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

By Peter S. Vogel The mandatory mediation provision of the software development agreement seemed like a good idea to me since a mediation conference was required before litigation could be filed. However, it turned out to be a ploy. The California software vendor had a contract for software development for the implementation of a new Enterprise Resource Program (ERP) system for a large company in Mississippi. Unfortunately as things turn out about 65% of the implementation of ERP systems fail, so it was not a surprise to me that the Mississippi customer demanded a refund of the monies paid. In response, the software vendor invoked the mandatory mediation provision. For the mutual inconvenience of everyone the mediation was in Houston, so I traveled from Dallas, the software vendor from California, and the customer from Mississippi. Mediation As Normal I should have known something was up since the software vendor did not bring a lawyer, rather showed up with just the CEO and VP of Operations. The customer brought the President, Information Technology folks, and their outside counsel. Each side made an opening statement in our joint session, and each made a demand. The customer wanted their money back or roughly $1 million, and the vendor wanted to be paid the balance of the contract which was also about $1 million. Mediation Not So Normal When I broke the parties into two rooms I met first with the customer, who explained their view of the case and was willing to pay the vendor a modest sum to terminate the contract so they could move on. So I explained to the software vendor the customer’s explanation of its position and its offer to pay a modest amount to the software vendor, and what happened next was astonishing to me. The software vendor refused to budge one cent, and the CEO told me that he had no intention of ever settling but now he understood the customer’s issues. He went on to tell me that he routinely used mediation conferences as a form of discovery, and that he had an E&O policy that would cover the cost the attorneys’ fees to defend the customer’s claims so it would not cost him anything. It seems to me that the point of requiring a mediation conference before litigation should not be to get some advantage, but rather a way for the parties to avoid continued litigation. I was extremely disappointed about the software vendor’s business model and sorry that he took advantage of the mediation conference solely to help him in litigation, never intending to settle at the mediation conference. Technorati Tags: ADR, law, mediation Peter S. Vogel is a trial partner at Gardere Wynne Sewell LLP where he is Chair of the Electronic Discovery Group and Co-Chair of the Technology Industry Team. Before practicing law he worked as a computer programmer, received a Masters in Computer Science, and taught graduate courses in information systems. For 12 years he served as the founding Chair of the Texas Supreme Court on Judicial Information Technology which is responsible for helping automate the Texas court system and putting Internet on the desktops of all 3,200 judges. Peter has taught courses on the Law of eCommerce at the SMU Dedman School of Law since 2000. Many of Peter’s topics are discussed on his blog www.vogelitlawblog.com.

The July 2009 issue of the Defense Litigation Journal, published by the International Association of Defense Council had an interesting article: Trends in Litigating Arbitration: Using Motions to Compel Arbitration and Motions to Vacate Arbitration Awards, 76 Def. Couns. J. 338 (2009), written by our blog contributor Don Philbin. Check it out. Technorati Tags: ADR, law, arbitration

Via the Business Conflict Blog, we learned of the recent ABA Resolutions and Report with respect to the Arbitration Fairness Act of 2009 (for background, click here and here) and its implications to international commercial arbitration. This is the summary: The American Bar Association should support the use of international commercial arbitration and legislation or regulation that recognizes and aids in the enforcement of international commercial arbitration agreements and awards, oppose the passage of any legislation or regulation that would discourage such arbitration, or that would invalidate pre-dispute arbitration agreements in international commercial transactions, or that would alter the current law as to the allocation of authority between the court and the arbitrators to determine the jurisdiction of the arbitral tribunal in international commercial disputes or that would alter the timing of such determinations, or that would protect discrete classes as an amendment to Chapter 1 of Title 9, i.e., the Federal Arbitration Act (“FAA”). The resolution and the report take no position as to the optimal treatment of disputes concerning consumers, employees, civil rights claims by individuals or purely domestic franchise disputes. Read more here. Technorati tags: arbitration, ADR, law,