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.
Continue reading...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
Continue reading...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.
Continue reading...By John Lande Part I described the “prison of fear” that keeps many lawyers and parties from negotiating early in a dispute. This Part describes how lawyers can initiate and conduct a “planned early negotiation” or “PEN.” Lawyers should routinely do an “early case assessment” to analyze what procedure would be most appropriate. In some cases, it is clear from the outset that the parties need to engage in all-out adversarial litigation. But in most cases, both sides would be better off by cooperatively managing the case and considering negotiation at an early stage. It can be especially important for lawyers to build confidence at the outset, when the parties may be especially afraid and distrustful. Lawyers should get to know each other by arranging a face-to-face meeting, if possible, perhaps over a meal. When they have personal connections, they are more likely to resolve problems that may arise. Lawyers can reassure their clients that they have little to lose by exploring negotiation as they can stop the process at any time. If they proceed in litigation, they generally will not have lost much since they will generally exchange information that they would provide in litigation anyway. Early in the case, lawyers can identify the information that each side needs to reasonably evaluate the matter. By voluntarily sharing information, they show that they are confident in their case and interested in negotiating a fair agreement. They can start by exchanging basic information that is clearly necessary and discoverable. After that, they can decide if specific additional information would be necessary. Lawyers often need experts’ analyses both for negotiation and litigation. When appropriate, lawyers can avoid expensive and risky “battles of the experts” by hiring joint neutral experts instead of partisan experts for each side. Lawyers can also help design multistep dispute resolution processes so that if they have problems with direct negotiation, they can use mediation and arrange for arbitration if they do not reach agreement within a specified period. If parties do adjudicate the dispute, lawyers can narrow the issues to be argued, identify expert witnesses to be called, share exhibits, and generally inform each other of their plans. Lawyers can also commit to focus their arguments on the merits of the dispute and avoid tactics that unnecessarily aggravate the conflict. This description is adapted from an article that will appear in a fall issue of Alternatives to the High Costs of Litigation, published by the CPR Institute. It is based on my book, “Lawyering with Planned Early Negotiation: How You Can Get Good Results for Clients and Make Money” (ABA 2011). For more information about the book and to order it, click here. The book includes numerous practical forms on a CD for lawyers to use in their own practices. Technorati Tags: law, ADR, arbitration John Lande is Director of the LLM Program in Dispute Resolution and Isidor Loeb Professor at the University of Missouri School of Law. He teaches courses on lawyering practice, non-binding methods of dispute resolution, and dispute system design. He began mediating professionally in 1982 in California. He received his J.D. from Hastings College of Law and Ph.D in sociology from the University of Wisconsin-Madison. He was a fellow in residence at the Program on Negotiation at Harvard Law School. Before coming to MU, he was on the faculty in the Dispute Resolution Department at Nova Southeastern University and he was Director of the Mediation Program and Assistant Professor at the University of Arkansas at Little Rock School of Law, where he supervised a child protection mediation clinic. The Legal Trends Network identifies him as a legal trendsetter. For more about his background, read the interview from the ABA Section of Dispute Resolution’s newsletter and Gini Nelson’s interview of John from her “Engaging Conflicts” blog. Professor Lande may be reached at landej@missouri.edu.
Continue reading...Disputing is published by Karl Bayer, a dispute resolution expert based in Austin, Texas. Articles published on Disputing aim to provide original insight and commentary around issues related to arbitration, mediation and the alternative dispute resolution industry.
To learn more about Karl and his team, or to schedule a mediation or arbitration with Karl’s live scheduling calendar, visit www.karlbayer.com.
Disputing is published by Karl Bayer, a dispute resolution expert based in Austin, Texas. Articles published on Disputing aim to provide original insight and commentary around issues related to arbitration, mediation and the alternative dispute resolution industry.
To learn more about Karl and his team, or to schedule a mediation or arbitration with Karl’s live scheduling calendar, visit www.karlbayer.com.