CPR Council Meeting: Abraham Lincoln and Dispute Resolution

By Xin Judy Wang

The June 22 CPR Council meeting featured a presentation on Abraham Lincoln and dispute resolution by the International Institute for Conflict Prevention & Resolution’s former CEO & President Thomas J. Stipanowich, the William H. Webster Chair in Dispute Resolution and a law professor at the Straus Institute at Pepperdine University’s Caruso School of Law in Malibu, Calif.

He served as CPR’s president and CEO from 2001 to 2006, and returned to discuss his project, “The Lincoln Way: Abraham Lincoln as a Problem Solver and Manager of Conflict.” 

Stipanowich began his presentation discussing the United States’ fascination with Lincoln, the 16th president. Possibly the nation’s most familiar historical figure along with George Washington, Lincoln lived one of the most documented and written-about lives from the nineteenth century. Almost everyone feels some level of familiarity with Lincoln, attaching him to particular principles, life experiences, or lifestyles. Lincoln was also a self-taught lawyer who worked on a broad spectrum of cases ranging from pig-stealing incidents to representation of railroads.

Stipanowich said he was attracted to Lincoln’s legacy through a telling quote: “Discourage litigation. Persuade your neighbors to compromise whenever you can. As a peacemaker the lawyer has a superior opportunity of being a good man. There will still be business enough.” The quote came from Lincoln’s lectures to fellow lawyers around 1850, many of whom were trial attorneys.

From this quote, Stipanowich saw a striking similarity between Lincoln’s peacemaking spirit and CPR’s mission to reduce conflict to enable purpose.

As Stipanowich’s project title suggests, Lincoln was a lifelong problem solver and a conflict manager.

Lawyer Lincoln encouraged fellow trial lawyers to discourage litigation and always sought ways to resolve conflict out of the courtroom to avoid the often-unsatisfactory result through trials. Stipanowich found evidence that Lincoln was an informal mediator and had served as an arbitrator. Once, he organized a minitrial with a judge outside the court, with the judge rendering a nonbinding decision that settled a dispute without going to trial.

Stipanowich found Lincoln recognizing that, especially for reputational conflict–a popular type of suit at the time–going to trial is not the best way, whether one is representing the plaintiff or the defendant. It was better to reach a negotiated settlement privately.

As a politician, Abraham Lincoln navigated across party lines to achieve resolutions in the context of a mega-negotiation to address every stakeholder group. He had contacts in different parts of the country, reaching out to border states and southern politicians. It was his awareness of changing circumstances that led to his campaign leading to the Emancipation Proclamation. The African American community’s support was critical for restoring the union as a growingly important constituency and a necessary force in the military.

As an individual, Lincoln wrestled with internal conflict on self-image, religion, and relationships. Stipanowich found Lincoln to be tremendously influenced by reading the autobiography of Ben Franklin as a teenager, thus developing an enduring rationalist spirit. Lincoln was clear in his mission and ambition: “Every man is said to have his peculiar ambition. Whether it be true or not, I can say for one that I have no other so great as that of being truly esteemed of my fellow men, by rendering myself worthy of their esteem.” In pursuit of such honor and respect, Lincoln wrestled with depression, a broken engagement, and an avoided duel.

Through navigating conflicts and periods of crisis stemming from his internal and external conflicts, Lincoln built and rebuilt a transformational leadership. Lincoln’s rational, problem-solving spirit is just as relevant today for lawyers, corporations, and interested parties. In Stipanowich’s 2009 article, “Lincoln’s Lessons for Lawyers,” he summarized Lincoln’s legal practice principles:

  1. Use litigation as a last resort—and be frank with your client about its costs and risks.  
  2. Try to be objective in assessing your client’s case; avoid “irrational optimism.” 
  3. Begin negotiating cooperatively and encourage the reliance of others by behaving in a logical and predictable way. Look for trade‐offs.
  4. Seek creative ways of bridging the gap to an agreement that achieves a client’s key goals and priorities in a simple, straightforward manner.
  5. Do not place your own financial interests or ego above the interests of the client.

Thomas, Stipanowich, “Lincoln’s Lessons for Lawyers” Dispute Resolution Magazine 18  (Feb. 1, 2010) (available at https://bit.ly/3INyalO).

* * *

The CPR Council, the governance body of the CPR Institute, promotes the practice of more efficient and effective dispute prevention and resolution. It oversees the development of dispute management resources and tools. The Council’s web page is available at www.cpradr.org/about/cpr-council.

In addition to Tom Stipanowich’s presentation, the June 22 Council meeting also discussed the updated Council Charter, new Council programming, CPR Dispute Resolution Panelists, CPR’s new Immediation Platform for dispute resolution services, and the revised CPR Diversity Commitment. The meeting concluded with a networking session.

* * *

The author, who will be a second-year student at Columbia University Law School in New York this fall, is a 2022 CPR summer intern.

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More on Section 1782: Why the U.S. Supreme Court Says the Law Doesn’t Permit Discovery Requests from International Arbitrations

By Tamia Sutherland & Russ Bleemer

Here is a deeper dive into today’s U.S. Supreme Court consolidated decision in ZF Automotive US Inc. v. Luxshare Ltd.No. 21-401, which was consolidated with and covers AlixPartners LLP v. Fund for Protection of Investor Rights in Foreign StatesNo. 21-518. Does the new decision, which restricts discovery under a law aiding foreign governmental entities in U.S. courts, also limit discovery under the Federal Arbitration Act?

Our post covering the opinion from this morning can be found on CPR Speaks here.

In today’s unanimous 9-0 opinion, available here, the Court held that the use of 28 U.S.C. § 1782 for discovery in international proceedings was limited. “Only a governmental or intergovernmental adjudicative body constitutes a ‘foreign or international tribunal’ under 28 U. S. C. §1782,” wrote Justice Amy Coney Barrett in her first arbitration decision since ascending to the bench in 2020, “and the bodies at issue in these cases do not qualify.”

The statute, as the opinion notes, “permits district courts to order testimony or the production of evidence ‘for use in a proceeding in a foreign or international tribunal.’”

Specifically, Section 1782 states:

The district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal, including criminal investigations conducted before formal accusation.

Justice Barrett focused in the opinion on the phrase “foreign or international tribunal,” citing Black’s Law Dictionary and the Court’s only previous Sec. 1782 holding, Intel Corp. v. Advanced Micro Devices Inc., 542 U. S. 241  (2004) (available at https://bit.ly/3xKIMO5), which permitted discovery to a foreign tribunal but didn’t decide the arbitration-application issue. She parses the definitions individually of “foreign,” “international,” and “tribunal.”

Citing the U.S. government’s brief, which sought a limited use of the statute that didn’t include arbitration, Barrett writes,

“Tribunal” is a word with potential governmental or sovereign connotations, so “foreign tribunal” more naturally refers to a tribunal belonging to a foreign nation than to a tribunal that is simply located in a foreign nation. And for a tribunal to belong to a foreign nation, the tribunal must possess sovereign authority conferred by that nation.”

John B. Pinney, counsel to Cincinnati’s Graydon Head & Ritchey–who is counsel of record on an AlixPartners amicus brief urging the Court to accept the case on behalf of CPR, publisher of this blog (details here)–says that the government’s intervention in the case was pivotal. He cites the government brief and, in particular, Assistant Solicitor General Edwin Kneedler’s participation in the March 23 Supreme Court hearing.

“Between the lines,” notes Pinney in an email, “Kneedler’s argument on behalf of the United States did change the momentum of the proponents’ arguments as well as bolstering the opponents’ arguments.  . . . Justice [Stephen G.] Breyer, whose early questions seemed to put him in the proponent’s camp, appeared to move toward the opponents’ position during Kneedler’s argument when he made a comment that the well-heeled users of international arbitration could petition Congress if they wanted authorization for federal court judicial assistance.  In other words: the view that the operative phrase, ‘foreign or international tribunal,’ in Sec. 1782 ought not be expansively interpreted and that, as a result, it should be up to Congress to be clear if it truly wanted federal courts to have jurisdiction to provide discovery assistance for international arbitral tribunals.”

The Supreme Court opinion’s section on the meaning of the statutory wording concludes by excluding private matters, stating,

“[F]oreign tribunal” and “international tribunal” complement one another; the former is a tribunal imbued with governmental authority by one nation, and the latter is a tribunal imbued with governmental authority by multiple nations.

* * *

The opinion then compares 28 U.S.C. 1782 discovery to the Federal Arbitration Act. It notes that limiting the law’s use to “only bodies exercising governmental authority is consistent with Congress’ charge to the Commission,” referring to the Commission on International Rules of Judicial Procedure, which studied U.S. judicial assistance to foreign countries, and recommended improvements, including the law.

Barrett discusses the effects of adopting a broader reading, and, rejecting the plea, notes:

[T]he animating purpose of §1782 is comity: Permitting federal courts to assist foreign and international governmental bodies promotes respect for foreign governments and encourages reciprocal assistance. It is difficult to see how enlisting district courts to help private bodies would serve that end. Such a broad reading of §1782 would open district court doors to any interested person seeking assistance for proceedings before any private adjudicative body—a category broad enough to include everything from a commercial arbitration panel to a university’s student disciplinary tribunal. [The opinion cites petitioner ZF Automotive’s brief.]

An extension to private bodies of Section 1782 would create “significant tension with the FAA” because the discovery allowed under Section 1782 is broader, Barrett explains.

But in discussing the contrast, the passage that followed also appears to refine the FAA’s use, and is sure to raise questions about the limits among veteran practitioners:

Among other differences, the FAA permits only the arbitration panel to request discovery, see 9 U. S. C. §7, while district courts can entertain §1782 requests from foreign or international tribunals or any “interested person,” 28 U. S. C. §1782(a). In addition, prearbitration discovery is off the table under the FAA but broadly available under §1782. See Intel, 542 U. S., at 259 (holding that discovery is available for use in proceedings “within reasonable contemplation”).

“This wouldn’t be the first time the Court made arbitration law via dicta,” notes Fordham University School of Law adjunct George H. Friedman, a former longtime senior vice president of dispute resolution at FINRA in an email, adding, “Manifest disregard” [which had been used in addition to FAA Sec. 10 to overturn awards] was announced via dicta in Wilko v. Swan back in 1953.” For more on the Court’s FAA gloss, see George H. Friedman, “SCOTUS Decides ZF Automotive: Yet Another Unanimous Decision, This One Holding that Section 1782 Discovery in Foreign Arbitrations Applies Only to Governmental Tribunals,” Securities Arbitration Alert (June 13) (available here).

Barrett concludes the Court’s Section 1782 definition by noting,

§1782 requires a “foreign or international tribunal” to be governmental or intergovernmental. Thus, a “foreign tribunal” is one that exercises governmental authority conferred by a single nation, and an “international tribunal” is one that exercises governmental authority conferred by two or more nations. Private adjudicatory bodies do not fall within §1782.

* * *

In looking at the facts in the two arbitration cases on appeal to the Supreme Court, the opinion analyzed whether the “adjudicative bodies” were “governmental or intergovernmental,” concluding that the matters were private arbitration, and not subject to Section 1782 discovery.

It was an easy call on the ZF Automotive case:

[P]rivate entities do not become governmental because laws govern them and courts enforce their contracts—that would erase any distinction between private and governmental adjudicative bodies. [Respondent] Luxshare’s implausibly broad definition of a governmental adjudicative body is nothing but an attempted end run around §1782’s limit.  

The opinion quickly notes, however, that the AlixPartners case involving the Lithuanian government is harder. It features a government on one side of a case where the arbitration option is contained in an international treaty rather than a private contract, making the case appear to be an intergovernmental dispute under Section 1782.

“Yet neither Lithuania’s presence nor the treaty’s existence is dispositive, because Russia and Lithuania are free to structure investor-state dispute resolution as they see fit,” the opinion states.

Instead, wrote Barrett, “What matters is the substance of their agreement: Did these two nations intend to confer governmental authority on an ad hoc panel formed pursuant to the treaty?”

The Supreme Court analyzed the parties’ contractual arbitration options, which included using court-related processes, as well as Arbitration Institute of the Stockholm Chamber of Commerce and the  International Chamber of Commerce’s Court of Arbitration.

But the parties chose “an ad hoc arbitration in accordance with Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL).”

That, wrote Justice Barrett, “by contrast, is not a pre-existing body, but one formed for the purpose of adjudicating investor-state disputes. And nothing in the treaty reflects Russia and Lithuania’s intent that an ad hoc panel exercise governmental authority. For instance, the treaty does not itself create the panel; instead, it simply references the set of rules that govern the panel’s formation and procedure if an investor chooses that forum. In addition, the ad hoc panel “functions independently” of and is not affiliated with either Lithuania or Russia.”

The opinion adds, “So inclusion in the treaty does not, as the [respondent] Fund suggests, automatically render ad hoc arbitration governmental.” Still, after its focus on the ad hoc nature of the investor-state bilateral investment treaty dispute resolution process, the opinion notes that in the future, sovereign parties may be able to “imbue an ad hoc arbitration with official authority.”

In reversing the lower court decisions in both consolidated cases, Justice Barrett lays out the new rule of law on overseas discovery under 28 U.S. 1782 succinctly in her conclusion:

In sum, only a governmental or intergovernmental adjudicative body constitutes a “foreign or international tribunal” under §1782. Such bodies are those that exercise governmental authority conferred by one nation or multiple nations. Neither the private commercial arbitral panel in the first case nor the ad hoc arbitration panel in the second case qualifies.

* * *

Sutherland, a former year-long 2021-2022 CPR intern, will be a third-year law student at the Howard University School of Law, in Washington, D.C. this fall. Bleemer edits Alternatives to the High Cost of Litigation for CPR and John Wiley & Sons.

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Supreme Court Bars Discovery Assistance for Private Overseas Arbitration Panels Under U.S. Law

By Tamia Sutherland & Russ Bleemer

The U.S. Supreme Court this morning restricted the use of 28 U.S.C. § 1782 for discovery in international proceedings to “[o]nly a governmental or intergovernmental adjudicative” body, but not cross-border arbitration matters.

The unanimous 9-0 decision in consolidated cases by Justice Amy Coney Barrett—her first arbitration opinion as a member of the nation’s high Court—clarifies the use of the 1964 law, which recently split the federal circuit courts over its reach for arbitration parties.

“Interpreting §1782 to reach only bodies exercising governmental authority is consistent with Congress’ charge to the Commission,” wrote Barrett–referring to the 1960’s Commission on International Rules of Judicial Procedure, to improve U.S. laws reaching overseas–in today’s decision in ZF Automotive US Inc. v. Luxshare Ltd.No. 21-401, which was consolidated with and covers AlixPartners LLP v. The Fund for Protection of Investor Rights in Foreign StatesNo. 21-518.

The opinion can be found here.

The issue was whether 28 U.S.C. § 1782 can be invoked in international arbitrations to obtain U.S.-style discovery for evidence. This inquiry looked at whether the statutory language—“foreign or international tribunal”—extends to arbitration panels.

The opinion had little problem removing arbitration discovery requests from a private arbitration tribunal in ZF Automotive, where a federal district court permitted discovery under the statute in the U.S. for parties in the court’s jurisdiction. The Sixth U.S. Circuit Court of Appeals denied a ZF Automotive request to stay the order.

Today’s opinion, however, states that the legislative history behind the statute, as well as a comparison to the domestic-focused Federal Arbitration Act, which allows far narrower discovery than Section 1782, puts the law’s focus on discovery for governmental bodies, not private arbitration tribunals.

The Court had more difficulty with the AlixPartners case, which involved the government of Lithuania. But the Barrett opinion says that the parties’ actions under a bilateral investment treaty are the key here–the parties were acting more like private parties than governmental entities in setting up an ad hoc ADR process. 

“An ad hoc arbitration panel, by contrast, is not a pre-existing body, but one formed for the purpose of adjudicating investor-state disputes,” wrote Barrett, “And nothing in the treaty reflects Russia and Lithuania’s intent that an ad hoc panel exercise governmental authority.”

AlixPartners focused on investor-state arbitration, in which one of the parties is the Lithuanian government. In AlixPartners, the respondent is a Russian entity representing investors pursuing claims before an ad hoc UNCITRAL-rules arbitral tribunal against Lithuania for the investors’ financial losses resulting from the insolvency of a Lithuanian bank. The Second U.S. Circuit Court of Appeals permitted discovery, finding that the ad hoc panel qualified under Section 1782 as a “foreign or international” tribunal rather than a private arbitration matter.

The Barrett opinion notes that the inclusion of arbitration in the BIT did not automatically make the process a governmental proceeding meriting the use of Section 1782. “Instead,” wrote Barrett, “it reflects the countries’ choice to offer investors the potentially appealing option of bringing their disputes to a private arbitration panel that operates like commercial arbitration panels do.”

[The publisher of this blog, CPR, urged the Court in an amicus brief to hear the AlixPartners case last year, without taking a merits position on the case. Details are available here.]

In ZF Automotive, a private commercial contract with ZF Automotive’s German parent required that disputes be arbitrated before the German Arbitration Institute, an arbitration provider. The ZF Automotive case, however, was brought in Detroit before the commencement of the Germany private international arbitration. 

The U.S. District Court allowed the requested discovery.  On appeal to the Sixth Circuit, ZF Automotive, in an unusual move, petitioned for certiorari before judgment to bypass waiting for the Sixth Circuit to decide its appeal. The Sixth Circuit, as noted, declined to stay the lower court’s order. Respondent Luxshare had requested and was granted discovery for the arbitration, in which it alleged fraud against ZF Automotive, under Section 1782. The Supreme Court granted certiorari on Dec. 10, and reversed the lower court decision today.

During a two-week, four-argument deep dive into arbitration law and practice in March (see this CPR Speaks link for previews, argument summaries, and reports on the decisions issued so far here), the Supreme Court heard these Sec. 1782 consolidated arguments as well as an oral argument from the U.S. Solicitor General’s office.

Veteran Assistant Solicitor General Edwin Kneedler’s contention that the Court should be cautious in accepting respondents’ arguments because any expansion of the scope of Section 1782’s reach should be addressed by Congress is reflected in the decision-making process, and the U.S. government’s brief is cited by Justice Barrett. Full details on the March 23 ZF Automotive oral arguments are available on this CPR Speaks blog here.

* * *

Sutherland, a former year-long 2021-2022 CPR intern, will be a third-year law student at the Howard University School of Law, in Washington, D.C. this fall. Bleemer edits Alternatives to the High Cost of Litigation for CPR and John Wiley & Sons.

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CPR Asks Supreme Court to Consider Another Foreign Tribunal Evidence Case

The International Institute for Conflict Prevention and Resolution has asked the U.S. Supreme Court to hear a case on the extent of a law allowing U.S. federal courts to grant requests from foreign tribunals for discovery on U.S. persons as defined under the statute.  

The question in AlixPartners LLP, et al. v. The Fund for Protection of Investors’ Rights in Foreign States, No. 21-518, is whether the law on international tribunals applies to arbitration panel requests.

It’s the second Supreme Court amicus request by CPR in 2021.

CPR didn’t take a position in its Monday amicus filing, but instead asked the Court to hear the matter and clear up a federal circuit split over whether overseas arbitration tribunals may obtain requests for discovery under the law as, say, a foreign court can do.

The reach of 28 U.S.C § 1728 has become a hot topic in federal appellate courts over the past two years.  It was thought to be nearing a conclusion when the nation’s top Court granted cert on the issue in Servotronics Inc. v. Rolls-Royce PLC, et al., No. 20-794.

But while the parties waited for the October Court argument date, they also proceeded in arbitration.  After a July award by a London tribunal, the Court granted the parties’ request to dismiss the case in September, and it was removed from the docket. For more on Servotronics’ details and history, see Bryanna Rainwater, “Case Dismissed: Supreme Court Lightens Its Arbitration Load as Servotronics Is Removed from 2021-22 Docket,” CPR Speaks (Sept. 8) (available here).

CPR last January also had filed an amicus brief, linked at the CPR Speaks post, urging the Court to accept Servotronics. That brief also can be found at the Court’s docket page here.

CPR’s motion for leave to file the AlixPartners amicus brief, as well as the brief itself, is posted on the Supreme Court’s docket page for the case, linked above, and can be accessed directly here. The matter is expected to be considered by the Court at a conference before year end.

Attorneys at Cincinnati’s Graydon Head & Ritchey LLP prepared and filed the brief on CPR’s behalf.  The counsel of record on the filing is John B. Pinney, and the attorneys on the brief are Roula Allouch and John C. Greiner.

For coverage of CPR’s Alixpartners amicus filing argument, see Victoria McKenzie, “Arbitration Group Urges High Court To Define ‘Tribunal,’” Law360 (Nov. 9, 2021) (available here).

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Y-ADR Interview Series #4: Mathias Goh

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

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

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

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

Watch above, and share the interview on YouTube here.

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

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

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

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

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10 Reasons Arbitration Beats Traditional Litigation

Janice_NewBy Janice L. Sperow

  1. Faster

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

  1. Flexibility

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

  1. Confidentiality

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

  1. Affordable

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

  1. Choice

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

  1. Expertise

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

  1. Simpler

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

  1. More Predictable

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

  1. Control

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

  1. Finality

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

________________________

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

 

 

 

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

Opiate Crisis Faces Two Tracks, Settlement and Litigation

By Ginsey Varghese

The potentially vast opioid litigation has received a big push for an alternative dispute resolution intervention.

In December, the U.S. Judicial Panel on Multidistrict Litigation (MDL) consolidated and transferred more than 400 opiate-related cases to Ohio’s Northern U.S. District Court under the oversight of Judge Dan Aaron Polster.

And Polster immediately said he will push for a solution to get a handle on the cases filed against manufacturers by cities and counties and bring on special masters to handle the negotiations. Jan Hoffman, Can This Judge Solve the Opioid Crisis? N.Y. Times (Mar. 5) (available at http://nyti.ms/2Fhx7sK).

The plaintiffs in the MDL are cities, counties and states, though some states participating in the MDL settlement discussions have filed separate suits.

The consolidated case under Judge Polster is called In re Nat’l Prescription Opiate Litigation. In re Nat’l Prescription Opiate Lit., No. MDL 2804, 2017 WL 6031547,*1 (J.P.M.L. Dec. 5, 2017)(available at https://bit.ly/2G3EELQ). The court’s case page is available at https://bit.ly/2qDbbmg.

Opioid makers and distributers, including individual doctors, are accused of creating a public-health crisis with their mishandling of the potent drugs, estimated to kill 180 people in the U.S. daily from misuse. Opioids are painkillers, and they range from prescription drugs to illegal heroin.

Judge Polster said in the first hearing on Jan. 9 that he will drive the case toward settlement. He explained the importance of meaningful resolution. He said, “I don’t think anyone in the country is interested in a whole lot of finger pointing . . . depositions, and discovery, and trials.  . . . [W]ith all these smart people here and their clients, I’m confident we can do something to . . . make sure that the pills manufactured and distributed go to the right people and no one else, and that there can be an effective system to monitor delivery and distribution.  . . .” Transcript of Proceedings (Doc 58) at 411-12, In re Nat’l Prescription Opiate Litig., No. MDL 2804 (N.D. Ohio Jan. 9, 2018)(available at https://bit.ly/2DPT1BA).

The parties suggested three names to serve as Special Masters–David Cohen, a Cleveland-based special master with experience in mass torts and antitrust (see www.specialmaster.law); Cathy Yanni, a JAMS Inc. neutral in San Francisco who has worked as a special master on pharmaceutical cases (see www.jamsadr.com/yanni/), and Duke University Prof. Francis McGovern, of Durham, N.C., who also has worked as a special master in pharmaceutical cases (see https://law.duke.edu/fac/mcgovern/). Id. at 414.

Polster had said that there been substantial progress made in settlement discussions since January, but several barriers “to a global resolution” identified prompted the establishment of “limited litigation track, including discovery, motion practice, and bellwether trials.” Minutes of 3/6/2018 Conference and Order, In re Nat’l Prescription Opiate Litig., No. MDL 2804 (N.D. Ohio Mar. 7, 2018) (available at https://bit.ly/2HZmdZy); see also, Amanda Bronstad, Opioid Judge Allows Some Discovery, Motions to Go Forward in MDL, Nat’l L. J. (Mar. 7, 2018)(available at https://bit.ly/2HYeriy).

This was followed by an April 11 discovery order by Polster (available at https://bit.ly/2KiSSen). The National Law Journal termed the case management order—the first in the MDL–“aggressive,” noting it targets the litigation track to a first-quarter 2019 trial date. Amanda Bronstead, Polster Sets Aggressive Discovery Schedule, Slating Opioid Trial for March 2019, Nat’l L. J. (Apr. 12)(available at https://bit.ly/2FhYdPy).

Polster identified some of the cases that would proceed on the litigation track in the order. The Bloomberg article above notes that allowing local governments and opioid makers’ attorneys to prepare for trial may be the quickest way to overcome some of the barriers to settlement, which include causation issues.

A settlement conference is scheduled for May 10, announced earlier this year and confirmed in an order by Polster earlier this week (available at https://bit.ly/2HTzc2g).

If no deal can be reached, Polster noted in the first hearing that he is prepared to try Ohio’s claims against opioid makers in 2019. Transcript of Proceedings (Doc 58) at 412-13, above.

* * *

More details will appear in an expanded article later this spring in Alternatives to the High Cost of Litigation.

The author was a CPR Institute 2018 intern. She is a law student at Pepperdine University’s School of Law in Malibu, Calif.  

Litigation vs ADR – Different Strokes for Different Folks

steven_125By Judge Steven Platt

My last column described the cultural, economic and structural changes in the legal and business communities that have transposed “Alternative Dispute Resolution” (ADR) from a “cross-practice” which litigators engage in when they are contractually required or court-ordered to do so to a fully-integrated but increasingly separate and distinct set of dispute resolution services to be offered by law firms or other private “Dispute Resolution Firms”, “Groups”, and “Individual Professionals”. As I pointed out in that column the Judiciary has also, albeit belatedly, in the last 25 years recognized this primarily economic, but also legal and political reality and begun to provide or at least encourage individual and corporate litigants to seek cost effective and time sensitive alternatives to full-blown litigation.

That trend is now firmly in place and developing to the point where even some courts, specifically the Chancery Court in Delaware, have begun to formally offer other dispute resolution services as alternatives to their traditional inventory of services. Until recently courts restricted the services they offered to litigation and “settlement conferencing.” The Delaware Chancery Court has expanded this to institutionalize arbitration, evaluative mediation and neutral case evaluation services by the “Sitting Chancellors.”

This has produced a further change to the structure, operations, and culture of mid-size to large law firms albeit slowly because of entrenched resistance based on law office economics and egos. Until recently for example under the prevailing law firm business models and processes, transactions belonged to the “Corporate Department”, wills and trusts to “Trusts & Estates (T&E)” and Bankruptcy to their own discrete practice areas or Boutique Law Firms. Within these typical structures “disputes” have been the exclusive domain of the litigators.

It should not therefore be surprising to encounter resistance to this change by litigators who have historically settled most of their cases (98%) without help from a third-party neutral either privately retained or court-imposed. Many litigators on their own have adapted to the changing client expectations for a faster and less expensive resolution of their disputes by engaging in more extensive and intense settlement negotiations as a part of the litigation process or as Robert Marguilies, a business litigator in New Jersey calls it – “Litigoatiation.”

This resistance and the reason for it however are based on a fundamental misunderstanding of the purpose and processes of Alternative Dispute Resolution. What those who resist the expansion of the techniques utilized to resolve disputes beyond the traditional litigation process even when it includes a large element of “litigotiation” do not comprehend is that the use of these alternative dispute resolution techniques is not just to settle the specific dispute before them but to resolve latent client goals and concerns which have led to their dispute. These other concerns almost always include addressing the underlying causes of the dispute as a means of preventing future conflict between the parties or even with third parties.

This is not always the case as for example where the dispute is purely over money such as in negligence cases resulting from automobile accidents, etc. But even in cases where professional liability issues are to be resolved, there are clearly other issues and interests to be addressed besides purely dollars and the merits and value of the claims and defenses. These can include reaching a resolution that does not engender future litigation or conflict between the policy holder and the carrier, as well as future underwriting issues between the policy-holder and the carrier. There can also be issues and interests related to professional discipline and registration involved.

The resolution of these issues are not easily achieved by the standard “position-based” settlement negotiations by lawyers that typically occur at various stages of a case which is being litigated. Furthermore it is clear to anyone who has engaged in both that settlement discussions between litigators with multiple and alternating agendas are of a different nature and quality than those led by a qualified neutral ADR professional committed to only finding an amicable comprehensive resolution to the dispute and the underlying cause of it. The former is most often intermittent, limited, unconcentrated (mixed in with litigation issues) and unfocused on a comprehensive resolution. The later is structured, concentrated and focused solely on a comprehensive settlement of all issues including those which caused the dispute to occur in the first place.

Litigators who are not trained as Mediators are also likely to confine their position-based negotiations to remedies available through the court in which the litigation is filed. This arbitrarily restricts the ability of the parties to satisfactorily and comprehensively resolve their dispute in a way that addresses the underlying issues which produces the conflict as well as eliminate the conditions which might create future controversies.

Finally, particularly in Maryland, position- based negotiations directly between lawyers acting as advocates for their clients are of necessity constrained by case law from The Court of Appeals. This case law in effect makes the issue of whether an attorney for a party who recommended a settlement based on what an “expert” now says was “insufficient information” as a result of inadequate or incomplete discovery a “jury question.” This exposes lawyers to professional liability if there is not universal acceptance that he/she complied with the standard of care within the “Expert Witness Community” whose ads can be found in many legal magazines. This exposure as a practical matter can be limited if not eliminated by skillful drafting of retainer agreements and/or settlement agreements. But if it is not, then the attorney in order to insulate himself or herself from a future adverse finding by a jury (not made up of other lawyers) will instinctively refuse or at least delay engaging in settlement discussions which may also be limited for these same reasons. This will have the effect of adding both unnecessary time and expense to the conduct of the case before even discussing settlement.

Which dispute resolution technique should the parties utilize in the Multi-Door Courthouse or Conference Room of the future? Stay tuned to this same newspaper and column for the answers to that question next month.

This post is reprinted with permission from “A Pursuit of Justice,” a blog by Judge Steven I. Platt (Ret.) that focuses on the intersection of law, economics, politics and the development of public policy.  Judge Platt currently owns and operates his own private Alternative Dispute Resolution Company, The Platt Group, Inc. through which several retired judges and experienced practitioners offer mediation, arbitration and neutral case evaluation services to business, governmental agencies and their lawyers mostly in complex litigation and disputes.  Judge Platt’s experience and vocation make him an expert in conflict resolution particularly in complex disputes whether they are political, economic, legal, or as most often the case all of the above. Judge Platt can be reached at info@apursuitofjustice.com or via his website at www.theplattgroup.com.

Litigation Financiers: Explain Yourselves!

Litigation Financiers: Explain Yourselves!

By Russ Bleemer

Replies are due from litigation financing companies to a request by prominent U.S. senators on how the firms run their operations and earn their profits.

In a sweeping inquiry, the senators asked three financing firms about how they fund lawsuits and arbitrations, usually against big companies, in exchange for a share of the recovery.

Two of the firms are based in the United Kingdom, and a third in Australia.  All are affiliated with hedge funds.  The litigation financing firms, whose parents are publicly traded overseas, get most of their revenue from investing in U.S. litigation and arbitration cases.

The field has grown immensely in recent years, and U.S. regulation is a patchwork of court decisions, legal ethics rules, and state laws.

But this is the first time lawmakers in the nation’s capital have taken notice, and they are not happy with what they are seeing in the wake of the industry’s growth.

In a late August release, Senate Judiciary Committee Chairman Chuck Grassley, R., Iowa, and Senate Majority Whip John Cornyn, R., Texas, issued three letters they had sent to the companies.  The letters were a deep dive into the companies’ operations, asking 12 expansive questions about the kinds of cases that the companies invest in, how much money the firms have advanced, and the names of the law firms they are backing.

Grassley and Cornyn—generally business-friendly conservatives—are clearly suspicious, and the questions may be precursors to regulating litigation financing.  In giving the firms until the middle of last month to produce the extensive replies the questions require, Grassley noted in a press release statement that:

Litigation speculation is expanding at an alarming rate. And yet, because the existence and terms of these agreements lack transparency, the impact they are having on our civil justice system is not fully known.  . . . It’s vitally important to our civil justice system that litigation decisions aren’t unduly influenced by third parties.

The senators’ concern is that the litigation financing firms are perpetuating courtroom fights and adding frivolous litigation to court dockets–even though at least one firm says it is backing fewer individual plaintiffs and leaning significantly toward financing business-to-business litigation conducted by big law firms.

The senators’ questions asked for the financing firms’ revenues for supporting arbitration matters, too, as well as whether the financing agreements include arbitration clauses.  The letters asked if the arbitration clauses cover disputes between the financing firms and the plaintiffs they back over whether the plaintiffs should settle their cases.

The Grassley/Cornyn inquiry picks up on long-running objections by the U.S. Chamber of Commerce, whose tort-reform arm has blasted litigation financing since its U.S. emergence over the past decade.  But the letters are information requests, and not subpoenas; Grassley, chairman of the powerful Senate Judiciary Committee, has not announced that he is considering hearing.

The senators asked for a reply by Sept. 18.  At this writing, neither Grassley nor Cornyn have released further information.  And only one of the three firms, Burford Capital, a U.K. firm incorporated in Guernsey, an island in the English Channel, has issued a full public response. Noting that “[w]hat may be new about Burford is its introduction of professionalism and institutional specialization to the field,” the firm posted its lengthy Sept. 25 defense of litigation financing in response to the senators’ inquiries on its blog, here.

But for the litigation financing firms’ initial reactions, and more facts and figures as well the background that led to the Grassley/Cornyn letters, see the ADR Briefs feature, “Senators Want Explanations from Top Litigation Funding Firms,” in the October Alternatives (to be cited at 33 Alternatives 140 (October 2015)), which will be available on Oct. 6 HERE for free for CPR members and HERE for subscribers.  CPR membership information is available HERE, and Alternatives subscription information is available at www.altnewsletter.com.

Russ Bleemer is a CPR Consultant and the Editor of CPR’s award-winning publication, Alternatives

ADR Around the World: Taiwan

This article is the third in a four-part CPR summer series that examines ADR in a number of rapidly changing locales around the world. If you missed it, you can find the first post, about Colombia, here, and the second about Mexico here.

ADR in Taiwan: Strong Foundations and a Chance to Build

By Gideon Hanft, CPR Research Assistant and Ngutjiua Hijarunguru, CPR Student Intern

In 2013, research institute Business Environment Risk Intelligence S.A. (BERI) ranked Taiwan as the fourth-best investment environment globally. Taiwan’s largest trading partners are the world’s three largest economies, Japan, China and the United States, and, as a leader in technology production, Taiwan has a dynamic and expanding role in the global economy. Taiwan’s economic growth has corresponded with a growth in commercial litigation, but Taiwan’s government and cultural legacy has also built a strong ADR foundation and offers opportunities for further expansion.

Confucianism has historically cultivated an “anti-lawsuit” attitude, and this heritage has served as “fertile soil for the development of mediation.” However, Taiwan’s strong history of societally promoted mediation has not prevented a rapid expansion of civil litigation. Professor Yun-Hsien Diana Lin of National Tsing Hua University, Taiwan ascribes this development to the “increase in judicial staff…, the progress of economic development and the growing prevalence of education among Taiwanese people.” Despite this expansion of litigation, Taiwan’s government has continued to promote mediation as an alternative through two main avenues.

First, Taiwan has legislation that creates mandatory mediation through Article 403 of Taiwan’s Code of Civil Practice. As Salvatore Casabona, ‎Associate Professor of Comparative Law & International Trade Law at University of Palermo, describes, “Originally provided only for small value claims, the range of civil dispute subjected to mandatory mediation were gradually broadened, including a variety of cases from neighbourhood and real property controversies to traffic accident and medical treatment ones.” This type of mediation is conducted in the courtroom by mediators appointed by the presiding judge. A settlement is legally enforced by the judge, but if mediation does not result in settlement litigation follows. Casabona’s analysis suggests Taiwanese litigants have been resistant to this mandatory mediation; for example, less than 1% of debt discharge cases that provoked mandatory mediation have seen mediation sustained. Nevertheless, the number of successfully sustained mediations has risen over time and this act’s expansion points to recognition of the value of ADR procedures.

The second type of mediation in Taiwan is not conducted through the court but, rather, similarly to mediations abroad, is conducted by outside institutions under mutually agreed upon procedures. For example, mediation under the Chinese Arbitration Association, Tapei (CAA) is regulated under the institution’s rules, passed October 2008, which parties may choose to use unless they mutually agree to other rules. Article 45 of Taiwan’s arbitration law specifies that an arbitrator can propose and accept a mediated settlement with legal enforceability.

Beyond these two main avenues, Taiwan has an additional type of out of court mediation that is more unique. This is called Town Mediation, and many see it as an outgrowth of the Confucian tradition. Regulated by the Town Mediation Act, Town Mediation was first passed in 1955 and this local process has been amended frequently since. Townships and administrative divisions maintain mediation committees of seven to fifteen to mediate civil disputes and minor criminal cases. This act specifies “Mediators are appointed by the mayor of township and county–administered city ‘from the men of eminent fairness, within the administrative district, who have legal knowledge or other expertise and good reputation.’” Mediators are often local elders and are not always lawyers.  In recent years, amendments to the Town Mediation Act have increased the role of local courts in overseeing the committees and passed rules to reduce the appearance of bias.

Town mediation retains a distinctly local identity, with traditional mores playing a vital role in the local mediators’ attempts to resolve disputes. As Yun-Hsien Diana Lin, Associate Professor at the Institute of Law for Science & Technology, National Tsing Hua University, Taiwan, writes, “Fairness must be judged in the context of…social relations instead of according to strict justice under the law.” Unlike court mediation, town mediation can only be entered into at the request of both parties, decisions are non-binding until certified by a local court, and the process is free of charge to both parties. Town mediation’s popularity has grown in recent years, especially in the context of minor criminal cases. The number of approved town mediation cases exceeded the number of sustained in-court mediations in 2010 and 96 percent of town mediation settlements brought before courts were approved in that year.

In addition to mediation, arbitration has become a more common method of dispute resolution in Taiwan. The leading arbitration institution is the CAA, founded in 1955. The CAA’s main services are arbitration and mediation conducted in Chinese and English. The CAA specializes in civil, commercial, international banking, construction, distribution, financial/investment, maritime, securities and transportation disputes. The arbitration act and rules governing CAA proceedings are the Republic of China Arbitration Act of 2002, modeled after the UNCITRAL Model Law of 1985, and the CAA Arbitration Rules.

While most arbitral proceeding in Taiwan are conducted under the auspices of the CAA, specialized bodies performing arbitrations include the Taiwan Construction Arbitration Association, the Labour Dispute Arbitration Association and the Chinese Engineering Arbitration Association.

Despite the expanded use of both town and court mediation, it is hard to say that they have kept up with the expansion of civil litigation. In 2008, the number of civil disputes filed with the Taiwanese District Court increased to 2.81 million from 1.37 million in 1998. While this litigious trend may be a concern, it also means there will likely be a greater market for ADR providers and educators in years to come.

In all, the ADR environment in Taiwan is promising. The growth of civil litigation has been met with governmental expansion of mandatory mediation, suggesting that Taiwan’s leaders are eager for an expansion of ADR.  Town Mediation offers an interesting example of local receptiveness to ADR procedures, and judicial willingness to certify proceedings shows a recognition by judges that outside processes can effectively resolve disputes. With these strong foundations, there is room to build an ever stronger ADR culture. As Taiwan’s growing economy and increasingly strong economic ties have made it one of most important and dynamic markets in the world, expanding ADR there could lead to the more effective resolution of disputes in the rest of Asia and beyond.

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Gideon Hanft, a research assistant at CPR, is entering his first year at Columbia Law School.
Ngutjiua Hijarunguru is a LLM graduate from the Center of the Study of Dispute Resolution at the University of Missouri-Columbia.