As the Wall Street Journal reports, Jamie Leigh Jones’ trial has began in Houston. Jones v Halliburton/KBR is an employment arbitration case with tragic facts that made the national headlines, including a story by the National Public Radio (NPR). Jones claims that in July 2005, four days after she arrived to work in Iraq, she was gang raped by seven co-workers.

By Brett Goodman Unlike many other jurisdictions, the Texas statutes are silent on the issue of good faith mediation. Perhaps the most pertinent provision within chapter 154 of the Texas Civil Practices and Remedies Code is found at §154.002, stating, “It is the policy of this state to encourage the peaceable resolution of disputes, with special consideration given to disputes involving the parent-child relationship, including the mediation of issues involving conservatorship, possession, and support of children, and the early settlement of pending litigation through voluntary settlement procedures” Tex. Civ. Prac. & Rem. Code Ann. § 154.002 (emphasis added). This “voluntary” requirement implies no good faith requirement, as mandating good faith places a pressure on those involved in the mediation that could surpass a truly voluntary process. Although a good faith requirement would add to the perceived legitimacy of the mediation process and act as a deterrent to unwanted conduct, several other concerns would arise and provide insight why the idea has not been adopted in Texas. Placing the focus on the conduct of parties in mediation acts as a distraction to the main goal underlying the process, encourages frivolous claims over the good faith or lack thereof, and overall could discourage participation in mediation altogether. The case history in Texas shows a firm rejection of a good faith requirement. Shortly after the passage of the Texas ADR Act, the Texas Court of Appeals in Houston ruled void a mediation referral requiring parties to negotiate in good faith because “[a] court cannot force the disputants to peaceably resolve their differences, but it can compel them to sit down with each other.”Decker v. Lindsay, 824 S.W.2d 247, 250 (Tex. App. — Hous. [1st Dist.] 1992, no writ). This has been the norm within the Texas courts, as a Fort Worth court described, “An order requiring ‘good faith’ negotiation does not comport with the voluntary nature of the mediation process and [is] void.” In re Acceptance Ins. Co., 33 S.W.3d 443, 452 (Tex. App. — Fort Worth 2000, no pet.). Because the trial court in that Fort Worth case made an order that was void because of its good faith requirement, the court could not make further inquiry as to whether that court order was adhered to. One exception that could arise concerning good faith deals with filing an objection to mediation, which must be done within ten days of the court ordering a mediation in order to have effect. A Texas court has approved a sanction for a failure to mediate in good faith where the Texas Department of Transportation did not expressly object. See Texas Dept. of Transp. v. Pirtle, 977 S.W.2d 657, 658 (Tex. App.–Fort Worth 1998, pet. denied). In closing, this court declared, “We find that it is not an abuse of discretion for a trial court to assess costs when a party does not file a written objection to a court’s order to mediate, but nevertheless refuses to mediate in good faith.” Given the chance to continue down this path, however, the court of appeals in Austin rejected this mode of thought and declined to follow Pirtle. See Texas Parks & Wildlife Dept. v. Davis, 988 S.W.2d 370, 375 (Tex. App. — Austin 1999, no pet.). In this case, the Texas Parks and Wildlife Department did object to mediation according to proper procedure in a suit where park guest Davis was harmed as the result of a bench collapsing underneath him, but the court overruled the objection. Unlike Pirtle, though, the Department did attend mediation and made an offer, so the Department’s complaint was sustained “as to the trial court’s award of attorney’s fees as a sanction for the Department’s alleged failure to negotiate in good faith.” Given the chance to make exceptions to the lack of a good faith requirement commonplace, Texas courts have not followed that path. The Texas tendency to not require good faith is backed by several sound policy justifications. Requiring good faith would necessitate more judicial intrusion into the mediation process than is currently taking place, thus threatening the fundamental rights of the parties within mediation. In cases when the good faith requirement would come into collision with the confidentiality guarantees so that confidentiality would have to be breached in order to analyze what happened during mediation for good faith or lack thereof, the parties would be greatly hindered. This would almost certainly degrade confidence in mediation and discourage mediation altogether. Because the main goal of mediation should be to resolve the parties’ dispute, a good faith requirement may act as a distraction to the main goal and sidetrack what is really supposed to be achieved. Finally, a good faith requirement may open up the floodgates to frivolous claims of a lack of good faith, further straining the purposes of mediation and hindering the process. See Samara Zimmerman, Judges Gone Wild: Why Breaking the Mediation Confidentiality Privilege for Acting in “Bad Faith” Should be Reevaluated in Court-Ordered Mandatory Mediation, available here. Technorati Tags: law, ADR, arbitration Brett Goodman is a summer intern at Karl Bayer, Dispute Resolution Expert. Brett is a J.D. candidate at The University of Texas School of Law. He holds degrees in Finance, Mathematics, and Spanish from Southern Methodist University.

The Texas Supreme Court held that Texas Civil Practice and Remedies Code Section 51.016 does not allow an interlocutory appeal of an order appointing an arbitrator. In CMH Homes,et al.v. Adam Perez, No. 10-0688 (Tex., May 27, 2011), Adam Perez purchased a manufactured home from CMH Homes , Inc. from salesman Bruce Robinson Moore, Jr. and Vanderbilt Mortgage and Finance financed the purchase. The contract between CMH Homes and Perez contained an arbitration clause which provides that “All disputes, claims or controversies arising from or relating to this contract . . . shall be resolved by mandatory binding arbitration by one arbitrator selected by Seller with Buyer’s consent.” In November, 2009, Perez sued CMH Homes, the mortgage company, and the salesman for fraud and violations of the Texas Debt Collection Act. In January, 2010, Perez filed a motion to compel arbitration. The parties agreed to arbitration under the Federal Arbitration Act (“FAA”) but could not agree on the arbitrator. In March, 2010, the trial court issued an order appointing Gilberto Hinojosa as the arbitrator. The Texas Supreme Court now considers two issues: (1) Whether the court of appeals lacked jurisdiction under Texas Civil Practice and Remedies Code Section 51.016 of an interlocutory appeal of an order appointing an arbitrator. The court first explained that prior to the Legislature’s 2009 amendment (S.B. 1650) to the Texas Arbitration Act (“TAA”), parties seeking to appeal an order refusing to compel arbitration would file two separate appellate proceedings: (a) Under the TAA, a party could bring an interlocutory appeal of an order denying arbitration; and (b) Under the FAA, a party could only challenge an order denying arbitration by mandamus. Section 51.016 now provides that a party may appeal a judgment or interlocutory order “under the same circumstances that an appeal from a federal district court’s order or decision would be permitted by 9 U.S.C. Section 16.” The court then concluded that the court of appeals correctly determined it was without jurisdiction to hear an interlocutory appeal pursuant to Section 51.016. (2) Whether the court of appeals should have considered CMH’s interlocutory appeal as a petition for writ of mandamus. The Texas Supreme Court, although CMH had not filed a separate petition for writ of mandamus, the court of appeals nonetheless should have acted as though such a petition had been filed: “We will not unnecessarily waste the parties’ time and further judicial resources by requiring CMH to file a separate document with the title “petition for writ of mandamus” listed on the cover where the party has expressly requested mandamus treatment of its appeal in an uncertain legal environment.” The Texas Supreme Court reversed and remanded for the court of appeals to consider this appeal as though it had been filed as a mandamus proceeding. Technorati Tags: law, ADR, arbitration

By Brett Goodman The United States District Court for the Eastern District in Tyler, Texas, has allowed a motion to compel and denied a motion to protect in a suit concerning negotiation communications of formerly created license agreements to patents-in-suit. In Clear with Computers, LLC v. Bergdorf Goodman, Inc., 753 F. Supp. 2d 662, 663 (E.D. Tex. 2010) Clear With Computers (CWC), a provider of computer parts and repair, sued many defendants on the patents-in-suit, but only one went to trial whereas the rest were settled out of court. The issue was whether litigation induced settlement agreements are admissible in trial. The patent concerned an Electronic Preparation Proposal System claimed to be owned by CWC and alleged to be improperly used by the defendants. The defendants, various companies using the disputed system in their websites and sales methods, sought the production communications as a means of tracing how the suits were settled and thus determining if the settlement agreements were admissible at trial. The court first noted that Rule 26b of the Federal Rules of Civil Procedure allows discovery of nonpriviliged materials relevant to a claim or defense. Although district courts vary on their interpretations of Rule 26, the present court had ruled earlier in ReedHycalog UK, Ltd. v. Diamond Innovations Inc., 727 F.Supp.2d 543, 546–47, 2010 WL 3021550 at *3 (E.D.Tex.2010) “that the admissibility of litigation licenses—like all evidence—must be assessed on a case-by-case basis, balancing the potential for unfair prejudice and jury confusion against the potential to be a ‘reliable license.’ ” The court then found inconsistencies in CWC’s settlement amounts with the former defendants with what was to be expected. The court declared, “[T]he settlement communications are likely to be key in determining whether the settlement agreements accurately reflect the inventions’ value or were strongly influenced by a desire to avoid or end full litigation.” Still reaffirming that privileged communications would not be admissible at trial, the court decided that understanding the settlement agreements would be important as they would “likely be the only licenses of the patents-in-suit.” To the chagrin of CWC, the court did not accept the argument that this production would be overly burdensome because of the sheer number of settlement agreements and related communications because defendants’ “need for the documents outweighs this concern given that there are no non-litigation licenses that can be used to value the patents-in-suit and the inconsistencies among the litigation settlement agreements.” Thus, taking this case as an independent entity and weighing the particular facts in question, the court ruled for defendants and allowed the production of the negotiations leading to the settlement agreements. Though this ruling in an exception to the norm, it shows the possibility of confidentiality of mediation communications being overruled by weighing other interests. Technorati Tags: law, ADR, arbitration Brett Goodman is a summer intern at Karl Bayer, Dispute Resolution Expert. Brett is a J.D. candidate at The University of Texas School of Law. He holds degrees in Finance, Mathematics, and Spanish from Southern Methodist University.