A new paper entitled Regulating Mandatory Arbitration, is available from Thomas Burch, Assistant Visiting Professor in Law at the Florida State University College of Law. (Utah Law Review, 2011; FSU College of Law, Public Law Research Paper No. 493.) In his paper, Professor Burch examines mandatory arbitration jurisprudence and reform efforts over the past twenty-five years. Here is the abstract: Over the last twenty-five years, the Supreme Court has relied on party autonomy and the national policy favoring arbitration to expand the Federal Arbitration Act’s scope beyond Congress’s original intent. Choosing these loaded premises has allowed the Court to reach the outcomes it desires while denying that it is making any political or moral judgments in its decisions – a type of bureaucratic formalism. One controversial outcome of the Court’s formalism, overall, has been the increased prevalence of mandatory arbitration. Although it reduces judicial caseloads and lowers companies’ dispute-resolution costs, it also restricts or eliminates individual rights and reduces public regulation of the companies that require it. The Court has supported the spread of mandatory arbitration despite these negative effects. Because of the Court’s support, the parties being subjected to mandatory arbitration began asking lower courts for relief through the unconscionability doctrine in the early 1990s. And because the unconscionability doctrine could not provide the wide-scale relief they wanted, they also turned to Congress, convincing its members to introduce 139 anti-arbitration bills since 1995 – the majority of which proposed eliminating mandatory arbitration. A review of these efforts, including an original survey of these bills, reveals that these parties have been disregarding mandatory arbitration’s public benefits in favor of a rights-oriented, liberal approach that rejects regulation as a possible way to improve mandatory arbitration’s overall fairness. This Article shows that both the Supreme Court’s and the reform advocates’ approaches to mandatory arbitration are flawed. It makes more sense, at least for now, to continue mandatory arbitration’s use while improving its overall fairness through legislative or agency regulation. Regulating mandatory arbitration with the goal of improving its fairness is consistent with pragmatic principles and is superior to the Supreme Court’s formalism and the reform advocates’ liberalism in the current mandatory-arbitration context. Taking this approach will allow us to study mandatory arbitration over time before deciding whether to eliminate it – a fair way to proceed given the importance of the rights at stake and the positive effects that mandatory arbitration can (possibly) have on the public good. You may download a copy of the article here (without charge) from Social Science Research Network. Other papers by Professor Burch can be found here. Technorati Tags: arbitration, ADR, law, Mediation
Continue reading...The San Antonio Court of Appeals has held that a signatory’s waiver of its right to arbitrate could not be imputed to its non-signatory agent. In Garcia v. Huerta, No. 04-10-00688-CV (Tex. App. – San Antonio, March 30, 2011) Albert Garcia appealed a trial court’s order which denied arbitration against Edward and Margarita Huerta. The Huertas obtained a home equity loan from Wells Fargo and entered into an arbitration agreement with Wells Fargo as part of the loan process. After the Huertas subsequently defaulted on the loan, Wells Fargo sought a non-judicial foreclosure and purchased the property at the resulting foreclosure auction. Wells Fargo then employed real estate agent Albert Garcia to evict the Huertas and to sell the property after making any necessary repairs to the house. The Huertas filed suit against Wells Fargo, Garcia, and other parties. The court held in In re Wells Fargo Bank, N.A., 300 S.W.3d 818 (Tex. App. – San Antonio 2009, orig., proceeding) that Wells Fargo had the right to enforce the arbitration agreement, Garcia was likewise entitled to enforce the arbitration agreement as a non-signatory because his actions were conducted as an agent of Wells Fargo and none of the defendants to the Huertas’ lawsuit waived their right to compel arbitration. Following this ruling, the Huertas negotiated a settlement with Wells Fargo and all other defendants except Garcia. The resulting Settlement Agreement provided that Wells Fargo and the other settling defendants would assign their claims against Garcia to the Huertas and further waive their rights to enforce the arbitration agreement with respect to any claim against him. After executing the Settlement Agreement, the Huertas filed a Motion to Amend with the trial court and requested that arbitration of the Huertas’ claims against Garcia be denied. The trial court granted the motion and Garcia appealed. After finding that Garcia’s interlocutory appeal was appropriate under the Federal Arbitration Act (FAA), and that Garcia was entitled as an agent to enforce the arbitration agreement, the San Antonio Court of Appeals considered “whether Wells Fargo’s express waiver of its own right to arbitrate contained in the Settlement Agreement operated to deny Garcia his right to enforce the arbitration agreement.” The Huertas argued Wells Fargo’s express waiver must be imputed against Garcia and prevented his right to enforce the initial arbitration agreement because, as a non-signatory, his right to enforce was derived solely from his status as an agent of Wells Fargo. The Huertas, however, failed to cite any legal authority which supported their argument. The Appellate Court refused to hold that one party’s waiver of the right to arbitrate could be imputed to another when it was not alleged that the second party acted in any way to repudiate his right. Further, the court pointed out that Garcia “relied upon this Court’s holding that he had the right to enforce the agreement.” Together with the FAA’s strong presumption against waiver, Garcia’s reliance required the court to resolve any doubts in favor of arbitration. Because Garcia did not waive his right to arbitration, the San Antonio Court of Appeals reversed and remanded the case with instructions to enter an order compelling arbitration and stay all other proceedings pending that arbitration. Technorati Tags: arbitration, ADR, law
Continue reading...The Center for Public Policy Dispute Resolution at the University of Texas School of Law will be hosting “Innovations in Collaboration and Conflict Resolution – Skills Enrichment Institute,” July 28-29 at the Four Seasons Hotel in Austin, TX. According to the Center for Public Policy Dispute Resolution, This dynamic skill-building program allows participants to choose from five intensive two-day tracks. In addition, the program fosters opportunities to form a variety of connections. The selected session tracks showcase prominent trainers and represent the latest advances in the field. Participants will learn to integrate innovative techniques into their work, while the setting provides a congenial atmosphere for deliberate thought and dialogue among colleagues and recognized leaders in the field. The Plenary Speaker will be Nina Meierding and session tracks include: Nina Meierding, Advanced Negotiation Skills: A Skills Based Institute of Strategy and Technique (must have completed a basic negotiation course prior) Lee Jay Berman, Impasse is a Fallacy: An Advanced Mediators’ Forum Bernie Mayer, New Roles and New Approaches to Conflict Jennifer Kresge, Brains Matter: The Art and Science of Using the Mind in Conflict Matthew P. Guasco, Conflict Management and Resolution for Businesses and Other Organizations in a Rapidly Changing World More information about the Skills Enrichment Institute is available here. You may register by mail, fax, or online here. Technorati Tags: ADR, Mediation
Continue reading...The Ninth Circuit Court of Appeals has enforced a mediation confidentiality agreement and refused to nullify a mediated settlement agreement. In Facebook v. ConnectU, Inc., No. 08-16873, (9th Cir., April 11, 2011), Cameron and Tyler Winklevoss sued Mark Zuckerberg in Massachusetts claiming he stole the idea for the social networking site Facebook from them. Zuckerberg countersued the Winklevosses and their social networking site, ConnectU, in California. The United States District Court for the Northern District of California ordered the parties to mediation. Prior to mediation, all parties signed a confidentiality agreement which stipulated “all statements made during mediation were privileged, non-discoverable and inadmissible,” in any other proceeding. During mediation negotiations, the Winklevosses agreed to give up all of ConnectU in exchange for cash and a percentage of ownership in Facebook. The settlement fell apart during negotiations over the form of the final deal documents, and Facebook filed a motion with the district court seeking to enforce it. ConnectU argued that the Settlement Agreement was unenforceable because it lacked material terms and had been procured by fraud. The district court found the Settlement Agreement enforceable and ordered the Winklevosses to transfer all ConnectU shares to Facebook. This had the effect of moving ConnectU from the Winklevosses’ to Facebook’s side of the case. The Winklevosses then appealed to the Ninth Circuit Court of Appeals. The Court of Appeals rejected each of the Winklevosses’ claims. The court also stated, The Confidentiality Agreement, which everyone signed before commencing the mediation, provides that: “All statements made during the course of the mediation or in mediator follow-up thereafter at any time prior to complete settlement of this matter are privileged settlement discussions . . . and are nondiscoverable and inadmissible for any purpose including in any legal proceeding. . . . No aspect of the mediation shall be relied upon or introduced as evidence in any arbitral, judicial, or other proceeding.” (emphasis added). This agreement precludes the Winklevosses from introducing in support of their securities claims any evidence of what Facebook said, or did not say, during the mediation. See Johnson v. Am. Online, Inc., 280 F. Supp. 2d 1018, 1027 (N.D. Cal. 2003) (enforcing a similar agreement). The Winklevosses can’t show that Facebook misled them about the value of its shares or that disclosure of the tax valuation would have significantly altered the mix of information available to them during settlement negotiations. Without such evidence, their securities claims must fail. See In re Daou Sys., Inc., 411 F.3d 1006, 1014 (9th Cir. 2005); see also McCormick v. Fund Am. Cos., 26 F.3d 869, 876 (9th Cir. 1994). According to the Appellate Court, The Winklevosses are not the first parties bested by a competitor who then seek to gain through litigation what they were unable to achieve in the marketplace. And the courts might have obliged, had the Winklevosses not settled their dispute and signed a release of all claims against Facebook. With the help of a team of lawyers and a financial advisor, they made a deal that appears quite favorable in light of recent market activity. See Geoffrey A. Fowler & Liz Rappaport, Facebook Deal Raises $1 Billion, Wall St. J., Jan. 22, 2011, at B4 (reporting that investors valued Facebook at $50 billion —3.33 times the value the Winklevosses claim they thought Facebook’s shares were worth at the mediation). For whatever reason, they now want to back out. Like the district court, we see no basis for allowing them to do so. At some point, litigation must come to an end. That point has now been reached. The Ninth Circuit Court of Appeals affirmed the Northern District of California and refused to nullify the parties’ settlement agreement. Technorati Tags: Mediation
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.