By Holly Hayes Steve Mehta wrote a thoughtful and thought-provoking post on bad faith mediation on his blog Mediation Matters. Mr. Mehta references HB 2256, a Texas law that addresses three things as bad faith: failure to participate, failure to have a full authority representative present, and failing to provide necessary information. It authorizes the mediator to report this conduct. Mr. Mehta notes, “Interestingly, I do not think a statute like this would pass muster in California due to the limitations that the courts have imposed on the mediator’s ability to disclose information from the mediation. But even if this limitation were removed by statute (as an exception to confidentiality), is it reasonable to ask the mediator to disclose this bad faith action? Isn’t the mediator going to lose all credibility with one side or the other for reporting potential conduct? Moreover, aren’t many cases subject to interpretation. For example, what if a person has authority to settle from an insurance company but is limited by the authority given to him or her by the round table committee? Is that full authority or is that failure to provide a proper person? Is a client’s obstinate refusal to see the lack of merits in its position a failure to participate in the process? And what is necessary information? Does the party have to disclose all information? All relevant information? All unfavorable information? What if the party knows of a case or a theory that would destroy its position, but the other side doesn’t? The issue of bad faith is very complex and in my humble opinion cannot be defined as easily as the Texas Legislators seem to suggest.” I agree with Mr. Mehta’s conclusion, “We should be very careful about claiming bad faith, and should be even more careful in legislating bad faith in mediation.” 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.

As announced by U.S. Department of Homeland Security (DHS) Secretary Janet Napolitano, U.S. Senator Mary Landrieu of Louisiana and Federal Emergency Management Agency (FEMA) Administrator Craig Fugate, (see press release here) FEMA created a new arbitration process to expedite resolution of outstanding public assistance projects stemming from hurricanes Katrina and Rita. The administrative rules to govern this new arbitration process were published by FEMA on August 31 (find the rules here). Technorati tags: arbitration, ADR, law, FEMA

Part IVA: Who Decides? By Philip J. Loree Jr. I. Introduction In Part III (here) we examined the background of Stolt-Nielsen and identified four issues that the United States Supreme Court will likely confront when it decides the case. In this part IVA we consider the first issue: Who decides whether class arbitration can be imposed on the parties when their arbitration agreements are silent on that point? Put differently, is the question one of arbitrability for the court or one of procedural arbitrability or contract interpretation for the arbitrators? Resolution of the question defines the standard of review. Questions of arbitrability are reviewed de novo on the law and for clear error on the facts. But if the question is one of procedural arbitrability or contract interpretation, the standard is the deferential one provided by Federal Arbitration Act Section 10, the one applied by both the District Court and the United States Court of Appeals for the Second Circuit. The arbitrators in Stolt-Nielsen decided that class arbitration was authorized by the parties’ arbitration agreements even though the agreements said nothing about class arbitration. We believe that at least five Justices will conclude that this question was one of arbitrability for the Court to decide, and will either decide the issue de novo or remand it to the lower courts to decide. II. Who Decides Whether Imposing Class Arbitration on the Parties is Consistent with the Federal Arbitration Act When the Parties’ Agreement is Silent on Class Arbitration? Courts get to decide questions of arbitrability unless the parties “clearly and unmistakably” agreed that arbitrators get to decide them. See First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 945-46 (1995). Before discussing whether we are dealing with an arbitrability question, we must therefore consider whether Stolt-Nielsen has clearly and unmistakably submitted arbitrability questions to the arbitrators. If so, then the question is moot, and the applicable standard of review will be the deferential one under Federal Arbitration Act Section 10. A. Assuming the Question is one of Arbitrability, Has Stolt-Nielsen Clearly and Unmistakably Submitted it to the Arbitrators? We believe that at least five members of the Court will conclude that Stolt-Nielsen did not clearly and unmistakably submit arbitrability questions to the arbitrators. “[M]erely arguing the arbitrability issue to an arbitrator does not indicate a clear willingness to arbitrate that issue. . . .” First Options, 514 U.S. at 946. As discussed in Part III (here), in its submission agreement Stolt-Nielsen appears to have reserved its rights to argue the court should decide whether the parties consented to class arbitration. Stolt-Nielsen also argued to the Second Circuit that the arbitrators had no authority to decide whether the parties consented to class arbitration. Because Stolt-Nielsen “forcefully objected” to the arbitrators’ authority, and otherwise appears to have reserved its right to a judicial determination, we do not think Stolt-Nielsen clearly and unmistakably agreed that the arbitrators could decide arbitrability. See 514 U.S. at 946. B. Is the Question One of Arbitrability? One of the foundational tenets of arbitration law is that “arbitration is simply a matter of contract between the parties; it is a way to resolve. . . disputes — but only those disputes — that the parties have agreed to submit to arbitration.” First Options, 514 U.S. at 943. As a general rule, arbitrability questions concern “whether the parties have submitted a particular dispute to arbitration. . . .” Howsam v. Dean Witter Reynolds, Inc.,, 537 U.S. 79, 83 (2002). The Supreme Court has said that “[l]inguistically speaking, one might call any potentially dispositive gateway question a ‘question of arbitrability,’ for its answer will determine whether the underlying controversy will proceed to arbitration on the merits.” 537 U.S. at 83. But the term “arbitrability” has “a far more limited scope,” and is “applicable in the kind of narrow circumstance where contracting parties would likely have expected a court to have decided the gateway matter, where they are not likely to have thought that they agreed that an arbitrator would do so, and, consequently, where reference of the gateway dispute to the court avoids the risk of forcing parties to arbitrate a matter that they may well not have agreed to arbitrate.” Two classic examples of arbitrability questions are whether: (a) “the parties are bound by a given arbitration clause;” and (b) “an arbitration clause in a concededly binding contract applies to a particular type of controversy. . . .” 537 U.S. at 84 (citations omitted). But “the phrase ‘question of arbitrability’ [is] not applicable in other kinds of general circumstance where parties would likely expect that an arbitrator would decide the gateway matter.” 537 U.S. at 84. There is a doctrine known as “procedural arbitrability under which procedural questions which grow out of the dispute and bear on its final disposition are presumptively not for the judge, but for an arbitrator, to decide.” Id. (citation and quotations omitted) These types of questions generally concern “whether prerequisites such as time limits, notice, laches, estoppel, and other conditions precedent to an obligation to arbitrate have been met. . . .” 537 U.S. at 85 (citation and quotations omitted; emphasis deleted). And there is also a presumption that arbitrators decide “’allegation[s] of waiver, delay, or a like defense to arbitrability.’” See 537 U.S. at 84 (quoting Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983)). The plurality in Bazzle determined that the issue before it – whether the parties’ contracts authorized or precluded class arbitration – was a question of procedural arbitrability. On the facts before it the plurality characterized the question as concerning “what kind of arbitration proceeding the parties agreed to.” (See Part II, here.) It was, indeed, a “gateway” question; it was –- according to the plurality decision — simply not the type of “gateway” question that courts get to decide because it involved a disputed issue of contract interpretation. The question in Stolt-Nielsen is likewise a “gateway” question: Did the parties to each […]

The One Hundred Eleventh United States Congress began on January 3, 2009 and will last till January 3, 2011. Following is a summary of some alternative dispute resolution bills currently being considered during this session. Click on the bill number for its text and on the status link to find the bill’s most recent legislative action. Stay tuned to Disputing for more legislative updates! The Arbitration Fairness Act of 2009 would ban mandatory pre-dispute arbitration in employment, consumer, and franchise contracts. Senate version: S. 931 and Status. House version: H.R. 1020 and Status. The Employee Free Choice Act of 2009 would amend the National Labor Relations Act to require first mediation and then binding arbitration if both parties are unable to reach an agreement within a certain time frame. Senate version: S. 560 and Status. House version: H.R. 1409 and Status. The Payday Loan Reform Act of 2009 would amend the Truth in Lending Act to establish additional payday loan requirements to protect consumers. This bill prohibits a mandatory arbitration clause that is “oppressive, unfair, unconscionable, or substantially in derogation of the rights of consumers.” H.R. 1214 and Status. The Fairness in Nursing Home Arbitration Act of 2009 would render pre-dispute arbitration clauses in nursing home contracts unenforceable. S. 512 and Status. The Mortgage Reform and Anti-Predatory Lending Act of 2009 would amend the Truth in Lending Act of 1968. The bill provides that “[n]o residential mortgage loan and no extension of credit under an open end consumer credit plan secured by the principal dwelling of the consumer, other than a reverse mortgage may include terms which require arbitration of any other nonjudicial procedure as the method for resolving any controversy.” H.R. 1728 and Status. The Labor Relations First Contract Negotiations Act of 2009 would amend the National Labor Relations Act to require the arbitration of initial contract negotiation disputes. H.R. 243 and Status. The Consumer Fairness Act of 2009 would treat arbitration clauses which are unilaterally imposed on consumers as an unfair and deceptive trade practice and prohibit their use in consumer transactions. H.R. 991 and Status. Technorati Tags: arbitration, ADR, law, legislation, Arbitration Fairness Act of 2009, Employee Free Choice Act of 2009, Payday Loan Reform Act of 2009, Fairness in Nursing Home Arbitration Act of 2009, Mortgage Reform and Anti-Predatory Lending Act of 2009, Labor Relations First Contract Negotiations Act of 2009, Consumer Fairness Act of 2009