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
Continue reading...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, […]
Continue reading...The Southern District of Texas has remanded a case removed to federal district court pursuant to 9 U.S.C. § 205 because the requirements for allowing a nonsignatory to compel arbitration with a signatory were not satisfied and no other basis for federal jurisdiction existed. In QPro Inc. v. RTD Quality Servs. United States, No. H-09-3904, (S.D. Tex. January 4, 2011), QPro Inc. (“QPro”), a Texas company that performs nondestructive testing and inspection of coated, insulated pipes, leased technology through a nonexclusive licensing agreement from Applus RTD, a Dutch company, to perform its work. The lease agreement between QPro and Applus RTD contained an arbitration clause which stated, Each party undertakes to make its best effort to settle amicably any dispute with the other party arising out of or relating to this agreement. If such settlement efforts fail, disputes arising in connection with the present agreement shall be finally settled under the then current Rules of Conciliation and Arbitration of the International Chamber of Commerce in The Hague, The Netherlands. The arbitration proceedings shall be held in The Netherlands. The language of the arbitration shall be in English. Additionally, the lease provided “[t]he validity and interpretation of this agreement and the legal relations of the parties to it shall be governed by the laws of The Netherlands.” In 2006, QPro began a three year service agreement with Dow Chemical Company. In 2007, Applus RTD unsuccessfully attempted to acquire QPro. According to QPro, Applus RTD refused to lease QPRO additional equipment and attempted to put the company out of business through its subsidiary RTD Quality Services USA (“RTD”). QPro alleged that RTD induced Dow Chemical to reduce services provided by QPro and eventually rebid its contract with QPro, which resulted in a majority of the work being awarded to another company. QPro sued RTD in a Texas state court for tortious interference of the contract between QPro and Dow Chemical Company. RTD removed the case to federal court “under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 9 U.S.C. §§ 201–08, based on an arbitration agreement between QPro and Applus RTD.” In June 2010, the Southern District of Texas denied QPro’s motion to remand the case, because under 9 U.S.C. § 203, a defendant has the right to remove an action or proceeding that “relates to an arbitration agreement or award falling under the Convention . . . any time before the trial thereof. . . to the district court of the United States for the district and division embracing the place where the action or proceeding is pending.” 9 U.S.C. § 205 (emphasis added). The Southern District of Texas also directed RTD to file a motion to compel arbitration no later than June 18, 2010. After RTD filed its motion to compel, QPro again asked the court to remand the case to Texas state court. The Southern District began its review of QPro’s new motion to remand by stating the issue of arbitrability was for a court to decide, When, as here, the issue is whether a nonsignatory to an arbitration clause may enforce it against a signatory, the courts have viewed that as a matter for the court to decide. See, e.g., Arthur Andersen LLP v. Carlisle, — U.S. —-, 129 S. Ct. 1896, 1902 (2009). … Following the reasoning of the First, Second, and Federal Circuits, an arbitrator in an ICC arbitration would have jurisdiction to decide issues of arbitrability, but only between the parties to the arbitration agreement, here, QPro and Applus. The cases extending this reasoning and allowing a nonsignatory to compel a signatory to arbitrate issues of arbitrability involve a nonsignatory defendant that essentially stood in the shoes of a signatory to the arbitration agreement when defending the suit. In order to determine arbitrability, the court examined “Grigson v. Creative Artists Agency, LLC, in which the Fifth Circuit adopted equitable estoppel as a basis for a nonsignatory to compel a signatory to arbitrate a claim, and its progeny. 210 F.3d 524 (5th Cir. 2000).” According to the court, the Grigson doctrine “recognizes that it would be unfair to allow a plaintiff to rely on a contract when it works to its advantage, and repudiate it when it works to its disadvantage.” The Southern District next determined, [t]he tortious interference claim by QPro against RTD does not rely on the terms of the lease agreement between RTD and Applus. The close relationship between the alleged tortious interference and the underlying contractual obligations necessary to allow the nonsignatory to the contract to enforce the arbitration clause is not present. The court continued its examination by stating, The second basis for compelling arbitration discussed in Grigson is only met if a signatory to the arbitration clause alleges interdependent conduct by both a signatory and a nonsignatory to the arbitration agreement and the nonsignatory defendant seeks to compel the signatory plaintiff to arbitrate all claims. … In the present case, QPro did not sue Applus. QPro did not allege misconduct by Applus. QPro alleged that Applus had a connection with the facts of this case, but that is insufficient. As stated in Grigson, the standard is “substantially concerted and interdependent misconduct . . . .” 210 F.3d at 527. A court can consider what RTD did without considering what Applus did. The second prong of Grigson is not met. Finally, the Southern District addressed QPro’s motion for remand, Under Beiser, this case should now be remanded. QPro’s claim is based on state law and this court has found that the claim is not arbitrable. Absent § 205, no other basis for federal jurisdiction exists. Beiser holds that although removal of state law claims may be initially proper under § 205 as claims that “relate to” an arbitration agreement, once they are determined not to be arbitrable, remand to state court is appropriate. 284 F.3d at 674; see also Certain Underwriters at Lloyd’s v. Warrantech Corp., 4:04-CV-208-A, 2004 U.S. Dist. LEXIS 29953, at *8 (N.D. Tex. Sept. 23, […]
Continue reading...by Thomas J. Stipanowich (Editor’s note: An earlier version of this posting was published in the Los Angeles and San Francisco Daily Journals.) “Because of expense and delay, both civil bench trials and civil jury trials are disappearing.” So says a task force co-sponsored by—of all groups—the American College of Trial Lawyers. Litigation often costs so much and takes so long, they acknowledge, that parties nearly always settle or stop suing rather than go all the way to trial. While the great majority of disputes have always been resolved out of court, today even many parties with strong bona fide claims may be daunted by the time and money required to go to trial. The primary culprit is American-style discovery, which accounts for as much as ninety percent of costs in litigation—leading some to conclude that the “look-under-every-rock” approach embodied in our discovery system is simply unworkable. The scope of discovery has metastasized with the revolution in electronic communications, producing “a nightmare and a morass.” All this leads the Trial Lawyers’ task force to call for a wide range of critical changes in the landscape of American litigation, including an end to the “one size fits all” approach of current federal and state procedural rules. In other words, it’s critical to fit the process to the problem. Fitting the process to the problem—and avoiding the perceived pitfalls of litigation—is what leads many business users to adjudicate disputes out of court, in binding arbitration. One would expect the current dissatisfaction with the “one size fits all” model of court trial to provide fertile ground for the growth of arbitration—and to some extent that has happened. Advocates of arbitration point out that arbitration awards are likely to prove much more “final” than court judgments, tending to substantially reduce post-hearing process time and costs. Because arbitration usually is triggered by a written agreement, businesses that choose arbitration over litigation have the opportunity to craft a process that proves vastly superior to litigation in many cases; parties are able to choose their decision maker(s) (including subject matter experts), procedures and venue. Parties may also identify the issues that will (and will not) be arbitrated, help set the timetable for the process, and take steps to ensure the confidentiality of proceedings and of documents disclosed during the process. For any or all of these reasons arbitration may be an appealing alternative to litigation regardless of the relative cost and length of arbitration. If business users regard speed, efficiency and economy as important goals in dispute resolution, as they frequently do, there are steps that can be taken to tailor a process to serve those goals. The same ends are sometimes achieved through the excellent management skills of arbitrators and/or the cooperative efforts of counsel. It is therefore surprising to hear so many corporate counsel complain loudly about arbitration. Of the grievances most frequently expressed, complaints about the cost and length of arbitration top the list. Failed expectations for a cost-effective, expeditious process undermine arbitration’s vaunted advantages and turn off many business users. As one West Coast in-house lawyer with a major company recently reported, “We really sell arbitration to our business clients [as a superior alternative to litigation]. Now they are accusing us of false advertising. . . . Literally all of the top general counsels from the largest corporations in the Bay Area were uniform in their frustration with arbitration and many have said . . . they’re not agreeing to it anymore.” A similar calculus may lay behind the 2007 decision of the American Institute of Architects to delete from its widely used model construction industry contracts the long-standing provision calling for binding arbitration of disputes. Recently, a national Summit on the Future of Business-to-Business Arbitration in Washington D.C. brought together nearly two hundred corporate counsel, lawyers, arbitrators and agents of leading arbitration institutions for a “town meeting” on the gap between expectations and experiences in commercial arbitration. The participants concluded that the blame for lengthy, costly arbitration must be shared by business users, in-house attorneys, the institutions that provide arbitration and other dispute resolution services, outside counsel and arbitrators. Too-costly, too-lengthy arbitration begins with businesses that incorporate arbitration clauses in their contracts. Those who draft commercial contracts may be unable or unwilling to take advantage of the choices inherent in arbitration. They throw in, without discussion or reflection, a boilerplate arbitration or dispute resolution provision—frequently an omnibus, all-purpose scheme that leaves the parties and the arbitrators with a lot of discretion or wiggle room. When disputes arise, they “turn the keys over” to legal advocates who bring a “litigation mentality” to arbitration. Such lawyers insist on full-blown discovery, reflexively file motions and raise objections, raising costs and dragging out the process. Arbitrators may be reluctant to “ride herd” on such behavior, limit discovery, rule on those motions that hold promise for getting key elements of the case resolved, or act decisively on scheduling. All of these factors contribute to making arbitration a far cry from the speedy and efficient process of lore. In order to address these shared problems, National Summit participants supported the idea of shared solutions and called upon all “stakeholders” in arbitration to play a role in addressing the problem. The resulting College of Commercial Arbitrators Protocols for Expeditious, Cost-Effective Commercial Arbitration—guidelines soon to be made public—will play a key role in changing the culture of commercial arbitration by speaking directly to business users, lawyers, arbitrators and providers of arbitration services. Users: It’s your process. For businesses who use arbitration and their legal counsel, the clear message of the Protocols is that “the solution must begin with you.” If speed and economy are your priorities, plan your arbitration procedure accordingly. Consider arbitration in the context of a comprehensive strategy for resolving conflict—including the possibility of a negotiated resolution. (For some, this may mean providing “stages” for negotiation and mediation. Keep in mind that mediators, if they can’t help get a case settled, may be able to work with parties […]
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.