Professor S.I. Strong, Senior Fellow at the University of Missouri’s Center for the Study of Dispute Resolution wrote an excellent article about the international implications of class arbitration. The article is entitled “The Sounds of Silence: Are U.S. Arbitrators Creating Internationally Enforceable Awards When Ordering Class Arbitration in Cases of Contractual Silence or Ambiguity?” and appears at 30 Michigan Journal of International Law 1017 (2009). Here is an excerpt: The expansion of class arbitration into the international realm has not gone unchallenged. Instead, international defendants have already shown signs of their intent to fight tooth and nail against the development of international class arbitration, just as their U.S. counterparts did in the early days of domestic class arbitration. Many of the defenses to international class arbitration are the same as those used in domestic matters, and arbitrators are able to rely on a large and growing body of existing jurisprudence when considering those issues. However, the cross-border nature of international class arbitration gives rise to unique challenges, many of which have not yet been considered in the literature. For reasons that will be discussed more fully below, it is anticipated that (1) most international class arbitrations will be seated in the United States, at least for the foreseeable future, and (2) vigorous opposition to international class arbitration will arise at the international enforcement stage. The battle will be fought particularly fiercely in cases where the arbitration agreement is silent or ambiguous about the possibility of class treatment, with losing defendants arguing that the decision to proceed as a class was presumptively improper in the absence of the parties’ explicit agreement to that particular type of procedure. This sort of challenge will most likely be asserted as a procedural objection under Article V(1)(d) of the United Nations’ 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), and it is precisely these sort of arguments that will be the focus of this Article. The article has been cited in papers submitted to the United States Supreme Court in the upcoming case of Stolt-Nielsen SA v. AnimalFeeds Int’l Corp. which is expected to be heard by the Court around December, 2009. You may download the full article here. Read more about Stolt-Nielsen in our previous posts: GUEST-POST: Class and Consolidated Arbitration Under the Federal Arbitration Act: What Issues Will the United States Supreme Court Confront in Stolt-Nielsen, S.A. V. AnimalFeeds Int’l Co.? (August 6, 2009) GUEST-POST: The Emergence in the Last Month of an Express Judicial Recognition that Arbitration Clauses Barring Class Relief in Consumer Agreements Are Void (July 28, 2009) U.S. Supreme Court Grants Cert to Stolt-Nielsen: Class Action Arbitration Case (June 16, 2009) Sonia Sotomayor Meets Posner: Standards of Review for Arbitration Awards After Hall Street (June 2, 2009) Dead? Alive? Matter of Opinion? (Dec. 4, 2008) Technorati Tags: arbitration, ADR, law, FAA, Supreme Court, Stolt-Nielsen, class action

Part IVB: How will the Court Rule on the Merits? By Philip J. Loree Jr. I. Introduction In Part IVA (here) we considered whether the question in Stolt-Nielsen was one for the court or the arbitrators to decide, and predicted that at least five Justices of the United States Supreme Court will hold that the court must decide it. If we are correct, then the Supreme Court will consider on a de novo basis whether the arbitration panel had the authority to impose class arbitration on the Stolt-Nielsen parties. In this Part IVB we consider how the Supreme Court might rule on the merits of the question. We believe that at least five Justices will rule that the arbitrators should not, in the face of the agreements’ silence, have imposed class arbitration where, as here, there is no basis in the Federal Arbitration Act, New York state law or federal maritime law for implying consent to class arbitration. We had planned to address here the alternative question of how the Supreme Court might decide the case if, contrary to our prediction, it rules that the question whether class arbitration may be imposed is for the arbitrators to decide. But doing so would have resulted in an overly lengthy post, so we’ll leave that question for Part IVC. II. Is Imposing Class Arbitration Consistent with the Federal Arbitration Act? Stolt-Nielsen is, like Hall Street Assoc., L.L.C. v. Mattel , Inc, 552 U.S. ___, slip op. (March 25, 2008), another case that will test how committed the Court is to its prior precedent unequivocally stating the principal purpose of the Federal Arbitration Act is to enforce arbitration agreements as written and according to their terms, even if the parties’ freely-bargained-for dispute resolution method may lead to inefficiency in the form of multiple arbitration proceedings. See, e.g., Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989); Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 220 (1985). In Hall Street the Court stopped short of enforcing the parties’ express agreement that a court apply a de novo standard review to the arbitrators’ award, because doing so would have been contrary to the express statutory command of Sections 10 and 11 of the Federal Arbitration Act, which, said the Court, established the exclusive grounds for judicial review of arbitration awards. But in Stolt-Nielsen enforcing the agreements as written, without regard to judicial or arbitral efficiency, would not contradict any provision of the Federal Arbitration Act, and, indeed, would be in accord with the express commands of Sections 2, 4, 5 and Article V(1)(d) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. But that does not make this an easy case. There is institutional, political pressure on the Court evidenced by pending anti-arbitration legislation, and exacerbated by recent events concerning consumer credit arbitration. While Stolt-Nielsen involves maritime industry arbitration, the question whether class arbitration may be imposed in the face of silence is critically important in consumer arbitration. If the parties’ contracts in consumer arbitrations are enforced as written and consistently with state general contract law, then class arbitration in the consumer context will likely be imposed far less frequently. And enforcing as written what the parties have to say about class arbitration means enforcing controversial class arbitration waivers. The “outs” that were available in Bazzle and Hall Street are simply not available in Stolt-Nielsen, which means that the Court must face head on whether or not it will remain committed to the pro-enforcement policies articulated in Dean Witter, Volt, and other cases. The outcome will likely be influenced by the doctrines of stare decisis, separation of powers, and federalism. We believe at least five members of the Court will conclude that, in the face of an agreement’s silence, class or consolidated arbitration is permitted only where applicable state contract law (supplemented by federal maritime law where applicable) permits the court to imply into the parties’ agreement consent to class arbitration, and where doing so does not offend the express provisions of the Federal Arbitration Act, such as those governing arbitrator selection. That resolution would be the most consistent with the Federal Arbitration Act and the Court’s prior jurisprudence concerning it, and would leave it to Congress to decide whether class arbitration should be permitted when the agreement is silent (or when the parties agree to class arbitration waivers). The alternative would be for the Court to adopt a default rule under which class arbitration would be permitted in the face of the contracts’ silence. There is no statutory support in the Federal Arbitration Act for such a rule, and it would probably have to be based on whether or not applicable state arbitration law permitted courts or arbitrators to decide whether class arbitration may be imposed in the face of the contract’s silence. But in the absence of a choice of law clause unambiguously providing that state arbitration law applies, using state law as a gap filler could potentially fall afoul of the Federal Arbitration Act’s preeminent purpose, and would yield outcomes dependent upon choice of forum, forum-state choice-of-law rules and applicable state arbitration law – outcomes that could encourage forum shopping and mire courts in complicated choice-of-law questions. In the remainder of this post, we shall explore the reasons why the Court will likely find that the application of the default rule in this case requires the conclusion that consent to class arbitration cannot be implied in Stolt-Nielsen. A. Does Applicable State and Federal Law Permit a Court to Imply Consent to Class or Consolidated Arbitration when the Agreement is Silent on that Point? Assuming the question whether the parties consented to class arbitration in the face of the agreements’ silence is for the Court to decide, the Court will likely apply: (a) the Federal Arbitration Act; (b) New York law governing contracts generally; and (c) federal maritime law. Just last term, in Arthur Andersen LLP v. Carlisle, 556 U.S. […]

by Holly Hayes A recent post on the “bad faith mediation” section of Texas HB 2256 has prompted comments and discussion regarding the confidentiality of mediation. Texas mediators operate under the Civil Practice & Remedies Code, Chapter 154. Alternate Dispute Resolution Procedures. Specific sections of this code that address confidentiality are as follows: § 154.053. STANDARDS AND DUTIES OF IMPARTIAL THIRD PARTIES. (a) A person appointed to facilitate an alternative dispute resolution procedure under this subchapter shall encourage and assist the parties in reaching a settlement of their dispute but may not compel or coerce the parties to enter into a settlement agreement. (b) Unless expressly authorized by the disclosing party, the impartial third party may not disclose to either party information given in confidence by the other and shall at all times maintain confidentiality with respect to communications relating to the subject matter of the dispute. (c) Unless the parties agree otherwise, all matters, including the conduct and demeanor of the parties and their counsel during the settlement process, are confidential and may never be disclosed to anyone, including the appointing court. A future post will examine the confidentiality sections of the Uniform Mediation Act (UMA) for those states who have adopted the Act. The Association for Conflict Resolution (ACR) listed confidentiality in mediation as the number one principle that should be addressed in the adoption of a UMA, stating that confidentiality is an area where uniformity is required across the states. In her article, “Mediation Confidentiality and Enforceable Settlements: Deal or No Deal?“, Karin S. Hobbs gives a good summary of the importance of confidentiality in mediation: Why is confidentiality so important? Confidentiality is a critical element of successful mediation. In order for the mediator, the attorneys and the clients to understand the central issues, the motivations, the pressure points and the risks of litigation, the participants must be assured the discussions cannot and will not be disclosed to others so they can talk openly. Frequently, some of the motivating forces behind lawsuits are legally irrelevant and yet exceptionally important to understanding the conflict and facilitating resolution. Frequently, clients disclose private events, perceptions or issues in mediation they would not want disclosed to anyone. Explaining their concerns and fears is often critically important to them in order to resolve the conflict. If discussions with the mediator are not confidential and privileged, the mediation process, the mediator’s role and the potential for resolution are significantly diminished. The support of confidentiality in mediation is critical to the protection of the entire mediation process. Future posts will attempt to provide additional information on confidentiality statutes and a survey of key cases interpreting the provisions. We welcome comments, guest posts or links to other posts on this topic. Technorati Tags: ADR, law, mediation Holly Hayes is a mediator at Karl Bayer, Dispute Resolution Expert where she focuses on mediation of health care disputes. Holly holds a B.A. from Southern Methodist University and a Masters in Health Administration from Duke University. She can be reached at: holly@karlbayer.com.

[Ed. note: see our previous posts about this case here and here.] The United States Court of Appeals for the Fifth Circuit held that claims for (1) assault and battery; (2) intentional infliction of emotional distress; (3) negligent hiring, retention and supervision of employees involved in a sexual assault; and (4) false imprisonment are not related to the plaintiff’s employment contract and refused to compel arbitration. I. Background In Jones v. Halliburton Co., No. 08-20380 (5th Cir. Sept. 15, 2009), in 2004, at the age of 19, Jamie Leigh Jones began working as an administrative assistant for Halliburton Company/Kellogg Brown & Root (Halliburton/KBR) in Houston, Texas. On July 21 2005, Jones signed an employment contract with a subsidiary of Halliburton/KBR to work in Baghdad, Iraq that included the following clause: You . . . agree that you will be bound by and accept as a condition of your employment the terms of the Halliburton Dispute Resolution Program which are herein incorporated by reference. You understand that the Dispute Resolution Program requires, as its last step, that any and all claims that you might have against Employer related to your employment, including your termination, and any and all personal injury claim[s] arising in the workplace, you have against other parent or affiliate of Employer, must be submitted to binding arbitration instead of to the court system. (Emphasis added.) The incorporated Dispute Resolution Program, provides: “Dispute” means all legal and equitable claims, demands, and controversies, of whatever nature or kind, whether in contract, tort, under statute or regulation, or some other law, between persons bound by the Plan or by an agreement to resolve Disputes under the Plan . . . including, but not limited to, any matters with respect to . . . any personal injury allegedly incurred in or about a Company workplace. (Emphasis added.) Jones arrived in Baghdad on July 25 2005. Halliburton/KBR provided Jones with housing in a barracks (where the ratio of men to women was 20 to one) as a term of her employment contract. On July 27, 2005 Jones complained of sexual harassment by co-workers and requested to be moved to a different housing location. Jones alleges that no action was taken, and instead, her managers told her to “go to the spa.” Jones alleges that on July 28 2005, she was drugged, beaten, and gang-raped in her barracks bedroom by several Halliburton/KBR employees after a social function. Jones reported the incident promptly. After her rape-kit was administered, Jones alleges that she was placed under armed guard in a container and not permitted to leave or call her family. She further alleges that Halliburton/KBR human resources interrogated her for several hours and gave her two options: to stay and “get over it”, or to return to the U.S. without “guarantee” of a job. At the end, Jone’s father was able to get the help of a Congressman to secure his daughter’s return to the United States. As a result of the alleged incident, Jones received several serious injuries, which would later require reconstructive surgery. Shortly thereafter, Jones filed a complaint with the Equal Employment Opportunity Commission. The agency conducted an investigation and concluded that: Jones “had been sexually assaulted by one or more employees; physical trauma was apparent; and that Halliburton/KBR’s investigation had been inadequate.” II. District Court Decision In February 2006, Jones filed a request for arbitration against Halliburton/KBR. While the arbitration was pending, Jones obtained new counsel and filed this lawsuit claiming negligence, negligent undertaking, sexual harassment and hostile environment under Title VII, retaliation, false imprisonment, breach of contract, fraud in the inducement to enter the employment contract, fraud in the inducement to enter the arbitration agreement, assault and battery, and intentional infliction of emotional distress. In November, 2007, Halliburton/KBR moved to compel arbitration pursuant to the employment contract. On May 9, 2008, the district court refused to compel arbitration of Jones’ claims for: (1) assault and battery; (2) intentional infliction of emotional distress arising out of an alleged assault; (3) negligent hiring, retention and supervision of employees involved in the assault; and (4) false imprisonment. The district court concluded that those claims feel outside of the scope of the arbitration provision because they were not related to Jone’s employment and were beyond the outer limits of even a broad arbitration provision. The court, however, stayed litigation of those claims until the parties complete arbitration of the rest of the claims found arbitrable by the court. (see Jones v. Halliburton Co., 625 F.Supp. 2d 339 (S.D. Tex. 2008). In June 2008, Halliburton/KBR appealed. III. Fifth Circuit Decision The Fifth Circuit stated that the issue before the court was whether the alleged rape fell within the scope of the arbitration agreement. First, the court rejected Jones’ argument that the public policy of the Texas Arbitration Act (TAA) governed the scope of the arbitration provision. Under the TAA, agreements to arbitrate personal injury claims must be signed by each party’s lawyer. The court concluded that to the extent that the TAA affects the enforceability of the agreement, the Federal Arbitration Act preempts. Next, the court reviewed the case law split about similar arbitration clauses and claims premised on sexual assault. The court explained that a liberal construction of “scope of employment” for purposes of workers’ compensation was not necessarily the same standard to be applied when construing a similar arbitration provision. Finally, the Fifth Circuit agreed with the district court and concluded although the arbitration provision extended to personal-injury claims “arising in the workplace,” the court “d[id] not believe [Jones’] bedroom should be considered the workplace, even though her housing was provided by her employer”. The court, however, noted that its holding was fact-specific. Judge DeMoss filed a dissenting opinion. He concluded that “the issue before this court is debatable and therefore should be resolved in favor of arbitration.” Judge DeMoss added that Jones was required to live in the barracks as a condition of her employment and cited case law stating that “oversees employees […]