TBA Dispute Resolution Section
October 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

• California Construction Mediation Case – Confidentiality Issues

• Claim of "Evident Partiality" of Party-Appointed Arbitrator Fails

• AT&T’s Mandatory Arbitration Clause and Prohibition of Class Actions Flies in Seventh Circuit

• Memphis ADR Section

• John Lande at U. Missouri-Columbia Announces ADR Programs

• Carl Helmstetter’s Alternatives Article
Re: Evaluative Lawyer-Mediator Malpractice Available On-Line

• Resolve False Claims Act Cases Through Mediation???

• ADRWorld Reports that U. S. Supreme Court Grants Review in RICO Arbitration Case

• Who Decides Validity of Limitations on Remedies: Court or Arbitrator?

• Mediate Civil False Claims Act Cases

• HRhero.com: Tips on Creating Valid Employment Arbitration Agreements

Carl Ingwalson on California Mediation Document Confidentiality

Editor’s Note: Full text of Rojas case can be found at: http://www.courtinfo.ca.gov/opinions/documents/B158391.PDF

Carl writes: "I recently reported on California's recent Rojas case which seems to hold that certain things (eg. "raw materials"), even if prepared specially for a mediation, are not necessarily confidential and their production may be required in subsequent litigation. There is a lot of debate about the breadth of the opinion and some even speculate a Brief prepared for a mediation might be "raw material" although I think that's reading too much into the opinion. If nothing else, most seem inclined to limit the data and admissions they put in Briefs. Those who practice in the construction defect arena are routinely asked to prepare Defect Lists or Preliminary Defect Lists for use at a mediation and to include an itemization of each defect, proposed methods to cure and estimated costs for each method. At least one attorney indicates he'll discuss that at a mediation but will no longer put it in writing. I don't know if anyone anticipates an appeal of the case but, in the meantime, the following is from an article in the Los Angeles Daily Journal newspaper:

"Some evidence produced for confidential mediation may not always stay confidential, a state appellate court said Thursday. In a 2-1 vote, the 2nd District Court of Appeal found that factual evidence gathered or prepared for a previous mediation could be used against the defendant in a later lawsuit, even though a state law normally protects information prepared especially for a mediation. Rojas v. Los Angeles County Superior Court, B158391 (Cal. App. 2nd Dist. Oct. 10, 2002). ‘To give parties one more avenue where they could hide evidence and obstruct the fact finding process of litigation would be, in our view, disastrous and would not foster resolution of disputes, but hinder them,’ Presiding Justice Mildred L. Lillie wrote. ‘Parties could simply agree to mediate, introduce all their evidence, and then refuse to settle, and claim privilege. What then?’ But Justice Dennis M. Perluss dissented from the majority’s opinion, writing that, since the evidence was prepared especially for the mediation, it should be confidential. ‘Even if such material can be properly described as "raw material," or "purely evidentiary," it is confidential and protected from disclosure, not because it was used during a mediation, but because it was "prepared for" the mediation,’ Perluss wrote. The 2nd District’s published decision reverses a trial court ruling that said the evidence was protected. Attorney Bruce M. Brusavich of Agnew & Brusavich, who represents the plaintiffs, called the appeals court’s reversal ‘the right result.’ ‘The trial court ruling allowed the evidence to be effectively destroyed by allowing it to be placed in this magical mediation box,’ Brusavich said. ‘The true intent behind the mediation privilege is to allow for a frank and protected discussion of the case to facilitate settlement, as opposed to allowing mediation to be used to conceal evidence.’ Robert C. Risbrough of Watten, Disco & Bassett, attorney for building owner Julie Coffin, a defendant in the suit, said the court’s opinion would undermine the confidence of attorneys in the mediation process. ‘It will thwart the free exchange of information and ideas in order to settle a case,’ Risbrough said. The underlying case involves three purportedly mold-infested apartment building near downtown Los Angeles. Coffin purchased the buildings in 1994 and sued the buildings’ developers and subcontractors in 1996, claiming that construction defects had let water into the building, which, in turn, had grown toxic mold. To prove the case in mediation, Coffin prepared lists of construction defects and photos that were supposed to show the mold. Coffin and the developers settled the suit confidentially in April 1999. But in August 1999, the residents of the buildings filed suit against Coffin and the buildings’ developers and subcontractors. Since the buildings had been repaired or changed since Coffin first sued the subcontractors, the plaintiffs argued that they couldn’t get the evidence any other way. Brusavich, president-elect of Consumer Attorneys of California, said many of the suit’s 163 plaintiffs were sick because of the mold. All of the suit’s plaintiffs but one, Deco Construction Co., have settled since the appeal was filed. Deco’s attorney, Carlos Cabral of Friedenthal, Cox & Herskovitz, declined to comment." Katherine Galdos, Panel Leaves Mediation Evidence Vulnerable. Los Angeles Daily Journal (10/11/02).

Claim of "Evident Partiality" of Party-Appointed Arbitrator Fails

The Seventh Circuit in Sphere Drake Insurance Limited v. All American Life Ins. Co., No. 02-2458, decided on October 9th, rejected a lower court’s setting aside of an award on the grounds that a party-appointed arbitrator displayed "evident partiality," one of the few grounds for refusing to enforce an award. See 9 U. S. C. § 10 (a) (2). After observing that this is the first time since the FAA was enacted in 1925 that a federal court had set aside an award on this basis, and pointing out that the arbitrator in question would have been allowed to sit as a federal judge in litigating this case, the decision in the court below (N. D. Ill., Eastern Div.), was reversed.

Full text: http://www.ca7.uscourts.gov/op3.fwx?submit1=showop&caseno=02-2458.PDF

AT&T’s Mandatory Arbitration Clause and Prohibition of Class Actions Flies in Seventh Circuit

A state law challenge to the arbitration "agreement" was preempted by the Federal Communications Act of 1934 and the consumer was bound to follow the arbitration clause. Boomer v. AT&T, U. S. Ct. App., 7th Cir., No. 02-2667, decided October 3, 2002. For full text, go to:
http://www.ca7.uscourts.gov/op3.fwx?submit1=showop&caseno=02-2667.PDF

JOCIE WURZBURG HEADS MEMPHIS BAR’S ADR SECTION, HAYDEN LAIT [TBA ADR Section’s Western Delegate] SERVES AS DIRECTOR

Jocelyn Wurzburg announced that the Memphis Bar’s ADR Section has planned several CLE seminars. Although a couple have passed before this issue could be published, they are doing a joint monthly program with the Divorce & Family Law Section, and I’m sure will be doing other CLE in the future. For further information about the Memphis Bar’s ADR activities, you can contact Jocelyn at: wurzburg@imediate.com.

A particular aim of the section is the exploration and study of contemporary issues in ADR, e. g., pre-dispute mandatory arbitration clauses.

John Lande at U. Missouri-Columbia Announces ADR Programs

We received information about the Law School’s Center for the Study of Dispute Resolution you may find interesting. Check it out at http://www.law.missouri.edu. Faculty includes Len Riskin and Jean Sternlight, among other notables.

Carl Helmstetter’s Alternatives Article Re: Evaluative Lawyer-Mediator Malpractice Available On-Line

In the July/August 1999 issue of Alternatives, a publication of the CPR Institute for Dispute Resolution (www.cpradr.org), Carl Helmstetter of the Kansas City, Missouri firm, Spencer Fane Britt & Browne, wrote an excellent article on "Malpractice Warning Signs for the Evaluative Lawyer-Mediator." You can find a copy at his firm’s website, http://www.spencerfane.com/content/content/79.asp.

Resolve False Claims Act Cases Through Mediation???

The lead article in the Spring 2002 issue of The Procurement Lawyer, a publication of the Section of Public Contract Law of the ABA, is "Techniques for Resolving False Claims Act Cases through Mediation" by Peter B. Hutt II, Michael C. Eberhardt, and Kimberly R. Heifetz.

ADRWorld Reports that U. S. Supreme Court Grants Review in RICO Arbitration Case

ADRWorld (http://www.adrworld.com/) reported that the U. S. Supreme Court would review PacifiCare Health Systems, Inc. v. Jeffrey Book, D. O., et al (No. 02-215 decided August 13, 2002), ruling that RICO claims did not have to be arbitrated because punitive damages were barred by the arbitration agreement. Compare Larry’s United Super, Inc. v. Werries, 253 F. 3d 1083 (U. S. Ct. App. 8th Cir. 2001) which compelled arbitration of RICO claims, notwithstanding the exclusion of punitive damages.

Who Decides Validity of Limitations on Remedies: Court or Arbitrator

As reported by ADRWorld, PacifiCare’s petition asked the Court to address this question because of the conflict between the 1st, 3rd, and 8th Circuits (Arbitrator decides) and the 5th, 9th, and 11th (Court decides). It will be interesting to follow this case to see if the Supreme Court reinforces its pro-arbitration decisions.

Mediate Civil False Claims Act Cases

Peter B. Hutt II, Michael C. Eberhardt, and Kimberly R. Heifetz writing in Procurement Lawyer (Spring 2002), a publication of the Section of Public Contract Law of the ABA, tell how in recent years mediation has become a frequently used tool of the Justice Department’s Civil Division. They provide a list of DOJ’s factors counseling in favor of ADR and those counseling against it. These factors are not much different from those traditionally used to assess the value or disvalue of trying mediation, although one is intriguing: "Opposing counsel are not trustworthy."

The article also addresses how to structure a mediation when there are parallel criminal proceedings, although the bias against mediating criminal cases – such as is used in state law VORP cases – is evident.

HRhero.com: Tips on Creating Valid Employment Arbitration Agreements

HRhero.com (www.Hrhero.com) has an article from the Vermont Employment Law Letter, Tips on Putting Together a Valid Arbitration Agreement – and Staying Out of Court that’s a good read and reminder of the kinds of pre-dispute provisions that have been torpedoed by the courts.


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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.