The Corpus Christi Court of Appeals has refused to order a dispute to arbitration where a clause in a general partnership agreement provided for mediation. In Appling Farms & Appling Interests, Ltd. v. Turner Mgmt., Inc., No. 13-09-00051-CV, (Tex. App. – Corpus Christi, January 27, 2011), Appling Farms, Appling Interests and Turner Management, entered into a limited partnership agreement to run a fish farm, Lonestar Aquafarms, Ltd., located in Texas. John Turner, President of Turner Management, owned thirty-three and one-third percent, Turner Management owned one percent, and the two Appling entities owned a combined sixty-six and two-thirds percent of Lonestar. Under the partnership agreement, Turner management acted as the general partner of Lonestar. John Turner was Turner Management’s primary employee and performed the daily management of Lonestar. In 2007, the Appling entities (collectively “Appling”) sued both John Turner and Turner Management for misappropriation of trade secrets and customer lists and for entering into unfair competition with Lonestar by starting a competing fish farm. After 18 months of discovery and motion practice and one month before trial was set to begin, Appling sought arbitration on the issue of removing Turner Management as general partner of Lonestar pursuant to a clause in the parties’ partnership agreement. The clause at issued stated, 8.7 Removal of General Partner. Upon thirty (30) days’ prior written notice, and with written consent of a majority of the Limited Partners, a General Partner may be removed for any act which constitutes fraud, gross negligence or willful misconduct that has a detrimental effect on the Partnership, as determined by an independent third-party mediator appointed by agreement of the Limited Partners, provided that the written consent of the Limited Partners designates a substitute General Partner. After Turner Management refused to consent to arbitration, Appling filed a motion to compel arbitration with the trial court. Turner Management responded stating the “clause did not constitute an agreement to arbitrate and, alternatively, that Appling had waived its right to arbitration by substantially invoking the judicial process to Turner Management’s detriment.” The trial court denied Appling’s motion and Appling appealed. First, The Corpus Christi Court stated “whether an enforceable agreement to arbitrate exists here is a legal question subject to de novo review.” Next, the court declared, “the only issue before us is whether an agreement to arbitrate exists.” According to the Court of Appeals, Mediation, the only type of third-party dispute resolution directly referenced in the clause here, is defined as a “method of nonbinding dispute resolution involving a neutral third party who tries to help the disputing parties reach a mutually agreeable solution.” BLACK’S LAW DICTIONARY 1070-71. Looking to the plain language of the contract to ascertain the parties’ intentions, see Dynegy Midstream Servs., L.P., 294 S.W.3d at 168; Frost Nat’l Bank, 165 S.W.3d at 311-12, we cannot conclude that the clause’s requirement of a mediator manifests a plain, clear, and certain intention to submit the partner removal issue to a third-party for binding and final resolution. See Bates, 177 S.W.3d at 422. Neither does the clause manifest an intent to submit the issue to a third-party in substitution for the courts. See Jack B. Anglin Co., Inc, 842 S.W.2d at 268. Rather, arbitration and mediation are fundamentally different methods of dispute resolution, and we believe the parties’ use of the word “mediator” and the absence of any terms indicating that third-party resolution is mandatory and/or binding is key. Because “a party cannot be required to arbitrate unless it has agreed to do so,” the Corpus Christi Court of Appeals denied Appling’s motion to compel arbitration and affirmed the trial court’s ruling. Technorati Tags: ADR, law, arbitration, mediation

On May 29, 2010, the International Bar Association (IBA) Council adopted new Rules on the Taking of Evidence in International Arbitration. The new Rules, developed by a Subcommittee comprised of 22 practitioners from a wide variety of legal systems, reflect the first amendments since 1999. The revised rules apply to any agreement to use the IBA Rules made after May 29, 2010. According to the January 18, 2011 American Bar Association Section of International Law Arbitration Committee Call Minutes, the more substantive Rules, conform to the actual practice of parties and tribunals in international arbitrations: The revised rules now expressly incorporate a requirement of good faith in taking evidence. While uncontroversial, the implications of this rule, and whether it will lead to anything new in practice, are still unclear. The revisions now provide that the tribunal is to meet and consult with the parties at the earliest appropriate time regarding anticipated evidentiary issues. This frequently occurs already, either by way of institutional rules or simply as a matter of practice. Again consistent with actual practice, under the new revisions, documents are to be produced in the first instance only to the opposing party, and not to the tribunal. The amendments now provide greater guidance to the tribunal on how to address requests for documents or information maintained in electronic form, e.g., by way of limiting to certain document ‘custodians’ or by using a list of search terms designed to cull out irrelevant documents. Confidentiality protections governing documents have been expanded; now, any documents submitted in an arbitration, whether by a party or non-party, are automatically considered confidential. This revision was designed to account for the wide variation in national laws on this subject. The revisions provide more specific guidance for arbitrators regarding issues of legal privilege; however, the rules do not endorse or adopt any single approach as they vary across jurisdictions. Disputing previously discussed the new Rules here. More information, including a link to the new IBA Rules, is available here. Technorati Tags: law, ADR, arbitration

Last week, Thomas J. Stipanowich, William H. Webster Chair in Dispute Resolution and Professor of Law at Pepperdine School of Law, and Academic Director of the Straus Institute for Dispute Resolution, was the keynote speaker at Fordham Law School’s Fifth Annual Alternative Dispute Resolution Symposium. At the Symposium, Professor Stipanowich presented a paper entitled “Revelation and Reaction: The Struggle to Shape American Arbitration.” The paper discusses the U.S. Supreme Court’s recent Stolt-Nielsen S.A. v. AnimalFeeds International and Rent-A-Center, West v. Jackson decisions and will be published in Contemporary Issues in International Arbitration and Mediation: The Fordham Papers (2010). Thanks to Paul Lurie, Partner at Schiff Hardin, LLP’s Chicago office, Disputing obtained a pre-publication version of Professor Stipanowich’s paper. The paper offers readers a timely and clear analysis of the two Supreme Court decisions and their effect on arbitration jurisprudence. First, Professor Stipanowich provides a brief history of U.S. Supreme Court decisions related to arbitration in recent decades and how the decisions expanded federal substantive law under the Federal Arbitration Act. Next, the author examines the limiting effect the Court’s decisions in Stolt-Nielsen and Rent-A-Center, West have had on the ability of lower courts to police arbitration agreements. After that, Professor Stipanowich explores arbitration reform efforts and “the dynamic political response to the extreme, non-nuanced pro-arbitration position developed in modern Court jurisprudence.” Finally, the paper concludes with a call “for carefully crafted legislation or administrative regulations limiting the use of arbitration agreements in adhesion contracts or establishing due process standards for such agreements.” The paper may be downloaded (without charge) from Social Science Research Network. In the future, Professor Stipanowich will expand upon this paper by analyzing the Supreme Court’s much anticipated decision in AT&T Mobility LLC v. Concepcion in an article entitled “The Third Arbitration Trilogy.” More information about the AT&T case is available here. Technorati Tags: law, ADR, arbitration

by Holly Hayes The Joint Commission Journal on Quality and Patient Safety published a two-part article in the February 2011 edition entitled “A Strategic Approach for Managing Conflict in Hospitals: Responding to the Joint Commission Leadership Standard.” The articles by Charity Scott and Debra Gerardi were published as Part 1 and Part 2. Part 1 begins by reviewing Conflict Management Standard LD.01.03.01 which states, “The governing body is ultimately accountable for the safety and quality of care, treatment, and services.” Elements of Performance, or how The Joint Commission will score the standard, include: Development of a code of conduct that defines acceptable, disruptive, and inappropriate behaviors; and creation and implementation of a process for managing disruptive and inappropriate behaviors. Read more here. The abstract for Part 1 of the article states The Joint Commission has numerous standards and alerts that address: the significant impact of relational dynamics on patient safety and quality of care and the critical need for a strategic approach to conflict in health care organizations. Whether leadership conflicts openly threaten a major disruption of hospital operations or whether unresolved conflicts lurk beneath the surface of daily interactions, unaddressed conflict can undermine a hospital’s efforts to ensure safe, high-quality patient care. Developing a Strategic Approach to Conflict Management: How leaders manage organizational conflict has a significant impact on achieving strategic objectives. Aligning conflict management approaches with quality and safety goals is the first step in adopting a strategic approach to conflict management. A strategic approach goes beyond reducing costs of litigation or improving grievance processes—it integrates a collaborative mind-set and individual conflict competency with nonadversarial processes. Undertaking a Conflict Assessment: Conflict assessment should determine how conflicts are handled among the leaders at the hospital, the degree of conflict competence already present among the leaders, where the most significant conflicts occur, and how leaders think a conflict management system might work for them. Conclusions: Strategically aligning a conflict management approach that addresses conflict among leadership groups as a means of protecting the quality and safety of patient care is at the heart of LD.02.04.01. The abstract for Part 2 states the following: Background: A well-designed conflict management process for hospital leaders should both retain the positive benefits of constructive conflict engagement and minimize the adverse consequences that unmanaged conflict can have on patient care. Dispute system design (DSD) experts recommend processes that emphasize the identification of the disputing parties’ interests and that avoid reliance on exertions of power or resort to rights. In an emerging trend in designing conflict management systems, focus is placed on the relational dynamics among those involved in the conflict, in recognition of the reciprocal impact that each participant in a conflict has on the other. The aim is then to restore trust and heal damaged relationships as a component of resolution. Components of the Conflict Management Process: The intent of Standard LD.02.04.01 is to prevent escalation to formal legal disputes and encourage leaders to overcome their conflict-avoidance tendencies through the use of well-designed approaches that support engagement with conflict. The sequence of collaborative options consists of individual coaching and counseling; informal face-to-face meetings; informal, internally facilitated meetings; informal, externally facilitated meetings; formal mediation; and postdispute analysis and feedback. Conclusions: Every hospital has unique needs, and every conflict management process must be tailored to individual circumstances. The recommendations in this two-part article can be adapted and incorporated in other, more comprehensive conflict management processes throughout the hospital. Expanding the conflict competence of leaders to enable them to effectively engage in and model constructive conflict-handling behaviors will further support the strategic goal of providing safe and effective patient care. The Joint Commission Medical Staff Standard MS.01.01.01 addressing conflict will go into effect March 31, 2011. See the Standard here. American Medical News summarizes: The new standard states that the organized medical staff has the primary job of assuring quality and patient safety in the hospital while laying out a mechanism for physicians, the hospital governing body and chief executive to resolve differences over rules, policies and procedures. By spelling out these respective roles and responsibilities, the standard aims to foster collaborative working relationships to improve the quality of care. Medical staffs around the country will have to revise their bylaws in the next year to comply with the standard. Read more here. With regard to the management of conflict, The Joint Commission introduction to the new standard states: If conflict arises within the medical staff regarding medical staff bylaws, rules and regulations, or policies, it implements its process for managing internal conflict (see Element of Performance 10 — see below). If conflicts regarding the medical staff bylaws, rules and regulations, or policies arise between the governing body and the organized medical staff, the organization implements its conflict management processes, as set forth in the Leadership chapter. Element of Performance 10 states: The organized medical staff has a process which is implemented to manage conflict between the medical staff and the medical executive committee on issues including, but not limited to, proposals to adopt a rule, regulation, or policy or an amendment thereto. Nothing in the foregoing is intended to prevent medical staff members from communicating with the governing body on a rule, regulation, or policy adopted by the organized medical staff or the medical executive committee. The governing body determines the method of communication. The Joint Commission recognition of the value of teamwork in the medical setting and the mandate for the development of a conflict resolution process is summarized as follows: This collaborative relationship is critical to providing safe, high quality care in the hospital. While the governing body is ultimately responsible for the quality and safety of care at the hospital, the governing body, medical staff, and administration collaborate to provide safe, quality care. (Please see the Leadership chapter for more discussion of the relationship among the organized medical staff, administration, and governing body.) We welcome your comments on managing conflict in hospitals. Technorati Tags: Mediation Holly Hayes is a mediator at Karl Bayer, […]