Special Masters: How To Make the Best of Both Worlds, Part XIV

Part Fourteen: It Doesn’t Just Have To Be Construction That’s Constructive

By: Merril Hirsh, James M. Rhodes and Karl Bayer

In Part Thirteen, we discussed ways of institutionalizing the use of special masters by maintaining rosters, choosing them based on qualifications and experience, training them and evaluating their effectiveness. We closed by raising the question – has this been done before?

As best as we have been able to determine, the answer is sort of. California’s Code of Civil Procedure, §§ 638-645.1, authorizes the appointment of referees for a variety of purposes, sometimes by agreement and sometimes without. California Code of Civil Procedure §639(a), specifies that:

(a) When the parties do not consent, the court may, upon the written motion of any party, or of its own motion, appoint a referee in the following cases …

(1)   When the trial of an issue of fact requires the examination of a long account on either side; in which case the referees may be directed to hear and decide the whole issue, or report upon any specific question of fact involved therein.

(2)   When the taking of an account is necessary for the information of the court before judgment, or for carrying a judgment or order into effect.

(3)   When a question of fact, other than upon the pleadings, arises upon motion or otherwise, in any stage of the action.

(4)   When it is necessary for the information of the court in a special proceeding.

(5)   When the court in any pending action determines that it is necessary for the court to appoint a referee to hear and determine any and all discovery motions and disputes relevant to discovery in the action and to report findings and make a recommendation thereon.

From our experience and discussions with practitioners in California it appears that different courts make different use of this authority. In some counties, the use of referees or special masters appears to be fairly limited. In others, the practice appears to be more general. For example, San Mateo County’s local rules are quite broad and contemplate that complex cases will be screened for referral to a special master and practitioners report that in particular areas of law, such as construction and, more recently, domestic disputes deemed appropriate for collaborative-type of resolution, the use of special masters is common.

The use of non-court neutrals to resolve construction disputes has a very long history. As then University of Kentucky, and now Pepperdine University School of Law, Professor Tom Stipanowich noted some years ago, “[t]he custom of referring construction projects to the design professional responsible for planning the project dates back to mid-nineteenth century England, during the period of massive canal-building projects.” Thomas J. Stipanowich, “The Multi-Door Contract and Other Possibilities,” 13 Ohio S. J. on Dispute Resolution 303, 358 (1998).  In fact, construction seems like a natural subject for alternative dispute resolution: an area involving technical skill in which there are frequent disputes and multiple repeat players who, on the whole, do a lot better if things are resolved quickly than if they drag out in litigation.

But from our conversations with practitioners, like long-time Bay Area construction lawyer and neutral, Ronald Kahn, it appears that the California rules calling for regular appointments of neutrals in construction cases does not stem so much from how neutrals have historically been used in the industry. Instead it stems from more recent frustration from judges who were inundated with a rash of construction defect cases and anxious to find a way out. As usual, necessity (or at least, docket demands) is the mother of invention.

At least on paper, these programs seem to have some of the elements we’ve been talking about. They contemplate having special masters deal with discovery. Although we understand that for a long time a relatively small number of neutrals were known as the “go-to” people for special master work in construction, more recently, there has been at least some effort by some courts to maintain a local roster. The San Mateo County rules contemplate that the presiding judge will supervise the special master’s work. See San Mateo County Division VII Rule 8.5.

In practice, however, it is not clear that the authorization has been used as broadly as it might be.  We have not heard (but would love to hear from anyone who has more direct experience) that referees (special masters) have performed intense or direct hands-on case management. Our sense from discussions and the tenor of some of the rules is that the main focus for special masters has been in attempting to assist the parties in reaching settlement, and not quite so much in case management generally. In construction cases, for example, the role seems to be closer to an informed mediator than an adjudicator. The special master insists that the parties exchange particular information and then works with them based on that information to obtain settlement.

More on what experience has taught us in the next post.

Read Part One: The Problem.

Read Part Two: Improving the Process, Not Just the Rules.

Read Part Three: What Incentives Are We Creating?

Read Part Four: How Do We Create Better Incentives?

Read Part Five: Incentives Through Expertise.

Read Part Six: An Appellate Court Success Story.

Read Part Seven: Being the Neutral Eyes.

Read Part Eight: How Are Special Masters Perceived?

Read Part Nine: Beating the Rap.

Read Part Ten: Using Regularity to Start Beating the Rap

Read Part Eleven: The Rule Rather than the Exception

Read Part Twelve:  An Adjunct to Civil Litigation

Read Part Thirteen: Doing Disagreement as Effectively as Doing Agreement

Read Part Fifteen: Where Else Do We Bring Alternative Dispute Resolution Skills to Dispute Resolution?