Getting Online Justice, from AALS’s Annual Meeting

By Ellen Waldman

At the January American Association of Law Schools annual meeting, the organization’s Section on Alternative Dispute  Resolution teamed with the Section on Commercial Law and Consumer Law, and the Section on Creditors’ and Debtors’ Rights, to host a panel discussion titled “Online Dispute Resolution in the Post-Pandemic Era.”

The virtual panel featured speakers Alicia  Bannon from the Brennan Center for Justice at NYU Law School in New York City; Prof. Jean Sternlight from the University of Nevada, Las Vegas William S. Boyd School of Law, and U.S. Bankruptcy Judge Christopher Lopez, of Texas’s Southern District in Houston. The moderators were Prof. Christopher Bradley of the University of Kentucky’s J. David Rosenberg College of Law, in Lexington, Ky., and Prof. Amy Schmitz from Ohio State University’s Moritz College of Law, in Columbus, Ohio.

Noting that the pandemic pushed many forms of dispute resolution, including trials, into a virtual format, the panel focused its attention on both the promise and peril of widespread adoption of online dispute resolution. 

On the promise side of the ledger, panelists agreed that the shift to virtual platforms had the potential to increase the ease with which disputants could access dispute resolution proceedings, cutting down on cost, time and inconvenience. 

Judge Lopez, who presides over roughly 3,000 individual and corporate bankruptcies and, as of the conference, had conducted about 20 online mediations since proceedings went virtual in early 2020, was particularly enthusiastic about his court’s use of online evidentiary hearings and mediations. He observed that that stressed debtors juggling multiple jobs and parenting commitments need not take time off from work in order to “go to court.” 

Allowing litigants the option to tune-in from their computers and cell phones conserved scarce time and money, helping debtors, in Lopez’s view, “keep their cars” and “stay in their houses.”

But panelists agreed that the rush to pivot online was not without its perils. Alicia Bannon, co-author of a report on best-practice  principles for remote court proceedings, noted that the balance courts were   being asked to strike was delicate: how best to adhere  to public health guidelines while continuing to serve constituent communities, and to expand efficiencies while preserving  fairness.

Courts, she suggested, should not be going it alone, but should engage with a diverse array of stakeholders, including, as noted in the report, “community advocates, public defenders and prosecutors, civil legal service providers, tenant representatives, survivors of domestic violence, public health experts, disability rights advocates, court employees, and more.”  

The panelists emphasized the traditional courthouse as a place where litigants access legal information and guidance, and suggested that alternative forms of support needed to be built into remote proceedings.  Pro se litigants were a particular source of concern as, in addition to being unfamiliar with the justice system, they may have limited computer literacy and may struggle with accessing and engaging with the required technology.

Recognizing and attending to the digital divide was a consistent theme. For those litigants with counsel and a sophisticated mastery of video-camera technique, online proceedings present obvious benefits.  But, for those without counsel and no easy access to or understanding of computer-assisted communication, the dangers presented are equally obvious. Static reception, dropped calls, an inconsistent or shaky camera, distracting background visuals and ambient noise all influence a  disputant’s ability to communicate, absorb information, and engage with other dispute resolution participants.

And, if one aim of dispute resolution procedures is to foster a disputant’s sense of procedural justice–the experience of having a voice and being heard–technology failures can render that goal  impossible.

Prof. Sternlight in particular emphasized the importance of adopting a context-sensitive approach.  Drawing on her research into the psychological impacts of varied forms of technology with co-author Jennifer Robbennolt, Sternlight suggested that different communication channels affect disputant behavior and experience in important ways. 

For example, certain modes of communication are better suited to the expression and understanding of emotion. We can “read” upset or anger better in face-to-face or even video-conference meetings, as  opposed to text or email exchanges.

Similarly, the perceived anonymity of an Internet-based communique can disinhibit disputants who would otherwise maintain a more polite discourse. Asynchronous technological formats such as email can slow down exchanges, leading to more thoughtful and deliberate decision-making. But the leanness of the medium and lack of interpersonal cues can lead to conflict escalation where rapport or goodwill in the relationship is lacking. 

At an earlier moment in dispute resolution’s development, Northwestern University Pritzker School of Law Emeritus Prof. Stephen Goldberg and the late Frank Sander of Harvard Law School advocated for a form of triage where policymakers considered both a dispute’s characteristics and the particular attributes of litigation, arbitration, and mediation, and “matched the forum to the  fuss.” Stephen B. Goldberg & Frank E.A. Sander, “Fitting the forum to the fuss: Factors to consider when selecting an ADR procedure,” 12 Alternatives 48 (April 1994) (available at https://bit.ly/3sAj8sT).  

In today’s environment, panelists urged that we similarly match our technologies to the “fusses” that face us.  When determining whether a dispute should be handled in-person, by phone, via video-conference or through an Internet chat, decision-makers must consider their goals for the process, the characteristics of the disputants, and the nature of the dispute or particular task at hand. See Jean R. Sternlight & Jennifer K. Robbennolt, “High-Tech Dispute Resolution: Lessons from Psychology for a Post-Covid-19 Era,” DePaul Law Review (forthcoming) (Sept. 9, 2021) (available at https://bit.ly/3HPjqBx).

All the speakers acknowledged that online dispute resolution proceedings pose new, previously unknown questions. Judge Lopez said that he has been spending a great deal of time thinking through the confidentiality issues that arise when litigants screen-share sensitive financial information that can be easily photographed and distributed.

He also noted that judges had to ensure that there was no “home court” advantage, and that litigants appearing in person receive no special attention compared to those appearing virtually.  Panelist Alicia  Bannon called attention to a study conducted in an immigration court that revealed detainees appearing virtually in immigration proceedings were more likely to be deported than those facing the judge in person.  Appearing by video alone, however, apparently was not the determinative factor. Rather, those detainees who accessed court via video-conference also accessed legal services at lower rates than their “in-person” counterparts and seemed generally less engaged with the judicial process. In this way, the perception that online proceedings may provide a lessor form of justice becomes a self-fulfilling reality.

The discussion ended on a final point that resonated with the audience of educators. Courts need to train attorneys to be proficient with new online technologies and provide resources for disputants so that they can competently participate in virtual proceedings.

Similarly law schools need to emphasize technological competence as they work to prepare lawyers, mediators, arbitrators and other dispute resolution for our brave, new, online world.

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The author is Vice President, Advocacy & Educational Outreach at CPR.  Her bio on CPR’s website can be found here.

[END]

Nominee Ketanji Brown Jackson’s ADR Work

By Tamia Sutherland and Russ Bleemer

President Biden’s nominee to the U.S. Supreme Court, U.S. District of Columbia Circuit Court of Appeals Judge Ketanji Brown Jackson, is well acquainted with conflict resolution’s role in legal practice from her law firm days.

The 51-year-old was elevated just last June to the appeals court by Biden, but has been on the bench since 2013, serving as a U.S. District Court judge in Washington, D.C. She would be the first black woman Supreme Court justice if she is confirmed.

While her ADR-centric cases on the bench were few, Jackson–who clerked in 1999-2000 for Justice Stephen G. Breyer, whom she would replace, though she wasn’t at the Court for the justice’s seminal arbitration cases–has significant commercial conflict resolution work in her CV.

Most notably, while of counsel in the Washington office of Morrison & Foerster, Jackson did extensive work on the seminal case of Hall Street Associates LLC v. Mattel Inc., 552 U.S. 576 (2008) (available at http://bit.ly/38ELtSU), successfully preserving respondent Mattel’s arbitration award (pending additional court review) and standing for the proposition that the parties cannot expand the scope of review for an award because it is contrary to the Federal Arbitration Act’s mission.

Jackson’s MoFo litigation department work, on both the civil and criminal sides, was preceded by two years as an associate at one of the nation’s highest-profile commercial conflict resolution practices with mediator Kenneth Feinberg.  Jackson was an associate in Feinberg’s Washington firm, then known as the Feinberg Group, in 2002-2003, in the midst of Feinberg’s best-known case, when he served as special master of the September 11th Victim Compensation Fund of 2001. Congress established the fund to aid victims and survivors of the 9/11 attacks; the fund used mediation-style processes to reach out to potential claimants, and evaluated applications, determined appropriate compensation, and disseminated awards.

Judge Jackson described her work at the firm in her Senate Judiciary Committee Questionnaire for Judicial Nominees ahead of a hearing on her nomination last April:

While at the Feinberg Group, I assisted in the negotiated (non-litigation) resolution of mass tort claims. I attended arbitration proceedings and advised client corporations regarding trust payment structures for
resolving mass-tort liability, such as asbestos claims.

She noted later in her disclosure, “my typical clients were large corporations facing mass tort liability. I specialized in mediation and arbitration procedures and in the evaluation of trust structures for the settlement of current and potential (future) tort claims.” She noted that she did not appear in court while working at the firm.

“I recall quite well the superlative legal skills of Judge Jackson while a member of the Feinberg Group Law Firm,” notes Ken Feinberg in an email. He continues:

Ketanji was involved in a series of matters relating to ADR: asbestos mediation, Dow-Corning breast implants mediations and some work on the 9/11 Victim Compensation Fund. Quite apart from her obvious legal skills, she proved to be a creative lawyer looking for paths to resolve complex mass tort litigation outside of the conventional legal system. She quickly recognized that mediation, arbitration and negotiation were cost effective, efficient and an abbreviated way to “get to yes.”

Feinberg concludes, “It was clear to me some 20 years ago that she was destined for greatness.”

* * *

Jackson was confirmed to the D.C. Circuit Court by the Senate 53-44 on June 14. In a statement this morning, the White House noted that the president “sought a candidate with exceptional credentials, unimpeachable character, and unwavering dedication to the rule of law,” but also noted, in anticipation of a close confirmation vote, that “Judge Jackson has been confirmed by the Senate with votes from Republicans as well as Democrats three times.”

Senate Majority Leader Chuck Schumer, D., N.Y., told reporters Friday afternoon he will seek “a prompt hearing” by the Senate Judiciary Committee, to be followed quickly by Senate confirmation to the U.S. Supreme Court seat.

* * *

Judge Jackson further detailed her ADR work in her Senate Judiciary Committee questionnaire. She listed on her questionnaire the sole arbitration case for which she wrote an opinion, CEF Energia B.V. v. Italian Republic, No. 19-cv-3443 (KBJ) (D.D.C. Jul. 23, 2020).  In the case, Jackson granted Italy’s request to decline to confirm arbitration awards.  The two awards in favor of four energy companies against the Italian government were stayed in a Sweden court pending Italy’s challenge to the award, and the companies sought enforcement before Judge Jackson.

Jackson conducted an analysis of the power to stay proceedings in the United States while a foreign arbitral matter is continuing under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, best known as the New York Convention. 

Noting “the ongoing set-aside proceedings that are taking place in Sweden (the primary jurisdiction of the parties’ arbitrations) and the significant interests in judicial economy and international comity that weigh in favor of staying this case,” Jackson stayed the confirmation decision pending the outcome in Sweden.

She wrote that a federal district court “must recognize and enforce a foreign arbitral award ‘unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the said Convention.’” 9 U.S.C. § 207. Furthermore, Jackson found that “a court ‘may refuse to enforce the award only on the grounds explicitly set forth in Article V of the Convention.’”

The applicable grounds for refusal Jackson highlighted from Article V of the New York Convention, were that the agreement is not valid if (1) “award …has been set aside or suspended by a competent authority of the country in which … that award was made[,]” or (2) recognition or enforcement… would be contrary to the public policy of that country. New York Convention Art. V(1)(e), Art. V(2)(b).

But Judge Jackson’s holding to stay the confirmation was supported by her findings that the interest of the judicial economy, and the test in Europcar Italia S.P.A. v. Maiellano Tours, 156 F.3d 310 (2d Cir. 1998), which she wrote weighed in favor of staying the case. Quoting Naegele v. Albers, 355 F. Supp.2d 129, 141 (D.D.C. 2005), Jackson stated that  “[l]itigating essentially the same issues in two separate forums is not in the interest of judicial economy or in the parties’ best interests.”

In concluding her point that the interest of the judicial economy weighed in favor of staying the case, she acknowledged the length of time that had elapsed and wrote:

This Court fully understands that Petitioners have been pursuing recompense from Italy since 2015 and that the resolution in the [Sweden] Court may take one to two more years. . . . But it is not at all clear that proceeding with the instant litigation will necessarily lead to a faster resolution of the complex issues that must be determined prior to enforcing the awards. …

Judge Jackson carefully analyzed each of the six Europcar factors in deciding whether to stay an action under Article VI of the New York Convention in relation to the CEF Energia B.V. facts, concluding that the Europcar factors weighed in favor of staying the case.

She also noted that the European litigation over the awards stemmed from the controversial European Court decision in Slovak Republic v. Achmea B.V., Case C-284/16 (2018) (available at https://bit.ly/2Kf8OmM), in which the court found that “intra-[European Union] treaty arbitration provisions are invalid to the extent that they prohibit judicial review of EU law by EU courts.” Achmea concerned cases under the Energy Charter Treaty—the treaty under which the CEF Energia B.V. arbitrations were conducted.

* * *

In addition to CEF Energia, B.V. v. Italian Republic, Judge Jackson had eight other arbitration-focused cases on her docket covering a range of arbitration issues. In Metropolitan Municipality of Lima v. Rutas De Lima S.A.C. Jackson presided over an issue regarding Federal Arbitration Act Section 10, where the city of Lima, Peru, petitioned and moved for an order vacating an arbitral award that was rendered in favor of the respondent, a contractor. The matter was reassigned to Judge Florence Y. Pan before Jackson could rule on the merits.  

The other cases mostly involved confirmation proceedings.

* * *

Here is how Judge Jackson described her work on Hall Street Associates from her Senate Judiciary questionnaire:

From 2007 to 2008, I was part of a litigation team that represented respondent Mattel in a Supreme Court case involving the section of the Federal Arbitration Act that grants expedited judicial review to confirm, vacate, or modify an arbitration award. I was responsible for reviewing the factual record related to the subject matter of the underlying arbitration, and I drafted parts of both the primary brief for respondent and two supplemental briefs on specified issues the Supreme Court ordered. I also assisted in the preparation of oral argument counsel. The Supreme Court ultimately agreed with Mattel’s argument that the Act’s grounds for vacatur and modification of arbitration awards are exclusive for parties seeking expedited review under the FAA, but remanded the case for a determination regarding whether the parties did, in fact, intend for the arbitration proceeding at issue to be governed by the FAA.

She listed the case as one the 10 most significant litigated matters she has worked on in her career on the Senate Judiciary questionnaire.

The case is often cited for limiting the ability of parties to contract for review of their arbitration awards, though it does not apply to arbitration awards written solely under state laws, where, at least theoretically, parties could contract for expanded review under some circumstances.

Hall Street Associates also left alive the judicial standard of “manifest disregard” of the law for overturning awards under FAA Section 10, which commentators have urged needs clarification.  See, e.g., Stuart M. Boyarsky, “The Uncertain Status of the Manifest Disregard Standard One Decade after Hall Street,” 123 Dick. L. Rev. 167 (2018) (available at https://bit.ly/3slmLTk), and Michael H. LeRoy, “Are Arbitrators Above the Law? The ‘Manifest Disregard of the Law’ Standard,” 52 B.C. L.Rev. 137 (2011) (available at https://bit.ly/3ImK05i).  

The 116-page Senate Judiciary Questionnaire prepared by Judge Jackson containing descriptions of her professional work and education history can be found at https://bit.ly/35vbFSJ.

* * *

Sutherland, a second-year law student at the Howard University School of Law, in Washington, D.C., is a CPR 2021-22 intern. Bleemer edits Alternatives to the High Cost of Litigation for CPR.

[END]

Justice Breyer’s ADR Legacy

By Andrew Ling

U.S. Supreme Court Justice Stephen G. Breyer’s retirement announcement last month puts the focus on his replacement, but it also requires looking back at the justice’s record. Serving more than two decades on the Court, he has made important contributions to U.S. jurisprudence on arbitration, in both domestic and international contexts.

Breyer officially retired on Jan. 27, just ahead of the Court’s winter recess.  It returns this week, with an opinion expected soon on the one arbitration case argued so far this year, Badgerow v. Walters, No. 20-1143 (see Russ Bleemer, “Supreme Court Hears Badgerow, and Leans to Allowing Federal Courts to Broadly Decide on Arbitration Awards and Challenges,” CPR Speaks (Nov. 2)), and four more arbitration arguments slated for next month.  See Russ Bleemer, “The Supreme Court’s Six‐Pack Is Set to Refine Arbitration Practice,” 40 Alternatives 17 (February 2022) (available on open access at https://bit.ly/3GDEJEK).

In 1995, in his second year on the bench, Breyer drafted two frequently cited Federal Arbitration Act opinions. In the first, Allied-Bruce Terminix Companies, Inc. v. Dobson, 513 U.S. 265 (1995) (available at https://bit.ly/3uUcJu5), Breyer wrote that the FAA applies to all transactions involving interstate commerce, even if the parties did not contemplate an interstate commerce connection.

The holding endorsed a broad FAA reading—specifically on 9 U. S. C. § 2,  which “makes enforceable a written arbitration provision in “a contract evidencing a transaction involving commerce.”

In First Options of Chicago Inc. v. Kaplan, 514 U.S. 938 (1995) (available at http://bit.ly/2WEXGnF), Breyer set up the general principle that courts, not arbitrators, should decide whether a dispute is subject to arbitration, phrased as the “question of arbitrability.”

To submit questions of arbitrability to arbitration, there must be clear and unmistakable evidence indicating such intent from the parties. As Columbia Law Prof. George Bermann commented, First Options recognizes “the fundamental importance of consent to arbitrate,” and guarantees parties’ rights to an independent judicial determination. See George A. Bermann, “After First Options: Delegation Run Amok,” American Review of International Arbitration (Sep. 2021) (available at https://bit.ly/3oV54bb).

By contrast, when an issue does not raise a question of arbitrability, it should be presumptively decided by an arbitrator. In Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002) (available at https://bit.ly/2yiejeh), Justice Breyer wrote that a FINRA time-limit rule for submission to arbitration is a procedural issue that an arbitral tribunal should decide. This approach achieves a balance between respecting arbitrators’ authority and parties’ consent to arbitrate.

Justice Breyer is recognized as an international arbitration authority. As he argued in his 2015 book, “The Court and The World: American Law and the New Global Realities” (Penguin Random House), the Court must look at foreign and international laws in today’s increasingly interdependent world.

Breyer put his philosophy to use in the investment treaty case of BG Group PLC v. Argentina, 572 U.S. 25 (2014) (available at https://bit.ly/3LIfLb8). The matter dealt with an enforcement action of a foreign investment arbitral award. Breyer, writing for the 6-2 Court, held that a treaty precondition to arbitration is a procedural issue that usually leaves the arbitral tribunal to decide, and the court should defer to the tribunal’s decision on that matter.

But the view was expansive. Breyer cited multiple international authorities and wrote that a bilateral investment treaty should not be treated differently from a contract.

Washington, D.C.-based Paul Hastings partner Igor Timofeyev praised the opinion for bringing predictability to the enforcement of investment arbitral awards in the U.S. See Caroline Simson, “Justice Breyer Set Many Standards for Arbitration Community,” Law 360 (Jan. 27) (available at https://bit.ly/3oSQoJO).

Justice Breyer’s arbitration opinions also reflect his often-noted pragmatic streak. He drafted majority opinions on class arbitration, such as Green Tree Financial Corp. v. Bazzle, 539 U.S. 444 (2003) (available at https://bit.ly/33putSQ) (designating that the decision on the contract in the case about the applicability of class arbitration was for the arbitrators, not the court), and Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407 (2019) (available at https://bit.ly/3696Cb2) (finding that “Like silence, ambiguity does not provide a sufficient basis to conclude that parties to an arbitration agreement agreed to ‘sacrifice[ ] the principal advantage of arbitration,’” and reaffirming that “courts may not infer consent to participate in class arbitration absent an affirmative ‘contractual basis for concluding that the party agreed to do so.’”)

But Justice Breyer also sometimes found himself in the minority. In the seminal consumer arbitration case, AT&T Mobility LLC v. Concepcion, 563 U.S. 133 (2011) (available at https://bit.ly/3LEpkHV), the Court ruled that the Federal Arbitration Act preempted California arbitration law, which barred class arbitration. While Breyer drafted a dissenting opinion in the case, he upheld and applied Concepcion in his majority decision in DIRECTV Inc. v. Imburgia, 577 U.S. 47 (2015) (available at https://bit.ly/3gS8DKQ). He wrote,

No one denies that lower courts must follow this Court’s holding in Concepcion. The fact that Concepcion was a closely divided case, resulting in a decision from which four Justices dissented, has no bearing on that undisputed obligation. Lower court judges are certainly free to note their disagreement with a decision of this Court. But the “Supremacy Clause forbids state courts to dissociate themselves from federal law because of disagreement with its content or a refusal to recognize the superior authority of its source.” . . . The Federal Arbitration Act is a law of the United States, and Concepcion is an authoritative interpretation of that Act. Consequently, the judges of every State must follow it.

For Justice Breyer, “it’s the court’s job to help make government work for real people,” according to a former law clerk. See Richard Wolf, “After 20 Years, Breyer Is High Court’s Raging Pragmatist,” USA Today (Aug. 7, 2014) (available at https://bit.ly/3GTfu1m).

In Breyer’s view, by following judicial precedents, the Court contributes to social stability and allows people to plan their lives. He said, “The law might not be perfect but if you’re changing it all the time people won’t know what to do, and the more you change it the more people will ask to have it changed, and the more the court hears that, the more they’ll change it.” Andrew Chung, “U.S. Justice Breyer Touts Compromise, Democracy, Adherence to Precedent,” Reuters (May 28, 2021) (available at https://reut.rs/3Ju4Wr4).

* * *

The author, a third-year law student at the University of Texas School of Law, in Austin, Texas, is a CPR 2022 Spring Intern.

[END]

‘Oncoming Tsunami’: With CDC Eviction Moratorium Ending July 31, Will ADR Programs Come to the Rescue of Tenants, Landlords, and Courts?

By Mylene Chan

The Covid-19 pandemic has had a number of negative economic effects, and one of the most significant is the exposure of renters across the United States to increased eviction risks.

And mediation, in turn, has been a significant response.

According to Princeton University’s eviction tracking system–monitoring five states and 29 cities in the United States–landlords have filed about 386,000 evictions during the pandemic, including an estimated 6,250 filed last week.

In response, governments at the federal, state, and local levels have developed short-term eviction moratoriums and similar measures to help renters keep their homes. But in the long run, eviction proceedings are likely to rise.

Federal, state, and local governments have adopted a variety of temporary emergency measures aimed at helping renters. For example, in September 2020, the U.S. Department of Housing and Urban Development and the Centers for Disease Control issued a nationwide moratorium on evictions. See the Federal Register announcement, since extended, here.  

This moratorium was challenged by real estate groups, but a U.S. Supreme Court ruling this week allowed it to remain in effect through the end of the month. Alabama Association of Realtors, et al. v. Department of Health and Human Services, et al., No. 20A169 (June 29); see also analysis at Amy Howe, “Divided court leaves eviction ban in place,” Scotusblog (June 29) (available at https://bit.ly/3xhd74c).  

In addition, Congress allocated $46 billion in rental assistance to struggling renters through the American Rescue Plan Act of 2021 and the December 2020 Covid-19 relief package; much of the relief funding, however, has yet to reach struggling renters. See, e.g., “Emergency Rental Assistance through the Coronavirus Relief Fund,” Congressional Research Service (June 8) (available at https://bit.ly/3Ak9vjX).  See also Kristian Hernández, “As CDC’s Eviction Moratorium Ends, States Prepare for Flood of Cases,” Pew Stateline (June 22) (available at https://bit.ly/3AqTHw2).

Several states and cities–such as Maryland, New York, Vermont, Hawaii, Philadelphia and Washington, D.C.–have adopted eviction bans or limitations. These moratoriums have sharply reduced eviction filings during the extent of the pandemic. 

But eviction restrictions will not remain in place indefinitely. After being extended several times, the federal moratorium is scheduled to expire on July 31. (See the CDC press release on the extension at https://bit.ly/3684qNN.) State and local eviction protections are also expected to end at some point this year. As a result, states and cities are preparing for a potential wave of eviction actions in their housing courts once moratoriums lift.

Some states and local governments have attempted to modify eviction procedures to make the process less burdensome on renters. For example, Maine passed a bill instructing landlords to explain the eviction process, options for legal assistance and rent relief, and eviction notices. Nevada and Illinois each adopted a law requiring courts to seal records of evictions relating to defaults during the pandemic.

One possible solution that could help both the courts and renters adapt to the expected rise in evictions is alternative dispute resolution. These programs aren’t new.  But recently, interest has been heightened due to the pandemic, and many U.S. jurisdictions have turned to ADR eviction programs to encourage tenants and landlords to negotiate.

According to the Urban Institute, as of April, there were 38 ADR eviction diversion and prevention programs nationwide. Mark Treskon, Solomon Greene, Olivia Fiol & Anne Junod, “Eviction Prevention and Diversion Programs,” Urban Institute Housing Research Crisis Collaborative (April 2021) (available at https://urbn.is/3qI9C4j).

The states with programs include California, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Maine, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, Ohio, Oregon, Pennsylvania, Tennessee, Texas, and Washington. See https://bit.ly/3xdHMPP, collected by Chicago’s Resolutions Systems Institute.

ADR eviction programs have been successful in several jurisdictions over the past few years. One example is a St. Paul, Minn., housing clinic. Colleen Ebinger & Elizabeth Clysdale, “Justice Served, Housing Preserved: The Ramsey County Housing Court Model,” 41:3 Mitchell Hamline L.J. of Pub. Policy & Practice: Article 10 (2020) (available at https://bit.ly/2V1DaON).

In July 2018, the Ramsey County court—covering part of the Minneapolis-St. Paul area–launched a housing clinic with the target of reducing eviction by 50%  in five years. Eighteen months after implementation, eviction judgments declined, settlements rose, the court trial calendar lightened and expungements doubled.

Another successful eviction mediation program was developed by the Washington University School of Law Civil Rights & Mediation Clinic and the Metropolitan St. Louis Equal Housing and Opportunity Council in St. Louis in 2012. Karen Tokarz, Samuel Hoff Stragand, Michael Geigerman & Wolf Smith, “Addressing the Eviction Crisis and Housing Instability Through Mediation,” 63 Washington U. J. of Law & Policy 243 (available at https://bit.ly/3694AEG).  

In the St. Louis Mediation Project, professional mediators and students provide free mediation services for landlord-tenant cases. In 2018, 71% of pro se landlord-tenant cases mediated by the project resulted in a settlement. More than half of these agreements resulted in a dismissal of eviction proceedings.

There is some evidence that even many landlords support ADR in the eviction context. Last month, the American Bar Association and the Harvard Negotiation & Mediation Clinical Program published a report identifying nationwide best practices to divert eviction filings and enhance housing stability. See “Designing for Housing Stability: Best Practices for Court-Based and Court-Adjacent Eviction Prevention and/or Diversion Programs” (available at https://bit.ly/3yn3FN7).

This research revealed that stakeholders generally supported eviction prevention efforts during the pandemic. More than 70% of the landlords surveyed were willing to discuss tenant non-payment outside of court. 

Report author Deanna Parrish, Clinical Instructor and Lecturer at Harvard Law School’s Dispute Systems Design Clinic, wrote in an e-mail:

Effective eviction prevention and/or diversion programs use a multi-sector and holistic approach to provide parties with a combination of legal representation, quality mediation, cash or rental assistance, and self-help or supportive services. Investing in eviction prevention and/or diversion programs is not just urgent, it is doable. These programs enjoy wide support across landlords, court staff, and tenants. Over 81% of property owners surveyed reported being less likely to pursue eviction if their tenant had access to rental or cash assistance.Court staff and judicial stakeholders reported eviction diversion programs as essential to helping lighten what they described as an “oncoming tsunami” of eviction filings once the CDC moratorium lifts. Tenant advocates have long been calling for legal representation and easily accessible rental and cash assistance, among other interventions, to help increase housing stability. Legislatures and courts should act swiftly to formalize eviction prevention. Doing so would be nothing short of a lifeline for millions of Americans, landlords and tenants alike.

As the Covid-19 pandemic winds down and emergency measures are lifted, alternative dispute resolution eviction programs may soften the blow to tenants as eviction moratoriums end. Although these ADR programs are in the early stages of adoption, there are promising signs that they might help the U.S. economy’s housing segment return to normalcy without significant housing disruptions.

* * *

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

[END]

Let’s Schein Again!

The International Institute for Conflict Prevention and Resolution presents a CPR Speaks blog discussion of the 1/25/2021 U.S. Supreme Court per curiam decision dismissing Henry Schein Inc. v. Archer and White Sales Inc., No. 19-963, and a same-day order declining to hear Piersing v. Domino’s Pizza Franchising LLC, No. 20-695. Alternatives to the High Cost of Litigation Editor Russ Bleemer hosts Prof. Angela Downes, University of North Texas-Dallas College of Law, and arbitrator-advocates contributors Richard Faulkner, also of Dallas, and Philip J. Loree Jr. in New York.

By Russ Bleemer

The panel returns to CPR Speaks and YouTube to analyze the Monday Henry Schein dismissal–a one-line decision–just a month after the Court heard oral arguments on the issue of how a contract carve-out removing injunctions from arbitration affects the delegation of the entire matter to arbitration.

In fact, the Dec. 8, 2020, Henry Schein oral argument repeatedly turned to an issue in the rejected Piersing case on the effectiveness of the incorporation by reference of arbitration rules in designating an arbitration tribunal to decide whether a case is arbitrated, rather than a court deciding whether the matter is to be arbitrated. A cross-petition by Archer and White asking for review of the incorporation by reference of the arbitration contract’s American Arbitration Association rules was declined by the Supreme Court the same day it agreed to hear the carve-out issue last June.

Our panel discussed these issues after the oral argument on this blog.  See “Schein II: Argument in Review,” CPR Speaks (Dec. 9) (available at http://bit.ly/2VXfyIa) (in which the panelists also discuss their work on an amicus brief in the case, a subject that arose in this post’s video).

You can see today’s per curiam decision on the Supreme Court’s website here.

Monday’s Henry Schein dismissal ends a long period of Supreme Court litigation in the case that also included a 2019 U.S. Supreme Court decision. For now, the case returns to the Fifth Circuit for proceedings on whether the parties properly intended to arbitrate the case.

Details on the Supreme Court’s Monday cert denial in Piersing v. Domino’s Pizza Franchising LLC, No. 20-695, are available on CPR Speaks here.

For more analysis on the Henry Schein dismissal, see Ronald Mann, “Justices dismiss arbitrability dispute,” Scotusblog (Jan. 25, 2021) (available at http://bit.ly/2Yh9U4O), in which the Columbia University professor and Scotusblog analyst concludes that

it seems likely that the justices ultimately decided that they couldn’t sensibly say anything about this matter without addressing the question of whether the contract called for arbitration of the gateway question. Because they had declined to call for briefs on that question, it did not make sense to address it here. A logical course of action, then, was to dismiss the matter from the docket, providing a rare victory for a party opposing arbitration.

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The author edits Alternatives for the CPR Institute.

Scotus’s Henry Schein No-Decision

By Russ Bleemer

If the U.S. Supreme Court appeared frustrated at last month’s arbitration argument in Henry Schein Inc. v. Archer and White Sales Inc., No. 19-963, this morning’s one-line decision confirmed it.

The Court today dismissed the entire case without a decision on the merits.  The entire per curiam decision:  “The writ of certiorari is dismissed as improvidently granted.”

You can view it on the Supreme Court’s website here.

The immediate effect is that respondent Archer and White Sales sees a big win:  It will get the determination of whether its long-running case over a medical equipment contract dispute is to be arbitrated made by a judge, not an arbitrator.  A Fifth U.S. Circuit Court of Appeals decision now stands. See Archer & White Sales, Inc. v. Henry Schein, Inc., 935 F.3d 274 (5th Cir. 2019) (available at http://bit.ly/2NC7EmL).

Archer and White contended that a delegation agreement sending a matter to arbitration did not “clearly and unmistakably” send the case to arbitration because of a contract carve-out for injunctions.

With a one-line dismissal, it’s unknown why the Court did what it did. In shutting down the case, it may be backing Archer and White’s and the Fifth Circuit’s view. 

Or it may have reconsidered a point that Henry Schein’s successor status to the contract didn’t sustain its arbitration demand.

Or, in a point returned to repeatedly in last month’s argument, the Court may have botched the case on its own. When it granted Henry Schein’s cert petition on June 15 on the carve-out issue, the Supreme Court simultaneously rejected Archer and White’s cross petition challenging the determination of arbitrability of the case on a question of incorporation by reference. The cross petition contended that the “clear and unmistakable” evidence of an intent to arbitrate was insufficient; the contract incorporated American Arbitration Association rules that include a provision that arbitrators decide arbitrability.

Even though the Court rejected the cross-petition, the issue returned in the December arguments, at times overwhelming the discussion of the question of the carve-out’s effect. For more on the argument, see “Schein II: Argument in Review,” CPR Speaks (Dec. 9) (available at http://bit.ly/2VXfyIa).

One thing is certain:  The Court won’t use a follow-up petition to address the incorporation-by-reference issue, which would have interpreted the standard from the Court’s seminal decision on arbitrability, First Options of Chicago Inc. v. Kaplan, 514 U.S. 938, 944 (1995) (available at https://bit.ly/39fAwcR).

That’s because a case that a petitioner and an amicus stated presented the issue cleanly—unencumbered by the carve-out issue and Henry Schein’s long history, including a 2019 U.S. Supreme Court decision—was denied certiorari 30 minutes ahead of today’s one-line opinion. Details on the Court’s cert denial in Piersing v. Domino’s Pizza Franchising LLC, No. 20-695, are available on CPR Speaks here.

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The author edits Alternatives for the CPR Institute.

[END]

Court Again Rejects Review on Incorporating Rules that Define Arbitrability

By Temitope Akande & Russ Bleemer

The U.S. Supreme Court this morning declined to hear a case that presented a persistent arbitration issue: whether the incorporation of a set of arbitration rules that state that an arbitrator decides whether a case goes to arbitration, instead of a court making the arbitrability decision, provides sufficient “clear and unmistakable evidence” that the parties agreed for the tribunal to make the decision.

It was the second time in eight months that the Court has rejected a significant case on the issue.

Piersing v. Domino’s Pizza Franchising LLC, No. 20-695, would have analyzed the clear-and-unmistakable evidence standard for delegation to arbitrability from the Court’s First Options of Chicago Inc. v. Kaplan, 514 U.S. 938, 944 (1995) (available at https://bit.ly/39fAwcR).  

The question presented by the petitioner, a former employee of two Domino’s franchisers who had a claim against the parent company, was:

In the context of a form employment agreement, is providing that a particular set of rules will govern arbitration proceedings, without more, “clear and unmistakable evidence” of the parties’ intent to have the arbitrator decide questions of arbitrability?

Last June, the Court declined to hear the question on arbitrability in a cross-petition in Henry Schein Inc. v. Archer & White Sales Inc., No. 19-1080 (June 15, 2020), while accepting the case on the original cert petition on another, close issue involving the reach of carve-out provisions in arbitration agreements. 

In its December arguments in Schein, which awaits decision, the discussion of incorporation by reference on arbitrability arose.  See “Schein II: Argument in Review,” CPR Speaks (Dec. 9) (available at http://bit.ly/2VXfyIa). In its brief in Piersing, the petitioner “acknowledges that [the] Court recently denied certiorari of a cross-petition presenting a similar question,” citing Schein, adding, “however, the question is presented in this case cleanly and as a stand-alone question.”

In Piersing, the petitioner worked as a delivery driver for a franchisee of respondent Domino’s, and later got an employment offer from Carpe Diem, another Washington state Domino’s franchisee. While the petitioner intended to increase his hours and earnings, the first franchisee fired him based on a no-poach clause in his employment agreement.

He eventually brought a U.S. District Court class-action suit against Domino’s alleging that the hiring rules violated, among other things, antitrust laws.

Domino’s sought to compel arbitration of Piersing’s claims based on the arbitration agreement between the employee and Carpe Diem.  Domino’s asked for arbitration, according to the Sixth Circuit opinion in the case that was the subject of the cert petition (see Blanton v. Domino’s Pizza Franchising LLC, 962 F.3d 842 (6th Cir. 2020) (available at http://bit.ly/3sWDlrg)), “because the agreement’s reference to the AAA rules constituted a delegation clause in that the AAA rules supposedly provide for delegation.”

The district court held that equitable estoppel applies to permit franchiser Domino’s to enforce franchisee Carpe Diem’s agreement against Piersing and, according to the petitioner’s cert petition brief, “that the clause providing the AAA rules would govern any arbitration amounted to ‘clear and unmistakable’ evidence of Piersing’s and Carpe Diem’s intent to delegate questions of arbitrability to the arbitrator.”

Piersing appealed the district court’s decision. Relying on Rent-a-Center, West Inc. v. Jackson, 561 U.S. 63 (2010), and more, the Sixth Circuit held that the incorporation of arbitration rules that permit the arbitrator to resolve questions of arbitrability is sufficient to delegate those questions to the arbitrator.

Piersing’s Supreme Court cert petition brief analyzed the holdings in First Options, Rent-a-Center, West, and the first Henry Schein decision, Henry Schein Inc. v. Archer & White Sales Inc., 139 S. Ct. 524 (2019), which wrestled with the question of and the standard for who decides arbitrability, the tribunal or the court.

Based on these precedents, the petitioner argued that the existing circuit court analysis allowing for incorporation of rules that included arbitrators determining arbitrability wasn’t “clear and unmistakable evidence” of the parties’ intent to arbitrate.  It emphasized that, particularly for consumers and employees, the cases weren’t sufficiently thorough in light of the First Options standard. The petitioner also noted that the Sixth Circuit’s decision conflicts with the holdings of several state high courts.

Domino’s countered that an agreement incorporating privately promulgated arbitral rules that assign questions of arbitrability to the arbitrator clearly and unmistakably show the parties’ agreement that an arbitrator, not the court, will resolve whether the case is suitable for arbitration.

Domino’s successfully argued for the nation’s top Court to reject the petition and thereby uphold the Sixth Circuit.

An amicus brief in support of the petitioner was filed by Columbia University Law School Prof. George Bermann, who described the issue in the appeal as “a central but unsettled issue of domestic and international arbitration.” Echoing the petitioner, the brief noted the importance of the issue in both Henry Schein Supreme Court cases, but stated that “the delegation question is presented front and center for review in this case.” It also cited the divergence between state and federal court views.

The amicus brief discussed the principle of “competence-competence” in international commercial law—the international equivalent of the arbitrability question under which the tribunal is presumed to be in a position to determine its jurisdiction, and which the Sixth Circuit invoked.  Bermann’s brief discussed the concept under the “clear and unmistakable” agreement standard of parties to arbitrate.

The amicus noted that the competence-competence language does not constitute “clear and unmistakable” evidence. “[A]ll modern arbitral procedure rules contain a ‘competence-competence’ clause,” the brief argued, “so that treating such language as clear and unmistakable evidence of a delegation means that parties will almost invariably lose their right to a judicial determination of what this Court has multiple times referred to as the very cornerstone of arbitration, viz. consent to arbitrate.”

Noting the state-federal divide in the interpretation of whether the incorporation of rules satisfies First Options, the brief concluded, “Only this Court can definitively resolve that issue and ensure that parties do not forfeit their right to a judicial determination of arbitrability unless they manifest that intention clearly and unmistakably.”

For more information on the case and an in-depth discussion of the issues involved, see the Supreme Court’s docket page at http://bit.ly/39Zxed1.

* * *

Akande, who received a Master of Laws in Alternative Dispute Resolution last May at the University of Southern California Gould School of Law in Los Angeles, is volunteering with the CPR Institute through Spring 2021. Bleemer edits Alternatives for the CPR Institute.

[END]

Supreme Court Rejects Decade-Old Class Arbitration Employment Discrimination Case

By Cristina Carvajal

A contentious employment discrimination case now focusing on whether an arbitrator is within her authority to bind a class of employees who did not affirmatively opt-in or consent to class arbitration will not resurface now at the Supreme Court.

This morning, in its first 2020-2021 term order list (available at https://bit.ly/3la3Y72), declined to hear Jock v. Sterling Jewelers Inc., 942 F.3d 617 (2d Cir. 2019) (available at https://bit.ly/30yP3eZ).

The Second Circuit decision in the case last year will return the case to federal district court in New York for more proceedings ahead of arbitration in the 12-year-old-case.

The nation’s top Court today denied cert in Sterling Jewelers Inc. v. Jock, No. 1382 (Supreme Court case page available at https://bit.ly/3lgflL2). While the opt-in is the issue most recently litigated, the Court considered and rejected today a petition by the national jewelry chain on an event broader question presented,

Whether an arbitrator may compel class arbitration—binding the parties and absent class members—without finding actual consent, and instead based only on a finding that the agreement does not unambiguously prohibit class arbitration and should be construed against the drafter.

The employment case’s gender-based discrimination claim was first filed in 2008 by then-present and former women Sterling Jewelers employees. All workers were required to sign its Resolve agreement subject to American Arbitration Association rules, which included a mandatory arbitration clause, as well as a litigation waiver. For more, see Anne Muenchinger, “Still No Arbitration: In Its latest Jock decision, Second Circuit Reverses for More Contract Interpretation,” 38 Alternatives 77 (2020) (available at https://bit.ly/2GuxplA).

Not only has this case been moved from New York’s Southern U.S. District Court to the Second U.S. Circuit Court of Appeals four times, but today’s rejection was its second at the Supreme Court. Today’s decision puts the case back on a road to the case’s arbitrator, former New York Southern District magistrate Kathleen A. Roberts, now a JAMS Inc. neutral in the firm’s New York office.

David Bouffard, vice president of corporate affairs at Signet Jewelers Ltd.in Akron, Ohio, notes in a statement,

While we respect the Court’s decision, we believe the claims in this matter are without merit and are not substantiated the relevant facts and statistics. We will continue to vigorously defend against these claims, which do not accurately reflect our company or our culture. Indeed, we have long been committed to fostering a culture of respect, integrity, diversity, and inclusion where all employees feel safe, supported, and empowered—this is a tenet of who we are. In particular, Signet is a recognized leader among companies for gender diversity, with women filling 74% of store management positions and gender parity in both the C-Suite and Board of Directors. Under the leadership of our CEO, Gina Drosos, we continue to champion diversity and inclusion as a strategic priority, as we have been honored to be included on the Bloomberg Gender Equality Index for two consecutive years.

Plaintiffs’ attorney, Joseph M. Sellers, a Washington, D.C., partner in Cohen Milstein Sellers & Toll, declined to comment on the cert denial.

In its latest decision last year, the Second Circuit reversed the lower court’s judgment and held “that the arbitrator was within her authority in purporting to bind the absent class members to class proceedings because, by signing the operative arbitration agreement, the absent class members no less than the parties, bargained for the arbitrator’s construction of their agreement with respect to class arbitrability.” Jock v. Sterling Jewelers Inc., 942 F.3d 617 (2d Cir. 2019) (available at https://bit.ly/30yP3eZ).

The Second Circuit referred to its previous decisions as Jock I, Jock II and Jock III. (For more on the case’s knotty procedural history, see the Alternatives’ link above). Noting that a court’s standard of review of arbitrator decisions is highly deferential, the unanimous panel in the opinion written by Circuit Judge Peter W. Hall reasoned that the arbitration agreement’s incorporation of the AAA Rules, in particular the Supplementary Rules which give an arbitrator authority to decide if an arbitration clause permits class arbitration, makes it clear that the arbitrator can decide on the question of class arbitrability.

The panel further noted the arbitration agreement itself provides that “’[q]uestions of arbitrability’ and ‘procedural questions’ shall be decided by the arbitrator.” Id.at 624.

The decision underscored that while in Jock II the panel pointed out that Jock I did not address “whether the arbitrator had the power to bind absent class members to class arbitration given that they . . . never consented to the arbitrator determining whether class arbitration was permissible under the agreement in the first place.” (Quoting an earlier decision in the case.)

That fact, however, was not a basis to alter the Second Circuit’s analysis given that class actions in arbitration and courts may bind absent class members as part of mandatory or opt-out classes.

 The Second Circuit noted that its “use of ‘consent’ as shorthand” left unclear “the possibility that the absent class members consented in a different way to the arbitrator’s authority to decide class arbitrability.” Id.at 626.

In remanding the case, the Second Circuit left open for the District Court to decide “whether the arbitrator exceeded her authority in certifying an opt-out, as opposed to a mandatory, class for injunctive and declaratory relief.” The Second Circuit already reversed an affirmative determination on that issue, but in the 2019 decision, the panel states that the lower court may revisit the issue “after allowing the parties an opportunity to present renewed argument in light of any subsequent developments in the law.”

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The author, a third-year student at the City University of New York School of Law, is a Fall 2020 CPR Institute student intern.  Alternatives to the High Cost of Litigation editor Russ Bleemer assisted with reporting for this post.

[END]

How Far Can the Bench Go? The ABA on Judges’ Independent Research

By Elena Gurevich

Last month, the American Bar Association ABA Standing Committee on Ethics and Professional Responsibility, which develops model ethics standards for attorneys and judges, took on the judiciary’s use of the web in trial work.

The committee published Formal Opinion 478, “Independent Factual Research by Judges Via the Internet,” highlighting how “a vast amount of information available on the Internet exposes judges to potential ethical problems.” Released Dec. 8, the opinion is available at http://bit.ly/2mOetAr.

The formal opinion may have implications for alternative dispute resolution. It defines the term “judge” as “anyone who is authorized to perform judicial functions, including an officer such as a justice of the peace, magistrate, court commissioner, special master, referee, or member of the administrative law judiciary.” See Model Code of Judicial Conduct, Application § I(B)(2011).

The question is whether it can be inferred that arbitrators fall into this category as well, subjecting their neutrals’ roles to the opinion’s rules.

The general rule, the opinion notes, is Model Code of Judicial Conduct Rule 2.9(C).  The rule states: “A judge shall not investigate facts in a matter independently, and shall consider only the evidence presented and any facts that may properly be judicially noticed.” A comment to the rule says the ban on investigating facts “extends to information available in all mediums, including electronic.”

In the opinion, the committee stresses a distinction between the “legislative facts”—defined as “general facts which help the tribunal decide questions of law and policy and discretion”—and “adjudicative facts,” which are facts “concerning  the immediate parties—who did what, where, when, how, and with what motive or intent.”

The opinion notes that “research of legislative facts does not raise the same due process concerns as research of adjudicative facts.”

The ABA provides guidelines in the opinion for independent Internet factual research by judges. These guidelines are designed to help judges decide whether to independently investigate facts on the Internet.

They include (1) assessing whether additional information is necessary to decide the case, and (2) whether the judge is corroborating or discrediting facts, or filling in factual gaps in the record—and, where, in the case adjudicative facts, it would be improper to do so.

But there is still a possibility that a judge can misjudge—pun intended—a situation when it comes to verifying sources. For example, a third guideline states that when a judge is “seeking general or educational information that is useful to provide the judge with a better understanding of a subject unrelated to a pending or impending case . . . [then] the inquiry is appropriate. Judges may use the Internet as they would other educational sources, like judicial seminars and books.”

A fourth and final guideline looks at a judge seeking background information about a party or subject matter of a case.

The question with these guidelines is what if, while doing research unrelated to a case, a judge stumbles upon and reads something that is related? The research might start as a need for a better understanding, but the moment a judge obtains that information it can affect his or her judgment.

The ABA underscores that the key inquiry for the judge is “whether the information to be gathered is of factual consequence in determining the case.”  The opinion, which illustrates its points with hypothetical examples, continues, “If it is, it must be subject to testing through the adversary process.”

The opinion also equates general background learning on the Internet to “attending judicial seminars or reading books”, but warns that it can be of service “so long as there is reason to believe the source is reliable.”

And here lies another problem: the definition of “reliable.” To different individuals, it is all a matter of perspective.  To some prominent judges, Wikipedia has been a reliable source. See, e.g., Lubavitch-Chabad of Illinois Inc. v. Northwestern Un., 772 F.3d 443 (2014)(7th Cir. 2014)(available at http://bit.ly/1xu1bZt).

For judges, the dangers are not only on the World Wide Web, but even in the court’s computerized records systems, where judges are essentially urged to rely on their skill and capability in order to get the search right. The committee quotes Illinois Judicial Ethics Opinion 2016-02, which cautions judges that

the particular judge’s competence to navigate the computerized court records is essential . . . only facts which are ‘not subject to reasonable dispute’ are the proper subject of judicial notice. The judge must be confident that his or her review will lead to accurate information. For example, indexes of computerized court records are likely to contain individuals with the same name; is the inquiring judge capable of finding the appropriate records and accurately matching them to the party in question? Judges must be aware of their own skills and, more importantly, their limitations.  . . . [Emphasis is in the opinion.]

The bottom line is that judges are walking a fine line every time they are taking on a case. After all, it is very easy to make a mistake when it’s only one click away.

The opinion also notes that Model Rule 2.9(D) requires judges to make sure the court staff and officials do not perform improper independent investigations.

The ABA’s website explains that the ABA Standing Committee on Ethics and Professional Responsibility “periodically issues ethics opinions to advise lawyers, courts and the public in interpreting and applying ABA model ethics rules to specific issues of legal practice, client-lawyer relationships and judicial behavior.”

ABA Formal Opinions have been cited as persuasive when courts around the nation interpret state-adopted Rules of Professional Conduct.

Formal Opinion 478 and previous ABA ethics opinions are available on the ABA Center for Professional Responsibility website under “Latest Ethics Opinions,” or directly at the link above.  For more analysis, see Debra Cassens Weiss, “May judges search the internet for facts? ABA ethics opinion sees problems,” ABA Journal (Dec. 8)(available at http://bit.ly/2DpkC1a).

The author is a CPR Institute intern.

Sealing of Record to Confirm Arbitration Award Rejected in Favor of Specific Redactions of Only the Most Sensitive Information

Kantor Photo (8-2012)By Mark Kantor

A decision of the US District Court for the District of Columbia in the middle of last month offers a reminder of the hurdle a party must meet in order to seal from public access the entire record of a proceeding to confirm or vacate an arbitration award.  In XPO INTERMODAL, INC. v. American President Lines, Ltd., Civ. Action No. 17-2015 (PLF) (D. D.C., October 16, 2017)(available here – https://scholar.google.com/scholar_case?case=5024133744129204150&hl=en&lr=lang_en&as_sdt=20003&as_vis=1&oi=scholaralrt), the applicant (XPO INTERMODAL) sought an order in a confirmation proceeding to seal its petition to confirm the arbitration award (denominated, oddly, as a “Binding Mediation Decision”), as well as all exhibits.  US District Court Judge Paul L. Friedman denied the request notwithstanding a confidentiality provision in the contract underlying the arbitrated dispute (“this matter can and should be open to the public to the greatest extent possible”).  But he did order that the parties seek to agree in redactions of “only the most sensitive information.”

XPO INTERMODAL sought the order to seal “its Petition to Confirm Arbitration Award, as well as two exhibits attached thereto: the Binding Mediation Decision issued by the three-member mediation panel and the parties’ Amended and Restated Stacktrain Services Agreement and Schedules A-F and Appendices 1-4 thereto.”  The Court characterized that as a request deny public access to “what, in effect, amounts to the entire substantive record in this case.”   In support, the petitioner referred to the confidentiality provisions of the services agreement out of which the underlying dispute arose, and further stated that the award and exhibits contained “highly sensitive propriety [sic] commercial information,” including information regarding the parties’ “rates and business practices.””  Apart from those general arguments, however, XPO INTERMODAL offered little to the court to justify sealing the record.

In support of its motion, applicant directs the Court to the confidentiality terms of the parties’ Services Agreement and represents that “[b]oth parties have strong property and privacy interests in maintaining the confidentiality of these documents, as they contain highly sensitive propriety [sic] commercial information,” including information regarding the parties’ “rates and business practices.” See Mot. 4. Beyond these general assertions, however, applicant’s motion proffers little to justify sealing what, in effect, amounts to the entire substantive record in this case.

The District Court began its analysis by referring to the “strong tradition” of public access to judicial proceedings.

This country has a “strong tradition of access to judicial proceedings.” United States v. Hubbard, 650 F.2d 293, 317 n.89 (D.C. Cir. 1980). “[A]s a general rule, the courts are not intended to be, nor should they be, secretive places for the resolution of secret disputes.” United States v. Bank Julius, Baer & Co., 149 F. Supp. 3d 69, 70 (D.D.C. 2015) (citing Nixon v. Warner Communications, Inc., 435 U.S. 589, 597 (1978))….

Therefore, “[t]he starting point in considering a motion to seal court records is a strong presumption in favor of public access to judicial proceedings.”  To obtain an order to seal judicial records in the Federal courts despite this presumption, the applicant must satisfy the court regarding whether there is a need for public access, the extent of prior public access, whether someone has objected to disclosure, the strength of property and privacy interests, and the purposes of the documents in the court proceeding.

To determine whether a party seeking to seal court records has overcome this presumption, courts apply a six-factor balancing test to assess:

(1) the need for public access to the documents at issue; (2) the extent of previous public access to the documents; (3) the fact that someone has objected to disclosure, and the identity of that person; (4) the strength of any property and privacy interests asserted; (5) the possibility of prejudice in those opposing disclosure; and (6) the purposes for which the documents were introduced during the judicial proceedings.

After reciting this “six-factor balancing test,” though, Judge Friedman simply jumped to his conclusion without addressing how the various factors weighed in the circumstances of this application.  The only two factors noted by the District Court Judge in his analysis were the presumption in favor of public access and the ease of redaction.

Given the strong presumption in favor of public access and the ease with which confidential information may be redacted from documents before they are publicly filed, the Court concludes that this matter can and should be open to the public to the greatest extent possible.

Importantly, Judge Friedman was not persuaded that exhibits should be sealed in their entirety “simply because they contain or refer to confidential information.”  Generalized business interests in confidentiality (even if mutual between the parties) would not suffice, especially if redaction is feasible.

First, generalized business interests in confidentiality simply “do[] not rise to the level of the privacy and property interests that courts have permitted to outweigh the public’s right of access.” ….   This is particularly so where trade secrets, pricing, and other sensitive information regarding business practices or strategies may be redacted. ….

Judge Friedman noted in particular a line of cases rejecting the argument that confidentiality provisions in the underlying contract were sufficient to provide for sealing the judicial record.

Furthermore, the parties’ mutual desire for confidentiality, without more, does not justify the sealing of the entire substantive record of the case. See Grynberg v. BP P.L.C., 205 F. Supp. 3d 1, 3 (D.D.C. 2016) (explaining that even if disclosure would violate the terms of the parties’ settlement and confidentiality agreements, such agreements between private parties “do not dictate whether documents can be filed under seal” (citing In re Fort Totten Metrorail Cases, 960 F. Supp. 2d 2, 9-11 (D.D.C. 2013))); see also Am. Prof. Agency v. NASW Assurance Serv., 121 F. Supp. 3d 21, 25 (D.D.C. 2013); Brown & Williamson Tobacco Corp. v. FTC, 710 F.2d at 1180.

The District Court acknowledged that XPO INTERMODAL’s confirmation filings appeared to contain “some potentially sensitive business information, including rates and schedules.”  Accordingly, the Court ordered the parties to seek to agree on redactions to the documents rather than complete sealing of the filings.

Here, it appears that the exhibits to applicant’s Petition do include some potentially sensitive business information, including rates and schedules, but the filings otherwise do not warrant sealing from the public. The Court thus sees no reason why the Petition itself should not be made publicly available in full, nor any reason why the exhibits thereto should not be made generally available, with only the most sensitive information redacted. The Court is confident that a more rigorous examination undertaken in good faith will lead to a more tailored and appropriate proposal for redaction.

****

FURTHER ORDERED that the parties shall confer regarding the Petition’s exhibits and submit proposed redactions to the Court on or before October 30, 2017

The simple lesson from XPO INTERMODAL is that, if the judge is paying attention, requests to seal the entirety of a judicial proceeding to confirm an arbitration award are likely to be met with an instruction instead to identify particular redactions of “only the most sensitive information.”

Mark Kantor is a CPR Distinguished Neutral and a regular contributor to CPR Speaks. Until he retired from Milbank, Tweed, Hadley & McCloy, Mark was a partner in the Corporate and Project Finance Groups of the Firm. 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). Additionally, Mr. Kantor is Editor-in-Chief of the online journal Transnational Dispute Management.