The CPR European Advisory Board Presents: “Meet CPR Distinguished Neutrals Based in Europe: Piotr Nowaczyk”

The CPR European Advisory Board (EAB) continues its series “Meet CPR’s Distinguished Neutrals in Europe” and today it presents its next Q&A with Piotr Nowaczyk.

Piotr is based in Warsaw.  In addition to being a CPR Distinguished Neutral, he is a chartered arbitrator, advocate, the former president of the Court of Arbitration at the Polish Chamber of Commerce, a former member of the ICC International Court of Arbitration and a member of the VIAC Advisory Board. https://whoswholegal.com/piotr-nowaczyk

How did you get your start as a neutral?

In 1998 I was included on the roster of VIAC arbitrators and at around the same time I was appointed by the Court of Arbitration at the Polish Chamber of Commerce and recommended by the ICC Polish National Committee.  I believe my background as an ex-judge, advocate admitted in Poznan, Paris and Warsaw, partner at Salans (legacy firm of Dentons) and polyglot with an international background was helpful and has led to over 350 arbitration appointments in the last 20 years.

Who is your dispute resolution hero/heroine?

Pierre Karrer, Robert Briner and Eric Schwartz. 

Starting with the youngest (Eric Schwartz):  In 1991 I came to Paris, having been invited as a visiting lawyer by the Law Offices of S.G. Archibald.  Eric Schwartz was leading the arbitration practice there, together with Sarah François-Poncet.  He was an arbitrator in the dispute over the Egyptian Assuan Dam.  For me, a newcomer from Poland, it was my first introduction to a large-scale arbitration.  Later, our paths crossed many times.  Eric became Secretary General of the ICC Court of International Arbitration.  He wrote, together with Yves Derains, a Commentary on the ICC Rules of Arbitration.  About 12 years later I became a member of the ICC Court.  Eric became a partner at Salans Herzfeld & Heilbronn, where I was also a partner.  I organized his meetings and lectures in Warsaw.  To this day, I admire his calmness and composure.  He always speaks quietly and calmly about the most difficult matters.

Pierre Karrer was my favorite colleague among the members of the ICC Arbitration Court.  We usually sat side by side around the oval table at the court’s monthly plenary sessions.  I admired his comments on draft awards.  They were always light, accurate, often witty, and at the same time positive, even if critical.  We served as arbitrators on a few occasions and he gave me some practical advice.  For example, he advised me to separate the parties’ submissions.  He put the claimant’s submissions into the green file (“because, as at the pedestrian crossing, the claimant always wants to go forward”), and the respondent’s submissions into the red file (“because the respondent usually tries to stop the proceedings”).  The papers produced by the arbitral tribunal and the arbitral institution he assembled in a yellow binder.  In his house, he showed me specially designed shelves on wheels.  Each of them contained binders of documents regarding a particular case.  He moved them easily across the floor.  The files were bound in soft binders (“because they don’t damage the inside of the traveling suitcase”).  He gave me a lot of good advice. He said, “Piotr, if I have one dollar and I give it to you, it will be your dollar, not mine anymore. However, if I give you an idea or give you a thought, it will be mine and your thought, mine and your idea”.  He shared countless ideas and thoughts with me.  His famous multilingual Glossary of Arbitration and ADR was developed and expanded in Warsaw to include arbitration terminology in Czech, Polish and Russian.  It was my idea, his idea, our idea, my thought, his thought, or our common thought.

Robert Briner was the President of the ICC Court when I became a court member for Poland. He was one of the giants of international arbitration, a man of slightly old-fashioned ways, a gentleman always holding fast to his principles.  His three full terms of office making nine full years as president of the world’s biggest court of arbitration had left an indelible stamp on this institution.  He was an elegant, distinguished man, sparing in word and gesture.  He was ready to advise anyone who asked for his advice, in the simplest way possible, discreetly and briefly, sometimes in one sentence.  When the Polish National Committee put forward my candidacy for the ICC Court membership, I asked Robert Briner what he thought of it.  He looked me in the eye and asked: “Why hesitate?”  It’s difficult to forget that conversation which took place many years ago in a very unusual setting. We were both watching a pair of koalas in an Australian eucalyptus wood during a break at the annual congress of the Union Internationale des Avocats.

What is the one piece of advice you would want to give to the younger generation looking for a first appointment as neutral?

It is not easy to start out as an arbitrator.

Arbitrators are late starters.  At first, you have to establish yourself as a barrister, solicitor, judge, academic, diplomat, businessman, politician or expert.  So, it is only later in life that you would typically become an arbitrator.  Young legal eagles tend to champ at the bit, eager to get their first case.  A rude awaking often comes at the first interview when they have to field these brutal questions: “How often have you acted as arbitrator?” “How many awards have you made?” “What is your experience with arbitration?

The young hopefuls are stumped for an answer.  Imagine a patient asking a budding orthopedic surgeon eager to perform his first knee operation: “How many knee operations have you conducted, doctor?”  If the flustered doctor says, “Not even one, but I’d love to make a start,” the patient will go to see a real specialist, preferably one with more than 100 knee operations to his name.

There is no clear recommendation on how to get the first appointment.  David Rockefeller published the book “How to make a million dollars”.  In the preface he stated: “from this book you will learn how to make the second, the third or the fourth million…”.  I would rather not mention his advice on how to get the first million!  Young people are often attracted to arbitration because it offers the opportunity to publish articles, go to conferences and take part in the Vis Moot.  Many of the famous arbitral institutions sell modular training courses scaling up from introductory to advanced, from domestic to international and so on.  I would caution aspiring young arbitrators, completion of such courses does not necessarily mean that appointments will automatically follow.  Young lawyers can include an arbitration clause in every contract drafted and act as a counsel or administrative secretary.  One day, someone will offer an appointment as an arbitrator.  Currently, we have more participants in arbitration conferences than there are arbitration cases on this continent.  Telling young people “under 40” that they are well prepared and will replace us all one day is only partly true.  Parties still prefer experienced arbitrators who have earned their reputation with years of impeccable professional activity.  The patient prefers an experienced surgeon, not a young one, who is eager for the first surgery in his life.

Were you ever the first in doing something?

Yes, I was the first Polish advocate admitted to the Paris Bar back in 1993.

What makes your conflict resolution style unique?

I would like to think it is my intuition.

What has been the most difficult challenge you have faced as a neutral?

Initiating disciplinary proceedings against three young counsels who were intent on seizing my personal bank account to cover their fees in case they lost the arbitration case.

The counsel were defending the family business of one of them.  I was an arbitrator nominated by the claimant.  From the beginning, the counsel treated me as their number one enemy.  They also tried to seize the chairman’s bank account.  We learned about their activities in the middle of the proceedings.  At the hearing, we informed the claimant because we were concerned that doubts may be raised as to our impartiality and independence.  We completed the arbitration and passed a fair award, mostly in favor of these rogues.  We initiated disciplinary proceedings immediately after the award was delivered.  It lasted 5 years and resulted in discontinuation due to the statute of limitations.  The young counsel made friends with the dean of the local bar council. They became his friends and helpers, to the point of becoming members of the local bar council.  They became almost untouchable.  Time went by, and the bar members, including the dean, acting as disciplinary prosecutors dragged out the proceedings to such an extent that the claim ultimately became time barred.

What is the most important mistake you see counsel make?

Typically, they file too many documents and charge too many billable hours!

Now let’s turn to some specific topics:

  1. What is your view on the duration of arbitration proceedings?

Arbitration is like a pregnancy.  It should not be aborted or last longer than 9 months.  Every dispute can be managed within 9 months. It all depends on the energy, proactivity, devotion and dedication of the arbitral tribunal.  One of our roles is to combat delays provoked by counsel.  Unfortunately, counsel want to have as much time (billable) as possible and produce endlessly long submissions.  Counsel for the conflicting parties are able to agree on a highly extended provisional timetable, and then want to impose it on the arbitral tribunal.  Weak arbitrators spread their hands and say: “It is the parties who are the hosts of the dispute. We have to accept their joint proposal”.  I ask the co-arbitrators then: “If they are the hosts, then who the hell are we, the arbitrators? Guests?”

2. With respect to the taking of evidence in arbitration: are you IBA Rules or Prague Rules? And why?

Prague Rules are much simpler and tailor made for Eastern and Central Europe.

What do you see as the next “big thing” in global dispute prevention and resolution?

The big problem is arbitrators’ safety.  It is time to think about arbitrators’ immunity and an international convention to grant it.

For which types of conflicts would you recommend ADR?

I think you can use ADR for all types of conflicts, with very few local exceptions.

Monster Energy and Evident Partiality

Alternatives to the High Cost of Litigation Editor Russ Bleemer is joined by veteran arbitrator-litigators Philip J. Loree Jr., in New York, and Richard Faulkner, in Dallas, to discuss the U.S. Supreme Court’s Monday cert denial in Monster Energy v. City Beverages LLC. The panel also discusses a recent Pennsylvania federal court case that follows Monster Energy, Martin v. NTT Data Inc., No. 20-CV-0686 (E.D. Pa. June 23) (available at https://bit.ly/2VwZi0V).   

By Heather Cameron

The U.S. Supreme Court this morning declined to grant certiorari on a petition requesting clarification of the Federal Arbitration Act’s “evident partiality” standard.

This means that the Court, for now, will not revisit the “evident partiality” standard for arbitrators that can be used to overturn an arbitration award under the Federal Arbitration Act at 9 U.S.C. § 10(a)(2). And a Ninth Circuit decision overturning an arbitration award because a JAMS Inc. arbitrator failed to disclose his ownership ties to the Irvine, Calif., provider, will stand.

The Court’s docket page for the case, Monster Energy Co. v. City Beverages LLC, No. 19-1333, is available HERE.

Monster Energy was an appeal from a Ninth U.S. Circuit Court of Appeals decision last October, throwing out an arbitration award in favor of Monster Energy and ruling that “arbitrators are required to disclose their ownership interests in the organizations they are affiliated with and the organizations’ business dealings with the arbitration parties.” Monster Energy Co. v. City Beverages LLC, Nos. 17-55813/17-56082 (9th Cir. Oct. 22, 2019) (available at http://bit.ly/2PjmXzq); for more background and analysis, see Daniel Bornstein, “Ninth Circuit, Overturning an Award, Backs More Arbitrator Disclosure,” 37 Alternatives 170 (December 2019) (available at https://bit.ly/2NE7Q1x).

The decision is unusual because of its emphasis on the “repeat-player” phenomenon in arbitration.  It highlighted a circuit split over disclosure requirements for arbitrators, and reflected concern over bias in favor of repeat players in arbitration—an issue usually restricted to employment and consumer arbitration cases, not big companies. See Lisa Bingham, “Employment Arbitration: The Repeat Player Effect, 1 Emp. Rights & Emp. Policy J. 189, 209–17 (1997) (available at https://bit.ly/2VuElDJ).

The questions presented to the Supreme Court were:

  1. What is the standard for determining whether an arbitration award must be vacated for “evident partiality” under the Federal Arbitration Act, 9 U.S.C. § 10(a)(2)?
  2. Under the correct “evident partiality” standard, must an arbitration award be vacated when the arbitrator does not disclose that (i) he has a de minimis “ownership interest” in his arbitration firm and (ii) that firm has conducted a “nontrivial” number of arbitrations with one of the parties?

City Beverages, which distributed its adversary’s energy drinks in the Pacific Northwest, alleged that Monster Energy committed breach of contract in 2015 when it terminated their distribution contract without good cause. Monster Energy  exercised the contract’s clause permitting such termination so long as severance of $2.5 million was paid.

Though City Beverages rejected payment, the move was upheld in arbitration and Monster Energy was awarded $3 million in attorneys’ fees.

Overturning that award, the Ninth Circuit agreed with City Beverages’ claim that the arbitrator had failed to adequately disclose his relationship to JAMS and his firm’s relationship with Monster Energy.

In the Supreme Court’s only prior case examining the FAA’s evident partiality  standard, which authorizes vacatur of arbitration awards “where there was evident partiality or corruption in the arbitrators,” a majority agreed to overturn the award in question, but no clear rationale emerged. See Commonwealth Coatings Corp. v. Continental Cas. Co., 393 U.S. 145 (1968) (available at https://bit.ly/3g766Ks); see also Petition for Writ of Certiorari at 6–8 (available at https://bit.ly/2Bo3VU7).

Commonwealth Coatings, written by Justice Hugo Black, interpreted evident partiality as coextensive with the judicial standard, finding that arbitrators must not only be unbiased, “but must also avoid even the appearance of bias.” Commonwealth Coatings, 393 U.S. at 150.

Two of the five justices joining Black’s opinion, however, wrote a narrowing concurrence, penned by Justice Byron White, concluding that vacatur was only appropriate where the arbitrator failed to disclose “a substantial interest in a firm which has done more than trivial business with a party” to the arbitration. Id. at 151­–52. They found that the mere “appearance of bias” disqualification standard for federal judges does not establish evident partiality on the part of an arbitrator. See Petition at 19.

A majority of federal circuit courts have applied something akin to Justice White’s reasoning, according to the petition. “The First, Second, Third, Fourth, Fifth, and Sixth Circuits require those seeking vacatur of an arbitration award for evident partiality to show ‘a reasonable person would have to conclude that an arbitrator was partial to one party to an arbitration.’” Id. (Citations omitted; emphasis is in the brief.)

In its Monster Energy decision, the Ninth Circuit joined the Eleventh Circuit in adopting Justice Black’s less-demanding “reasonable impression of partiality” standard.

In her dissenting opinion in Monster Energy,Ninth Circuit Judge Michelle T. Friedland wrote that such a standard will have the effect of generating endless litigation over arbitral awards, defeating arbitration’s benefits of expedience and finality, echoing Monster Energy’s claims. See Bornstein, supra at 172.

JAMS, noting its role as a neutral organization “that has always refrained from supporting or opposing challenges to the arbitral process or arbitration awards,” filed an amicus brief in support of Monster’s rehearing petition. (Available HERE).

Both Monster Energy’s petition and JAMS’ brief stressed the lack of evidence to support the Ninth Circuit’s assumption that arbitrators might be biased in favor of repeat players since the law review article it cited on the phenomenon described a single study of employment, rather than commercial, arbitrations. See Petition at 31–32.

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Cameron, a second-year Fordham University School of Law student, is a CPR Institute 2020 Summer Intern.

The CPR European Advisory Board presents: “Meet CPR Distinguished Neutrals Based in Europe: Fatos Lazimi”

The CPR European Advisory Board (EAB) continues it series “Meet CPR’s Distinguished Neutrals in Europe” and today it presents its next Q&A, with Fatos Lazimi.

Fatos is a partner at Optima Legal and Financial based in Tirana, Albania.  He is an expert in international arbitration law and has participated in several international arbitration cases.  He is also a member of the ICC Court of Arbitration in Paris. Please see http://optimalaw.al/2016/11/03/fatos-lazimi/

 

How did you get your start as a neutral?

It all began back in 2015 when I was a party appointed arbitrator in a domestic case and at about the same time I was handling an ICC FIDC based case.  I was appointed as an Arbitrator by a well known company based in Albania but with foreign control.  The case was very complex as it dealt with a commercial transaction in the mining industry with a State party.  The proceedings lasted longer than expected due to the involvement of many accountant experts and witnesses of facts.

Who is your dispute resolution hero/heroine?It is very hard to pick just one hero or heroine in the dispute resolution arena, but I am deeply inspired by three esteemed gentlemen arbitrators:

  • Sigvard Jarvin
  • G. Bunny
  • Christofer C. Seppala

Sigvard Jarvin: I have been lucky to be local counsel in proceedings where Mr. Jarvin was an Arbitrator (mainly FIDIC Contract based disputes).  He is extremely skilled in the management of proceedings and he demonstrates an insightful analysis of the cases before him.  His patience and thoughtfulness are very impressive.

Nal G.Bunny: I have not been so lucky to be involved in proceedings where Mr. Bunny has served as an Arbitrator but I have admired him from a distance.  He has an encyclopedic knowledge of FIDIC contracts and his Awards – which I have been able to examine – are always well reasoned.

Christofer C. Seppala: I have been honored and privileged to be in close contact with Mr. Seppala while being Member of ICC Court of Arbitration in Paris.  On the one hand, he could be characterized without any hesitation as a mentor of interpretation and implementation of ICC Rules.  On the other hand, he is an excellent and unique interpreter of FIDIC concepts which are mirrored in many ICC FIDIC based cases. 

What is the one piece of advice you would want to give to the younger generation looking for a first appointment as neutral?

They must recognize that they have to live with their cases so they must make their best professional endeavors to ensure the legal process is full of integrity, independence and impartiality.

What makes your conflict resolution style unique?

I encourage the parties in dispute to try and find the things they have in common and I insist on this as part of the process.

What has been the most difficult challenge you have faced as a neutral?

Probably having to consider and then make a decision on a procedural issue which was requested by one party after the proceedings were declared closed.  I remember a case where the Claimant asked that the proceedings be reopened more than a year and a half after they were declared closed.  It was a very difficult decision to make because the circumstances which triggered the request to reopen were rather exceptional.  In particular, evidence had come to light but for state reasons it was classified as highly confidential.  The particular difficulty I was faced with was a lack of applicable legislation covering the confidentiality matters and their reflection in arbitration proceedings.

What is the most important mistake you see counsel make?

Devising dilatory tactics and unethical conduct.  I have witnessed  cases where the parties’ counsels engage in dilatory tactics.  For example, filing numerous applications seeking permission to postpone decision making and deferring the time for making a draft award.  I view these strategies as harmful for the parties which counsel represents and for the proceedings in their entirety.  They have the potential to undermine a party’s position in the eyes of the Tribunal and this may prompt the latter to make adverse inferences.  In the long run, such delay tactics decrease the advantages of arbitration as a method for resolving disputes

If you could change one thing about commercial arbitration/mediation [please chose one], what would it be?

Adoption and enforcement of strong conflict rules, i.e. procedural controls on appointments so that the parties do not abuse the right to nominate arbitrators.

What is your approach to cybersecurity and data protection in international dispute resolution?

Data protection and cyber risks are becoming more and more important aspects in administration of arbitration proceedings.  I would support a revision of the various institutional rules e.g. ICC, ICSID, LCIA etc. so that they address these issues in stronger terms and impose penalties for breach of the applicable data protection rules.

In preliminary/ early decisions: do you attempt to identify and decide potentially dispositive issues early in the case?

Yes.  It is very important in terms of efficiency of the arbitration proceedings to identify the potential areas of dispute, in particular, those which are fundamental to the whole process, like jurisdiction matters, validity of arbitration agreements, bifurcation of proceedings on liability and quantum etc.

With respect to the taking of evidence in arbitration: are you IBA Rules or Prague Rules?  And why?

Given my professional background and personality I support a more proactive approach in administration of arbitration proceedings and I would therefore opt for the Prague Rules.

What do you see as the next “big thing” in global dispute prevention and resolution?

Extending arbitration to disputes arising from the Belt & Road Initiative.  This initiative is likely to spawn many disputes and ADR could be beneficially deployed.

For which types of conflicts would you recommend ADR?

If I had to pick one, I would say labor disputes.

In your view, what makes CPR unique?

Its philosophy and policy of conducting disputes.  I think CPR has unrivalled experience in procedural approaches and adopting final workable solutions.

Do you have an anecdote you would like to share?

Arbitration is the key but not the open door.

Supreme Court Returns Schein To Its Docket, With a Focus on Arbitrability

By Russ Bleemer & Heather Cameron

Schein is back.

The U.S. Supreme Court this morning agreed to hear a new arbitration petition on an old case. 

The Court granted cert today on the issue of “Whether a provision in an arbitration agreement that exempts certain claims from arbitration negates an otherwise clear and unmistakable delegation of questions of arbitrability to an arbitrator.”

The case, Henry Schein Inc. v. Archer and White Sales Inc., No. 19-963, is expected to be scheduled in the Court’s 2020-2021 term beginning in October. The Court’s docket page is available at https://bit.ly/30L3gX4.

The issue will be on the delegation agreement in the arbitration contract in a case the Court saw and decided last year, Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524 (Jan. 8, 2019) (available at https://bit.ly/2CXAgPw).

The new case, which comes at the request of New York-based health care supplier Schein, will likely center on whether the arbitration agreement’s exclusion of injunctive relief from an arbitrator decision in favor of a court overrides the agreement’s delegation to an arbitrator a decision on whether the matter should be arbitrated.

But that’s also only half the Court’s arbitration story today.  It also denied a cross petition in the case by Texas dental supply company Archer & White Sales on two more arbitration issues that still could still work their way into the decision or, at the least, are guaranteed to see more litigation in state and circuit courts. 

The cross-petition cert denied issues were

(1) Whether an arbitration agreement that identifies a set of arbitration rules to apply if there is arbitration clearly and unmistakably delegates to the arbitrator disputes about whether the parties agreed to arbitrate in the first place; and

(2) whether an arbitrator or a court decides whether a nonsignatory to an arbitration agreement can enforce the arbitration agreement through equitable estoppel.

A question related to the latter issue already appeared just this month in the Court’s decision in an international arbitration case, GE Energy Power Conversion France SAS Corp. v. Outokumpu Stainless USALLC, et al., No. 18-1048 (available at https://bit.ly/2XogerH) (see a CPR Speaks article and video analysis at https://bit.ly/2U1QrDs).

When the Court first decided Schein in January 2019, it reversed the Fifth Circuit and unanimously held that under the Federal Arbitration Act, an arbitrator, not the court, should determine the threshold question of arbitrability—whether an arbitration agreement applies to a particular dispute—when the parties have clearly and unmistakably delegated that question to an arbitrator via delegation agreement, even if the argument for arbitrability is “wholly groundless.” See Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. at 526 (Jan. 8, 2019) (available at https://bit.ly/2CXAgPw).

The case was remanded to the Fifth Circuit to determine whether the parties’ contract contained a delegation agreement, sending the determination of arbitrability to a tribunal rather than a court, and satisfied the Supreme Court’s “clear and unmistakable” intent standard established in First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (available at https://www.oyez.org/cases/1994/94-560).

Rule 7(a) of the AAA Commercial Arbitration Rules, which the parties incorporated into their contract in the case, explicitly gives the arbitrator power to determine his or her own jurisdiction as well as the arbitrability of any claim or counterclaim. (available at https://www.adr.org/Rules).

Following circuit precedent, the Fifth Circuit noted that by incorporating the AAA’s rules, the parties had indeed entered into a delegation agreement for at least some disputes. But in its remand, the Fifth Circuit also found an explicit “carve-out” exception in the contract for disputes, like the one at hand, seeking injunctive relief.

The appeals court, therefore, affirmed the district court’s denial of Schein’s motion to compel arbitration. Archer & White Sales, Inc. v. Henry Schein, Inc., 935 F.3d 274 (5th Cir. 2019) (available at http://bit.ly/33Cb78g).

Schein petitioned the Supreme Court again to challenge that decision. That’s the case and the issue the Court agreed to hear today, while Archer & White’s conditional cross-petition issues were not accepted.

For more on the case and an in-depth discussion of the issues involved, see Philip J. Loree Jr., CPR Speaks, “Schein Returns: Scotus’s Arbitration Remand Is Now Back at the Court” (Feb. 19, 2020) (available at http://bit.ly/3bQXQgl); Richard D. Faulkner & Philip J. Loree Jr., “Schein’s Remand Decision: Should Scotus Review the Provider Rule Incorporation-by-Reference Issue?” 38 Alternatives 70 (May 2020) (available at https://bit.ly/2C6Ksap), and Richard D. Faulkner & Philip J. Loree Jr., “Why the U.S. Supreme Court Should Review Whether Arbitrability May Be Incorporated by Reference,” 38 Alternatives 87 (June 2020) (available athttps://bit.ly/2YB0zVj).

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Bleemer edits Alternatives at altnewsletter.com for the CPR Institute.  Cameron, a second-year Fordham University School of Law student, is a CPR Institute 2020 Summer Intern.

Supreme Court Declines to Hear a California Supreme Court Case on Arbitration and Unconscionability

By Seorae Ko

Alternatives editor Russ Bleemer is joined once more by Richard Faulkner and Philip Loree Jr., this time talking about the Supreme Court recently declining to hear a California Supreme Court case on arbitration and unconscionability, OTO LLC v. Kho, discussed below

The U.S. Supreme Court this morning declined a certiorari petition ona California Supreme Court decision to render a wage arbitration agreement unenforceable as procedurally and substantively unconscionable.

While the issue of unconscionability overhangs the breadth of arbitration jurisprudence, the Supreme Court has used the Federal Arbitration Act to preempt such concerns in favor of arbitration’s predominance. AT&T Mobility LLC v. Concepcion, 563 U.S.333, 344, 348 (2011). Today’s cert denial can be seen as a divergence from the pattern.

On the other hand, today’s declined case, OTO LLC v. Kho, No. 19-875, reinforces the California’s top Court decision that, though it found in favor of the employee opposing arbitration, permitted an agreement to arbitrate wage disputes “so long as it provides an accessible and affordable process.” The California decision follows AT&T Mobility in that it states that the “FAA preempts a state-law rule that categorically prohibits an adhesive arbitration agreement from requiring an employee to waive access to a Berman hearing.”

The Berman hearing is a California administrative process designed to provide a quick, informal, and affordable method for resolving disputes over unpaid wages, according to a brief filed in the case by the state’s labor commissioner. (See below.)

The California Supreme Court OTO decision held that a court “faced with a petition to compel arbitration under these circumstances must grant the petition unless the party opposing the petition asserts a valid contract defense.”

In the case, the parties contested the enforceability of an arbitration agreement on wage disputes, which the employee, Ken Kho, challenged as unconscionable. OTO L.C. v. Ken Kho, 447 P.3d 680 (Cal. 2019) (available at https://casetext.com/case/oto-llc-v-kho-1).

The California Supreme Court first noted that general contract defenses such as unconscionability may be applied to invalidate arbitration agreements without contravening the FAA or state arbitration acts, citing Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC, 282 P.3d 1217, 1231 (Cal. 2012)).

The opinion then evaluated the agreement’s substantive and procedural unconscionability on a “sliding scale,” and stated that substantive fairness must be considered in the context of the agreement’s procedural unconscionability, citing Armendariz v. Foundation Health Psychcare Services, Inc., 6 P.3d 669, 689 (Cal. 2000); Sanchez v. Valencia Holding Co., LLC, 353 P.3d 741(Cal. 2015)).

Ultimately, the California Supreme Court ruled that the arbitration agreement in question was unenforceable as unconscionable. It found that the agreement was made under such oppression and surprise as to produce a high degree of procedural unconscionability. In light of the substantial procedural unconscionability, the court also found substantive unconscionability in the agreement.

OTO filed a cert petition in January to have the decision reversed. Petitioner argued that the California Supreme Court’s decision violated U.S. Supreme Court precedent in two ways.

First, the petitioner argued that the decision went against precedent mandating that the FAA preempt state rules discriminating against arbitration. The California Supreme Court’s comparative approach to substantive unconscionability, unique to arbitration agreements, failed to place arbitration agreements on equal footing with other agreements. Brief for Petitioner at 4 (citing AT&T Mobility, 563 U.S. at 339-340 (2011)) (available at https://www.supremecourt.gov/DocketPDF/19/19-875/128316/20200113114622841_OTO%20cert%20petition.pdf).

The petitioner connected this approach to a broader trend in the California Supreme Court to adopt “sharply anti-arbitration rules, only to be reversed by this Court.” Brief by Petitioner at 13 (citing DIRECTV Inc. v. Imburgia, 136 S. Ct. 463, 468-471 (2015); AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339-340 (2011); Preston v. Ferrer, 552 U.S. 346, 353-354 (2008); Perry v. Thomas, 482 U.S. 483, 492 n.9 (1987); Southland Corp. v. Keating, 465 U.S. 1, 16 n.11 (1984)).

Citing Sonic-Calabasas A Inc. v. Moreno, 247 P.3d 130 (2011) (Sonic I), the petitioner explained that the California Supreme Court’s substantive unconscionability analysis was a method devised to reach “effectively the same result” as its decision in Sonic I, which had been vacated by the Supreme Court for violating the equal treatment principle. Brief for Petitioner at 13. The Sonic I decision had been condemned because its class-arbitration rule uniquely addressed arbitration agreements; by the same reasoning, the petitioner suggested, the OTO decision could not stand.

Second, the petitioner, an auto dealership, argued that the decision went against precedent mandating the FAA to preempt even a general contract defense if it interferes with the “‘fundamental attributes of arbitration,’ including lower costs, greater efficiency and speed, and the ability to choose an expert adjudicator to resolve specialized disputes.”

Accordingly, a contract defense erecting “preliminary litigating hurdles” that destroy the “prospect of speedy resolution” is preempted by the FAA. Brief for Petitioner at 6 (citing AT&T Mobility, 563 U.S. at 344, 348). The petitioner argued that the California Supreme Court’s approach erected such a litigating hurdle because it required a prolonged fact-intensive inquiry. Brief for Petitioner at 17 (referring to American Express Co. v. Italian Colors Restaurant, 570 U.S. 228 (2013)).

A particularly salient point pursued by the petitioner focused on the California Supreme Court’s substantive unconscionability analysis. The petitioner suggested that the court condemned the arbitration agreement, which it claimed covered a wage dispute with the respondent, a service technician, as a time-consuming hurdle to litigation when the agreement consumed time because it “offered too many of the protections of civil litigation.” Brief for Petitioner at 12. (Emphasis is in the brief.) Such an approach evaluates an agreement to be substantively unconscionable for the reason that it tries too hard to avoid unfairness.

The petitioner also stressed that the case holds enormous significance in “safeguard[ing] the [FAA]’s commitment to the enforceability of arbitration agreements.” Brief for Petitioner at 19.

Petitioner OTO was not alone in its view. Five amicus briefs were filed in support of the objections. Cautioning against “judicial hostility towards arbitration” (Amicus Brief by Atlantic Legal Foundation at 2 (citing Nitro-Lift Techs., L.L.C. v. Howard, 133 S. Ct. 500, 503 (2012) (per curiam)) (available at https://www.supremecourt.gov/DocketPDF/19/19-875/133006/20200213191401278_19-875tsac%20Atlantic%20Legal%20Foundation%20%20-OTO%20v%20Kho%20FINAL.pdf)), they called out the decision below as “a thinly veiled effort to bar wage-dispute arbitration altogether.” Amicus Brief by Washington Legal Foundation at 8 (available at https://www.supremecourt.gov/DocketPDF/19/19-875/133008/20200214090311910_19-875%20tsac%20Washington%20Legal%20Foundation.pdf).

The petitioner’s reasoning on both the equal treatment principle and the litigating hurdle assessment found support in the amicus briefs.

On the other side, respondent Kho argued that the California Supreme Court’s decision was consistent with the Supreme Court’s arbitration precedents. Brief for Respondent California Labor Commissioner at 10 (available at https://www.supremecourt.gov/DocketPDF/19/19-875/142627/20200429130457818_No.%2019-875%20DOJ%20CA%20FINAL%20BIO.pdf). Pointing to the California courts’ tradition of comprehensive and contextual approach to unconscionability, the respondent emphasized that OTO had offered “no conflicting case remotely similar which creates a need to hear [the] case.” Brief for Respondent Ken Kho at 18 (available at https://www.supremecourt.gov/DocketPDF/19/19-875/142640/20200429135355866_OTO%20v.%20Kho%20Opposition%20to%20Petition%20for%20Writ%20of%20Certiorari%2019-875.pdf). The respondent further asserted that, instead of disfavoring arbitration, the California Supreme Court had promoted arbitration by “requir[ing] an arbitration procedure that has all of the ‘fundamental attributes of arbitration.’” Brief for Respondent Ken Kho at 25.

As a tangentially related matter, Kho also challenged the jurisdiction of the Supreme Court, arguing that petitioner had failed to establish either that the FAA applies or that the dispute effects commerce as per the commerce clause. Brief for Respondent Ken Kho at 27.

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The author, a second-year Harvard Law School student, is a 2020 CPR Institute Summer intern.

Holding There Is No Treaty-FAA Conflict, Supreme Court Permits Equitable Estoppel for International Arbitration Parties

By Russ Bleemer

Philip J. Loree and Richard D. Faulkner discuss the GE Energy v. Outokumpu Supreme Court decision with Alternatives editor, Russ Bleemer

Seeing no conflict between key international arbitration enforcement law implemented by the Federal Arbitration Act and state laws, the U.S. Supreme Court today permitted a company that was not a party to an arbitration contract to make its case in using the doctrine of equitable estoppel to enforce an arbitration agreement.

GE Energy Power Conversion France SAS Corp. v. Outokumpu Stainless USALLC, et al., No. 18-1048 (available at https://bit.ly/2XogerH), reverses and remands an Eleventh U.S. Circuit Court of Appeals decision that said that GE Energy, which provided motors to Outkumpu via a general contractor, could not use the contract between Outokumpu and the general contractor to take the case to arbitration.

A unanimous opinion written by Justice Clarence Thomas held that the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (available at https://bit.ly/2ZVazuK), which is codified in United States in the FAA’s second chapter, does not conflict with domestic equitable estoppel doctrines that permit the enforcement of arbitration agreements by nonsignatories.

On remand, GE Energy will be able to use the equitable estoppel doctrine to invoke the arbitration contract between Outokumpu and the general contractor, and argue that the contract contemplates that nonparty suppliers to the general contractor may use arbitration to settle disputes.

Much of the opinion centered on the role of nonparties in invoking arbitration agreements under the international and national laws, deploying, in Thomas’s words, a “textual” analysis of the Convention and the FAA.

The predecessors and affiliates of Outokumpu, a Calvert, Ala., steel manufacturer, signed a contract for the construction of three mills. The contract contained an arbitration clause. The construction company subcontracted for nine motors to run the plants from petitioner GE Energy. When Outokumpu filed suit against GE Energy after it refused repairs on the motors, all of which failed, GE Energy asked a court to compel arbitration under the Outokumpu-general contractor agreement, also objecting to Outokumpu’s attempted federal-court joinder of foreign insurers.

GE Energy was not a party to the Outokumpu construction contract. Still, an Alabama federal district court granted GE Energy’s motion, and Outokumpu appealed to the Eleventh Circuit, which reversed and sent the case back to the trial court.

The Supreme Court today reversed again, remanding the case back for further proceedings, likely eventually to the district court, which had granted GE Energy’s motion to compel arbitration with Outokumpu and an insurer. But the lower court had granted the arbitration request because it said that, in its role as a subcontractor, GE Energy qualified as a party under the contract.

The Supreme Court today used the opinion to uphold the principle of equitable estoppel, which didn’t figure in the trial court’s decision.

The Eleventh Circuit had reversed the trial court, rejecting arbitration, because it said that the Convention required that the party actually sign an arbitration agreement, excluding nonparties’ ability to invoke the contract using a state law doctrine like equitable estoppel.

Thomas’s reasoning started with the FAA, which he wrote “permits courts to apply state-law doctrines related to the enforcement of arbitration agreements.” That would allow the application of states’ equitable estoppel doctrines. 

The opinion states, “Generally, in the arbitration context, ‘equitable estoppel allows a nonsignatory to a written agreement containing an arbitration clause to compel arbitration where a signatory to the written agreement must rely on the terms of that agreement in asserting its claims against the nonsignatory.’” 21 R. Lord, Williston on Contracts §57:19, p. 200 (2017).

The Convention, noted Thomas, focuses almost entirely on enforcement, and the short Article II on agreements “in writing,” which discusses the need for a signature, wasn’t in conflict with the FAA-backed equitable estoppel doctrines.

The opinion notes that the New York Convention is silent on the status of nonsignatories. “This silence is dispositive here,” wrote Justice Thomas, “because nothing in the text of the Convention could be read to otherwise prohibit the application of domestic equitable estoppel doctrines.”

The opinion analyzes the treaty’s “negotiating and drafting history,” and says that the Court found “Nothing in the drafting history [that] suggests that the Convention sought to prevent contracting states from applying domestic law that permits nonsignatories to enforce arbitration agreements in additional circumstances.”

The opinion also dodges the need to interpret the significance of the executive branch’s view of the treaty. The United States, which argued in the case in January, backing GE Energy, claimed that the Court should give deference and “great weight” to its amicus interpretation of the treaty, which it had  submitted in another unrelated D.C. Circuit Court of Appeals case. 

Outokumpu countered “that the Executive’s noncontemporaneous interpretation sheds no light on the meaning of the treaty, asserting that the Executive expressed the “opposite . . . view at the time of the Convention’s adoption.”

But Justice Thomas concluded,

We have never provided a full explanation of the basis for our practice of giving weight to the Executive’s interpretation of a treaty. Nor have we delineated the limitations of this practice, if any. But we need not resolve these issues today. Our textual analysis aligns with the Executive’s interpretation so there is no need to determine whether the Executive’s understanding is entitled to “weight” or “deference.”

The Court’s remand order addressed the big issue in the Eleventh Circuit about the New York Convention’s requirement that the agreement in writing needs to be signed by the parties.  Noting that the Convention provisions cited by the Eleventh Circuit address the recognition of arbitration agreements, not who is bound by the agreements, Thomas wrote, “Because the Court of Appeals concluded that the Convention prohibits enforcement by nonsignatories, the court did not determine whether GE Energy could enforce the arbitration clauses under principles of equitable estoppel or which body of law governs that determination. Those questions can be addressed on remand.”

The opinion concluded by limiting the holding to the issue of the Convention and domestic-law equitable estoppel doctrines, finding no conflict between the two.

Justice Sonia Sotomayor concurred separately, agreeing that the Convention “does not categorically prohibit the application of domestic doctrines. She noted, “however, that the application of such domestic doctrines is subject to an important limitation: Any applicable domestic doctrines must be rooted in the principle of consent to arbitrate.”

Sotomayor said that consent is foundational to arbitration practice.  “This limitation is part and parcel of the Federal Arbitration Act (FAA) itself,” she wrote.

For a discussion of the Jan. 21 oral arguments in the case, see David Chung and Russ Bleemer’s post on CPR Speaks, “Tuesday’s SCOTUS Argument: Can Non-Signatories Compel Arbitration in the United States Under the New York Convention?” (January 22) (available at https://bit.ly/2ZVqPfg). For an examination of the GE Energy parties’ and amicus’s briefs, see “The Friends Speak: Here’s What Scotus Will Decide In the GE Energy International Arbitration Case,” 38 Alternatives 2 (January 2020) (available at https://bit.ly/2TXmcO2).

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The author edits Alternatives for the CPR Institute.  CPR Institute Summer 2020 intern Heather Cameron, a second year law student at Fordham University School of Law in New York City, contributed research. 

Supreme Court Declines Arbitration Case that Would Have Preempted Public Injunction Relief

By Yixian Sun

The U.S. Supreme Court this morning let stand a Ninth U.S. Circuit Court of Appeals ruling that struck a consumer arbitration agreement because it waived litigation including “public injunctive relief,” California’s so-called McGill Rule.

            Specifically, today, the Court this morning declined to hear AT&T Mobility LLC v. McArdle, Docket No. 19-1078, and Comcast Corp. v. Tillage, Docket No. 19-1066, two companion cases that raised a prominent question on consumer arbitration agreements.

            Arbitration experts believed the Court would take the case as a sequel to Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1623 (2018), and AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011), which, respectively, backed individual arbitrations in employment and consumer cases.

McArdle is a Ninth Circuit case concerning the enforceability of a consumer arbitration agreement.  The specific issue, according to AT&T’s petition for certiorari, is that: “[w]hether California’s public-policy rule conditioning the enforceability of arbitration agreements on acquiescence to public-injunction proceedings is preempted by the Federal Arbitration Act (FAA).” Brief for Petitioner at i, AT&T Mobility LLC v. McArdle, No. 19-1078 (available on the Supreme Court’s website at https://bit.ly/2TYos7M).

Under the McGill Rule, any provision that precludes consumers from seeking public injunctive relief–injunctive relief that has the primary purpose and effect of prohibiting unlawful acts that threaten future injury to the general public–in arbitration or in other dispute resolution forums, is contrary to California public policy and thus is unenforceable in California. McGill v. Citibank, N.A., 393 P.3d 85, 86 (Cal. 2017).

In 2019, the Ninth Circuit issued similar holdings in three cases including McArdle; it held that the McGill Rule was not preempted by the FAA, which directed courts to treat arbitration agreements as “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” McArdle v. AT&T Mobility LLC, 772 Fed. Appx. 575, 575 (9th Cir. 2019) (unpublished) (available at https://bit.ly/3eQsmrx); see also Blair v. Rent-A-Ctr. Inc., 928 F.3d 819 (9th Cir. 2019) (articulating reasons for upholding the McGill Rule).

AT&T filed its cert petition in February, seeking to have the Ninth Circuit’s decision overruled. According to the petition, since public-injunction claims focus on third parties’ interests and frequently involve complicated proceedings, they are “fundamentally inconsistent with arbitration’s traditionally individualized and informal nature” protected by the FAA. Brief for Petitioner at 14–20.

Relying on Justice Clarence Thomas’s previous interpretation of the FAA’s saving clause, it added that the McGill Rule cannot be saved because it deals with the enforceability rather than the validity of arbitration clause. FAA Section 2, the source of the saving clause, states “an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S. Code § 2.

Many commentators believed that the petitioners should have had a compelling case if they were able to set foot into the Supreme Court, given the Court’s “35-year history of declaring numerous California laws preempted by the FAA,” and its “unabashedly pro-arbitration Justices” including the Chief Justice John G. Roberts Jr. and Justice Brett Kavanaugh. See, e.g., Mark J. Levin, Possible Supreme Court Review of California’s “McGill Rule” Moves One Step Closer as Ninth Circuit Stays Mandates in Blair Appeals, JDsupra (Jan. 31) (available at https://bit.ly/2XNsFfz); Richard E. Gottlieb & Brad W. Seiling, Arbitration: Will U.S. Supreme Court Step In to Solve California’s McGill Problem? Manatt (Feb. 5) (available at https://bit.ly/2XmEgn5).  See also Alan S. Kaplinsky & Mark J. Levin, “FAA Preemption Petitions Now Ripe for Scotus Conference,” Consumer Finance Monitor (Ballard Spahr) (May 12) (available at https://bit.ly/3eFpOwg).

In addition to AT&T Mobility LLC v. Concepcion, and Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612 (2018), last year the Supreme Court sought to preserve the enforceability and the individualized nature of bilateral arbitration in the context of consumer and employment disputes via Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407 (2019). A major argument made by the petitioners is that Concepcion governed, because granting public injunctive relief would interfere with the bilateral nature of arbitration just as class action does. Brief for Petitioner at 20–22.

Precedents at lower courts on public injunction suits and arbitration are split, however, as AT&T Mobility reported itself in the McArdle cert petition. Brief for Petitioner at 26 (citing McGovern v. U.S. Bank, N.A., 362 F. Supp. 3d 850, 862-64 (S.D. Cal. 2019)).

The petitioners believed that the stakes are high. AT&T Mobility warned that under the Ninth Circuit ruling, it would only take a public-injunctive request for parties to circumvent an arbitration provision, thereby forcing companies to abandon consumer arbitration altogether.

Business interests strongly backed AT&T Mobility’s claim.  In order to support AT&T Mobility and Comcast’s position, more than half dozen pro-business groups, including the U.S. Chamber of Commerce, filed amicus curiae briefs, reasoning that the McGill rule’s deterrence effect against traditional bilateral arbitration will leave both businesses and consumers worse off. See., e.g., Brief amici curiae of The Chamber of Commerce of the United States of America at 7–11.

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The author, a second-year Harvard Law School student, is a 2020 CPR Institute Summer Intern in Cambridge, Mass.

10 Reasons Arbitration Beats Traditional Litigation

Janice_NewBy Janice L. Sperow

  1. Faster

Parties usually get to hearing within a year of filing and even quicker for simpler and expedited disputes whereas a court case will often wend its way through the system for two to five years before trial depending on the jurisdiction. Now add the backlog of closed courts, reduced public funding, criminal case priority, and pandemic-related lawsuits, and arbitration becomes significantly quicker than the court system. Even the decision-making process can be swifter. Most arbitrators render an award within thirty days of closing the hearing, whereas an overworked judge or appellate court may require months to issue a final decision. Traditional litigation’s delay becomes even more troubling when the parties consider the ticking of the pre or post judgment interest clock.

  1. Flexibility

Parties can schedule discovery, c10 Reasons Arbitration Beats Traditional Litigationonferences, deadlines, motion practice, and hearings around their schedule, not the beleaguered, overcrowded court docket. Most arbitrators will accommodate scheduling conflicts and personal plans, whereas the courts expect the parties to work around their calendars. Parties can also narrow the scope of the issues presented to the arbitrator for resolution without the need for a summary adjudication process.

  1. Confidentiality

Parties can ensure confidentiality. Only participants can attend the arbitration because the proceedings remain private unlike traditional litigation open to the public. Even the arbitration filings remain private while anyone can access court filings. Parties may also like the non-precedent setting nature of arbitration, especially if they have similar cases coming behind this dispute.

  1. Affordable

Faster hearings mean lower costs. Instead of the litigation expense mounting over years of protracted conflict, the parties can curtail the amount of discovery, conferences, motion practice, and time to hearing and thereby significantly reduce their attorneys’ fees and costs.

  1. Choice

Parties typically select their arbitrator. They agree upon the decisionmaker of their choice instead of the random assignment of a court judge or the jury pool in traditional litigation.

  1. Expertise

Parties can also choose an arbitrator with specific subject matter expertise, skill, or experience. Especially in highly technical cases, the parties can save a lot of time, expense, and effort when their jurist already understands the landscape. Some parties choose to forgo expert testimony because, unlike the jury, the arbitrator has the specialized knowledge to follow the presentation of evidence without an expert’s explanation.

  1. Simpler

Parties can schedule a quick call with the arbitrator to settle a discovery dispute or email a subpoena request; they do not have to file a costly motion with proper notice. Most arbitrators relax the rules of evidence and eliminate burdensome procedures.

  1. More Predictable

As every seasoned litigator knows, no one can predict how a jury will decide. Arbitrators, however, pride themselves on following the law, applying it to the facts, and eschewing emotional appeals. They remain far less susceptible to sympathy than a jury.

  1. Control

Parties can control the arbitration process either through their arbitration contract or by post-dispute agreement. They decide how much discovery to afford, what law will apply, which procedural rules will apply, where the dispute will be heard, how the dispute will be heard – in person, video conference, telephonic, or documentary – and much more. The arbitrator will implement the parties’ choices as long as they agree. In fact, the parties can amend, modify, or reject most arbitral rules of the forum if they want.

  1. Finality

Parties can only appeal arbitration awards on limited grounds. Accordingly, they can put their dispute to rest and get back to business quicker, faster, and cheaper – something we all want to do as soon as the pandemic permits.

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Janice Sperow is a full-time arbitrator and mediator. She serves as a neutral for the San Diego Superior Court (where she also sits as a Judge Pro Tem), American Arbitration Association, the International Institute for Conflict Prevention & Resolution, the Financial Industry Neutral Regulatory Authority, the World Intellectual Property Organization, the National Futures Association, and the Better Business Bureau. www.janicesperow.com

 

 

 

The views expressed in this article are those of the author(s) and do not necessarily reflect the views of The CPR Institute.

A Letter from CPR President & CEO, Allen Waxman

It has been a month since my last update to you, and certainly much has happened during this strange and challenging time. I hope that you are finding ways to tend, not only to the health of your businesses and professional lives, but also to yourselves personally. While honoring our responsibilities to our companies and clients/customers, I believe it is of paramount importance during this time also to be gentle with ourselves and each other. If it feels difficult, it is because it is difficult! We are trying to take the same counsel at CPR.  Our staff has all been working remotely, and finding ways to connect with each other over diverse platforms.  I now know the look of the kitchens, living rooms or guest rooms of each of my colleagues.  That takes us to a whole new level!

At the same time, I am so very proud of our staff in being true to our mission – managing conflict to enable purpose.  We have continued to offer insightful programming on how to prevent and resolve disputes most effectively during this time while also providing our dispute resolution services.  Your engagement and support (financial and otherwise) for us is more important than ever to enable us to pursue our mission.  Thank you.

I thought I would take this opportunity to review with you some of our activities over the last month.

CPR DISPUTE RESOLUTION REMAINS OPEN FOR BUSINESS

CPR Dispute Resolution continues to operate seamlessly, offering our full suite of dispute prevention and resolution services. Given the backlog in the courts, the time for ADR is now.  DRS’ services, rules and protocols, and Panel of Distinguished Neutrals can help resolve matters efficiently and effectively.

Arbitration – For parties in disputes during COVID-19, you may want to consider converting a pending court case to a CPR Administered Arbitration, or entering (with the other party) into an arbitration clause more appropriate under the circumstances. In both cases, you will need to enter into an arbitration submission agreement with your counterparty. Model language for doing so can be found HERE.

Mediation –CPR’s Mediation Services are also available to assist businesses in these difficult times. You can find more information on these services HERE. In addition, CPR has just announced the upcoming launch of a new COVID-19 Flat Fee Mediation Program, in collaboration with Legal Innovators and FTI Consulting, to resolve disputes below $5 million. That program is being kicked off with a free May 13 webinar.

Dispute Prevention – We have launched a new Dispute Prevention Panel, comprised of neutrals who have the experience to facilitate resolution of a dispute before it becomes a legal conflict.  You can find more information HERE.

Because our offices remain closed, new filers should continue to submit electronically at cprneutrals@cpradr.org, and all payments should be made via credit card or wire transfer (please specify in your cover email how you would like to pay); paper filings cannot be accepted. To send files via Voltage encrypted email, please email herickson@cpradr.org to be authorized.

NEW PROGRAMMING

We recently hosted one of many programs that are part of our COVID-19-related focus, titled “Stability in the Pandemic: Personal, Professional and Global Targets.” This webinar featured renowned academics Lela Love, Professor of Law and Director of the Kukin Program for Conflict Resolution at Cardozo Law School, and Sukhsimranjit Singh, Assistant Professor of Law and Practice and Managing Director of the Straus Institute for Dispute Resolution at Pepperdine University Caruso School of Law. The speakers discussed holistic methods to approach conflict while social distancing, touching on key mediation strategies and self-care techniques to create a positive and conflict-free living and work space. A recording will be available soon and can be found in our “ADR in the Time of COVID-19” section, along with numerous other resources, HERE, and I encourage you to explore and check back often for updates.

SOCIAL DISTANCING – BUT STILL SURGING AHEAD ON ALL FRONTS

CPR continues to forge ahead and grow in numerous other ways I am delighted to share with you.

New Partnerships – CPR recently announced a strategic partnership with the International Association of Defense Counsel (IADC), through which IADC named CPR as a recommended ADR services provider. The IADC will be promoting CPR membership, DRS services, and arbitration and mediation rules to its 2,500 members, which in turn will gain access to valuable CPR benefits, resources and discounts, including CPR membership and other joint programming opportunities. And this collaboration is bearing almost immediate fruit, in the form of our upcoming joint webinar, “Resolving Legal Disputes in the Era of COVID-19.”

Support for Remote Video Arbitrations – Ever responsive to the changing legal landscape, CPR quickly convened a task force that created an Annotated Model Procedural Order for Remote Video Arbitration Proceedings. The model order puts into one, user-friendly document the best practices that the arbitration community needs to navigate remote video hearings. This new model procedure is a perfect example of what CPR can do and does regularly – harnessing the rich insights and vast experience of its membership to create timely and cutting-edge resources that both benefit users and enhance the capacity for ADR, in general.

The Drive for Diversity Continues – Since my last update, CPR also took a further step toward promoting diversity in alternative dispute resolution (ADR) by launching a new clause to be used by parties who wish to pre-commit to a diverse panel of neutrals in a future dispute to be resolved by arbitration. Read the full press release HERE.

New Data Security Resources – CPR continues to take steps to help parties and neutrals address the challenges of maintaining data and cybersecurity in ADR matters. In our new website section, you will find information relating to communicating with CPR on case-related matters, cybersecurity in arbitration and other ADR proceedings, data protection and the CPR online dispute resolution platform, as well as other technology tools and member discounts for e-filing services.

Networking for Neutrals – CPR has continued its role of providing service to the ADR community by convening three Neutrals Forums in different time zones to provide a space for the exchange of questions, learning and best practices for remote proceedings during the time of COVID-19. Participants were able to discuss issues that have arisen or are anticipated to arise in such proceedings such as the potential for witness coaching and the handling of exhibits during such procedures. The CPR Annotated Model Procedural Order was circulated to attendees and several of its provisions highlighted. Neutrals, please watch your email inbox for future invitations.

A RICH SCHEDULE OF UPCOMING PROGRAMMING

Our events calendar continues to be as relevant as it is robust. Upcoming virtual events include:

New events are scheduled regularly, so be sure to check our website Upcoming Events section regularly for new offerings.

STAY SAFE AND STAY STRONG

This has been a trying but also a productive time.  Keep engaging with us as we navigate this new normal together.  We in the CPR community are a resilient and resourceful bunch, and I am confident that, with generosity and patience, we will continue to overcome these challenges together.

As always, please let us know if you have any questions or concerns, or just let me know how you are doing. (Instead of hitting reply, please drop me a note at awaxman@cpradr.org to make sure I see your message quickly.)

Warm regards,

Allen Waxman

Supreme Court Declines To Hear Arbitration Case on ‘Equal Footing’

The U.S. Supreme Court this morning declined to hear an appeal in an Oklahoma arbitration case on the so-called equal-footing principle—the idea that the Federal Arbitration Act prevents courts and legislatures from targeting rulings and laws to arbitration agreements, and instead requires  them to place arbitration on an equal footing with other contracts.

The Court denied cert on Tamko Building Products, Inc. v. Williams, Daniel, et al., No. 19-959 (case documents including party briefs available on Scotusblog at https://bit.ly/3dcPrn7).

The Oklahoma Supreme Court case declined to enforce an arbitration agreement between homeowners and shingle manufacturers where the arbitration agreement was “printed on shingle wrapping viewed only by contractors and then discarded.”

Tamko, a Galena, Kansas, building supply company, contended that the Oklahoma court’s decision violated the principle in the Supreme Court case of Kindred Nursing Ctrs. Ltd. P’ship v. Clark, 137 S. Ct. 1421 (2017) (available at https://bit.ly/2YvMji9), which held that the FAA couldn’t be held to higher standards than other contracts.

Tamko, according to its reply brief filed last month with the Court, contended that the Oklahoma Supreme Court “found an agency relationship that empowered contractors buying shingles to bind homeowners to the terms of sale concerning matters such as price and delivery, but not arbitration—because of the importance of the jury-trial right.”

But, it continued, “That decision blatantly violates the FAA’s equal-footing principle.”

As a result of the cert denial, the Oklahoma Supreme Court’s decision that the homeowners “never had an opportunity to make a knowing waiver of access to the courts,” stands, along with its reversal of a trial court order remanding the case for trial.