Y-ADR Interview Series #5: Kelly Xing, Legal Counsel, General Motors

CPR’s new Y-ADR Interview Series returns with another discussion on in-house work, law practice development, and careers in dispute prevention and resolution.

This week, Y-ADR Steering Committee member Elizabeth Chan, an associate in the London office of Three Crowns, discusses conflict resolution with Kelly Xing, Legal Counsel at General Motors Co. in the Jing’an District, in Shanghai, China.

Kelly discusses her career path and conflict resolution experience, including how she approaches the drafting of dispute resolution clauses, and how the company uses a multi-tiered approach to dispute resolution that focuses on resolving disputes at management level.

She also talks about the business, discussing in detail the GM joint ventures she works on.

Lizzie Chan’s interview is her fifth in the CPR Y-ADR Interview series.  The previous interview, with Mathias Goh, can be viewed on CPR Speaks here. Previously, Lizzie spoke with Timothy Shore on working as an ombudsman, which can be viewed on CPR Speaks here. The second interview in the series, with CPR Y-ADR co-chair Jason Klingensmith, Assistant General Counsel, at General Motors Co. in Detroit, is available on CPR Speaks here

Lizzie’s kickoff interview in the series, with Jason’s GM colleague Brittany Mouzourakis, is available on CPR Speaks here.

You can watch the new Kelly Xing interview above, and share it on YouTube here.

CPR’s Young Leaders in Alternative Dispute Resolution educates the next generation of leaders on the full spectrum of dispute prevention and resolution mechanisms, and offers unique networking and professional development benefits to participants. Through periodic seminars and other initiatives, participants are introduced to CPR and gain an insider’s view into how CPR’s community of corporate counsel, law firm counsel, and other experts in the field are using dispute prevention and resolution techniques to manage conflict.

Y-ADR is open to the conflict prevention and resolution community–attorneys, professionals, academics and students–45 years old and younger, or those with less than eight years of professional experience in international or domestic ADR practice or other areas of conflict prevention and resolution.

The Y-ADR Steering Committee is the leadership group for Y-ADR. Jason Klingensmith’s co-chair is Ulyana Bardyn, counsel in the New York office of Eversheds Sutherland.

Follow CPR’s social media at the links at the bottom of this page for developments, and connect with Y-ADR’s LinkedIn page here.

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Another Appeals Court Take on ‘Who Decides’: The Sixth Circuit Overturns Provider’s Ruling to Reject Arbitration

By Mark Kantor

Last week, the Sixth Circuit U.S. Court of Appeals issued one of the rare rulings addressing the authority of an arbitral institution to make decisions. 

In the case, the appeals court considered the authority of an American Arbitration Association administrator to make what the court considered a “gateway” decision under the AAA’s Healthcare Policy Statement and rules rather than allowing that decision to be made by arbitrators. 

The 2-1 majority opinion ruled that only an arbitrator could make the decision, not the administrator.  That ruling has significant implications for the administrability of due process protocols and policy statements in patient healthcare, consumer and employment disputes.

In Ciccio, et al. v. SmileDirectClub LLC, No. 20-5833 (6th Cir. June 25, 2021) (available at https://bit.ly/2U8OqZ8), Senior Circuit Judge David W. McKeague authored the majority Sixth Circuit panel opinion overturning an AAA decision to apply the AAA’s policy against accepting a claim that “implicated various AAA policies that precluded arbitration unless the parties signed a post-dispute arbitration agreement or a court otherwise ordered arbitration.” 

The AAA’s Consumer Arbitration Rules, Healthcare Policy Statement and Healthcare Due Process Protocol bar the AAA from arbitrating a patient healthcare dispute unless either (1) all parties have agreed to submit the matter to arbitration after the dispute has arisen or(2) a court has ordered the disputing parties to arbitrate the matter.  The AAA Healthcare Policy Statement  describes this policy succinctly:

In 2003, the American Arbitration Association (“AAA”) announced that it would not administer healthcare arbitrations between individual patients and healthcare service providers that relate to medical services, such as negligence and medical malpractice disputes, unless all parties agreed to submit the matter to arbitration after the dispute arose. . . .  However, the AAA will administer disputes between patients and healthcare providers to the extent a court order directs such a dispute to arbitration where the parties’ agreement provides for the AAA’s rules or AAA administration.

The dispute in this case arose out of a false advertising claim brought by plaintiffs and former patients Dena Nigohosian, Dr. Joseph Ciccio, Dr. Arthur Kapit, and Dr. Vishu Raj, and joined by Dana Johnson and others, against SmileDirect, originally in federal court.  The U.S. District Court first held that an arbitration agreement in SmileDirect’s customer contract applied and ordered Nigohosian to arbitrate.  The other plaintiffs then voluntarily dismissed their court claims. 

The arbitration clause in question read:

AGREEMENT TO ARBITRATE – I hereby agree that any dispute regarding the products and services offered [b]y SmileDirectClub and/or affiliated dental professionals, including but not limited to medical malpractice disputes, will be determined by submission to arbitration and not [b]y lawsuit filed in any court, except claims within the jurisdiction of Small Claims Court . . . .   I agree that the arbitration shall be conducted by a single, neutral arbitrator selected by the parties and shall be resolved using the rules of the American Arbitration Association.

Johnson thereafter filed a class arbitration claim against SmileDirect with the AAA on behalf of consumer claimants who had been SmileDirect patients.

At that point, the AAA itself became involved in deciding whether the class arbitration should proceed in light of AAA policies and rules.  An AAA administrator advised the parties that that AAA’s Healthcare Due Process Protocol and Healthcare Policy Statement in the circumstances required healthcare providers and their consumers to sign post-dispute arbitration unless a court order has compelled arbitration, according to the Sixth Circuit opinion:

An AAA administrator informed the parties that AAA’s Healthcare Due Process Protocol and Healthcare Policy Statement applied, which require healthcare providers and their patients to sign an arbitration agreement after a dispute arises in certain cases unless a court order has compelled arbitration.  SmileDirect’s counsel asked the AAA administrator to reverse this decision but the AAA administrator maintained his “initial, administrative determination [that] the Protocol [and the Healthcare Policy Statement] appl[y].” . . . SmileDirect’s counsel objected again, noting that the district court had already compelled Nigohosian to arbitrate “whether the claims themselves are arbitrable” and argued that “AAA’s administrative decision to apply the Protocol [and the Healthcare Policy Statement] to these consumer claims is erroneous. ***

The AAA administrator “reaffirm[ed] [his] administrative determination” that the Healthcare Policy Statement applied to Johnson’s claims.  . . .  He concluded that arbitration could only proceed following a court order (seemingly like the court order already entered for Nigohosian) or a post-dispute arbitration agreement.

Johnson refused to sign a post-dispute agreement consenting to arbitration, while Nigohosian (who was bound by the earlier District Court order compelling arbitration) never initiated arbitration herself.  When claimants renewed their court proceedings in the U.S. District Court, however, “SmileDirect responded that they couldn’t rejoin the case because the Agreement required an arbitrator to decide the merits of any dispute, including any gateway issues about whether the dispute was arbitrable.” (Emphasis added.)

The district court, though, decided that SmileDirect and Johnson “got what they bargained for” because the dispute had been “resolved using the rules of the [AAA].”  Consequently, the court  determined that Johnson could renew the dispute before the judicial forum:

The district court interpreted the Agreement to fully incorporate Rule 1(d), the Consumer Due Process Protocol, and the Healthcare Policy Statement.  The court’s interpretation of these rules and policies next led it to conclude that Johnson had discharged his obligations under the Agreement and could “submit [his] dispute to the appropriate court for resolution.” . . .  Under the district court’s reasoning, Rule 1(d) incorporates the Consumer Due Process Protocol, which in turn states that AAA has subject-specific policies (incorporating the Healthcare Due Process Protocol and Healthcare Policy Statement by implication), and the Healthcare Policy Statement requires a post-dispute arbitration agreement or a court order.  Therefore, the court held that “the AAA process to which the parties mutually agreed ha[d] been completed in Johnson’s case.”

With respect to Nigohosian, however, the Court decided that she was bound by the existing Court order compelling arbitration.  The District Court therefore stayed her claims, pending arbitration.

SmileDirect thereafter appealed the decision regarding Johnson to the Sixth Circuit Court of Appeals. 

The Court of Appeals did not resolve the substantive arbitrability issue.  Rather, Judge McKeague held on behalf of a majority of a divided appellate panel that “The text of the [parties’ arbitration agreement] confirms that the parties didn’t intend to allow an administrator to short-circuit arbitration by refusing to appoint an arbitrator to answer this initial gateway question.  Accordingly, we don’t have anything further to say on the matter until and unless a party asks us to review an arbitrator’s decision under 9 U.S.C. § 10.”

To reach this result, the appellate panel started with basic principles in U.S. arbitration jurisprudence that “[w]hether the parties have agreed to arbitrate or whether their agreement covers a particular controversy” are gateway arbitrability questions.”  The parties may decide to send these gateway issues to an arbitrator rather than a court, but only upon a showing of “clear and unmistakable” evidence that the parties did indeed intend to delegate those issues to an arbitrator under the ruling in the U.S. Supreme Court’s First Options v. Kaplan, 514 U.S. 938 (1995). 

In the Sixth Circuit, like almost all other federal circuit courts, the incorporation of AAA rules authorizing the arbitrator to decide on the scope or validity of the arbitration agreement or the arbitrability of a claim satisfies the First Options standard. 

Thus far, the Court of Appeal’s reasoning paralleled the U.S. District Court’s reasoning on gateway arbitration questions.  But, stated the McKeague opinion, “What remains is the related question of whether the parties intended to allow an AAA administrator to apply the Healthcare Policy Statement before sending any gateway-arbitrability questions to the arbitrator,” explaining that

The Agreement dictates that “any dispute . . . will be determined by submission to arbitration,” not by litigation, and “that the arbitration shall be conducted by a single, neutral arbitrator selected by the parties.” The parties never got that far here because an AAA administrator “ma[d]e[] an initial, administrative determination [that] the [Healthcare Policy Statement] applie[d].”

The appeals court read the arbitration agreement between the parties to show that they intended to send gateway questions of arbitrability “exclusively” to an arbitrator, not to an AAA administrator.  Senior Circuit Judge McKeague expressed confusion as to the basis relied upon by the AAA administrator to take this decision rather than referring the question to an arbitral panel:

It is unclear what the administrator was doing.  There are two ways to view his decision.  Perhaps the administrator independently interpreted the Agreement and read it to incorporate the Healthcare Policy Statement, which led the administrator to conclude that the parties did not intend to arbitrate the instant dispute without a post-dispute agreement or court order.  Or perhaps the administrator was simply applying AAA’s Healthcare Policy Statement because he concluded that this case concerns healthcare and the AAA follows this policy no matter what a particular agreement says or what particular parties intended.

“Either way,” wrote Judge McKeague, “the end result was contrary to the text of the Agreement and the FAA.” Arbitrators and arbitral administrators “are distinct.”  Under AAA instruments, he wrote, administrators do not decide the merits of a dispute. 

The opinion notes, “The arbitrator decides the merits of a dispute.  And if an administrator could preempt a final merits ruling by an arbitrator, the administrator would effectively run afoul of the provision that administrators ‘cannot overrule or change an arbitrator’s decisions or rulings.’”  It continues later:

Under AAA’s rules, an arbitrator and an administrator are distinct.  “The [a]dministrator’s role is to manage the administrative aspects of the arbitration, such as the appointment of the arbitrator.  . . .  [T]he [a]dministrator does not decide the merits of a case or make any rulings on issues such as what documents must be shared with each side.” . . .  Unsurprisingly, the administrator helps disputes get to an arbitrator and doesn’t make merits rulings.  On the other hand, “[a]rbitrators are neutral and independent decision makers who . . . make the final, binding decision on the dispute.  . . .  The [a]rbitrator makes all the procedural decisions on a case not made by the administrator.” ….  The arbitrator decides the merits of a dispute.  And if an administrator could preempt a final merits ruling by an arbitrator, the administrator would effectively run afoul of the provision that administrators “cannot overrule or change an arbitrator’s decisions or rulings.”

Therefore, concluded the Sixth Circuit, “the arbitrability of Johnson’s claim, thus should’ve gone to an arbitrator for a ‘final, binding decision.’”

The appellate court also considered whether the issue of compliance with the AAA’s post-dispute agreement requirement for consumer healthcare arbitrations is a “procedural decision” delegated to an AAA administrator rather than an arbitral panel.  The appeals panel stated, “We don’t see how it could be.” 

In so deciding, the appellate judges reminded the parties that contract interpretation is a legal question.  Procedural decisions, stated the Court of Appeals, are more like administrative aspects of the arbitration such as appointment of arbitrators, location of hearings and fees:

The procedural decisions AAA administrators make, in turn, are more akin to “administrative aspects of the arbitration, such as the appointment of the arbitrator, . . . preliminary decisions about where hearings might take place, and . . . handl[ing] the fees.” ***  So it generally wouldn’t make sense to require clear intent to delegate arbitrability questions to an arbitrator but then allow either arbitrators or administrators to decide that legal question. [Citation and footnote omitted.]

The appellate court distinguished in this regard a Fourth Circuit decision upholding resolution by AAA administrators of a dispute as to how many arbitrators would be appointed, Dockser v. Schwartzberg, 433 F.3d 421 (4th Cir. 2006). 

Not only were the clauses in the two disputes different, said the Sixth Circuit majority, but the issue in that latter case was procedural.  “Dockser dealt with ‘what kind of arbitration proceeding the parties agreed to,’ whereas here the relevant question is arbitrability—what the Agreement itself means.”

If, instead of interpreting the parties’ arbitration agreement, the AAA was applying its own “sound policy,” then according to Judge McKeague that conduct too would contravene applicable law.  Nor did the arbitration agreement grant the AAA administrator the authority to make this policy choice for the parties. The majority opinion states:

Although the AAA may choose for itself which claims it will arbitrate, it is not at liberty to “impose its own view of sound policy” regarding when or how parties should be allowed to arbitrate independent of the parties’ own choices in their contract.

***

We also see nothing in the Agreement that gives the administrator the right to make this policy choice for the parties.  To be sure, the Agreement incorporates the AAA rules, which perhaps could be read to include the AAA’s due process review under Consumer Rule 1(d).  And Consumer Rule 53 says that “[t]he arbitrator shall interpret and apply these Rules as they relate to the arbitrator’s powers and duties” but that “[a]ll other Rules shall be interpreted and applied by the AAA.” . . .  But Consumer Rules 1(d) and 53 must be read together with the Agreement and the other rules to ascertain the parties’ intent.  . . .  When an arbitration agreement and its incorporated rules seem to conflict, our job is to find the “best way to harmonize” them. [Emphasis is the court’s.]

“We won’t,” stated the appellate majority, “interpret this agreement to arbitrate to permit Johnson to avoid arbitration.”

Moreover, the appeals panel pointed out that its decision to require an arbitrator to decide the gateway question, rather than an administrator, was not inconsistent with AAA policy.  The court’s resulting order would satisfy the AAA Healthcare Policy alternative that the AAA will arbitrate consumer healthcare disputes if so directed by a court order. The opinion notes:

The Healthcare Policy Statement also does not stand in the way of such an appointment.  It makes clear that “the AAA will administer disputes between patients and healthcare providers” either when the parties enter into a post-dispute agreement or when “a court order directs such a dispute to arbitration where the parties’ agreement provides for the AAA’s rules or AAA administration.” . . . Our decision will lead to such a court order—seemingly clearing the administrative path.  Here, to give effect to both the parties’ agreement that “the arbitration shall be conducted by a single, neutral arbitrator” and that the arbitration “shall be resolved using the rules of the American Arbitration Association,” we can’t read the AAA rules to preclude decision by an arbitrator.

.The Sixth Circuit opinion also drew attention to the fact that the approach taken by the majority will result in a different, narrower judicial review standard by the federal courts–review for vacatur of an arbitral decision rather than de novo review:

The district court effectively reviewed the Agreement de novo.  In doing that, the district court relied on a court’s interpretation of the same set of AAA rules and policies to hold that the AAA rules effectively nullified an arbitration agreement.  . . . But by agreeing, clearly and unmistakably, to send the arbitrability question to the arbitrator, the parties here bargained for the narrow 9 U.S.C. § 10 review, not de novo review.  . . .

This is where the Agreement’s requirement that the dispute would not be determined by litigation comes in.  The district court determined the contract-interpretation question, so the dispute was determined by litigation contrary to the intent of the parties.  But once an arbitrator interprets the Agreement, any judicial review under 9 U.S.C. § 10 wouldn’t be review of the arbitrability question de novo but under the limited grounds identified (for fraud, corruption, etc.).  Because the parties bargained for an arbitrator to interpret the Agreement and for the courts to have a very limited role, it wouldn’t make sense to allow an administrator’s preemptive contract interpretation to be a portal to de novo judicial review.   

Circuit Judge Eric L. Clay dissented, noting “I agree with the majority’s statement at the onset of its opinion that “this case is about whether the Agreement incorporates the Healthcare Policy Statement,” even though it then proceeds to repudiate the Healthcare Policy Statement.”  The parties, Circuit Judge Clay reasoned, “made their decision to abide by the rules when they signed the contract incorporating rules that included the Healthcare Policy Statement.” He added:

Turning to the plain language of the agreement, the threshold question of what the agreement incorporated is readily apparent: [disputes] shall be resolved using the rules of the American Arbitration Association.  . . .  As part of the AAA rules, the AAA maintains consumer protocols that ensure a fair process in healthcare disputes.  The Healthcare Policy Statement’s incorporation into the agreement was clear to anyone who read the AAA’s rules.  The parties made their decision to abide by the rules when they signed the contract incorporating rules that included the Healthcare Policy Statement, but in my colleagues’ view, those rules may simply be disregarded if they interfere with requiring the parties to proceed with the arbitration.

***

Here, the AAA determined that proceeding to arbitration would violate their due process rules without its mandatory post-dispute agreement.  When the parties agreed that the dispute “shall be resolved using the rules of the AAA,” they were aware that those rules called for an administrator to render the AAA’s initial determination regarding the requirements of the organization’s own rules before proceeding to arbitration.  That was not an unusual decision, nor a decision out of lockstep with the rules of the AAA.  Quite the contrary, that decision followed the process by which the AAA typically administers all of its arbitrations.  That provides the “clear and unmistakable” evidence that the parties intended to have these gateway issues decided in accordance with the AAA’s procedures and policies.

The majority opinion addressed Circuit Judge Clay’s dissent in footnotes 3 and 4.  Notably, in footnote 4 the Court of Appeals stated, “we interpret the words of this Agreement in conjunction with AAA’s rules without deference to AAA’s ‘typical’ practice.” The footnotes state:

3The dissent agrees that AAA’s rules specifically assign arbitrability questions to the arbitrator while reserving AAA’s “administrative duties” for the administrator as detailed in the arbitration agreement and the AAA’s rules themselves.  . . .  Where we differ is whether the AAA rules include an initial arbitrability decision among these “administrative duties.”  The dissent points to no rule granting the administrator such authority, but instead locates the authority in the general requirement that “the AAA will administer the arbitration.” . . .  Our decision to follow the AAA’s rule granting such authority to an arbitrator doesn’t mean that the parties “contract[ed] the AAA’s administrator out of the process,” but instead means the parties intended the administrator to have the role the AAA’s rules mandate: “to manage the administrative aspects of the arbitration, such as the appointment of the arbitrator, preliminary decisions about where hearings might take place, and handling the fees associated with the arbitration.”

4The dissent suggests that requiring an administrator to determine arbitrability “was not an unusual decision” but is rather “the process by which the AAA typically administers all of its arbitrations”—a fact that “any party doing their due diligence would have seen.” . . .   But we interpret the words of this Agreement in conjunction with AAA’s rules without deference to AAA’s “typical” practice.  The Agreement or the AAA Rules could grant the administrator that authority, but in this case they do not.

Judge Clay volleyed back at the majority by arguing in his own footnote 1 that “The majority claims that we agree that the AAA’s rules assign arbitrability to the arbitrator, and ‘administrative duties’ to the administrator, but that is not the case.  To the contrary, the AAA’s rules do not clearly delineate these roles as the majority alleges.  Instead, as stated in the rule cited above, the AAA has the final decision on who administers cases under its rules.”

* * *

Whether one agrees with Senior Circuit Judge McKeague’s opinion on behalf of the majority or with Circuit Judge Clay’s dissent, this ruling has significant implications for many disputes in the U.S. involving healthcare, consumer and employment matters. 

The AAA has adopted due process protocols for those areas, as well as making policy statements regarding how the AAA will handle applications for arbitration in many areas.  The reasoning by the Ciccio majority could vitiate the authority of an AAA administrator to apply those instruments to decline to accept cases that do not comply with those protocols and policy statements. 

Instead, application of those instruments would be allocated to an arbitral panel, resulting in significant delay and expense while the panel is constituted and briefed before a decision on the applicability of due process protocols and policies crystallizes.

Given the dissent, it is worth wondering whether this case is headed toward en banc review by the Sixth Circuit Court of Appeals or will be the subject of a certiorari petition to the U.S. Supreme Court.

* * *

Mark Kantor is a member of CPR-DR’s Panels of Distinguished Neutrals.  Until he retired from Milbank, Tweed, Hadley & McCloy, he was a partner in the firm’s Corporate and Project Finance Groups.  He currently serves as an arbitrator and mediator.  He teaches as an Adjunct Professor at the Georgetown University Law Center (Recipient, Fahy Award for Outstanding Adjunct Professor).  He also is Editor-in-Chief of the online journal Transnational Dispute Management.  He is a frequent contributor to CPR Speaks, and this post originally was circulated to a private list serv and adapted with the author’s permission. 

[END]

Supreme Court Again Declines a “Who Decides?” Case in Class Arbitration

By Russ Bleemer

The U.S. Supreme Court this morning declined to hear a case that would have covered two issues that are familiar arbitration turf at the nation’s top court—whether rules incorporated into an ADR agreement are a specific-enough designation for the arbitration to go forward, and whether arbitrators can invoke class processes.

The court denied cert in Shivkov v. Artex Risk Solutions Inc., 20-1313, where an appeals court, compelling arbitration, also held that “the availability of class arbitration is a gateway issue that a court must presumptively decide,” but because the agreements “do not clearly and unmistakably delegate that issue to the arbitrator,” and “[b]ecause the Agreements are silent on class arbitration, they do not permit class arbitration.” Shivkov v. Artex Risk Sols. Inc., 974 F.3d 1051 (9th Cir. 2020) (available at https://bit.ly/3y6e9jL).

This morning’s order can be found here.

The issues presented challenging the Ninth Circuit petition to the Supreme Court by the petitioners—more than 80 individual and business plaintiffs who had filed suit against insurance management companies that set up captive insurance firms for the petitioners that were audited and held liable for unpaid federal taxes—covered the incorporation by reference rules question, and class arbitration.  The specific questions presented by the petitioners that the Court declined today were:

1. The parties’ arbitration clause expressly designates the American Arbitration Association (“AAA”) as their default dispute-resolution method. The clause did not also specifically mention the AAA Rules themselves, which, according to the AAA, apply whenever parties select a AAA arbitration. Must an agreement that specifies arbitration before the AAA as the default dispute-resolution method also specifically mention the AAA Rules to avoid being considered ambiguous about whether the parties intended to apply the AAA Rules?

2. Under the plain text of the Federal Arbitration Act, courts—not arbitrators—decide gateway issues, such as whether there is an agreement to arbitrate and what controversies does it cover. Procedural questions, however, are reserved for arbitrators. Is the availability of class arbitration a matter for an arbitrator to decide, or for a court to decide?

The Shivkov cert denial isn’t surprising because the incorporation of AAA rules issue that the petitioner attempted to have the Court examine already was rejected, indirectly, in a startling move earlier this term.  The Court heard arguments in December in Henry Schein Inc. v. Archer and White Sales Inc., No. 19-963 on whether a contract’s delegation agreement sending a matter to arbitration “clearly and unmistakably” designated the case for arbitration because the contract had a carve-out provision from arbitration for injunctions.

But in January, just a month after the oral arguments, the Court dismissed the case as improvidently granted, after justices at the hearing appeared to get stuck on whether the incorporation by reference to the AAA rules was sufficient for the clear and unmistakable delegation to arbitration.

The Court a year ago, in focusing on the Henry Schein contract carve-out language in granting certiorari, had denied a cross petition in the case on the incorporation-by-reference issue. The cross petition had asked the Court to address the AAA rules that encompassed a provision that arbitrators decide arbitrability. That denial appeared to have a hand in the Court’s January dismissal of the carve-out language interpretation issue.

At the same time in Shivkov, on the petitioners’ second issue, there have been attempts to revisit class arbitration at the U.S. Supreme Court periodically since the Court’s recent seminal cases reviewing and restricting arbitrators’ power to use a class process without a contract authorization. See Lamps Plus Inc. v. Varela, 139 S. Ct. 1407 (2019); Oxford Health Plans LLC v. Sutter, 569 U.S. 564 (2013); Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (2010).

The Shivkov petitioners contended that the Court has left open the class arbitration determination. They urged the Court to preserve the decision for judges.

For example, last year, the Court declined to hear a case asking whether an arbitrator may compel class arbitration—binding the parties and absent class members—without finding actual consent, instead based only on a finding that the agreement does not unambiguously prohibit class arbitration and should be construed against the drafter. See Cristina Carvajal, “Supreme Court Rejects Decade-Old Class Arbitration Employment Discrimination Case,” CPR Speaks (Oct. 5, 2020) available at https://bit.ly/35WsvHm) (discussing the Court’s second cert denial in the history of Jock v. Sterling Jewelers Inc., 942 F.3d 617 (2d Cir. 2019) (available at https://bit.ly/30yP3eZ)).

The Shivkov petition contended that the agreement to use the AAA means agreeing to the AAA rules, which put the arbitrability question in the arbitration tribunal’s hands–a cousin to the Jock argument, and which achieved the same cert-denied result. 

The Ninth Circuit Shivkov decision linked above stands, and the case, at least for now, is headed for arbitration under the AAA rules, with the appeals court, not the arbitration tribunal, determining that there will not be a class process.

* * *

The author edits Alternatives to the High Cost of Litigation, which CPR Speaks’ owner, the International Institute for Conflict Prevention & Resolution publishes with John Wiley & Sons.

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Highlights from Harvard Law PoN’s ‘Negotiation and Leadership’ Program (Updated July 23, 2021)

By Mylene Chan

The Harvard Law School Program on Negotiation offers a Negotiation and Leadership program several times throughout the year. Last month, faculty consisting of six Harvard University professors–Guhan Subramanian, James Sebenius, Daniel Shapiro, Debbie Goldstein, Robert Wilkinson, and Brian Mandell–taught the program. About 70 professionals and executives from around the world attended.

The program provided training in Interest-Based Bargaining, which was developed by Roger Fisher and William Ury in the 1980s through the Harvard Negotiation Project. The classic popular guide to this Harvard model of “win-win” negotiation and a value-creating mindset is “Getting to Yes: Negotiating Agreement Without Giving In,”by Roger Fisher, William Ury, and Bruce Patton (Penguin Books 2011).

In this approach, parties negotiate based on their interests and not their positions, as in traditional bargaining. Parties shift their view of the opposition from adversaries to collaborators, and by doing so, they can then explore the deeper interests underlying their positions to identify potential trade-offs and win-win opportunities.

The Interest-Based Bargaining model can apply in any cultural setting because the core negotiation principles are universal despite variations in communication and presentation styles.

The May 2021 session took place over the course of six half days. Each day, a different teacher presented a new topic and assigned a negotiation exercise adapted from real-life Harvard case studies to practice implementing the concept. After each negotiation exercise, the faculty tabulated the results for a plenary debrief. 

Guhan Subramaniam opened the interactive sessions by introducing the fundamentals of value claiming, also known as single-issue negotiation. Successful value claiming starts with mastering the use of anchors and strategic concessions, while identifying the zone of possible agreement and shaping the counterpart’s perception of it.

Subramanian explained that one must ensure that the negotiating counterpart perceives the process of negotiation as fair, but at the same time, one must deploy concessions at an appropriate rate and scope. Being aware of the influence of the midpoint rule–predicting the final deal price as the midpoint of the first semi-reasonable offer and counteroffer–will make anchors and concessions more effective.

Negotiators can also leverage social proof–the tendency to look at how others behave when making choices–to add pressure on counterparts to conform to articulated norms.

Moving from claiming value, James Sebenius introduced how to create value in multiple-issue negotiations.  Sebenius emphasized that parties must overcome the zero-sum mentality to expand the negotiation pie. Another paramount lesson, he explained, involves understanding the power of probing for information on each side’s underlying interests and valuations. This would lead to discovery of uncommon grounds that negotiators could leverage to strengthen cooperation.  

Sebenius continued by explaining that negotiators should seek strategic moves that offer high value at low cost so both sides are better off.  To maximize value creation, negotiators can also employ multiple equivalent and simultaneous offers.

An unusual technique that Sebenius outlined as a way to overcome sufficiency bias–believing that parties have already done everything to strike the best deal–is to engage in post-settlement settlements. These are settlements in which parties negotiate better and novel terms that were not considered during the initial deal-making process.

Meanwhile, the existing deal remains unaltered unless both deem the post-settlement terms superior to the agreement just signed. Post-settlement settlements capitalize on the trust and goodwill generated during the negotiation to increase joint value creation.

Dan Shapiro presented negotiation from a psychological standpoint through discussing five core concerns of emotions and relationships. Each of the core concerns (appreciation, autonomy, affiliation, status, and rule) serve as a lens to understand and as a lever to improve negotiation.

Shapiro explained that, for example, if a negotiator and the opposing side appreciate one another, the negotiator is more likely to reach a wise agreement. Being appreciated, the opponent will feel more at ease and become more cooperative. Shapiro laid out details of this framework in Beyond Reason: Using Emotions as You Negotiate, which he co-wrote  with Roger Fisher (Penguin Books 2005).

Debbie Goldstein exhorted negotiators not to underestimate the importance of emotions in driving negotiation outcomes. Emotions affect thinking and perceptions of what is happening, shift reservation values, and narrow zones of possible arrangements. The critical lesson is to develop one’s capacity to be a neutral observer of the negotiation so that one can analyze interactive interdependencies, adapt, and deploy appropriate strategies to further the negotiation.

Goldstein and the instructors emphasized listening skills.  If one feels stuck with counterproductive behaviors in negotiation, developing a listening stance to check the understanding of the counterpart’s intentions would help.

Robert Wilkinson built on the concepts covered to bring in more complex organizational challenges. Complex negotiations contain unfamiliar interacting and interconnected elements that challenge negotiators’ abilities to satisfy their interests. Veteran negotiators often wrestle with commonly encountered obstacles such as cultural differences, leadership/organizational problems, spoilers, and radical changes in circumstances.  To make progress in complex negotiations, Wilkinson suggested many techniques–such as generating a sequencing strategy with convincing objectives–to build a winning coalition conducive to reaching a fruitful resolution.

Wilkinson expanded in an email to the author. “When you enter into more complex negotiations, the way in which you manage the process matters far more,” Wilkinson noted, adding, “People often don’t realize the influence they can exert in a negotiation simply by thinking through their process choices. I always encourage people to ask themselves ‘Who am I privileging in this process?’ ‘Who am I excluding?'” Wilkinson’s latest thoughts on negotiation can be found in a recent paper and a podcast available at https://bit.ly/2Uwhgn1 and https://bit.ly/2WcWedx.

Brian Mandell concluded the program by integrating concepts from the previous sessions and offering tactical advice to participants on their real-life negotiation dilemmas. In response to a question regarding how to manage a repeated liar in negotiation, Mandell suggested employing tactical retorts to guide the opponent into revealing the truths, asking questions such as “ Help me understand . . .”; “Walk me through your logic and thinking . . .”; “How do you come to that conclusion?” and “What do you think of that scene?”

Dan Shapiro, who is founder and director of the Harvard International Negotiation Program, commented in an email: “We negotiate all the time–but rarely as well as we could. So PON offers frameworks and tools to help participants hone their negotiation skills. I present a potent method to help negotiators leverage the power of emotions to build authentic relationships, promote information exchange, and achieve value-optimizing outcomes. We’ve applied the model successfully to business and political conflicts around the world, and I love exploring the framework with the exec ed participants, who bring substantial perspectives to our conversations, making for an edifying learning experience!”

The ideas covered in the program are creative and practical. The faculty helped the participants think through habits and behaviors that may not be helpful and how to get unstuck in the moment. Participants left the program with four to five sentences written in small print on a notecard with the essential takeaways from the program. Brian Mandell asked the participants to memorize this aphorism: “Negotiation is the art of letting other people have it your way.”   

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The author, an LLM candidate, at Yeshiva University’s Benjamin N. Cardozo School of Law in New York, is a 2021 CPR Summer Intern.

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Highlights from the June Session of the Harvard Law School Program on Negotiation ‘Mediating Disputes’ Training

By Mylene Chan

The Harvard Law School Program on Negotiation conducted a June 7-11 program called Mediating Disputes. This is a recurring course that the program has offered to executives for many years.

About 50 professionals from around the world, including judges, lawyers, business executives, and nonprofit managers attended the sessions taught by Robert Mnookin, Samuel Williston Professor of Law at Harvard Law School, Gary Friedman, of Mill Valley, Calif.’s Mediation Law Offices, and Sausalito, Calif., mediator Dana Curtis.

Mediating Disputes provides training in the non-caucus “Mediation through Understanding” model of mediation that Mnookin, Friedman, and, along with Friedman, co-founder of the Center for Understanding in Conflict, Jack Himmelstein, of New Rochelle, N.Y., have developed and promoted as teachers and practitioners for more than 20 years at the Center of Mediation in Law and the Harvard Negotiation Research Project.

The Understanding Model is a transparent approach in which conflicts are resolved through deepened understanding. This approach eschews the risks of coercion and manipulation potentially present in some other mediation models. 

A distinguishing feature is that all parties work together in a mediation with everyone present. There are no separate meetings and no shuttle diplomacy where the mediator alone has information from both sides. This arrangement eliminates the opportunity for mediators to manipulate information asymmetry. Apart from resolving that ethical dilemma, working together fosters more extensive mutual understanding between the disputants.

The model starts from the foundational belief that disputants should not caucus when conflicts arise and that, in fact, embracing conflicts is often the best opportunity to create value. By staying together throughout the mediation, even when emotions are high, the disputants are forced to vet their underlying interests, allowing the true issues to surface and bring about more nuanced appreciation of each party’s perspective and interest.

Another distinctive characteristic of the Understanding Model is the emphasis on placing ultimate responsibility for whether and how the conflict is resolved on the disputants, not the mediator. It is the parties, rather than the professionals, who ultimately have the best knowledge of what underlies their disputes. Although the intensity of the conflict can obscure their views, the parties hold the key to reaching a resolution of their dispute that best serves them.  When the parties take the lead in resolving the conflict, coercion and manipulation can be eliminated from a mediation, according to the course. 

Mnookin, Friedman, and Curtis presented together during the five-day course. The faculty members engaged the participants in two full mediation stimulations–a personal dispute and a complex business dispute–using the Understanding Model. Each day was dedicated to one of the model’s phases, including contracting, defining the problem and dealing with conflict, understanding law and interests, generating options, and exploring interests and packages.

The faculty demonstrated how each phase should be conducted.  They sent the participants to breakout rooms to roleplay, with guidance and critique, followed by debriefing.  After the day concluded, the three faculty members held office hours for follow-up questions.

The attendees participated in about four hours of simulated mediations using the Understanding Model so they could understand its impact and effect cognitively and viscerally.  

On the final day, the faculty showed a mediation training video produced by the International Institute for Conflict Prevention & Resolution, the host of CPR Speaks, illustrating the caucus model to compare and contrast the different styles. See “Resolution Through Mediation: Solving a Complex International Business Problem” (updated version on YouTube at https://www.youtube.com/watch?v=xTbj-eHwX-w and available from CPR at https://bit.ly/3cFEkW5).

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Reflecting on the processes reviewed in the Program on Negotiation training sessions, Prof. Robert Mnookin noted, “Many lawyer-mediators primarily rely on separate meetings or caucusing for understandable reasons:

(1) it is more comfortable for them because it avoids their having to deal with heated conflict between the parties;

(2) they believe they will be told things in secret that will allow them to create alternatives that facilitate resolution. Besides, many lawyers (who typically select the mediator) prefer it because it gives them more client control.”

“But in my view,” Mnookin continued, “there is far too much reliance on caucusing. The Understanding Model puts the focus on the parties themselves and provides a much greater opportunity for them to take responsibility for helping shape a resolution that may provide a foundation for repairing a damaged relationship.”

Faculty member and Understanding Model developer Gary Friedman noted in an email,  “The model is premised on the idea that the power of understanding is an underutilized power as opposed to the power of coercion, and has the ability to help people find agreements that are more responsive to what’s personally important to them. Understanding in the form of agreements about how the mediation proceeds as well as the ultimate result give the parties control not just over the outcome, but provides them with participation in designing the process as well.”

Faculty member Dana Curtis, like Robert Mnookin, also had misgivings about relying on caucuses in mediation. She stated, “Unfortunately, the caucus model has eclipsed the Understanding Model, especially in recent years. I believe this has occurred for two reasons. Lawyers prize their role as legal adversaries and protectors at the expense of their role as collaborators and problem-solvers. And mediators, especially retired judges and lawyers brought up on settlement conferences, have not acquired the skills and understandings to enable them to offer parties and lawyers an alternative that can lead to a satisfying and meaningful process and, hopefully, resolution, rather than simply a ‘deal.’”

Concluded Curtis: “We would like to change that!”

Details of the Understanding Model can be found at the links above, and in Beyond Winning: Negotiating to Create Value in Deals and Disputes by Robert H. Mnookin, with Scott R. Peppet and Andrew S. Tulumello (Harvard University/Belknap Press 2004).  A mediation training video illustrating the Understanding Model titled Saving the Last Dance: Mediation Through Understanding, with Robert Mnookin and Jack Himmelstein as narrators and Gary Friedman as mediator, is available at the Harvard Program on Negotiation website at https://bit.ly/35hbdEE.  

And for more on recent views of mediation joint sessions and caucusing, see “Decline of Dialogue? Galton, Love & Weiss on Joint Sessions, Caucuses, and the State of Mediation,” CPR Speaks (June 2) (available at https://bit.ly/3daRBGe).

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The author, an LLM candidate, at Yeshiva University’s Benjamin N. Cardozo School of Law in New York, is a 2021 CPR Summer Intern.

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Claim Forfeited? California Appeals Court Upholds Exclusion of Estate Benefits for Non-Compliance with Court-Ordered Mediation

By Mylene Chan

A recently filed petition for review pending before the California Supreme Court raises a controversial issue regarding the fairness of court actions related to non-compliance with court-ordered mediation.

Breslin v. Breslin, 62 Cal.App.5th 801 (Jan. 26) (available at https://bit.ly/3xI7ige), is a probate case for which a cert petition was filed at California’s top Court on May 6.

The case involves a probate dispute regarding interests in a trust, with potential beneficiaries including 24 charities. The court ordered mediation, but most of the nonprofit groups did not attend. The attending parties reached an agreement.

The opinion notes, “The settlement agreement awarded specific amounts to various parties, including the appearing charities, and attorney fees with the residue to the intestate heirs.” Other non-attending parties were not included.

The probate court approved the settlement and explained that appellants lost their interests in the trust by failing to file responses and objections to the initial trustee’s petition and failing to participate or appear in the court-ordered mediation.

The appellate court upheld the probate court’s decision on the ground that the California Probate Code gives courts discretion to order mediation. “A party receiving notice under the circumstances here, who fails to participate in court-ordered mediation, is bound by the result,” the opinion states.  

The appellants argued that the court’s decision conflicts with existing California laws that are designed to honor a decedent’s testamentary intent, protect beneficiaries, avoid forfeitures, and encourage charitable giving. “Under the label of ‘forfeiture,’ the majority opinion has established what amounts to a terminating sanction for beneficiaries who fail to attend private mediation,” the petition states.

In a reply to the cert petition, Kevin G. Staker and Brandon P. Johnson, of Camarillo, Calif.’s StakerLaw Tax and Estate Planning Law Corp., on behalf of respondent David Breslin, who is the estate’s trustee, argued that the appellants were never vested beneficiaries and lost their alleged rights in the trust because they failed to participate in the court-ordered mediation.

Mark A. Lester, Katherine H. Becker, and Eric A. Hirschberg, attorneys at Jones, Lester, Schuck, Becker & Dehesa in Camarillo, Calif., who filed a brief on behalf of intestate respondents Paul G. Breslin and Kathleen Breslin LaForgia, took a similar position, and also noted that affirming the lower court decisions benefits the trust and estate practice. Respondent counsel Lester indicated in an email with the blog’s author that using mediation early in trust and estate disputes means that the vast balance of the estate gets to the beneficiaries rather than the attorneys. 

The California attorney general submitted a six-page amicus curiae letter in support of the appellants’ request that the state Supreme Court grant review of Breslin. The attorney general argued that the case raises important questions concerning whether a court has discretion to waive a beneficiary’s objections to a petition for approval of a settlement agreement and presents significant policy ramifications.

It is uncertain what trends Breslin would set nationally because Breslin raises several challenging issues, such as forfeiture, due process, cost burdens, and bad faith. For now, it does not appear that New York, for example, would endorse a similarly harsh sanction for non-compliance with court-ordered mediation.

In the past five years, in New York state and federal courts, a court has sanctioned parties for non-compliance only in rare cases. For example, in Workneh v. Super Shuttle Int’l, Inc., 2020 WL 3492000 (S.D.N.Y. June 8, 2020), the court dismissed the case; in Kantor v. Air Atl. Med., P.C., 2020 WL 7130732 (E.D.N.Y. Sept. 23, 2020), the court issued default judgments and recommended monetary sanctions, and in Rice v. NBCUniversal Media, LLC, 2019 WL 3000808, (S.D.N.Y. July 10, 2019), the court imposed a monetary sanction.

These three cases involved egregious behavior–such as repeated violations of court orders in a variety of contexts over the course of two years (responses to discovery requests, refusal to provide authorization, failure to appear as directed), and failure to communicate with the court and opposing counsel for almost a year–warranting serious sanctions. It appears, however, that New York judges might not quickly divest parties of rights for non-appearance as did the California court in Breslin.

If the California Supreme Court accepts Breslin and affirms the lower court rulings, it could signal a shift in the impact and effects of court-ordered mediation. The mediation community, as suggested by the cert petition, is watching closely.  Practitioners will want to monitor the case because of its potential to change the standards applied to parties in court-ordered mediation.

***

The author, an LLM candidate, at Yeshiva University’s Benjamin N. Cardozo School of Law in New York, is a 2021 CPR Summer Intern.

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Court Declines Question on Email Service, Leaving an International Arbitration Award Confirmation Intact

By Jacqueline Perrotta

Today, the Supreme Court declined to hear Grupo Cementos de Chihuahua S.A.B. de C.V., et al. v. Compañía de Inversiones Mercantiles S.A., No. 20-1033, an international arbitration case regarding a breached stock-purchase agreement. The petitioner had asked the Supreme Court whether service of process by email, in line with Federal Rules of Civil Procedure 4(f)(3), to a foreign entity’s U.S. counsel violates the Hague Service Convention.

This morning’s order list denying cert in Grupo Cementos can be found here.

The Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters, Nov. 15, 1965, 20 U.S.T. 361, better known as the Hague Service Convention, details what constitutes valid service on parties in another country. The petitioner argued that the dispute falls under the Hague Service Convention and “service,” as instructed by the convention, does not include service by email.

The parties are a Bolivian company, Compañía de Inversions Mercantiles S.A. (“Cimsa”), the respondent in the U.S. Supreme Court case and the original plaintiff, and Mexican companies Grupo Cementos de Chihuahua, S.A.B. de C.V. and GCC Latinoamerica, S.A. de C.V. (collectively “GCC”), which appealed the case to the Court (cert petition available here) and who are the original defendants.

GCC had agreed to give Cimsa a right of first refusal if GCC decided to sell shares it acquired in a third-party cement company. GCC sold shares to a Peruvian company, and Cimsa alleged the sale breached its right of first refusal.

The companies had agreed to arbitrate disagreements arising from the stock deal. In a Bolivian arbitration, Cimsa was awarded several million dollars for the breach of its right of first refusal. GCC challenged this decision; litigation over the arbitration damages award is continuing in Bolivia.

This case came before a Colorado U.S. District Court when Cimsa filed an arbitral award confirmation action through the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which recognizes and enforces foreign arbitral awards.

Cimsa received court permission to serve GCC through its U.S. counsel, which GCC claimed was improper service. The district court found that alternative service through the GGC’s U.S. Counsel was proper under the Hague Service Convention, and confirmed the award.

The Tenth U.S. Circuit Court of Appeals affirmed that service was proper, and also affirmed the district court’s decision to back the Bolivian arbitration tribunal’s decision. Compania De Inversiones v. Grupo Cementos de Chihuahua, No. 19-1151 (10th Cir. 2020) (available at https://bit.ly/3vBlh65).

In holding that the district court correctly confirmed the arbitration tribunal, the Tenth Circuit found that courts construe the New York Convention defenses to enforcing awards “`narrowly’ to ‘encourage recognition and enforcement of commercial arbitration contracts’ citing OJSC Ukrnafta v. Carpatsky Petroleum Corp., 957 F.3d 487, 497 (5th Cir. 2020).

By affirming the district court’s decision, the Tenth Circuit has found that proper service under the Hague Convention includes service by email. By this morning’s Supreme Court action, that case stands, and the arbitration award’s confirmation will not be affected.

At the same time, in its cert petition, GCC had challenged the U.S. award confirmation on the basis that the U.S. courts did not have sufficient contacts for personal jurisdiction, which was also the subject of then-pending U.S. Supreme Court cases, Ford Motor Co. v. Montana Eighth Judicial District Court, No. 19-368 and Ford Motor Co. v. Bandemer, No. 19-369 (S. Ct.).  The Court decided the consolidated cases in Ford Motor Co. v. Montana Eighth Judicial District Court, No. 19-368 (March 25, 2021) (available at https://bit.ly/3wU5sbO).

With today’s cert denial, the Court also declined the petitioners’ suggestion to grant certiorari, vacate the matter, and remand for a decision on personal jurisdiction in accordance with the Ford Motor decision.

GCC’s Supreme Court cert petition can be found at https://bit.ly/2SOkTnl

* * *

The Court today declined to hear a second arbitration case, Amazon.com Inc., et al. v. Bernard Waithaka, No. 20-1077.

Amazon had asked the Court to consider ” Whether the Federal Arbitration Act’s exemption for classes of workers engaged in foreign or interstate commerce, 9 U.S.C. 1, prevents the Act’s application to local transportation workers who, as a class, are not engaged to transport goods or passengers across state or national boundaries.”

Amazon had cited conflicting lower court authority on whether drivers who signed up for an Amazon distribution program and who stayed within state lines could avoid arbitration provisions under the FAA exemption in their disputes with online retailing giant.

Both the federal district court and appeals court declined to compel arbitration. Those decisions stand, with other cases still pending. Earlier this year, in a similar case Amazon linked to today’s decision, the Court declined cert in Amazon.com Inc. v. Rittmann, No. 20-622 (Feb. 22).

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The author, a J.D. student who will enter her second year this fall at Brooklyn Law School, is a 2021 CPR Summer Intern.

[END]

Y-ADR Interview Series #4: Mathias Goh

CPR’s new Y-ADR Interview Series returns with another discussion on in-house work, law practice development, and careers in dispute prevention and resolution.

This week, Y-ADR Steering Committee member Elizabeth Chan, an associate in the London office of Three Crowns, discusses career advice and conflict resolution with Mathias Goh, the Regional Legal Counsel with Carlsberg Asia in Hong Kong.

Goh discusses his career path and conflict resolution experience.  He covers factors to consider when negotiating dispute resolution clauses, with a spotlight on Hong Kong-seated arbitration provisions; the difficulties of multi-tiered dispute clauses; what he looks for when selecting external counsel for a matter and when designating an arbitrator; his experience with virtual hearings; advice for young lawyers–spoiler alert: learn financial concepts–and the importance of reputation and brand as a young lawyer.

Lizzie Chan’s interview is her fourth in the CPR Y-ADR Interview series.  The previous interview, with Timothy Shore on working as an ombudsman, can be viewed on CPR Speaks here. The second interview in the series, with CPR Y-ADR co-chair Jason Klingensmith, Assistant General Counsel, at General Motors Co. in Detroit, is available on CPR Speaks here.  The kickoff interview in the series, with Jason’s GM colleague Brittany Mouzourakis, is available on CPR Speaks here.

Watch above, and share the interview on YouTube here.

CPR’s Young Leaders in Alternative Dispute Resolution educates the next generation of leaders on the full spectrum of dispute prevention and resolution mechanisms, and offers unique networking and professional development benefits to participants. Through periodic seminars and other initiatives, participants are introduced to CPR and gain an insider’s view into how CPR’s community of corporate counsel, law firm counsel, and other experts in the field are using dispute prevention and resolution techniques to manage conflict.

Y-ADR is open to the conflict prevention and resolution community–attorneys, professionals, academics and students–45 years old and younger, or those with less than eight years of professional experience in international or domestic ADR practice or other areas of conflict prevention and resolution.

The Y-ADR Steering Committee is the leadership group for Y-ADR. Jason Klingensmith’s co-chair is Ulyana Bardyn, counsel in the New York office of Eversheds Sutherland.

Follow CPR’s social media at the links at the bottom of this page for developments, and connect with Y-ADR’s LinkedIn page here.

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Beyond the Pandemic: A U.K. Research Center Issues Disputes Guidelines

By Jacqueline Perrotta

In response to the Covid-19 pandemic, the British Institute of International & Comparative Law (“BIILC”) developed the “Breathing Space” series to discuss the impact of the pandemic on the legal and business world, and reflect on preserving commercial relationships further promoting economic sustainability.

The BIILC is a center for research projects, seminars, and publications to advance and develop the understanding of international and comparative law in the U.K. and globally. As part of the Breathing Space series, the first and second “concept notes” focused on the legal and business communities’ reliance on private law and how disputes arise during the pandemic, particularly the burden on the courts, and how dispute resolution can be used to foster rather than impede economic recovery. 

Last September’s third concept note in the series outlined the best practices for dispute resolution, continuing the discussion of how business uncertainty and the effects of the pandemic inhibit economic growth.

Using the guidelines as a different perspective from which to view legal and business disputes in light of the pandemic, BIILC is encouraging efficient dispute resolution, keeping existing relationships intact and strengthening new commercial partnerships.

The guidelines outline three main concepts: (A) interactions between contractual parties; (B) dispute resolution considerations, and (C) ADR and legal proceedings, focused on efficient proceedings and resolution using ADR techniques or other available procedures.

Subpart A, interactions between contractual parties, highlights the conduct of contractual parties and the goal of supporting the relationships by discussing and balancing each parties’ perspective. Subpart B, dispute resolution considerations, focuses on the behaviors geared toward resolving disputes and preventing further aggravation by appointing appropriate parties and addressing each sides’ limitations. Finally, Subpart C tackles dispute resolution through official procedures and efficient resolution, using ADR techniques such as mediation or arbitration.

Meant to supplement a business’s existing practices rather the supplant them altogether, the guidelines are a reminder that maintaining meaningful commercial relationships is essential to the success of the overall economy.  

Helen Dodds, co-drafter of the BIILC guidelines, says the aim is to provide a “menu to help make sensible choices,” and should be referred to generally when tackling disputes and coming to resolutions between parties.

By tailoring the guidelines and revising them slightly to make them more applicable globally, BIILC has provided a simple but effective reference tool. While the focus is on commercial contracts, the guidelines can also apply more broadly to commercial torts matters.

Many U.K. firms and organizations have commented on these guidelines and their potential across legal and business communities, Dodds says, noting the importance behind implementing these best practices and making the guidelines as universal as possible.

The guidelines can be applicable in any culture, jurisdiction, or legal system, says Dodds, who is a member of the Commercial Dispute Resolution Taskforce of LawtechUK, which works on digital initiatives to benefit the U.K. legal services sector. She also is former Global Head of Legal, Dispute Resolution, at Standard Chartered Bank.

The catalyst for the guidelines was the pandemic, but looking forward, the goal is to have the guidelines used broadly and globally, collating the ideas and practices in a succinct and cohesive document.  Dodds says that the guidelines assist in promoting good choices so that business and legal communities can contribute to economic recovery by promoting less confrontational dispute resolution, ultimately preserving commercial relationships and decreasing the costs of disputes.

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The author, a J.D. student who will enter her second year this fall at Brooklyn Law School, is a 2021 CPR Summer Intern.

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EEOC (and Congress) Rolls Back ADR Policy

By Cai Phillips-Jones

A new U.S. Equal Employment Opportunity Commission rule affecting the agency’s conciliation process became effective Feb. 16, but was repealed via a Senate resolution last month. The May 19 Senate move signals “disapproval”; In order for the rule to be fully overturned, the House will have to vote on the joint resolution, and it must be signed into law by President Biden.

Passage is likely in House, where it awaits consideration. The conciliation process rule, devised under the Trump Administration, drew fire from Democrats because it required more information in early stages of discrimination complaints to be provided to employers, and critics said that could spark retaliations.  Republican supporters said the process supported settlements. See, e.g., Daniel Wiessner, “Senate votes to repeal EEOC settlement rule that ID’ed bias victims,” Reuters (May 19) (available at https://reut.rs/3wcIYCG).

Conciliation is a mediation-like process that aims to increase the speed at which EEOC complainants get relief. Conciliation is conducted by an EEOC investigator rather than a third-party mediator, and takes place after the agency has found evidence of discrimination.

The new rule required the EEOC to share the factual and legal basis of any findings of discrimination with employers about findings of discrimination during the conciliation process. The rule aims to increase the transparency of the conciliation process by providing the employer with more information about their potential liability.

The rule has been viewed as a rollback of the Supreme Court decision in Mach Mining v. EEOC, 575 U.S. 480 (2015) (available at https://bit.ly/2TmuMZg), which limited the amount of information employers received about EEOC discrimination findings.

The Senate vote to overturn the new conciliation rule is the latest example of EEOC rules changing since the Biden administration took office. In addition to this rule change, a conciliation pilot program was ended earlier than expected, in January. The pilot program made a small change to the existing EEOC program by mandating that settlement offers be shared with “appropriate levels of [EEOC] management” before being shared with the respondent.

In January, the EEOC also ended a mediation pilot program, which expanded the use of mediation to additional case types and during more phases of the EEOC administrative process. The mediation pilot program was announced on July 7, 2020, and was originally scheduled to run for six months, ending in January 2021. On Jan. 6, the pilot was extended until September, 2021. But the EEOC reversed course weeks later, and under new Biden Administration EEOC leadership, ended the program on Jan. 27.

In addition to expanding the availability of mediation, the pilot program also increased the use of video-conferencing mediation and electronic feedback from mediation participants. The video conferencing and electronic communication elements will be carried forward from the pilot program, as will the ability for parties to request a mediation at any point during the EEOC process.

It appears that the only major part of the pilot not being continued is the expansion of mediation to additional case types. EEOC cases are individually evaluated for referral to mediation. Some case types, however, including class and systemic charges, have historically been exempted from mediation referrals. During the pilot, these exemptions were suspended. The end of the pilot likely signifies a return to exempt status for these cases.

In the Jan. 27 press release terminating the previously extended pilot but noting the popularity and success of EEOC mediation, the new EEOC Chair, Charlotte A. Burrows, endorsed the continuing use of mediation and conciliation when appropriate. “I strongly support the prompt and voluntary resolution of discrimination charges whenever doing so is consistent with our mission,” she noted in a statement in the release, adding, “The Commission will continue to strengthen its conciliation and mediation programs in accordance with the overarching goal of preventing and remedying discrimination in the workplace.”

Burrows was critical of the pilot program’s implementation by predecessor chair Janet Dhillon. As an EEOC Commissioner last July, Burrows, noting that the program hurt the agency’s traditional enforcement role, said that Chair Dhillon “lacks authority to institute this sweeping change unilaterally, because it contradicts policy formally approved by a Commission vote.” See Paige Smith, “EEOC Alters Mediation Process Under New Temporary Program,” Bloomberg Law (July 7, 2020) (available here).

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The author, a J.D. student who will enter his third year this fall at Yeshiva University’s Benjamin N. Cardozo School of Law in New York, is a 2021 CPR Summer Intern.

[End]