LTERNATIVE DISPUTE RESOLUTION MECHANISMS
A SUMMARY OF BASIC
INSTITUTE FOR THE STUDY AND DEVELOPMENT OF LEGAL SYSTEMS|
Stephen A. Mayo
June 17, 1997
ALTERNATIVE DISPUTE RESOLUTION (ADR)
Traditional civil litigation may impose substantial costs and delay long before a trial commences. Further, the congestion of trial calendars in most courts, caused in part by a substantial criminal docket, contributes substantially to that cost and delay. In this environment, alternative processes for dispute resolution offer many advantages.
In an effort to streamline the life of a case while preserving justice, alternative dispute resolution (ADR) offers an arena for litigation outside of the traditional trial process. Within the chosen forum, each ADR mechanism provides a third-party neutral (private lawyer, mediator, judge(s)) to meet with both parties early in the life of the case in an effort to reduce any delay and expenditure on potentially unnecessary litigation. Following are descriptions of six such dispute resolution processes:
Case management is a judicial process which increases judicial control over (i) the identification of substantive issues, (ii) the exploration of utilizing ADR, and (iii) the time required to complete the procedural steps of a civil litigation. By streamlining the disputed issues and disciplining the procedural calendar, these processes curb the use of delay as a strategy in civil litigation.
At the commencement of the proceedings, the counsel are required to issue a joint written statement to the court of the results of the meeting. Following this submission, the court holds a case management conference, in which the court and the parties focus on the issues, and the court establishes a procedural plan and calendar for the case. In this way, the case management session helps to structure the pretrial proceedings of a case to compel the parties to exchange additional information of key issues as early as possible. By structuring the case in this manner, the case management process facilitates and promotes earlier settlements. For those cases where no such settlement is reached, the effective use of case management techniques enables the court to eliminate frivolous issues and streamline the case so that it may proceed to trial as efficiently and cost-effectively as possible.
Early neutral evaluation (ENE) is a technique used to provide early focus to complex commercial litigation. The central goal of ENE is to get the central participants in the litigation—that is the decision-makers on behalf of the clients and their principal trial lawyers—intensively involved in the legal and factual merits of the case in the very beginning of the litigation.
ENE is conducted by a senior lawyer with expertise and experience in a particular subject matter. In this process, the parties convene in the office of the early neutral evaluator (the "neutral"), who evaluates each side of the case. Following a joint session and private caucuses, the neutral prepares an outline of the issues and an informed evaluation of the potential outcome of the case, which is then communicated to the parties either jointly or (more frequently) separately. If appropriate, the neutral conducts consensual mediation of the dispute in an effort to pursue settlement discussions. If settlement is not reachable, the neutral then discusses case management and assists the parties in reaching agreement on a procedural plan for the case. All communications, except those expressly agreed to in the case management plan, are confidential. This process results in the parties gaining a better understanding of their respective positions and the likely outcome if they proceed with litigation. Nearly one-third of the cases filed in federal court are resolved during the ENE stage.
3. Judicial Settlement
Judicial settlement requires the involvement of a judge (not assigned to adjudicate the dispute in question) in aiding both parties to settle a civil case. The success of this process is attributable both to the advantage of utilizing judicial experience in evaluating the settlement value of a civil claim and to the separation of private and confidential settlement negotiations from public adjudicatory functions.
The settlement conference may be held at any time during the life of a civil case upon request of a party or recommendation of the trial judge. The settlement judge acts as a mediator or facilitator at the settlement conference, promoting communication among the parties, holding one-on-one sessions with each side, offering an objective assessment of the case, and suggesting settlement options. The settlement judge does not have the power to enforce settlement and does not communicate any information about the case to the trial judge. If settlement is reached, the parties sign an agreement, thereby avoiding the cost of trial or other litigation. If no settlement is reached, the case proceeds to trial before the previously appointed trial judge.
Mediation involves the use of a facilitator trained in conflict resolution. Mediation is consensual, confidential and non-binding. It encourages the parties to discuss their positions with greater candor and fosters compromise. Mediation involves a meeting at any time during the lawsuit between the parties, their legal representatives and a neutral, third party (whether former judge or attorney). As in early neutral evaluation, the lawyers prepare the legal authorities and factual evidence in support of their clients’ positions prior to the session. The mediator often allows the parties to voice their position in a joint session before meeting privately to discuss settlement opportunities. Frequently, the mediator will share with each party an informed prediction of the outcome of the litigation, assuming it were to proceed. All communications are confidential.
Arbitration is a process by which a dispute between two or more parties is submitted to a panel of impartial third parties for resolution on the merits based on the evidence presented at a hearing. Arbitrators are professional and business people who are selected by the court to assist in the informal resolution of disputes because of their knowledge, expertise and reputation for fairness and impartiality. Arbitration can be neither binding or non-binding.
The American system has a procedure known as a motion for summary judgment, through which, in appropriate cases, either party may obtain a final and complete resolution of a lawsuit without incurring the often considerable delay and expense of a full trial. Summary judgment exists, therefore, to prevent the misuse of the legal system for uncontested factual claims.
CASE MANAGEMENT IN THE
As the number and complexity of civil suits filed in the United States has increased, so too has the expense and delay associated with resolving those disputes through the normal processes of the judicial system. In an attempt to reduce the excessive cost and delay of civil litigation, courts throughout the United States are taking a more active role in managing their cases. The United States Congress endorsed this approach in adopting the Civil Justice Reform Act of 1990, when it referred repeatedly in the legislation to the importance of "litigation management" and instructed the courts to manage their cases on an individualized, case specific basis. In response, a number of courts in the United States have established formal case management programs with new rules and procedures which govern virtually all civil cases filed before them.
The basic concept behind "case management" is for the court to become actively involved, early in the case, in analyzing the specific issues presented by a particular lawsuit and to work with counsel and the parties to "manage" the structure of future proceedings to achieve the fastest and most cost effective resolution of the dispute. The process ordinarily begins with the court requiring that counsel for the parties schedule a meeting with one another shortly after the lawsuit has been filed. Counsel are directed to discuss the merits of the case, identify key legal issues, explore ways in which the case can be resolved using non-traditional dispute resolution mechanisms, and explore ways in which the parties can exchange information as efficiently as possible. Counsel are then required to file a written statement summarizing the results of their meeting and to make any case management suggestions they wish to the court. After that statement has been filed, the court presides over a Case Management Conference, at which time the court and counsel attempt to focus on the most important issues presented and determine the most effective and expeditious way of proceeding to resolve them. At this Case Management Conference, the court ordinarily will also impose deadlines for the assertion of new claims, the naming of additional parties, the informal exchange of factual information before trial, the filing of motions, and address other procedural matters that routinely occur before trial.
One of the goals of the case management approach is to structure the pretrial proceedings of a particular case in a way that will compel the parties to exchange additional information on key issues as early as possible, so the parties are in a continually better position to evaluate those key issues as the case proceeds. By structuring the case in this manner, it is hoped that the case management process will facilitate and promote earlier out-of-court settlements. For those cases where no such settlement is reached, the effective use of case management techniques will enable the court to eliminate frivolous issues and streamline the case so that it may proceed to trial as efficiently and cost-effectively as possible.
Among the case management procedures and techniques being utilized by the federal courts in the United States are the following:
( Assigning the case at the outset to one of the court-sponsored Alternative Dispute Resolution ("ADR") procedures to facilitate either the settlement or early evaluation of the case.
( Ordering the pretrial exchange of factual information so that information regarding the most significant issues is exchanged first, and postponing the exchange of information on less important issues until after the parties have had an opportunity to examine the first exchanges.
( Scheduling multiple Case Management Conferences at regular intervals to monitor the pretrial process and streamline issues for resolution at trial.
( Using written motions to eliminate claims, either in whole or in part, by presenting legal issues to the judge for a decision before trial.
( Imposing quantitative limits on the parties’ rights to obtain pretrial "discovery" (formal proceedings to obtain documents, information or testimony from parties and witnesses).
( Changing the order in which the factual and/or legal issues in the case will be presented at trial, to facilitate settlement discussions or dispositive legal motions during the trial (for example, addressing the issue of damages first where there is a significant dispute on that point and the resolution of the issue would have a direct impact on the chances of settling the case).
( Requesting the parties to stipulate or agree on certain legal or factual issues that are not seriously in dispute, so that the trial of the case can be streamlined and future proceedings can focus on the principal disputed issues.
( Combining a number of cases which involve the same or similar issues into a single consolidated proceeding in which those common issues can be resolved at the same time.
( Separating a case into two or more parts, for pretrial or trial purposes, to minimize delay and expense and to facilitate settlement negotiations after the conclusion of the initial proceedings.
( Using a court-appointed expert to assist the court in understanding technical or complex factual issues that are in dispute.
( Appointing a Special Master to preside over a particular portion of a case, to take evidence if appropriate, and to make proposed findings of fact to the court.
The advantages of the case "management" approach over more traditional and less active methods of judicial involvement can be significant. What has become clear in comparing the two methodologies is that the resolution of disputes can often be achieved more quickly—to the mutual satisfaction of all parties—if the court takes an active case management role early in the case. While additional statistical data for these programs must be analyzed further to quantify the actual levels of improvement achieved, the overall improvement in the efficiency and effectiveness of the judicial process is already apparent to counsel, the parties to litigation and the courts.
JUDICIAL CASE MANAGEMENT
1. TRANSITION FROM THE PASSIVE JUDICIAL ROLE TO ACTIVE CASE MANAGER
During the past twenty-five years, the civil caseload in the federal trial courts in the United States of America has increased dramatically with case filings rising to triple the number that existed in the early 1970s. Moreover, civil cases have become more complex and protracted with multiple parties, numerous factual issues, voluminous documents, and complicated legal issues. The explosive growth in civil litigation is due in part to population growth, the enactment of new federal statutes creating more rights and remedies, the expansion of commerce and business opportunities, a greater public reliance on the courts to find solutions to a variety of societal problems, and a large increase in the number of attorneys.
Although more judges and courtrooms have been added, the modest increase in judicial resources has not kept pace with the massive expansion of litigation. The result has been court congestion, increased costs, and excessive delay in the resolution of civil cases. Widespread concern among all segments of the legal community as well as the public led to the search for solutions designed to eliminate unnecessary expense and delay in civil litigation.
In the federal courts, the prevailing response was twofold: (1) the creation and expansion of less costly alternative dispute methods such as mediation, arbitration, and judicial settlement conferences; and (2) active judicial case management of each civil case.
Traditionally, the role of trial judges had been viewed primarily as presiding over trials, hearing and evaluating evidence, finding facts, applying the appropriate legal standards, making judgments, and dispensing justice. During the pretrial phase of civil cases, most judges assumed a passive role allowing the lawyers to control the progress and pace of the litigation.
Over the past two decades, the trial judge has emerged from a passive pretrial role to an active case manager in an effort to conduct the business of the courts with greater judicial efficiency. This transition has occurred contemporaneously with rule changes and legislation. Utilizing its rulemaking authority, the federal judiciary amended the Federal Rules of Procedure in 1983 to expressly provide for early judicial intervention in civil cases and authorizing judges to require attorneys and litigants to attend pretrial conferences and enter case management and scheduling orders setting time limits for the progression of the case including a firm trial date. (See Rule 16, Federal Rules of Civil Procedure, attached hereto as Exhibit A.)
In addition, the United States Congress enacted the Civil Justice Reform Act of 1990 requiring each United States District Court to develop and implement a "civil justice expense and delay reduction plan." The legislation instructed each court to formulate a case management program providing for "early and ongoing control of the pretrial process through involvement of a judicial officer" whose responsibilities include "assessing and planning the progress of a case" and "setting early, firm, trial dates."
The practice of judicial case management has spread to most state courts. Today, trial judges throughout the United States are actively managing civil cases from filing through disposition with a purpose of achieving the "just, speedy, and inexpensive determination of every action." (Rule 1, Federal Rules of Civil Procedure.)
2. ELEMENTS OF JUDICIAL CASE MANAGEMENT
The basic concept behind case management is for early judicial involvement in identifying the principal factual and legal issues in dispute between the parties, and working with them and their attorneys to plan for and manage the conduct of future proceedings to achieve the earliest and most cost effective resolution of the dispute. The current process of case management in the federal courts requires that upon the filing of a lawsuit, an initial Case Management Conference is scheduled within 120 days before the assigned judge.
In preparation for the conference, the attorneys for the parties are required to meet to discuss the nature and basis of their claims and defenses and the prospects for a prompt settlement or resolution of the case. They are required by rule: (1) to exchange specified information relevant to the claims and defenses, such as the names of witnesses, documentary evidence, and computations of damages; (2) to develop a discovery plan for further exchange of evidence; (3) discuss alternative dispute methods (other than trial) which may be useful in resolving the case; and (4) discuss dates for all future proceedings including trial.
After the meeting of counsel, they are required to file a Case Management report prior to the Case Management Conference. (A sample Form Report is attached as Exhibit B.) At the Case Management Conference, the trial judge imposes deadlines that limit the time in which the parties can: (a) amend the pleadings and add other parties; (b) provide disclosures required by the rules; (c) complete discovery; and (d) file pretrial motions. A date for a final pretrial conference and a date for the trial will also be set as part of a comprehensive scheduling order.
One of the goals of the case management process is to structure pretrial proceedings of a particular case in a manner that promotes the early exchange of information on key issues, so that the parties will be in a better position to evaluate their claims and defenses and achieve an early settlement of the lawsuit. In those cases where an early settlement is not possible, the court can employ other management techniques designed to eliminate frivolous issues and streamline the case so that it may proceed to trial efficiently, solely on genuine issues of material fact.
The utilization of case management tools are tailored to meet the needs of the individual case depending upon its simplicity or complexity. Among the case management techniques being utilized by U.S. federal trial courts are the following:
• Assigning the case at the outset to a court-sponsored Alternative Dispute Resolution Program, such as Mediation or Arbitration.
• Ordering the disclosure or discovery of information on particular factual issues.
• Inviting the parties to file written motions with a view to eliminating or narrowing the disputed issues of fact to be tried.
• Imposing quantitative limits on discovery or on the number of witnesses to save costs.
• Determining the order in which the factual or legal issues will be presented at trial.
• Requesting the parties to stipulate or agree to certain issues that appear undisputed, and to the admission of documentary evidence.
• Consolidating several cases which involve common issues into one case for pretrial discovery and trial.
• Scheduling multiple periodic case management conferences to monitor the pretrial process and discuss settlement.
To enable courts to enforce its case management orders, the Federal Rules (Rule 16) empower judges to prescribe sanctions or penalties for failing to comply with disclosure or discovery obligations, failing to appear at pretrial conferences, or failure to participate in good faith in case management. Sanctions may include: (i) an order refusing to allow the disobedient party to support or oppose designated claims or defenses, or prohibiting that party from introducing designated matters; (ii) an order striking out pleadings or parts thereof, or staying further proceedings until the order is obeyed, or dismissing the action or proceeding or any part thereof; and (iii) an order requiring the offending party to pay reasonable expenses, including attorneys’ fees, caused by the offending behavior.
The practice of active judicial case management in combination with the utilization of alternative dispute resolution programs has substantially reduced excessive litigation costs and undue delay in the resolution of civil cases in the federal trial courts in the United States. Ninety-five percent (95%) of civil cases are resolved without trial. While some cases are disposed of by dismissal or summary judgment under the Federal Rules of Procedure, most of the cases are resolved by settlement. Effective case management tailored to each particular case enables the parties to evaluate their positions sooner and less expensively. The average time from filing to disposition in most federal district courts has been reduced to seven (7) months. Without active judicial case management, the courts would be hampered in achieving the just, efficient, and inexpensive resolution of civil disputes.
EARLY NEUTRAL EVALUATION
Early neutral evaluation is a technique used in American litigation to provide early focus to complex commercial litigation, and based on that focus, to provide a basis for sensible case management or offer resolution of the entire case, in the every early stages. The central goal of early neutral evaluation is to get the central participants in litigation—that is the decision-makers on behalf of the clients, and their principal trial lawyers—intensively involved in the legal and factual merits of the case in the very beginning of the litigation, as opposed to the traditional American litigation pattern, which has such intense involvement only after lengthy periods of very expensive fact-finding called discovery.
The central process by which early neutral evaluation accomplishes this goal is the early neutral evaluation session. This session is presided over by a highly seasoned trial attorney in the subject area involved in the litigation (the "evaluator"). Prior to the session, attorneys for each side to the dispute provide to the evaluator in a written brief summarizing the legal arguments and authorities in support of that party’s position, and providing the evaluator with whatever documentary evidence that party believes the evaluator ought to have as background for the evaluation session. The session itself is attended by the evaluator, by the principal trial attorney for each party, and by the principal client decision-makers of each party. To achieve maximum effectiveness, it is essential that the actual decision-makers on behalf of each client—that is the people who will be ultimately responsible for the payment of legal fees, and who have final authority for settlement or judgment—be present at the session to observe firsthand the arguments and the evaluation. Further, to be effective, the session should be held in the first three to six months of the pendency of the case.
At the session, the attorney for each party makes a concise, but thorough, oral presentation of the parties’ position, including both the evidentiary support for that position, and the legal authorities which underlie it. The presentations are followed by questions from the evaluator directed not only to the attorneys, but also the representatives of the parties. The questions are designed to fully explore the parties’ positions, and to refine the areas of factual dispute. At the conclusion of the joint session a break is taken and the evaluator retires to prepare an outline of what he or she believes are the central issues in the case, and what, based on the presentations, he or she believes the likely outcome on each will be. The evaluator also estimates the likely cost in legal fees to each side if the matter is fully litigated. That evaluation is then shared with the parties either at a joint session, or, more typically, in private sessions or caucuses. The reason for the latter is that sharing the evaluation in private caucuses allows somewhat more candor, and also frequently leads to a mediation effort where the evaluator will "shuttle" from caucus to caucus in an attempt to help the parties settle the case based on the evaluation session.
In the event that settlement is not possible, or the parties do not desire to attempt it, the evaluation session becomes the basis for a case management planning effort. The goal is to use the opportunity that the session affords for a very focused look at the legal and factual merits of the case, and to do a rational job of planning the fact-finding which must be done in order to prepare the case for binding resolution by either trial or arbitration. Because ENE almost invariably results in a much better understanding by both parties of what the central and decisive issues in the case are, at the end of the session the parties are in a position to actively and rationally plan the case development process thus making it much less expensive, and less time consuming. At the conclusion of the case management effort, the evaluator assists the parties in documenting the results in the form of a written case management plan.
It is important to understand that the ENE session and all of the communications made in connection therewith are confidential and are not admissible in the litigation itself. Furthermore, the evaluator’s evaluation is not transmitted in any fashion to the judge before whom the case is being heard. Early neutral evaluation is a proven technique which was developed in the U.S. Federal Court in San Francisco, California, and has spread to numerous other federal courts throughout the United States. It has received an overwhelming endorsement of effectiveness from the attorneys and parties who have experienced the process.
MEDIATION IN THE U.S. LEGAL SYSTEM
The use of mediation as an example of modernization in the United States’ legal system is ironic in two respects. First, the words "mediation" and "modernization" hardly seem to belong in the same sentence; mediation is one of the oldest forms of peaceful dispute resolution. Second, the United States has been a late-comer to recognize the benefits of mediation; other cultures have used mediation to resolve disputes for centuries.
Having finally realized the benefits of mediation as a dispute resolution mechanism, the United States has made mediation a critical part of its efforts to solve its serious court congestion and backlog. In most jurisdictions in the United States, mediation is offered as one of several alternatives to the traditional legal process. Indeed, in many jurisdictions, mediation has become the most popular method of alternative dispute resolution.
2. What is mediation?
Mediation is a procedure designed to resolve disputes through agreement, i.e., through the mutual consent of the parties. Although the procedure is frequently confused with arbitration, it is fundamentally different. In an arbitration, the neutral reaches a decision based upon evidence presented by the parties; in a mediation, the neutral facilitates discussion between the parties with the objective of reaching an agreement between the parties. Mediation relies upon the consent of the parties; arbitration does not.
A successful mediation is thus dependent upon two inter-related factors: the willingness of the parties to resolve their dispute; and the skill of the mediator in guiding the parties to the point where agreement is possible. One of the most skilled mediators in California—and a frequent participant in ISDLS programs—has said that there exists a point in every dispute where the parties can reach agreement; it is the duty of the mediator to help the parties find that point. The existence of parties acting in good faith to resolve their differences, however, will significantly assist even the best mediators in achieving their objectives. The combination of a talented mediator and motivated parties will generally result in resolution of even the most difficult disputes.
3. What are the benefits of mediation?
The benefits of mediation are so obvious, it is surprising that it took a clogged judicial system for the United States to embrace the concept only when the courts began to be overburdened with civil cases. Mediation as an alternative dispute resolution mechanism is:
As the amount of time necessary for the parties and the mediator to prepare for the mediation is significantly less than that needed for trial or arbitration, mediation can occur relatively early in the dispute. Moreover, once mediation begins, the mediator can concentrate on those issues he or she perceives as important to bring the parties to agreement; time consuming evidence-taking can be avoided, thereby making the best use of the parties’ time and resources. Even if all of the evidence gathering has already occurred, it almost invariably takes less time to mediate a dispute than to try it in a court.
There exists no set formula for mediation. Different mediators employ different styles. Procedures can be modified to meet the needs of a particular case. Mediation can occur late in the process—even during trial—or before any formal legal proceeding begins. The mediation process can be limited to certain issues, or expanded as the mediator or the parties begin to recognize during the course of the mediation problems they had not anticipated.
C. Cost Efficient.
Because mediation generally requires less preparation, is less formal than trial or arbitration, and can occur at an early stage of the dispute, it is almost always less expensive than other forms of dispute resolution. If the mediation does not appear to be headed in a successful direction, it can be terminated to avoid unnecessary costs; the parties maintain control over the proceedings.
D. Brings parties together.
In the United States, parties often form opinions about their dispute that over time become intractable. The other side becomes the "enemy"; winning becomes a matter of principle. The only side a party can see—even if counseled otherwise by their attorney—is their own. Sitting down in a neutral setting with the opposing side can bring a better understanding of the problems with one’s own case, particularly if guided by a skilled mediator. Listening to the opponent’s case—and having it evaluated by a neutral—can give pause to even the most ardent believers in their own cause.
The time, location, and duration of the proceedings can be controlled to a significant extent by the parties. Scheduling is not subject to the convenience of overworked and sometimes bureaucratic courts.
Resolutions that are not possible through arbitration or judicial determination may be achieved. For example, two parties locked in a dispute that will be resolved by an arbitrator or a judge may be limited to recovery of money or narrow injunctive relief. A good mediator makes the parties recognize solutions that would not be apparent—and not available—during the traditional dispute resolution process. Two companies may find it more advantageous to work out a continuing business relationship rather than force one firm simply to pay another money damages. The limit on creative solutions is set only by the variety of disputes a mediator may encounter.
What is said during a mediation can be kept confidential. Parties wishing to avoid the glare of publicity can use mediation to keep their disputes low-key and private. Statements can be made to the mediator that cannot be used for any purpose other than to assist the mediator in working out a resolution to the dispute. Confidentiality encourages candor, and candor is more likely to result in resolution.
4. What makes a good mediator?
Because mediation differs from arbitration, a good arbitrator will not always make a good mediator. Obviously the two forms of dispute resolution have some overlap, and there certainly exist individuals who are both excellent arbitrators and mediators. However, the ability to render a decision is not the same skill as that required to bring parties together to reach agreement. The following are some of the qualifications that make a good mediator:
This is the most important characteristic. If the parties do not respect the mediator, the chances of success are small. Mediation often involves private discussions between a party and the mediator. If the party does not trust the mediator to keep confidences disclosed at such a session, there will exist little chance of success. Similarly, if the parties cannot trust the mediator to evaluate their positions impartially, the mediation is doomed.
Parties frequently come to the mediation with set positions that take a long time to modify. A mediator must have the patience to work with the parties to bring them to the point where agreement is possible.
The chances of success are greater if the mediator has some knowledge or expertise in the area of dispute. Because mediation does not result in a decision by the neutral, knowledge of the subject matter is not as crucial in mediation as it is in arbitration. However, the parties in a complicated dispute over software, for example, will probably have more confidence in a mediator who knows something about software technology than they would in a mediator who knew nothing about the subject. Furthermore, such expertise will enable the mediator to better assist the parties in identifying nontraditional solutions to their dispute.
A mediator must be quick to understand not only the nature of the dispute, but also the motivations of the parties. Through an understanding of what is important to each of the parties, the mediator can bring them into agreement much more quickly. The intelligence required is thus not only an ability to understand the subject matter, but an ability to understand people and their motivations as well.
This characteristic is closely related to trust. A mediator must be impartial. Some mediators will express their opinions about the position of a party, or will use their powers of persuasion in order to bring the parties to agreement. Other mediators will not analyze or evaluate the merits of a dispute, but will cause the parties to realize on their own where the settlement potential lies. In either case, the parties must be satisfied that the mediator is neutral. In the former situation, if the mediator is not viewed as neutral, any opinions will carry no weight; in the latter situation, the parties will refuse to follow a biased leader.
F. Good communication skills.
An arbitrator needs only to listen to the evidence and render a decision based upon knowledge of the law and good judgment. Although these talents are extremely valuable ones, an arbitrator need not have the ability to communicate with the parties. A mediator needs good judgment and good communication skills; it is the mediator’s job to evaluate and understand the motivations of the parties, foresee potential solutions, and then bring the parties to an agreement. Without good communication skills, this task is impossible.
5. Types of mediation
There are some types of cases that are required by law to go through the mediation process. Labor disputes and domestic (family law) disputes are two prime examples. In the United States, however, this type of mandatory mediation is rare.
B. Court ordered.
Most jurisdictions in the United States require some form of alternative dispute resolution before a case may be resolved through the traditional judicial process. The Northern District of California—long an innovator in the ADR process—is an excellent example of how mediation has become a key component of an effective dispute resolution program.
As soon as a case is filed in the Northern District, the parties are provided a number of ADR options. They must, unless exempted by the Court, select and pursue one of these options. Included as an option is mediation. The Court maintains a list of mediators—skilled and experienced attorneys selected by the Court—who are available to the parties. For parties who elect this option, the Court will appoint a mediator and designate a date by which the mediation must be completed. The results of the mediation are confidential—the Court will not know what occurred at the mediation, unless of course, an agreement is reached. If an agreement is reached, that agreement is enforceable as a judgment of the Court.
The parties to a contract, as part of the terms of their agreement, may include a mediation clause as a mechanism to resolve disputes. Although binding arbitration is a much more common contractual term since it will always result in a resolution, mediation can be an effective tool to resolve contractual disputes before they blossom into a protracted battle. The selection of the mediator, as well as the conditions of the mediation, are usually stated in the contract. If the mediation is successful, the results can be enforced as a judgment of a court.
The parties to a dispute may decide to seek mediation without being compelled by law, court order, or contract. They may choose to mediate their dispute at any time: as the dispute is developing, before initiating legal action, or even while legal action is pending. The conditions of the mediation—e.g., who will be the mediator, when the mediation will occur, the rules of the mediation—are controlled by the parties.
Mediation is a valuable dispute resolution tool because the means of reaching an agreement can be as varied as the disputes that need to be resolved. Mediation procedures can be tailored to a variety of factors: the personality of the mediator; the nature of the dispute; the time or resources available; and the antagonism between the parties. The procedure can thus minimize contentiousness, cost, and resources. If it is unsuccessful, the parties can always resort to the courts or other means of dispute resolution. In short, mediation is a valuable weapon against delay, cost, and injustice.
RESOLVING CIVIL DISPUTES THROUGH ARBITRATION
Arbitration is an informal process by which a dispute between two or more parties is submitted to an impartial third-party (known as an "Arbitrator"), for resolution on the merits based on the evidence presented at a hearing. Arbitration is normally a matter of contract and is therefore consensual. However, arbitration is utilized more and more frequently by courts as an involuntary means of dispute resolution. Arbitrators are professional and business people who are selected to assist in the informal resolution of disputes because of their knowledge, expertise and reputation for fairness and impartiality. Lawyers frequently serve as arbitrators because of their legal and substantive knowledge in many different areas. Other professionals and business persons also serve as arbitrators, and sometimes a combination of lawyers and other professionals act as co-arbitrators depending upon the particular case.
Arbitration can be either binding or non-binding. Normally, where parties agree by contract to submit their disputes to arbitration, the decision of the arbitrator is binding, and the arbitration award can be filed in a court and enforced as any other judgment of the court. If the arbitration is a judicially ordered involuntary procedure, normally it is not binding and either party can elect to proceed with a formal court trial after the procedure has been completed.
2. Arbitration By Agreement Of The Parties
When parties enter into a contract, they frequently provide that any dispute that may arise under the contract will be resolved by arbitration. Even in the absence of a pre-existing agreement to arbitrate, the parties may at any time agree to submit any dispute to arbitration. Normally, the parties select the rules that will govern the arbitration procedure as well as the organization that will administer the arbitration at the time of the initial contract. (A commonly used arbitration provision is included in the Appendix to these materials.)
There are several organizations that provide arbitration services. A commonly used organization is the American Arbitration Association ("AAA"). The AAA has developed specialized rules for the arbitration of disputes in particular subject matter areas. For example, there are rules governing the arbitration of "commercial" disputes, "construction" industry disputes, "securities" disputes and "employment" disputes. (Additional specialized rules are identified in the Appendix to these materials.) The rules for each of these subject matter areas have been tailored to address the issues that commonly arise in such disputes.
In addition to the AAA, there are other organizations offering specialized arbitration services, such as the New York Stock Exchange and the National Association of Securities Dealers. If the parties have not designated in their contract a particular organization or particular rules to govern the arbitration, the courts will designate an arbitrator at a party’s request, and the statutes or rules governing arbitrations conducted by that court will be applied.
The parties may agree to waive arbitration and proceed to have their dispute resolved in court. If, however, either party desires arbitration, the agreement to arbitrate is specifically enforceable. A court may not entertain a claim over the objection of a party to an agreement that provides for arbitration, and the court will enter an order commanding the parties to arbitrate their dispute in accordance with the agreement at either party’s request.
3. Judicially Ordered Arbitration
Many courts have developed their own arbitration programs and automatically assign selected types of cases, or cases that have a specified dollar amount, to arbitration pursuant to the court’s arbitration rules as a preliminary to further court proceedings. The purpose of assigning a case to a preliminary judicial arbitration is to give the parties the benefit of a neutral third party’s view of the merits of their case and a supervised means of resolving the controversy quickly and at a substantially lower cost than a court trial. This kind of arbitration is not binding on the parties, and the outcome of the arbitration is not admissible in evidence if either of the parties refuses to be bound by the arbitration award. The rules governing the arbitration as well as the selection of arbitrators vary depending upon the particular court in which the arbitration is ordered. However, the procedures followed by the courts are, in general, very similar to the procedures discussed below.
4. The Arbitration Process
When a dispute arises, the party desiring a formal resolution of the dispute simply notifies the organization specified in the parties’ agreement, or, if none is specified, files a petition in court to have an arbitrator appointed. The process is formally commenced either by completing a printed form provided by the organization designated by the contract, by submitting to the organization a letter stating the nature of the claim, the relief sought and identifying the names and addresses of the adverse and other interested parties or by filing a petition for appointment of an arbitrator in court containing this information. The party initiating the arbitration is referred to as the "Claimant." The designated organization then notifies the party against whom relief is sought (referred to as the "Respondent") that a claim has been submitted for arbitration and provides a copy of the statement of claim. If an organization has not been designated in the agreement, local court rules will govern the balance of the procedures to be used.
Upon receipt of the notice of a claim, the Respondent may deny or otherwise respond to the claim and may assert any counterclaims it might have against the Claimant. A copy of the response and any counterclaim is then provided to the Claimant, and the organization or court thereafter administers the process of selecting an arbitrator or, in some cases a panel of three arbitrators, who will hear and decide the controversy. The organization or court also establishes dates and procedures for hearing the dispute that meet the needs of the parties. In more complex cases, preliminary hearings may be conducted by the arbitrator or arbitrators in order to expedite the final hearing and narrow the issues to be resolved.
The selection of the arbitrator is administered by the designated organization or the court, and the procedure that is followed varies with the organization or court. Each organization and each court maintains a list of qualified arbitrators. In an arbitration conducted by the AAA, the administrative staff normally provides the parties with a list of potential arbitrators who have expertise in the subject area involved in the dispute. The parties then have an opportunity to assert any objections they may have to any person on the list and to indicate which arbitrators are acceptable to them. If the parties are unable to agree, the AAA appoints the arbitrator.
Once the arbitrator is selected, the arbitrator sets a mutually agreeable hearing date. ON the date set for the arbitration each of the parties appears with or without an attorney and presents its side of the dispute to the arbitrator. Each party has an opportunity to present its witnesses, to cross-examine the other party’s witnesses and to submit documentary evidence. A transcript of the proceedings may be made at the parties’ request. The rules of evidence are generally not applicable, and the arbitrator has discretion to admit or exclude any evidence. The parties are usually permitted to submit written arguments before or after the hearing. The extent to which pre-hearing and post-hearing briefing is permitted, however, is at the sole discretion of the arbitrator.
Because the principal purpose of arbitration is to provide an expeditious and inexpensive means of resolving disputes, pre-trial procedures that would be available if the claim were asserted in court generally are not available. Thus, the testimony of witnesses is not taken in advance of the hearing. While it is not unusual for there to be an exchange of documents or other information prior to the hearing, any exchange of documents or information is generally controlled by the arbitrator.
At the conclusion of the hearing the arbitrator formally closes the proceeding and takes the dispute under submission. Under the rules of arbitration adopted by most organizations, the award of the arbitrator is subsequently submitted to the parties in writing within a set period of time, usually 30 days. The award of the arbitrator is rarely, if ever, given at the hearing with the parties present. In making an award, the arbitrator is not bound to follow the law unless the arbitration agreement specifically requires the application of a particular law or laws. The arbitrator may therefor consider substantive law and principles of equity as well as rules of trade, custom or usage. The arbitrator is not required to, and usually does not, give a reason or explanation for the award.
5. Finalizing the Arbitration Award
In a binding arbitration, once the decision of the arbitrator has been submitted to the parties, any party may petition the court for an order approving, correcting or vacating the award. The court may vacate or correct the award under very limited circumstances. Otherwise, the court must approve the award, and once approved, the award has the force of a judgment of the court in which it is entered. The grounds for appeal of the judgment are extremely narrow. For all intents and purposes, once an award has been made by an arbitrator and a judgment on the award entered by the court, the decision is final and binding.
In a non-binding arbitration, such as an involuntary, judicially ordered arbitration, any party may reject the arbitrator’s award and proceed with formal judicial process. However, if both parties accept the award, it may be entered as a judgment of the court in the same manner as in binding arbitration.
SUMMARY JUDGMENT AND PARTIAL
By Chief Justice Ronald M. George,
California Supreme Court
A familiar maxim in Anglo-American law is that "justice delayed is justice denied." The phrase embodies a very significant, but often overlooked, point: that the success of a system of justice is dependent not only upon the fairness and reliability of the decisions ultimately produced by the judicial system, but, just as importantly, upon the system’s practical ability to render such decisions in a timely fashion.
An important factor in any judicial system’s success in resolving disputes in a timely fashion is its ability to develop mechanisms that enable the system to identify, accurately and efficiently, those cases that properly may be resolved expeditiously in a procedure short of a full trial.
The American legal system has developed a number of such legal mechanisms or tools. One such mechanism, which has a long common-law history, is a "demurrer" or, in the language of the Federal Rules of Civil Procedure, a "motion to dismiss an action for failure to state a cause of action," by which a defendant to a lawsuit may obtain a speedy dismissal of a lawsuit prior to trial by establishing that, even if all of the facts that a plaintiff has alleged in its complaint are assumed to be true, the plaintiff, as a matter of law, still would not be entitled to prevail in the action. The demurrer can be a very useful procedure, permitting courts to weed out, at the outset of the litigation process, those cases in which the legal system need not and should not waste time and resources in conducting a trial aimed at resolving any factual disputes between the parties, because such factual disputes are, as a matter of law, irrelevant to the proper disposition of the case.
Although the demurrer is a valuable procedure, it cannot identify all, or even the great majority of, the cases that properly can be resolved without a full trial. As noted, a demurrer reaches only those cases in which a trial is unnecessary because the defendant is entitled to prevail even if all the facts alleged by the plaintiff are true. A demurrer cannot identify cases in which a plaintiff has alleged facts that would entitle it to prevail but has no substantial evidence to support its allegations, nor does a demurrer identify cases in which a trial is unnecessary because the defendant lacks sufficient evidence either to refute the plaintiff’s allegations or to support a defense to the plaintiff’s claim. To identify this larger category of cases that can be resolved expeditiously without a full trial, the American legal system has developed a procedure known as a motion for summary judgment, through which, in appropriate cases, either a plaintiff or a defendant may obtain a final and complete resolution of a lawsuit without incurring the often considerable delay and expense of a full trial.
2. Specific Purposes of Summary Judgment Procedure
A. Limiting abuse of the legal system.
In general, the legal system that exists in the United States places a high value on facilitating access to the civil litigation process, making it easy for individuals or businesses either to bring or to defend a civil lawsuit in court. Thus, a plaintiff may institute a lawsuit simply by filing a complaint alleging the existence of facts that entitle the plaintiff to relief, and, in response, a defendant may avoid an immediate judgment against it either by simply denying the existence of the facts alleged by the plaintiff or by alleging that other facts exist that constitute a defense to the plaintiff’s suit.
The ease with which a suit may be instituted or defended creates a significant potential for abuse by both plaintiffs and defendants. Thus, for example, a plaintiff may institute an action against a defendant even if it does not possess evidence to support the claim, anticipating that the burdens that the lawsuit will place on the defendant, in terms of the considerable time, expense, inconvenience and emotional distress inevitably incurred in litigating an action through a full trial, may lead the defendant to pay a sum of money to the plaintiff to settle the lawsuit even if the defendant is confident of ultimately prevailing after a full trial.
By the same token, a defendant who recognizes the validity of a lawsuit filed by a plaintiff and realizes that the plaintiff is likely to prevail after a full trial, may wrongfully deny the allegations of the complaint or improperly interpose an unsubstantiated defense, in the hope that the plaintiff, who may not be able or willing to await the final resolution of a full trial, will abandon the lawsuit altogether or be willing to accept a reduced amount from the defendant in settlement of the case.
One important purpose served by the existence of a summary judgment procedure is to prevent the misuse of the legal system for such vexation or delay, by minimizing the danger that one party will be able to use the threat of potentially long and expensive litigation as a tactic to harass or coerce an unwarranted settlement from the other party. As one federal circuit court decision explained: "[T]he function of a motion for summary judgment is to smoke out if there is any case, i.e., any genuine dispute as to any material fact, and, if there is no case, to conserve judicial time and energy by avoiding an unnecessary trial and by providing a speedy and efficient summary disposition." (Bland v. Norfold & So. R.R. Co., 406 f.2d 863, 866 (4th Cir. 1969) (emphasis added).) Or, as another court put it: "Summary judgment is a marvelous instrument in expediting the administration of justice. It is the means by which causes or defenses with no real merit are weeded out without the hazard of a decision on an artificial situation described by artful pleadings, or without the cost in precious judicial time of a long protracted trial which ends with a determination that, on the facts viewed most favorably to a party, the claim or defense is not good as a matter of law." (Bros. Inc. v. W.E. Grace Mfg. Co., 261 F.2d 428, 432 (5th Cir. 1958) (emphasis added).)
By affording a party who is subjected to a sham or frivolous claim or defense a means of obtaining an expeditious judicial disposition of the matter on the merits without trial, the summary judgment procedure enables such a party to resist being coerced into an unjust settlement simply to avoid the expense of extended litigation. In addition, the availability of a summary judgment procedure may be useful in deterring parties from proffering frivolous or sham claims or defenses in the first place.
B. Expediting the administration of justice.
Even when both parties to a lawsuit are acting in good faith, there will be many instances in which a party believes it can establish, or disprove, the facts set forth in the pleadings, but in which, upon investigation, it turns out that the evidence upon which the party has relied does not exist or is not available, or is of a type that is not admissible at trial. In addition, there also are many instances in which a party or its attorney may be mistaken both as to some of the facts and as to legal consequences of such facts, and in which the facts that the party may be able to prove will not be sufficient either to establish a claim or to constitute a defense.
In such instances, the summary judgment procedure makes a very substantial contribution to the efficient operation of the judicial process by enabling the courts to identify at an early stage of the litigation process those cases in which a trial is unnecessary and unwarranted because the actual evidence that a party possesses is insufficient to raise a triable issue of fact—that is, the evidence, if presented at trial, would not be sufficient to warrant submission of the matter to the jury but rather would call for determination by the court as a matter of law. Thus, as one decision observed: "Summary judgment has, as one of its most important roles, the elimination of the waste of the time and resources of both the litigants and the courts in cases in which a trial would be a useless formality." (Zweig v. Hearst Corp., 521 F.2d 1129, 1135-36 (9th Cir. 1975).)
By affording courts the means to determine which cases can be resolved, as a matter of law, without the need to resort to the elaborate machinery of the full trial process, the summary judgment procedure serves the interests of all litigants, providing a speedier decision in those cases amenable to resolution by summary judgment and reducing the overall trial court backlog so as to permit other cases to proceed to trial more expeditiously.
3. Compatibility with the right to Trial by Jury
When the summary judgment procedure first was developed, a serious question was raised whether a trial court’s entry of summary judgment violated the nonmoving party’s right to trial by jury, since the case was fully resolved by the court and never submitted to the jury. The decisions have uniformly held, however, that the procedure does not violate the right to trial by jury, but simply provides a means for determining whether an issue, to be tried by a jury, exists. (Fidelity & Deposit Co. v. United States, 187 U.S. 315, 320 (1902).) As one member of the advisory committee that drafted the original federal rule on summary judgment explained: "[T]he rule does not interfere in the slightest degree with the right of trial by jury, because the court cannot . . . enter summary judgment if there is any issue of fact to be tried, and if the court erroneously orders a summary judgment, the right of appeal will protect the party." (Proceedings, Washington Institute on the Federal Rules of Civil Procedure (1938) p. 176 [comment of Robert Dodge].)
Nevertheless, in order to assure that the right to jury trial is protected, courts generally take considerable care not to deny the non-moving party a full trial whenever it appears that a genuine issue of fact exists or that the resolution of the matter may depend upon the credibility of witnesses.
4. Basic Procedure Under Rule 56 of the Federal Rules of Civil Procedure
A. Filing the motion.
As noted, the summary judgment procedure is generally available to either party to the action. Under the applicable federal rule of civil procedure (Rule 56), a plaintiff may file a motion for summary judgment as early as 20 days after the commencement of the action, and a defendant may file such a motion at any time. Thus, this procedure permits resolution of the action at the earliest stages of the litigation.
In bringing a motion for summary judgment, the moving party maintains that, notwithstanding the allegations of the pleadings, there is no genuine issue of material fact that requires a trial—that is, no "triable issue of fact"—and that the moving party is entitled to judgment as a matter of law. To support its position, the moving party may rely upon a variety of materials, including the pleadings in the case, transcripts of the depositions of the parties or potential witnesses, answers to interrogatories or affidavits or declarations of potential witnesses. The rules generally require the moving party to attach the relevant material as exhibits to its summary judgment motion.
Although the federal rule permits a summary judgment motion to be made "with or without supporting affidavits," because the general purpose of summary judgment is "to pierce the allegations in the pleadings and permit consideration of the dispute’s merits at an early stage of the proceedings, the claimant, as a practical matter, almost always will file supporting affidavits." (10A Wright et al., Federal Practice and Procedure (1983) ( 2719, p. 3.) Whenever the moving party does file supporting affidavits or other evidentiary material (such as depositions, answers to interrogatories, or admissions), the opposing party may not rely simply upon the allegations or denials of its pleading, but must file its own counter-affidavits or evidentiary material in order to establish that there is a triable issue of material fact that precludes the granting of summary judgment.
Because the purpose of a summary judgment motion is to determine whether, were the case to go to trial, there would be sufficient evidence to warrant submitting the issues to the jury, the affidavits or other evidentiary material must refer to evidence that would be admissible at trial. This is an important limitation upon both the moving and opposing parties, and permits the moving party to uncover sham or frivolous claims or defenses, or allegations that, although made in good faith, cannot be proved in court.
B. Opposing the motion.
Under Rule 56, a motion for summary judgment must be filed at least 10 days before any hearing on the motion, and thus the opposing party generally will have at least 10 days to file any opposition to the motion. The rule also permits the opposing party to submit an affidavit requesting a continuance to allow for further discovery in order to enable that party to respond to a summary judgment motion.
C. Summary judgment hearing.
(i) Form of hearing.
Although the federal rules do not preclude a trial court from ruling on a summary judgment motion on the basis of the written submissions alone, that is, without a hearing or oral argument, as a general rule courts routinely permit oral argument on a summary judgment motion, and, in some instances, may permit a party to present oral testimony at the hearing in support of or in opposition to the summary judgment motion.
(ii) Materials considered.
In passing on a summary judgment motion, the court considers all of the materials properly presented in support of or in opposition to the motion, including pleadings, depositions, answers to interrogatories, and affidavits; as noted, the court may consider any material that would be admissible at trial. The court’s decision usually is based solely upon the written materials accompanying the motion or opposition, but under the federal rules (see Rule 43(e)) the court is authorized to admit and consider oral testimony. (One prominent commentator has cautioned, however, that in this context a court should use oral testimony "sparingly and with great care," because the purpose of summary judgment "would be compromised if the hearing [on the summary judgment motion] became a preliminary trial." (10A Wright et al., supra, ( 2723, p. 62.).)
(iii) Standard for granting or denying summary judgment.
Under the federal rule, a court will grant summary judgment in favor of the moving party if it finds that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law;" if it does not so find, it will deny the motion. In determining whether there is a "genuine issue as to any material fact," however, the court does not summarily try the facts itself, but simply determines whether a triable issue of fact exists.
In other words, "a party moving for summary judgment is not entitled to a judgment merely because the facts [it] offers appear more plausible than those tendered in opposition, or because it appears that the adversary is unlikely to prevail at trial. . . . [I]f the evidence presented on the motion is subject to conflicting interpretations, or reasonable [persons] might differ as to its significance, summary judgment is improper." (10A Wright et al., ( 2725, pp. 104-109.)
In general, the party moving for summary judgment has the burden of proving that there is no genuine issue as to any material fact and that it is entitled to judgment as a matter of law; the burden generally is viewed as a stringent one, and any doubt as to the existence of a genuine issue of material fact will be resolved against the moving party. When the determinative issue in question is one on which the non-moving party bears the burden of proof at trial, however, the moving party may satisfy its initial burden by relying upon the pleadings and upon an allegation that the non-moving party has failed to establish an element critical to its case, thus shifting the burden to the non-moving party to go beyond the pleadings and designate specific facts establishing that there is a genuine issue for trial. (Celotex Corporation v. Catrett, 477 U.S. 317 (1986).)
(iv) Effect of ruling upon summary judgment motion.
When the trial court grants a summary judgment motion, the ruling operates to terminate the case on the merits and results in a judgment equivalent to a judgment that is entered after trial and verdict. Unless reversed on appeal, such a judgment will operate as res judicata, barring any further litigation of the claim.
By contrast, when the trial court denies a motion for summary judgment, the ruling is not a determination of the merits but is simply a determination that there is a material fact to be tried, and thus the ruling does not preclude either party from raising at trial any of the issues dealt with by the motion.
5. Partial Summary Judgment or Summary Adjudication of Issues
Under the applicable federal rule and the governing rules in many states, the summary judgment procedure may be used not only when the entire case may be disposed of, as a matter of law, without trial, but also where a party contends that "a part of" a claim or defense can and should be resolved definitively by the court through the summary judgment procedure prior to trial. (See Rule 56, subds. (a), (b), and (d).) The court’s authority in this regard generally is referred to as the power to grant "partial summary judgment" or to grant "summary adjudication" of an issue.
Initially, the authority to grant partial summary judgment was limited to cases in which the court could determine the issue of the defendant’s liability as a matter of law, but the issue of the amount of damages presented factual questions to be resolved by the jury. More recently, however, the applicable rules have expanded the court’s authority so as to permit the trial court, on the basis of the evidentiary material presented through the summary judgment procedure, to specify individual material facts that appear "without substantial controversy," and to summarily adjudicate any discrete issue, such as an alternative theory of recovery or a defense.
As a result of this expansion of the procedure’s applicability, the summary judgment procedure now can be quite useful even when a party’s motion for "complete" summary judgment must be denied, because the court is permitted "to salvage some results from the judicial effort involved [in such a denial]" (Yale Trans. Corp. v. Yellow Truck & Coach Mfg. Co., 3 F.R.D. 440, 441 (C.D.N.Y. 1944) by withdrawing sham issues from the case and specifying those material facts that cannot genuinely be controverted. Thus, even when the summary judgment procedure does not succeed in disposing entirely of a case without trial, it can limit the issues that remain to be resolved, thereby expediting further litigation and often facilitating the ultimate settlement of the case.
United States District Court, Northern California District, published a pamphlet entitled "Dispute Resolution Procedures in the Northern District of California" in 1993, which was consulted in drafting this ADR summary.