©2001 West Legal Studies in Business. All Rights Reserved. 1 Chapter 3: Alternative Dispute Resolution

©2001 West Legal Studies in Business. All Rights Reserved. 2 IntroductionIntroduction 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.

©2001 West Legal Studies in Business. All Rights Reserved. 3 § 1: Search for Alternatives to Litigation Many contracts today have forced “arbitration” clauses that require the parties to resolve disputes outside of the court system. Many courts require mediation and arbitration prior to trial. Other solutions: statutory caps on damages and court sanctions and penalties on frivolous lawsuits.

©2001 West Legal Studies in Business. All Rights Reserved. 4 ADRADR ADR describes any procedure or device (including such internet sites as ) 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.

©2001 West Legal Studies in Business. All Rights Reserved. 5 § 2: Negotiation and Mediation Less than 10% of cases reach trial. Negotiation is informal discussion of the parties, sometimes without attorneys, where differences are aired with the goal of coming to a “meeting of the minds” in resolving the case. Successful negotiation involves thorough preparation, from a position of strength.

©2001 West Legal Studies in Business. All Rights Reserved. 6 Assisted Negotiation Mini-Trial: Attorneys for each side informally present their case before a mutually agreed-upon neutral 3 rd party (maybe a retired judge) who renders a non- binding “verdict.” This facilitates further discussion and settlement. Expert evaluations of the case. Conciliation: 3 rd party assists in reconciling differences.

©2001 West Legal Studies in Business. All Rights Reserved. 7 MediationMediation 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.” –Advantages: few rules, customize process, parties control results (win-win). –Disadvantages: mediator fees, no sanctions or deadlines.

©2001 West Legal Studies in Business. All Rights Reserved. 8 § 3: Arbitration 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. –Recall the 1997 UPS strike when US. Labor Secretary Alexis Herman helped arbitrate the strike.1997 UPS strike when US. Labor Secretary Alexis Herman helped arbitrate the strike. F.A.A. Case 3.1: Hooters v. Phillips (1999).Hooters v. Phillips

©2001 West Legal Studies in Business. All Rights Reserved. 9 Arbitration Process Case begins with a submission to arbitrator. Next comes the hearing where parties present evidence and arguments. Finally, arbitrator renders an award.submission Courts are not involved in arbitration unless arbitration clause in contract needs enforcement. –Can a union waive the rights of its members? –Case 3.2: Wright v. Universal Maritime Service (1997).Wright v. Universal Maritime Service

©2001 West Legal Studies in Business. All Rights Reserved. 10 Post-ArbitrationPost-Arbitration Awards may be appealed to a court to either “set aside” or enforce the award. Courts will not disturb the findings and legal conclusions of an arbitrator’s award. Is the award final if parties did not agree it would be final? Case 3.3: Orlando v. Interstate Container Corp. (1996).Orlando v. Interstate Container Corp.

©2001 West Legal Studies in Business. All Rights Reserved. 11 Post Arbitration [2] Public Policy and Illegality. Defects in Arbitration Process. –Case 34.3: Garvey v. Roberts (2000).Garvey v. Roberts (2000) Waiver. Conflicts of Law. Choice of Law.

©2001 West Legal Studies in Business. All Rights Reserved. 12 Arbitration Disadvantages Results may be unpredictable because arbitrators do not have to follow precedent or rules of procedure or evidence. Arbitrators do not have to issue written opinions. Generally, no discovery available.

©2001 West Legal Studies in Business. All Rights Reserved. 13 § 4: Integration of ADR and Court Procedures Court-ordered ADR is available in many states and federal courts for employment, family and other civil disputes. Most states do not allow real estate and equitable issues to be arbitrated. Court-Annexed arbitration: either party may reject the award.

©2001 West Legal Studies in Business. All Rights Reserved. 14 ADR and Courts [2] Court-related mediation. Summary jury trials. ADR and mass torts.

©2001 West Legal Studies in Business. All Rights Reserved. 15 § 5: ADR Forums & Services Non-profit organizations: –American Arbitration Association.American Arbitration Association –Better Business Bureau.Better Business Bureau For Profit: –JAMS-Endispute (Flash enabled).JAMS-Endispute

©2001 West Legal Studies in Business. All Rights Reserved. 16 Law on the Web Internet ADR: –Clicknsettle.com.Clicknsettle.com –Cybersettle.com.Cybersettle.com –Internetneutral.com.Internetneutral.com Legal Research Exercises on the Web