CPR’s new website now hosts the CPR Speaks blog. You can find new posts, at https://www.cpradr.org/news/cpr-speaks.
Mediating Commercial Disputes: Understanding the Process to Maximize the Benefits
By Mia Levi
Mediation is a process in which a neutral third party—a mediator—meets with the disputing parties and actively assists them in reaching a settlement. Mediation is private and confidential, flexible, and more informal than other processes such as arbitration or litigation. It is concluded expeditiously, allowing parties to settle the dispute or narrow their issues at moderate cost. The overwhelming majority of disputes in mediation (70% to 80% of commercial disputes) settle, and because the outcomes are mutually agreed upon, they have high rates of compliance.
Mediation is able to preserve relationships because the emphasis is on the interests of the parties—process flexibility allows the people involved to find the best path to agreement. Parties may adapt the procedure to their own needs and can explore a wide range of remedies that might not have been available to them in court. It’s also more predictable than a trial decided by a judge or jury, avoids a “win or lose” outcome, and allows for an amicable resolution that may preserve the parties’ relationship. The goal is to resolve problems in a principled fashion (or reach an impasse) and move on.
But often, parties may be hesitant to agree to mediation. This can be remedied by understanding which kinds of disputes are suitable for mediation, when to schedule the mediation so that it is most successful, and, finally, how the mediation process itself works.
Is the Dispute Right for Mediation?
It is possible that the dispute at hand is not suitable for mediation. The ADR Suitability Guide, published by the International Institute for Conflict Prevention & Resolution (CPR), outlines three factors parties should consider in deciding the suitability of a case for mediation: (1) the parties’ goals for managing the dispute, (2) the suitability of the dispute for a mediation process, and (3) the potential benefits of mediation in relation to the specific dispute being considered.
First, looking at the parties’ goals, if there is a desire to maintain a working relationship, maintain control over the outcome, limit costs and disruption, and maintain privacy, then mediation may be a preferable tool. Second, for the dispute to be suitable for mediation, there should be no deep desire for vindication or revenge by the parties, no need to attain legal precedent, and no extreme power imbalance. Third, the potential benefits of mediation include allowing the parties to explore mutual needs and interests confidentially, providing an opportunity to be heard, providing a “reality check” for internal decision makers, helping to clarify the issues, and providing the opportunity to have an intermediary help frame proposals and present offers and counteroffers. Parties should weigh all these factors in making the decision to mediate.
Among dispute resolution processes, mediation offers a maximum degree of confidentiality and privacy. Contractual and legal protections provide additional assurances against the use or disclosure of mediation statements or documents. These confidentiality protections contrast sharply with the public nature of the litigation process and its procedures that encourage public disclosure. If parties are looking to attain a ruling that will contribute to legal precedent or require articulation of public policy, mediation likely is not the proper forum.
When Should Parties Mediate?
There is no one right time to conduct a mediation. Including a mediation step (prior to arbitration or litigation) in the proceedings is an easy way to ensure that the parties discuss settlement options. When mediated, many cases are settled or partially settled at the initial stages of the case. Settling even part of the dispute up front can make the arbitration hearings or litigation shorter and less expensive. The opportunities to reduce the costs and wear and tear of court proceedings are greatest before litigation has commenced, but mediation may be a sensible option at any point in the litigation process, even while an appeal from a trial court judgment is pending. Parties not ready for mediation at the outset of the case may be more receptive as it runs its course.
Indeed, the timing of mediation may be rendered somewhat inflexible when parties contract for a sequential, multistep dispute resolution. While tiered dispute resolution clauses may get parties to the mediation table, these provisions may not assist parties in achieving this goal at an ideal time in the life of their dispute. Some parties may find it more beneficial to mediate their dispute after some discovery has been exchanged. Parties should continuously keep an open mind as opportunities for settlement arise throughout the proceedings. It is not uncommon for cases to settle during or even after the hearings. Sometimes, an additional mediation session after some discovery is effective in reaching a settlement.
For those parties contemplating mediation in conjunction with arbitration, the Concurrent Mediation-Arbitration Clauses and Protocol, which CPR introduced in July 2020, allows the parties to agree they will attempt to settle any dispute that is the subject of arbitration by confidential mediation conducted during the pendency of the arbitration. This process was developed to encourage the availability of mediation to parties in a more flexible manner than is provided under standard multistep dispute resolution provisions. This, in turn, creates an opportunity for parties to continue to explore settlement options based on what they learn during the arbitration proceedings and without delaying those proceedings.
What Should the Parties Expect from Mediation?
Parties who have not written mediation into their contract or dispute resolution clause may need to execute a submission agreement—essentially an agreement to submit the dispute to mediation with an alternative dispute resolution (ADR) provider—or they may agree to mediate in an ad hoc process. Notably, an ADR provider will be able to assist the parties in selecting the appropriate mediator for their dispute.
Many ADR institutions provide opportunities for parties to further streamline the mediator-appointment process. For example, streamlined mediator appointment is suitable for disputes where the parties wish the ADR provider to choose a mediator for them. Parties submit information about their dispute and the candidate sought, and the ADR provider will make the selection based on the information provided by the parties and vet the candidate for conflicts purposes before the appointment. This streamlined process lowers administrative costs and allows the parties greater speed in getting a mediator appointed and the process underway.
The process itself will depend on the mediator selected. Mediators will have different styles of mediation. On one side of the spectrum, facilitative mediators will work with parties to find creative solutions that meet the interests and needs of the parties. This will be beneficial for cases where parties wish to continue a personal or business relationship. On the other side, evaluative mediators will offer an opinion regarding the relative strength of each side’s legal arguments and generally will predict the likely outcome if the parties were to bring the case to trial. Mediators may also offer a hybrid style, combining the two.
Understanding the mediation process will help parties gain more advantages from the mediation itself. It is important for parties to realize that while settlement of their dispute might be the most desired outcome, an impasse does not mean that the parties have failed. If parties narrow the issues, understand the opposing side’s point of view, or simply have an opportunity to be heard, it will be successful for the parties in the long run.
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Mia Levi (firstname.lastname@example.org) is the Vice President of Global Development for Dispute Resolution Services of the International Institute for Conflict Prevention and Resolution (CPR).
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This post is © 2022. Published in GPSolo eReport, Volume 11, Number 9, April 2022, by the American Bar Association. (Available here.) Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.
Looking for Definitions, the Supreme Court Weighs the Limits of the Federal Arbitration Act’s Sec. 1 Exemption
By Russ Bleemer
Today’s Federal Arbitration Act oral argument in the U.S. Supreme Court gives the justices the opportunity to refine the meaning of the first section of the nearly century-old law designed to discourage bias against arbitration.
They struggled with that task in trying to set the limits of the types of workers who would be exempt from arbitration under the law, at the same time sounding skeptical that a residual exemption would not provide the exemption to some transportation workers.
The justices explored the classes of workers currently exempt from arbitration under the FAA, and discussed expansions to particular jobs in relation to the statute’s wording. At times the justices appeared sympathetic to arguments from both sides as they tried to divine current application to commercial airline workers—job categories that didn’t exist when the FAA was enacted in 1925.
Southwest Airlines Co. v. Saxon, No. 21-309, presents a Federal Arbitration Act Sec. 1 question:
Whether workers who load or unload goods from vehicles that travel in interstate commerce, but do not physically transport such goods themselves, are interstate ‘transportation workers’ exempt from the Federal Arbitration Act.
The statute’s defines its application to maritime transactions and commerce. The key section before the Court this morning is the conclusion that notes “nothing [in the statute] shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”
The Court has interpreted the law to mean that the exception from FAA application is only for transportation workers “engaged in” interstate commerce. Circuit City Stores Inc. v. Adams, 532 U.S. 105 (2001) (available at https://bit.ly/2HhwYLu).
The Seventh U.S. Circuit Court of Appeals in the case (available at https://bit.ly/3rRA8Ln) held that the plaintiff was a transportation worker, and therefore exempt from the FAA, and didn’t have to arbitrate her Fair Labor Standards Act claim.
Petitioner Southwest Airlines requires all workers who aren’t covered by collective bargaining agreements to arbitrate workplace disputes, according to court papers which also note that the original plaintiff worked only locally—a “ramp agent supervisor” at Chicago’s Midway Airport.
For background, see Russ Bleemer, Supreme Court Preview: An Airline and an Employee Will Argue Over the Reach of an Exclusion from the Federal Arbitration Act, CPR Speaks (March 25) (available here).
Southwest Airlines’ lawyer said the FAA carves out the employee, who did not travel, for not being in interstate commerce, and therefore out of the flow of interstate commerce, following “from Circuit City and Section 1’s text and structure.”
Shay Dvoretzky, a Washington, D.C., partner at Skadden, Arps, Slate, Meagher & Flom, told the Court that meant that “an exempted class of workers must perform work analogous to that of seamen and railroad employees,” whose employment was characterized by working on moving ships and trains.
Jennifer Bennett, the lawyer for respondent Latrice Saxon, who heads the San Francisco office of Gupta Wessler, said that railway workers’ class was informed by the treatment of seamen in the statute and the “residual” wording of Sec. 1—“any other class of workers engaged in foreign or interstate commerce”—and that covered the original plaintiff, who therefore was not obligated to arbitrate her case under her employment agreement because of the exemption.
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Dvoretzky opened on behalf of Southwest Airlines noting that petitioner Saxon was like a stevedore, land-based shipping industry cargo loaders who don’t travel, originally perceived as separate from the statute’s arbitration exemption. “Seamen”, he said, was a term of art, with a long case history, and was based on the fact that they went on “long voyages,” unlike stevedores.
Chief Justice John G. Roberts Jr. told Dvoretzky that he was “very precise” in “emphasizing border crossing in . . . determining interstate commerce” in his opening and in his court papers, and asked whether a border crossing was required for the worker to be in interstate commerce under FAA Sec. 1.
No, Dvoretzky replied, the question “is whether movement of people or goods through the channel of interstate commerce is central to the job of the class of workers.” The inquiry, he explained, was “the job of the class of workers”—here, the ramp agent supervisor. “They all have the same job description,” he said, “and their job description doesn’t involve getting on the plane.”
But Dvoretzky initially added that the work, following Congress’s lead, would have to cross the border. Even if not going across borders, he said, seamen as a class have the central characteristic of traveling on a ship. He contrasted the ramp agent supervisors, with their own class characteristics, and which doesn’t include traveling across borders.
Justice Sonia Sotomayor said she didn’t see any difference between the FAA Sec. 1 definition of railway workers, which includes cargo loaders, and stevedores in the shipping industry. Dvoretzky countered that the view incorporated the “the fundamental characteristic of seamen is predominantly spending time on the ship.”
Justice Neil Gorsuch turned to the FAA Sec. 1 language, and asked repeatedly what evidence Dvoretzky could use to indicate that some railway workers were not covered by the statutory exclusion. “I know you like to talk about people who travel,” said Gorsuch, “What about the fellow who unloads cargo that’s come in interstate commerce from the railroad and hands it off to a carrier locally. . . . [W]hy isn’t the same person unloading cargo from a plane in the same position?”
Dvoretzky said those workers weren’t covered by the FAA Sec. 1 exemption. He said there are many types of railway workers, suggesting that many would not be part of the class of workers in the statute.
Gorsuch pressed for more. Dvoretzky conceded there was nothing that directly answers the FAA Sec. 1 definition limits, but insisted there were multiple solid indicators: statutory context, which shows that less than all railroad employees were included; the treatment of “seamen” engaged in interstate context, not all maritime employees; and the texts “engaged in foreign or interstate commerce” and “class of workers,” noting “the workers in particular have to be engaged in foreign or interstate commerce.”
Gorsuch responded, “I’m going to take all that as, ‘No, we don’t have any evidence. . . .’”
Justice Brett Kavanaugh pressed the point in a different way, noting an old case just before the 1925 FAA enactment that similarly classified workers loading and unloading shipments under the Federal Employers’ Liability Act to be a part of interstate commerce.
The question began a long exchange. Dvoretzky strongly contested the FELA cases’ view of interstate commerce as focusing on the businesses themselves, not on the workers. FAA Sec. 1 provides a narrower standard, he said.
He said that the view that seaman doesn’t include everyone involved in shipping should be applied to railway workers, too, under the FAA Sec. 1 exemption, noting that, for example, railway management is excluded. “The most natural reading,” he said, “isn’t everybody who works for the railroad.”
Later, at the conclusion of his argument, Kavanaugh returned to the FELA cases, but Dvoretzky deflected, noting that the case’s dormant Commerce Clause challenges were analyzed differently. Those cases characteristically looked at local laws prejudicing interstate commerce. “That is simply answering a different question on whether the people doing the loading and unloading are engaged in interstate commerce as [FAA] Sec. 1 uses that term,” he said.
Before Kavanaugh’s final questions, Justice Elena Kagan asked Dvoretzky to concede that if the Court found that baggage handers are included in interstate commerce, Southwest Airlines would lose the case. But he countered that Congress didn’t mean “to exempt the airline industry,” and returned to stevedores’ exclusion from the seaman definition as the proper ruling point for the Court.
Circuit City, he emphasized, supports the exclusion of the ramp supervisors and baggage handlers. “You still look at ‘engaged in foreign or interstate commerce,’” he said, “which, under Circuit City, is supposed to be a narrow construction.”
Justice Clarence Thomas, returning to the Court after missing last week, hospitalized for an unspecified infection, participating remotely, also pressed Dvoretzky on whether an individual seaman would have to travel interstate or internationally to qualify. The Southwest Airlines attorney said yes, the seaman would be part of the class even if the worker didn’t make such travels as part of the class of worker specifically cited in FAA Sec. 1.
Kagan returned to particular jobs. She asked whether railway signal operators would be considered railway employees for the Sec. 1 exclusion, and Dvoretzky said “they’re not riding the train,” so they wouldn’t be included.
She asked whether the test is that the employee is moving. Yes, replied Dvoretzky, “through the channels of interstate commerce.”
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Respondent’s attorney Bennett, representing original plaintiff Saxon, told the Court that her client engaged in interstate commerce, and made historical arguments via the FAA’s legislative history of the FAA.
“Southwest contends that workers who load and unload airplanes are not part of any class of workers engaged in commerce for purposes of the FAA,” said Bennett in her opening, adding, “There’s no support for this contention in the text of the statute. Southwest can’t point to even a single example from any time period in which the phrase ‘engaged in foreign or interstate commerce’ has ever been given the meaning it proposes.”
She suggested that Congress intended to exempt cargo workers from the statute, at least under the residual clause, discussed above. The Court and Bennett explored—and struggled–putting limits on a definition as to who was included under the exemption, with Bennett conceding that some examples were borderline.
Bennett told Chief Justice Roberts that railroad ticket workers in 1925 would be exempt-from-arbitration transportation workers under FAA Sec. 1, as well as station employees. “[T]he ordinary meaning was those people who did the customary work of the railroad at that time” were exempt from FAA arbitration, she said.
But she stopped short of office workers, noting that a general counsel, and executives, were not included in the statute, agreeing with her adversary. Both Bennett and the Court wrestled with airline workers’ fit with the statute.
Justice Gorsuch said that Southwest Airlines’ strongest argument was that “seamen were people who rode the waves and did not include stevedores,” who therefore weren’t in interstate commerce, which would be analogous to Saxon’s airline role in Chicago. Bennett countered on the differences under the statute between railway workers and seamen in separate industries, and said the lack of “commonality” in the statute—referring to the specificity of “seamen”–also pointed to respondent Saxon’s distinct job at an airline.
She conceded that Southwest’s credit card points program workers aren’t doing FAA Sec. 1 transportation work, but under questioning said that schedulers would be doing the customary work under the statute.
Justice Kagan asked about website designers. “That’s a difficult question,” replied Bennett, “but it’s at the outer edge.”
Bennett earlier declined to extend the rule to Lyft and Uber drivers who may not cross state lines, but might pick up goods and travelers who have come from interstate commerce. She told Gorsuch, that the question would be “[I]s it part of this continuous journey . . . [or] is it really a separate sort of local transportation?”
Both of the shared ride companies, along with Amazon.com, filed amicus briefs in the case asking the court to exclude local workers from the FAA Sec. 1 exemption. (The briefs are available at the Supreme Court docket link above.) But Bennett leaned toward a narrower definition in a discussion with Kagan.
That discussion continued with Kagan and Alito on bright line exemption rules by industry or, alternatively, more narrowly, in interstate commerce for classes of workers under Sec. 1.
Alito asked if the rule covered industries, which besides airlines would be subject to the exemption. Bennett she said two major industries would be trucking and busing, and perhaps space travel, but still likely with the narrower test under FAA Sec. 1. That was followed by a discussion led by Chief Justice Roberts on shipped goods, and the status of warehouse workers.
The exploration of the variations, without definitive views from the Court, suggested that the FAA Sec. 1 exemption fate of local Lyft and Uber drivers, and warehouse and local driver Amazon workers, may be left for future cases. Bennett pushed for workers at warehouses to be included in the FAA Sec. 1 exemption—” you know, a warehouse that is in the middle of . . . the goods journey.”
Justice Samuel A. Alito Jr. questioning potential FAA Sec. 1 exemptions and exclusions, told Saxon attorney Jennifer Bennett that her arguments shifted back and forth, with just about every commercial activity included today, but under a statute which is narrow. He said he couldn’t see how a Queen Mary cruise ship ticket seller could be included, and the FAA Sec. 1 foreign and interstate commerce meaning “has to have a narrower meaning.”
Bennett strongly disagreed. She said the language wasn’t “surplusage” as Alito suggested, because under Circuit City, being engaged in commerce was in the transportation requirement. She added that the two classes of workers cited in the statute, which also had preexisting dispute resolution statutes, “were commonly understood categories” illustrative of classes of workers.
It wasn’t thoroughly job specific, she explained. “Here, it doesn’t say seamen, you know, flagmen, railroad conductors,” said Bennett, “It says seamen and railroad employees. And so we’re talking about the classes of workers that are specific to the industry.”
She closed noting the distinctions between seamen and railroad employees, and the residual clause.
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Today’s case is expected to be decided before the Court’s term ends at the end of June. The transcript and audio of the Sec. 1782 arguments are available on the Supreme Court’s website here. Justice Amy Coney Barrett was not present on the audio stream today. The Court earlier announced she took no part in the consideration or decision of the certiorari petition in the case.
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The author edits Alternatives to the High Cost of Litigation for CPR at altnewsletter.com. Andrew Ling, a third-year law student at the University of Texas School of Law, in Austin, Texas, and a CPR 2022 Spring Intern, contributed to the research and writing of this post, which was based on the live audio stream provided by the Court Monday morning, March 28.
Florida’s Top Court Takes on ‘Who Decides?’ in Airbnb Arbitration Case
By Arjan Bir Singh Sodhi
Wednesday’s Florida Supreme Court argument presented a foundational issue on the adoption of arbitration proceedings—more on the question of who decides whether a case is arbitrated, based on the incorporation into a consumer contract of a set of arbitration rules.
The Nov. 3 argument, in Airbnb v. Doe, No. SC 20-1167, explores whether contract provisions are “clear and unmistakable”—the case law standard—in allowing the arbitration tribunal to determine its jurisdiction, and in allowing an assessment of the evidence from the contract that the parties agreed to arbitrate arbitrability.
Both federal and Florida cases back Airbnb, the best-known accommodations rental app, in finding that by incorporating a set of contract rules—in the case, the American Arbitration Association Commercial Arbitration Rules—the parties are agreeing to have an arbitration tribunal decide whether a case is to be arbitrated.
But a Florida appeals court bucked the trend, and in a detailed opinion, found that the click-thru web interface didn’t provide adequate notice to the app users that they were agreeing to arbitration via a link to the rules which stated the arbitrability provision.
In the case, an anonymous Texas couple filed a complaint against Airbnb and the condominium owner who had listed the Florida property on the Airbnb platform. The complaint includes intrusion against the condo owner, and constructive intrusion against Airbnb. The plaintiff rented the condo for three days in 2016 and later learned that the owner had installed hidden cameras and recorded the couple without their knowledge.
The Does filed their complaint in the Manatee County, Fla., circuit court. Airbnb moved to compel to settle the dispute through an arbitration proceeding. Airbnb claimed that the Does are bound to an arbitration proceeding under the signed terms and conditions when they accepted the app’s click-wrap agreement—that is, the legal contract in the Airbnb online software in which the customer indicates acceptance by typing in yes, or selecting a particular icon or link before they may use the service.
The click-wrap agreement included a dispute resolution clause stating that the parties must arbitrate under the rules of the American Arbitration Association, with a link to the rules. The rules contain the provision that the determination of whether the case is arbitrable goes to the arbitrator, not a court.
The Manatee County Circuit Court granted Airbnb’s motion to compel the arbitration. But Florida’s Second District Court of Appeal reversed. John Doe & Jane Doe v. Natt & Airbnb Inc., 299 So. 3d 599 (Fla. 2d DCA 2020) (available at https://bit.ly/3BPYPcu). The appellate court held that reference does not clearly and unmistakably suppress the court’s power to decide the arbitrability. The decision noted that the click-wrap agreement is not clear enough on the issue of who should decide the jurisdiction of the arbitration proceedings. It stated that the reference “was broad, nonspecific, and cursory: the clickwrap agreement simply identified the entirety of a body of procedural rules. The agreement did not quote or specify any particular provision or rule. . . .”
The appeals court also held that AAA Commercial Arbitration Rule 7 on arbitrability is not an exclusive power for the arbitrator.
At Wednesday’s oral argument, Joel S. Perwin, who heads his eponymous Miami law firm, argued on behalf of petitioner Airbnb that the click-wrap clause covered everything, including the arbitrator’s resolution of deciding the arbitrability.
Justice Carlos G. Muñiz asked Perwin to clarify whether parties who accept the contract are expected to understand caselaw and legal language—whether they should understand that the courts have deemed such agreements referring to rule to be a “clear and unmistakable” indication that arbitrability goes to the tribunal.
Perwin replied that he does not expect the parties to read the case law. “I would never suggest that,” he said. But he quickly added that the parties “are required to read the [contract] language.” He cited the “overwhelming weight of the authority” to indicate that the incorporation of the rules is accepted and customary.
Perwin addressed the parties’ sophistication, which was an argument that the Does made against the effectiveness of the click-wrap agreement. He said the Does introduced no evidence that they were not sophisticated, and added that the parties’ sophistication level is not even a relevant factor in the matter.
He said that in applying an objective test—Is the contract clear and unambiguous?–as to whether the agreement applies doesn’t depend on an analysis of the parties’ sophistication. “This language is clear and unambiguous as a matter of law,” he said.
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Thomas Seider, an attorney in the Tampa, Fla., office of Brannock Humphries & Berman, arguing on behalf of the respondents, the Does, opened by noting that arbitration is a matter of consent. He said the question is whether the respondents gave their consent to the arbitration proceedings.
Justice Ricky Polston strongly suggested that while looking at federal law, the AAA rules, and the incorporation by reference of the rules into the contract, that the rules indeed are a part of the contract.
Justice Polston asked why, in reading AAA Rule 7, it wasn’t clear and unmistakable that that arbitrators have the ability to decide the jurisdiction. Focusing on the contract language, Seider argued that the Does only needed to read the rules if they needed to know, for example, about how the arbitration would be conducted, or the costs, not the “condition precedent” question of whether the case was subject to arbitration.
Justice John D. Couriel was skeptical. “The trouble with the argument is that none of this is in the contract,” he said. Seider replied that if the consumer gets to the rule, then the party would understand that the arbitrator decides. But even then, Seider noted, the language itself was “permissive but not mandatory.”
Couriel pressed Seider on the language. Seider said that the AAA Rule 7 language—”The arbitrator shall have the power to rule on his or her own jurisdiction”—did not exclude a decision by a court on arbitrability.
Justice Alan Lawson asked about the agreement language and whether it satisfied the “clear and unmistakable” standard for a delegation, which derives from First Options of Chicago Inc. v. Kaplan, 514 U.S. 938 (1995 (available at http://bit.ly/2WEXGnF). He said it is “basic contract interpretation,” and “you apply the basic rules” on whether the contract reflects what the parties agreed to—in this instance, whether there was a “clear and unmistakable” parties’ agreement on the arbitrator deciding arbitrability. He asked “whether the rules count” in determining what the parties agreed to under the contract.
Seider agreed that the rules count in reading the contract, and Lawson asked whether the rules’ language is clear and unmistakable evidence. Lawson said that in analyzing the contract, look at the whole agreement, leaving the rules to return to the first part of the contract, “the more conspicuous part”: The first page which incorporates the AAA rules. With that, said Lawson, “it just seems pretty straightforward” that the parties agreed to arbitrate.
Seider said that “the clear and unmistakable standard is not supposed to require these inferential leaps” with cross-referenced rules, which he said are recognized by the U.S. Supreme Court as arcane. He said people do not understand the concept of arbitrability.
Justice Jorge Labarga was more sympathetic to the respondents’ argument. He said that consent must be waived for arbitration, adding, “And what I’m hearing here today is that the agreement–they can attach as many attachments as they want to online, you can have 100,000 pages, and in there, in a footnote, someplace they can say, ‘Oh, by the way the arbitrator gets to decide whether this goes to arbitration or not,’ and that is OK as long . . . as it is a part of the text of the package.”
Seider quickly agreed that burying provisions in the agreement will become the norm. Justice Lawson asked about the need for conspicuous language, and Seider conceded that First Options doesn’t discuss that point in defining “clear and unmistakable.”
Justice Couriel asked Seider to clarify if there is a clear statement in the contract on how it will affect people’s rights, and how Airbnb encourages parties to read terms and conditions carefully. He asked if the advisory was “over and above” the First Options requirements.
Seider agreed that Airbnb advises parties to read the terms and conditions. He countered that reading and understanding about 60 pages of procedures and rules are hard to understand and is not clear and unmistakable.
Justice Polston wasn’t convinced, noting that the rules “were there.” Seider said they were, but again stressed that a court arbitrability determination was not excluded by AAA Rule 7.
Justice Carlos G. Muñiz asked Tom Seider to clarify why previous case law has been overwhelmingly against the petitioners. Seider said that early decisions didn’t thoroughly analyze the question of arbitrability. He pointed out a lack of discussion on how contract language can be clear and unmistakable. “The analytical foundation of these cases really isn’t there,” concluded Seider.
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Airbnb attorney Joel Perwin rebutted, noting five points:
1. Every case is decided on its own merits and facts.
2. The test for clear and unmistakable is a matter of federal law. Justice Polston pushed back and agreed that arbitrability is a federal concept, but strongly noted that contract review is state law.
3. Party sophistication is not an issue because “clear and unmistakable” is an objective test. There is no evidence to prove that the Does are not sophisticated enough to understand the click-wrap agreement, Perwin emphasized, but regardless, it is an objective test.
4. Addressing Tom Seider’s argument that Rule 7 is permissive, Perwin noted that the language is clear enough for anyone reading it to understand that the arbitrator has “the power” to decide the matter. That is why the courts have said that when arbitrators are designated to get the power under the contract and nothing is said about the courts, it means the arbitrators have the power to decide alone.
5. The statute and contract should not be interpreted to be unreliable on arbitrability. In the past, courts have been clear on these issues.
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The Nov. 4 oral arguments in Airbnb v. Doe, which were televised and streamed on several web outlets including Facebook, are archived on YouTube at https://bit.ly/3EJ0rqa. The full Florida Supreme Court docket on the case, with links to documents, is available at https://bit.ly/3GYoZxe.
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The author, a CPR 2021 Fall Intern, is an LLM candidate at the Straus Institute for Dispute Resolution, at Malibu, Calif.’s Pepperdine University Caruso School of Law.
COVID-19 & CPR Administered Arbitration
The COVID-19 health crisis is causing unprecedented disruptions and damage to the world’s economy and business relationships. Many commercial disputes are surfacing as parties find it impracticable or impossible to perform their contractual obligations. At the same time, the crisis is also considerably slowing down the resolution of pending court cases, exacerbating the already significant backlog of cases in many courts.
In this context, we would like to remind you that CPR Dispute Resolution and its Case Management Team remain available to assist businesses in these difficult times.
To avoid any delays in the resolution of your dispute, you may want to consider converting a pending court case to a CPR Administered Arbitration. If your contract already provides for arbitration as the dispute resolution mechanism, but your arbitration clause is no longer appropriate under the circumstances, you may also want to consider using CPR administered arbitration. In both case, you will need to enter into one of the following arbitration submission agreements with your counterparty:
For a US domestic Dispute:
“We, the undersigned parties, hereby agree to submit to arbitration in accordance with the International Institute for Conflict Prevention and Resolution (“CPR”) Rules for Administered Arbitration (the “Administered Rules” or “Rules”) the following dispute:
We further agree that we shall faithfully observe this agreement and the Administered Rules and that we shall abide by and perform any award rendered by the arbitrator(s). The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq., and judgment upon the award rendered by the arbitrator(s) may be entered by any court having jurisdiction thereof. The place of arbitration shall be (city, state).”
For an international dispute:
“We, the undersigned parties, hereby agree to submit to arbitration in accordance with the International Institute for Conflict Prevention and Resolution (“CPR”) Rules for Administered Arbitration of International Disputes (the “Rules”) the following dispute:
We further agree that we shall faithfully observe this agreement and the Rules and that we shall abide by and perform any award rendered by the arbitrator(s). Judgment upon the award may be entered by any court having jurisdiction thereof. The seat of the arbitration shall be (city, country). The language of the arbitration shall be (language).”
Why use CPR Administered Arbitration?
- Quality comes from experience – Over the years, CPR’s Distinguished Neutrals have handled more than one trillion dollars in disputes
- Parties remain in control of the process
- Peer-reviewed and innovative rules
- Cases managed by highly experienced, accessible and multilingual attorneys
Efficiency and Lower Costs
- Time is money – CPR’s Rules have been designed to increase efficiencies, lowering overall costs, benefitting all parties
- Easy commencement process – No cumbersome paper filing requirements
- Rapid appointment of the Tribunal, typically within 2-4 weeks
- Efficient timeline with built-in benchmarks and accountability
- CPR is a savvy yet unobtrusive administrator, which maximizes direct tribunal-party interaction
- Mediation/settlement encouraged at any stage
- Administrative fees based on a scale of amounts at issue, capped at US$34,000, split among the parties, for disputes over US$500 millions
- Arbitrators free to set up their fees on a case by case basis but must disclose their rates up front during the selection process
- Arbitrators must be independent and neutral
- Arbitrators must disclose potential conflicts of interest and their availability up front during the selection process
- Innovative and award winning “Screened Selection Process” for party-appointed arbitrators – Arbitrators are appointed without knowing which party made the selection to enhance neutrality and independence
- Broad confidentiality applies to all participants: parties, arbitrators and CPR
- Tribunals must apply the rule of law
- Awards must be written and reasoned and they are reviewed for format, clerical, typographical or computational errors before being issued by CPR
- Arbitrator challenges are decided by an independent Challenge Review Panel
CPR’s Panel of Distinguished Neutrals comprises those among the most respected and elite arbitrators in the US and around the world. It includes prominent attorneys, retired judges, academics, as well as highly-skilled business executives, legal experts and dispute resolution professionals who are particularly qualified to resolve all business disputes including those involving multi-national corporations or issues of public sensitivity. Focusing in more than 30 practice areas, CPR’s esteemed arbitrators have provided resolutions in thousands of cases worldwide. Click here for more information about CPR’s Panel of Distinguished Neutrals.
- How do I file a case? To file a case, email your Notice of Arbitration to email@example.com. Include contact information for all parties, including e-mail addresses. You will also need to pay a US$1,750 non-refundable deposit by wire or credit card. As soon as you file your Notice of Arbitration, CPR will contact you.
- What are the key features of the 2019 CPR Administered Arbitration Rules? You can click here to learn more about the key features of the rules.
- How do I find out more about the administrative fees? For the full schedule of fees, visit our website here.
- How are arbitrator challenges decided? Challenges on the ground of independence and impartiality are decided pursuant to the CPR Challenge Review Protocol.
- How to I contact the case management team if I have additional questions? Contact Alveen Shirinyans at firstname.lastname@example.org or Helena Tavares Erickson at email@example.com