1. © 2004 West Legal Studies in Business A Division of Thomson Learning 1 Chapter 3 Alternative and Online Dispute Resolution

2. © 2004 West Legal Studies in Business A Division of Thomson Learning 2 §1: Search for Alternatives to Litigation Trials are a means of dispute resolution that are very expensive and sometimes take many months to resolve. Trials are a means of dispute resolution that are very expensive and sometimes take many months to resolve. There are “alternative dispute resolution” (ADR) methods to resolve disputes that are inexpensive, relatively quick and leave more control with the parties involved. There are “alternative dispute resolution” (ADR) methods to resolve disputes that are inexpensive, relatively quick and leave more control with the parties involved. Trials are a means of dispute resolution that are very expensive and sometimes take many months to resolve. Trials are a means of dispute resolution that are very expensive and sometimes take many months to resolve. There are “alternative dispute resolution” (ADR) methods to resolve disputes that are inexpensive, relatively quick and leave more control with the parties involved. There are “alternative dispute resolution” (ADR) methods to resolve disputes that are inexpensive, relatively quick and leave more control with the parties involved.

3. © 2004 West Legal Studies in Business A Division of Thomson Learning 3 ADRADR ADR describes any procedure or device for resolving disputes other than the traditional judicial process. ADR describes any procedure or device for resolving disputes other than the traditional judicial process. Unless court-ordered, there is no record which is an important factor in commercial litigation due to trade secrets. Unless court-ordered, there is no record which is an important factor in commercial litigation due to trade secrets. Most common: negotiation, mediation, arbitration. Most common: negotiation, mediation, arbitration. ADR describes any procedure or device for resolving disputes other than the traditional judicial process. ADR describes any procedure or device for resolving disputes other than the traditional judicial process. Unless court-ordered, there is no record which is an important factor in commercial litigation due to trade secrets. Unless court-ordered, there is no record which is an important factor in commercial litigation due to trade secrets. Most common: negotiation, mediation, arbitration. Most common: negotiation, mediation, arbitration.

4. © 2004 West Legal Studies in Business A Division of Thomson Learning 4 §2: Negotiation and Mediation Less than 10% of cases reach trial. Less than 10% of cases reach trial. Negotiation is informal discussion of the parties, sometimes without attorneys, where differences are aired with the goal of coming to a “meeting of the minds” in resolving the case. Negotiation is informal discussion of the parties, sometimes without attorneys, where differences are aired with the goal of coming to a “meeting of the minds” in resolving the case. Successful negotiation involves thorough preparation, from a position of strength. Successful negotiation involves thorough preparation, from a position of strength. Less than 10% of cases reach trial. Less than 10% of cases reach trial. Negotiation is informal discussion of the parties, sometimes without attorneys, where differences are aired with the goal of coming to a “meeting of the minds” in resolving the case. Negotiation is informal discussion of the parties, sometimes without attorneys, where differences are aired with the goal of coming to a “meeting of the minds” in resolving the case. Successful negotiation involves thorough preparation, from a position of strength. Successful negotiation involves thorough preparation, from a position of strength.

5. © 2004 West Legal Studies in Business A Division of Thomson Learning 5 Assisted Negotiation Mini-Trial: Attorneys for each side informally present their case before a mutually agreed-upon neutral 3 rd party (e.g., a retired judge) who renders a non-binding “verdict.” This facilitates further discussion and settlement. Mini-Trial: Attorneys for each side informally present their case before a mutually agreed-upon neutral 3 rd party (e.g., a retired judge) who renders a non-binding “verdict.” This facilitates further discussion and settlement. Expert evaluations. Expert evaluations. Conciliation: 3 rd party assists in reconciling differences. Conciliation: 3 rd party assists in reconciling differences. Mini-Trial: Attorneys for each side informally present their case before a mutually agreed-upon neutral 3 rd party (e.g., a retired judge) who renders a non-binding “verdict.” This facilitates further discussion and settlement. Mini-Trial: Attorneys for each side informally present their case before a mutually agreed-upon neutral 3 rd party (e.g., a retired judge) who renders a non-binding “verdict.” This facilitates further discussion and settlement. Expert evaluations. Expert evaluations. Conciliation: 3 rd party assists in reconciling differences. Conciliation: 3 rd party assists in reconciling differences.

6. © 2004 West Legal Studies in Business A Division of Thomson Learning 6 MediationMediation Involves a neutral 3 rd party (mediator). Involves a neutral 3 rd party (mediator). Mediator talks face-to-face with parties (who typically are in different adjoining rooms) to determine “common ground.” Mediator talks face-to-face with parties (who typically are in different adjoining rooms) to determine “common ground.”  Advantages: few rules, customize process, parties control results (win-win).  Disadvantages: mediator fees, no sanctions or deadlines. Involves a neutral 3 rd party (mediator). Involves a neutral 3 rd party (mediator). Mediator talks face-to-face with parties (who typically are in different adjoining rooms) to determine “common ground.” Mediator talks face-to-face with parties (who typically are in different adjoining rooms) to determine “common ground.”  Advantages: few rules, customize process, parties control results (win-win).  Disadvantages: mediator fees, no sanctions or deadlines.

7. © 2004 West Legal Studies in Business A Division of Thomson Learning 7 § 3: Arbitration Many labor contracts have binding arbitration clauses. Many labor contracts have binding arbitration clauses. Settling of a dispute by a neutral 3 rd party (arbitrator) who renders a legally-binding decision; usually an expert or well- respected government official. Settling of a dispute by a neutral 3 rd party (arbitrator) who renders a legally-binding decision; usually an expert or well- respected government official. Many labor contracts have binding arbitration clauses. Many labor contracts have binding arbitration clauses. Settling of a dispute by a neutral 3 rd party (arbitrator) who renders a legally-binding decision; usually an expert or well- respected government official. Settling of a dispute by a neutral 3 rd party (arbitrator) who renders a legally-binding decision; usually an expert or well- respected government official.

8. © 2004 West Legal Studies in Business A Division of Thomson Learning 8 Federal Arbitration Act Provides for means of enforcing the arbitration procedures established by the parties. Provides for means of enforcing the arbitration procedures established by the parties. Section 4: federal court can enforce arbitration clause. Section 4: federal court can enforce arbitration clause. Section 9: arbitrator’s decision confirmed in federal court. Section 9: arbitrator’s decision confirmed in federal court. Case 3.1: Hooters of America, Inc. v. Phillips (1999). Case 3.1: Hooters of America, Inc. v. Phillips (1999). Provides for means of enforcing the arbitration procedures established by the parties. Provides for means of enforcing the arbitration procedures established by the parties. Section 4: federal court can enforce arbitration clause. Section 4: federal court can enforce arbitration clause. Section 9: arbitrator’s decision confirmed in federal court. Section 9: arbitrator’s decision confirmed in federal court. Case 3.1: Hooters of America, Inc. v. Phillips (1999). Case 3.1: Hooters of America, Inc. v. Phillips (1999).

9. © 2004 West Legal Studies in Business A Division of Thomson Learning 9 Arbitration Process Case begins with a submission to an arbitrator. Next comes the hearing where parties present evidence and arguments. Finally, the arbitrator renders an award. Case begins with a submission to an arbitrator. Next comes the hearing where parties present evidence and arguments. Finally, the arbitrator renders an award.submission Courts are not involved in arbitration unless an arbitration clause in a contract needs enforcement. Courts are not involved in arbitration unless an arbitration clause in a contract needs enforcement. Case begins with a submission to an arbitrator. Next comes the hearing where parties present evidence and arguments. Finally, the arbitrator renders an award. Case begins with a submission to an arbitrator. Next comes the hearing where parties present evidence and arguments. Finally, the arbitrator renders an award.submission Courts are not involved in arbitration unless an arbitration clause in a contract needs enforcement. Courts are not involved in arbitration unless an arbitration clause in a contract needs enforcement.

10. © 2004 West Legal Studies in Business A Division of Thomson Learning 10 Enforcement of Agreements to Submit to Arbitration Arbitrability: whether the issue must be resolved with arbitration. Arbitrability: whether the issue must be resolved with arbitration. Mandatory arbitration in employment. Mandatory arbitration in employment. Arbitrability: whether the issue must be resolved with arbitration. Arbitrability: whether the issue must be resolved with arbitration. Mandatory arbitration in employment. Mandatory arbitration in employment.

11. © 2004 West Legal Studies in Business A Division of Thomson Learning 11 Setting Aside an Arbitration Award Loosing party may appeal the decision to a court. Loosing party may appeal the decision to a court. Winning party may ask a court to enforce the award. Winning party may ask a court to enforce the award. Court’s role is limited to determining whether a valid award exists Court’s role is limited to determining whether a valid award exists Facts and legal conclusions are usually final. Facts and legal conclusions are usually final. Case 3.2: Orlando v. Interstate Container Corp. (1996). Case 3.2: Orlando v. Interstate Container Corp. (1996). Loosing party may appeal the decision to a court. Loosing party may appeal the decision to a court. Winning party may ask a court to enforce the award. Winning party may ask a court to enforce the award. Court’s role is limited to determining whether a valid award exists Court’s role is limited to determining whether a valid award exists Facts and legal conclusions are usually final. Facts and legal conclusions are usually final. Case 3.2: Orlando v. Interstate Container Corp. (1996). Case 3.2: Orlando v. Interstate Container Corp. (1996).

12. © 2004 West Legal Studies in Business A Division of Thomson Learning 12 Setting Aside an Award 1. Award result of fraud or corruption. 1. Award result of fraud or corruption. 2. Arbitrator bias. 2. Arbitrator bias. 3. Arbitrator abuse of discretion. 3. Arbitrator abuse of discretion. 4. Arbitrator exceeded powers. 4. Arbitrator exceeded powers. Case 3.3: Major League Baseball Players Association v. Garvey (2001). Case 3.3: Major League Baseball Players Association v. Garvey (2001). 1. Award result of fraud or corruption. 1. Award result of fraud or corruption. 2. Arbitrator bias. 2. Arbitrator bias. 3. Arbitrator abuse of discretion. 3. Arbitrator abuse of discretion. 4. Arbitrator exceeded powers. 4. Arbitrator exceeded powers. Case 3.3: Major League Baseball Players Association v. Garvey (2001). Case 3.3: Major League Baseball Players Association v. Garvey (2001).

13. © 2004 West Legal Studies in Business A Division of Thomson Learning 13 Arbitration Disadvantages Results may be unpredictable because arbitrators do not have to follow precedent or rules of procedure or evidence. Results may be unpredictable because arbitrators do not have to follow precedent or rules of procedure or evidence. Arbitrators do not have to issue written opinions. Arbitrators do not have to issue written opinions. Generally, no discovery available. Generally, no discovery available. Results may be unpredictable because arbitrators do not have to follow precedent or rules of procedure or evidence. Results may be unpredictable because arbitrators do not have to follow precedent or rules of procedure or evidence. Arbitrators do not have to issue written opinions. Arbitrators do not have to issue written opinions. Generally, no discovery available. Generally, no discovery available.

14. © 2004 West Legal Studies in Business A Division of Thomson Learning 14 § 4: Integration of ADR and Formal Court Procedures Many states require some ADR before trial. Many states require some ADR before trial. Court-annexed Arbitration. Court-annexed Arbitration.  Finality of awards.  Role of the Arbitrator.  Waiver and Choice of Rules. Court-Related Mediation. Court-Related Mediation. Summary Jury Trials. Summary Jury Trials. Case 3.4: In re Atlantic Pipe Corp. (2002). Case 3.4: In re Atlantic Pipe Corp. (2002). Many states require some ADR before trial. Many states require some ADR before trial. Court-annexed Arbitration. Court-annexed Arbitration.  Finality of awards.  Role of the Arbitrator.  Waiver and Choice of Rules. Court-Related Mediation. Court-Related Mediation. Summary Jury Trials. Summary Jury Trials. Case 3.4: In re Atlantic Pipe Corp. (2002). Case 3.4: In re Atlantic Pipe Corp. (2002).

15. © 2004 West Legal Studies in Business A Division of Thomson Learning 15 § 5: ADR Forums and Services Non-profit organizations: Non-profit organizations:  American Arbitration Association. American Arbitration Association American Arbitration Association  Better Business Bureau. Better Business Bureau Better Business Bureau For Profit: For Profit:  JAMS-ADR.com(Flash enabled). JAMS-ADR.com Non-profit organizations: Non-profit organizations:  American Arbitration Association. American Arbitration Association American Arbitration Association  Better Business Bureau. Better Business Bureau Better Business Bureau For Profit: For Profit:  JAMS-ADR.com(Flash enabled). JAMS-ADR.com

16. © 2004 West Legal Studies in Business A Division of Thomson Learning 16 § 6: Online Dispute Resolution Also called ODR. Also called ODR. Uses the Internet to resolve disputes. Uses the Internet to resolve disputes. Still in its infancy but is gaining momentum. Still in its infancy but is gaining momentum. See, e.g., www.cybersettle.com. See, e.g., www.cybersettle.com.www.cybersettle.com Arbitration Programs. Arbitration Programs.  ICANN to resolved domain name disputes. Also called ODR. Also called ODR. Uses the Internet to resolve disputes. Uses the Internet to resolve disputes. Still in its infancy but is gaining momentum. Still in its infancy but is gaining momentum. See, e.g., www.cybersettle.com. See, e.g., www.cybersettle.com.www.cybersettle.com Arbitration Programs. Arbitration Programs.  ICANN to resolved domain name disputes.

17. © 2004 West Legal Studies in Business A Division of Thomson Learning 17 § 7: International Dispute Resolution Forum Selection and Choice-of-Law clauses in contracts govern the transaction. Forum Selection and Choice-of-Law clauses in contracts govern the transaction. Arbitration clauses are generally incorporated into international contracts. Arbitration clauses are generally incorporated into international contracts. Forum Selection and Choice-of-Law clauses in contracts govern the transaction. Forum Selection and Choice-of-Law clauses in contracts govern the transaction. Arbitration clauses are generally incorporated into international contracts. Arbitration clauses are generally incorporated into international contracts.

18. © 2004 West Legal Studies in Business A Division of Thomson Learning 18 Law on the Web American Arbitration Association. American Arbitration Association. American Arbitration Association American Arbitration Association ODR: Clicknsettle.com, Cybersettle.com, Squaretrade.com ODR: Clicknsettle.com, Cybersettle.com, Squaretrade.comClicknsettle.comCybersettle Squaretrade.comClicknsettle.comCybersettle Squaretrade.com Legal Research Exercises on the Web. Legal Research Exercises on the Web. Legal Research Exercises on the Web Legal Research Exercises on the Web American Arbitration Association. American Arbitration Association. American Arbitration Association American Arbitration Association ODR: Clicknsettle.com, Cybersettle.com, Squaretrade.com ODR: Clicknsettle.com, Cybersettle.com, Squaretrade.comClicknsettle.comCybersettle Squaretrade.comClicknsettle.comCybersettle Squaretrade.com Legal Research Exercises on the Web. Legal Research Exercises on the Web. Legal Research Exercises on the Web Legal Research Exercises on the Web