TBA Dispute Resolution Section April 2002 Newsletter

The Newsletter for Conflict Resolution Neutrals and Attorneys
Published by the Dispute Resolution Section of the Tennessee Bar Association

NOTE: Unless otherwise noted, this Newsletter may be freely redistributed. We request an acknowledgement that "This Newsletter [Article] was previously published in the Dispute Resolution Section's [Month and Year of Publication] Newsletter. Reprinted with permission of the Tennessee Bar Association." Contributions of articles, comments, and suggestions are solicited.

In this issue

• MINUTES OF ADR SECTION’S EXECUTIVE COUNCIL MEETING

• NASD UPDATES CODE OF ARBITRATION PROCEDURE

• A PRIMER ON MEDIATION: INDIANA APPELLATE COURT OVERTURNS TRIAL COURT’S SANCTION AGAINST STATE FARM FOR ALLEGED "BAD FAITH" IN MEDIATION

• GEORGE NOLAN ON "DISCOVERING LIABILITY INSURANCE INFORMATION": EXCHANGING INFORMATION AN IMPORTANT PART OF RESOLVING ANY DISPUTE

• PHIL CUTLER REPORTS ON 9TH CIRCUIT CASE ILLUSTRATING PITFALLS IN DRAFTING ARBITRATION CLAUSES

• JUDGE DON ASH AND KEN JACKSON AUTHOR TBA ON-LINE CLE PROGRAM ON PARENTING PLANS

• ART OF ARBITRATION – PROGRAM AGENDA

• IF YOU MEDIATE, TELL THE TRUTH

• A PROTOCOL FOR AN EMPLOYMENT ARBITRATION PRE-HEARING CONFERENCE

MINUTES OF ADR SECTION’S EXECUTIVE COUNCIL MEETING

The Executive Council met on April 16th. On line were David Taylor, Chair, Allen Blair, Lisa Giovanetti, Judy Johnson, John Blankenship, Jan Walden, Lynn Pointer, and Ken Jackson. We discussed our CLE program at the TBA convention on June 14th, the Art of Arbitration Programs in July (See Agenda below), and the annual forum highlighting Chip Rose’s Collaborative Law presentation on October 3rd and 4th. We also discussed proposed officers for 2002-2003, developing a position on the revisions to the Uniform Arbitration Act, and miscellaneous matters. The ADR Committee as a whole will meet at the TBA Convention, tentatively scheduled for Friday, June 14th after lunch.

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NASD UPDATES CODE OF ARBITRATION PROCEDURE

The latest version of the NASD’s Code of Arbitration Procedure is dated March 27, 2002. You can get a copy at http://www.nasdadr.com.

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A PRIMER ON MEDIATION: INDIANA APPELLATE COURT OVERTURNS TRIAL COURT’S SANCTION AGAINST STATE FARM FOR ALLEGED "BAD FAITH" IN MEDIATION

In Stoehr v. Yost, No. 49A05-0108-CV-343, decided April 2, 2002, the Indiana Court of Appeals decided that a trial court’s sanction against the insurer of defendant Stoehr should be reversed. Stoehr’s counsel had said at the mediation that he did not believe his client was liable, questioned the claimed damages, and stated that he did not intend to offer Plaintiff Yost any money to settle their claim. Yost filed a petition for fees and costs alleging that State Farm (who provided the attorney for Stoehr) had acted in bad faith by failing to authorize Stoehr’s counsel to settle the case. The trial court granted the petition, but deferred an award of sanctions pending an evidentiary hearing. The case was tried to a jury, which returned a verdict for the defendant.

At the evidentiary hearing, the court awarded the defendant some $2000 in fees and costs. The Court of Appeals reversed, saying "Because the trial court is not present at the mediation and, therefore, unlikely to appreciate all that took place there, it is vital that parties alleging that an opposing party failed to mediate in good faith are able to provide the trial court with some evidence beyond bald assertions of bad faith. Even if State Farm had no intention of offering a settlement, there are still several valid reasons [to mediate]. "Because mediation is not ‘all about money,’ we cannot conclude that State Farm’s behavior in scheduling mediation amounted to bad faith." Other goals of mediation, the Court noted, include: factual stipulations, identification of issues, reduction of misunderstandings, clarification of priorities, and location of points of agreement.

For full text see: http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=in&vol=app%5c04020201.nhv&invol=2

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GEORGE NOLAN ON "DISCOVERING LIABILITY INSURANCE INFORMATION": EXCHANGING INFORMATION AN IMPORTANT PART OF RESOLVING ANY DISPUTE

Please check out George’s article in the March 2002 Boult Cummings Conners & Berry Trial Counsel newsletter at http://www.boultcummings.com/bccb/Resources/PUB0402-Discovering%20Liability%20Insurance%20Info.htm. In addition to a brief, cogent analysis of the discoverability of liability insurance coverage under Rule 26 Tenn.R.Civ.P., he makes the point derived from the opinions on the question that such information will promote the amicable settlement of lawsuits by enhancing the ability of lawyers (and I would add neutrals and parties) to make informed settlement proposals.

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PHIL CUTLER REPORTS ON 9TH CIRCUIT CASE ILLUSTRATING PITFALLS IN DRAFTING ARBITRATION CLAUSES

When an underlying agreement contains only a general state choice-of-law clause, federal law governs the right to compel, and the rules for arbitration and state law governs all other aspects of the contract. So says the 9th Circuit in an amended opinion brought to my attention by Phil Cutler (Cutler & Nylander, P. S.) of Seattle, WA. The full text is available at http://caselaw.lp.findlaw.com/data2/circs/9th/0055298ap.pdf. Sovak v. Chigai Pharmaceutical Co., No. 00-55298 (9th Cir. February 19, 2002; amended opinion filed April 10, 2002.) This case is interesting because it makes the point that if the parties want to incorporate state law rules for arbitration in place of the Federal Arbitration Act, they must evidence a clear intention to do so.

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JUDGE DON ASH AND KEN JACKSON AUTHOR TBA ON-LINE CLE PROGRAM ON PARENTING PLANS

Judge Don Ash of Murfreesboro and Ken Jackson of Nashville have prepared an on-line CLE program for the Tennessee Bar Association that will be available in the near future. A fairly comprehensive text is followed by a number of hypotheticals with questions and answers and practice pointers.

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ART OF ARBITRATION – PROGRAM AGENDA

Arbitration is fast becoming not an alternative to litigation, but as a required and recommended way to reach final resolution of disputes. This seminar is for lawyers who are new to this field, or who are experienced, and will cover all aspects of arbitration, including considerations in drafting arbitration clauses, choosing an arbitrator, what rules should apply, preparing for a hearing and the law of appeals.

Our Chair, David Taylor, organized a great program in Nashville in December (see my report in the January 2002 Newsletter), and is taking it on the road. Dates are July 12th (Memphis) and July 26th (Knoxville).

IF YOU MEDIATE, TELL THE TRUTH

Otherwise, your settlement agreement may not be enforceable. So says the Texas Court of Appeals (2d Dist.) in Boyd v. Boyd, No. 2-00-218-CV dated January 3, 2002, a domestic case, where the husband and wife entered into a mediated divorce settlement agreement but the husband failed to disclose a bonus of $230,000. Where a person is under a duty to disclose material information and does not do so, and leads another to contract in reliance on a mistaken understanding of the facts, the contract is subject to rescission. Otherwise, to enforce the agreement would encourage gamesmanship, not the "peaceable resolution of disputes favored by Texas public policy."

There are a number of other property division matters discussed in the opinion that family mediators may want to look at – increase in value of retirement accounts due to post-divorce employment, stock options earned before, but exercisable after the divorce, etc.

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A PROTOCOL FOR AN EMPLOYMENT ARBITRATION PRE-HEARING CONFERENCE
By Ken Jackson

The idea behind this article is to develop a script that can be used by an arbitrator, whether in a single arbitrator position or as Chair of a panel, to conduct a comprehensive pre-hearing conference in an employment law arbitration. Remember that it is important for the arbitrator to keep notes of the preliminary hearing so that a comprehensive and accurate order can be issued following the hearing.

Your comments and suggested revisions and additions would be most welcome.

If the case is administered by a provider, such as the American Arbitration Association, the arbitrator should obtain information from the organization’s case manager. Particular items might include:
• Status of any settlement discussion
• Specification of claims and counterclaims
• Estimated number of hearing days
• Dates, times, and place of hearing
• Number, qualifications, and compensation of arbitrators
• Exchange of information
• Stenographic record
• Possibility of Mediation

Greeting. (Good morning, etc.) Today’s date is ________________ and this conference is taking place within __ days after appointment of the arbitrator(s).
This is an Arbitration Management Conference hearing before the Chairman (Members) of the _________________ Arbitration Panel in the Matter of (claimant) and (respondent).

Please confirm that I am/the panel is acceptable and that there is no objection to my/our conducting this conference.

NOTE: There may be an issue of arbitrability of some or all issues; challenges to contract clause; power to grant certain kinds of relief; need for joinder of others.

My name is _________________ and I am the Arbitrator/Chairman of this Panel.
[I ask now that the other panel members introduce themselves.]

Confirm that the Oath of Arbitrator has been filed by myself/other arbitrators or administer it. [Illustrative Oath from American Arbitration Association: Do you solemnly swear (affirm) that you will faithfully and fairly hear and examine the matters in controversy and that you will make a just award to the best of your understanding?"]

I now ask counsel for the parties to introduce themselves and state who you represent.
[If parties or others are present, please introduce them as well]
[If a telephone conference, state that it will be helpful for everyone to state their name before speaking]

As a preliminary matter, I want to ask the parties if they wish to submit their dispute to mediation prior to arbitration. Does either party wish to propose mediation?

The purpose of this pre-hearing conference is to cover all preliminary matters to promote an economical, expeditious, and fair resolution of the dispute between you. Understanding that there are disagreements between you, I expect the parties and counsel to treat each other with high standards of civility.

Next, I need to know if there are any written agreements as to changes in the arbitration rules applicable in this case.

In employment cases, has the employer-promulgated plan been reviewed for compliance with any applicable due process protocols ?

NOTE: It is still the arbitrator’s obligation to examine the underlying agreement for compliance with any applicable due process protocols.

I wish to confirm that this arbitration will be governed by the laws of the state of __________, and/or the Federal Arbitration Act, applicable employment arbitration rules and procedures, etc. [If argument, get oral argument or written briefs and decide quickly.]

I’d like to confirm that the following documents have been filed:
• Demand
• Answering Statement Counter-Claim
• Answering statement to counter-claim
• A copy of the applicable arbitration provision of the contract
• Others?

Are there any new or changed claims or counter-claims?

Are there any undisclosed or undetermined claims? Can these now be specified and quantified?

If claims cannot now be specified and quantified, all parties shall amend/specify claims and/or counterclaims (monetary amounts) and file any motion to join additional parties by _________________________.

[An additional preliminary hearing shall be held at ________________ (or by telephone conference) before the arbitrators on ___________ __, ____ at ___ m.]

Next, I’d like to confirm the dates, time, place, and expected duration of the hearing.

Start Date ___________________________________

Time _______________________

Location (city, state) _____________________________

Place _____________________________

Estimated number of days ____________________________________

Are there any dispositive motions? (If there are any prior to the conference, I will address them later)

Each party is tendered an opportunity to provide a brief written statement, not to exceed 5 pages, to describe the subject of the dispute, the issues expected to be resolved, and brief comments to educate me/us about the issues. Will briefs be submitted before the hearing? If so, dates? [If prehearing briefs used, need to establish a date for filing.]

I will now ask claimant to make a brief statement of the claim.

I will now ask respondent to make a brief statement of the answer.

[I will now ask respondent to make a brief statement of the counter-claim.]

[I will now ask claimant to make a brief statement as to the answer to the counter-claim.]

Can we agree on the issues to be arbitrated? As I understand it, the issues to be arbitrated are:

__________________________________________________________________________________________


NOTE: Burden is on party opposing arbitrability of a particular issue

What are your views on the need or desirability of bifurcating the arbitration into a liability phase and a damages phase?

I will now turn to discovery issues and parameters. I remind you that you are required to cooperate in committing to, conducting, and completing an exchange of information concerning your documents and witnesses.
• First, does either party wish to propound interrogatories?
• Are there any witnesses who cannot be subpoenaed or who cannot attend the arbitration? If so, shall affidavits or depositions be permitted? [Need the schedule for the Report of Preliminary Hearing and Scheduling Order]
• Address issue of whether or not arbitrator needs to issue subpoenas, or whether applicable state law permits attorneys to do so. (FAA 9 U. S. C. § 7, T. C. A. § 29-5-308)
• What document production issues do we need to address?
o Filing, marking, and exchanging of exhibits
o Provide for a date by which the parties shall exchange copies of, or make available for inspection all exhibits to be offered and all schedules, summaries, diagrams and charts to be used at the hearing.
o pre-mark each proposed exhibit for identification using the following designations:

Party Exhibit # to Exhibit #
______________________ _________ ________

______________________ _________ ________

Each party shall submit one set of exhibits to the arbitrator(s) on or before________________________.

My order will direct the parties to attempt to agree upon and submit a jointly prepared consolidated and comprehensive set of joint exhibits.

• What records are to be produced?
• Where are the records to be delivered?
• Dates for production?
• Costs of production?
• Number of copies for arbitrators and each party?
• Will anyone be bringing audio-visual aids? [Avoid surprise]

• Other discovery issues? Any disagreements?
• Are there any issues with respect to subpoenas that need to be brought to my attention?

NOTE: Employees and their representatives should have access to all information reasonably necessary and relevant to their claims.

What do you propose in terms of the exchange of witness lists and biographies, the scope of witness testimony, witness exclusion, and expected testimony?

[Claimant shall serve and file a disclosure of all witnesses reasonably expected to be called by the claimant on or before ____________________________.]

[Respondent shall serve and file a disclosure of all witnesses reasonably expected to be called by the claimant on or before ____________________________.]

The disclosure of witnesses shall include the full name of each witness, a short summary of anticipated testimony, copies of any experts’ reports, and written C. V. of experts. If certain required information is not available, the disclosures shall so state. Each party shall be responsible for updating its disclosures as such information becomes available. The duty to update this information continues up to and including the date that hearing(s) in this matter terminate.
The parties shall make arrangements to schedule the attendance of witnesses so that the case can proceed with all due expedition and without any unnecessary delay.
The party presenting evidence shall give notice to the other party the day before of the names of the witnesses who will be called to testify the next day and the order in which the witnesses will be called.

Are there any expert witnesses?

Will any party, counsel or witness require special accommodations in order to participate?

Does either party wish to raise questions on the applicable law, standards, rules of evidence, burdens of proof/burdens of going forward/standards of proof, or other matters that will apply in the evidentiary hearing? Unless you tell me it makes sense to do otherwise, we’ll follow the normal sequence for the order of evidence.

Does either party request any stipulations or declarations as to uncontested facts, exhibits, witnesses or other issues other than those admitted in the answer(s)? [If so, obtain in writing]

[The parties shall file a stipulation of uncontested facts by ____________________.]

Will a court reporter be used by either party?
Any interpreters?

Will there be post-hearing briefs or will you summarize your arguments orally only?

Are there any issues concerning the form of the award? [Examples: written opinion, factual findings with breakdown of amounts awarded, detailed findings of fact and conclusions of law]. A reasoned award will be prepared unless the parties specifically agree otherwise.

What is provided for in the arbitration agreement in terms of allocation of attorney’s fees and costs? Arbitrator’s fees and costs?

Any other issues relating to the subject or conduct of the arbitration?

My goal is to move the arbitration to a fair and speedy conclusion. I will interrupt repetitious testimony and evidence. Documents and exhibits should be self-identifying wherever possible. Any other time-saving suggestions from counsel?

Any other preliminary matters not otherwise provided for shall be raised through the by _______________________________.

I remind you that all deadlines stated in my preliminary hearing and scheduling order will be strictly enforced. After the deadline, such motions may not be filed except with leave of the arbitrator(s) and for good cause shown. [NOTE: One reason for frustration with arbitration is postponements. Yet one of grounds for vacating an arbitration is refusing to postpone the hearing upon sufficient cause being shown.]

I want to remind the parties of the rules regarding ex parte communications [Also, this arbitration is confidential as provided in ___________________.]

I expect to have the report of this pre-hearing conference and the scheduling order completed and mailed by _________________________.

Finally, I want to thank each of you for your participation today. This preliminary hearing is now closed.

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If you have questions or need information about TBA's Dispute Resolution Section, you may contact: Lynn C. Pointer, Sections/Committees Coordinator, Tennessee Bar Association, 221 Fourth Avenue North. Suite 400, Nashville, TN 37219. Email: lpointer@tnbar.org
Phone: (615) 383-7421 and Fax: (615) 297-8058.