoes? What is the negotiation norm in your community? Is problem solving more common or is hard, adversarial strategy the norm? What strategy does the client prefer? What is your personal style? What strategy are you more skilled at? What is the best negotiation strategy ever? Pretend to be collaborative, when youre really positional. This will lure the other side into being collaborative, and you can then be positional and eat them for lunch. Haha!