California Mediation and Arbitration

News: NY Times Reports Supreme Court Unsympathetic To Argument That Arbitration Agreement Can Be Invalidated Because It Does Not Permit Class Arbitration Of Federal-Law Claim

The Case Argued On February 27 Is American Express Company v. Italian Colors Restaurant

     On November 20, 2012, I posted about American Express Company v. Italian Colors Restaurant, the case now before the Supreme Court in which merchants have challenged American Express’s practice requiring them to accept its credit cards as a condition to accepting its charge cards.  (Charge cards amounts must be paid off each month, while credit cards can run a balance).  The merchants’ problem is that their agreements with American Express are subject to arbitration and a class action waiver, and it is prohibitively expensive to challenge American Express’s business practices in arbitration, when the upside for a typical claimant might be only $5,000.

      On February 27, 2013, Binyamin Appelbaum reports in the New York Times that the oral argument does not augur well for the merchants.  A majority seems to be leaning toward requiring the merchants resolve their complaints through arbitration, though it may be prohibitively expensive to do so.  Justice Breyer, who in the past has favored limiting arbitration, is quoted as saying, “It is an odd doctrine that just says, plaintiff by plaintiff, you can ignore an arbitration clause if you can get a case that’s expensive enough.” 

Augur holding lituus.  Wikimedia.

      So is the flip side to such an “odd doctrine” that you can have a right to complain about an antitrust violation, without a practical remedy, if you are a party to an arbitration clause with a class action waiver?   

     Scotusblog also posted about the case on February 22, 2013.

Good News: Harbor Clerks and Management Reach Tentative Deal Just As Federal Mediators Are Called In

Deal Affecting Ports of Los Angeles and Long Beach Requires Approval of ILWU Rank and File

Above:  Free Harbor Jubilee.  Los Angeles and San Pedro.  1899.  Library of Congress.

     Only yesterday, we read that federal mediators were being called in to assist in settlement negotiations between the International Longshore and Warehouse Workers (ILWU) Local 63 and management.  The costly strike has disrupted cargo traffic at the ports of Los Angeles and Long Beach.  In fact, this morning we heard a person on NPR describing an aerial photograph of the scene as resembling the Normandy invasion!

     Today the Los Angeles Times reports a tentative settlement has been reached, subject to ratification by union members.  And that is good news.

      Did the federal mediators make the difference?  Dan Whitecomb and Steve Gorman report on December 5 in the LA Times:  “Federal mediators called in to join negotiations at the mayor's behest earlier in the day showed up just as the settlement was being reached.”

News: Cost Effectiveness of Mediation and Arbitration Mulled Over In California Attorney’s Fees

    A November 7, 2012 post in California Attorney’s Fees discusses:  “Arbitration/Mediation: The Debate Goes On ... Are They Cost Effective?”  Summarizing a recent article authored by Victoria Paal, Randall Block, and Steven Roland in the most recent 2012 edition of the California Real Property Journal, the post suggests that mediation is widely perceived to be a more cost-effective approach than arbitration.  Hat Tip to Mike Hensley, my co-contributor to our blawg, California Attorney’s Fees.

News/FINRA: Morgan Stanley and Facebook Investor Are Not Friends

Lead Underwriter in Facebook IPO Seeks to Avoid FINRA Arbitration With Facebook Investor

     On November 6, 2012, Suzanne Barlyn reported for Reuters that Morgan Stanley, a lead underwriter for the Facebook IPO, has filed a complaint in federal court in Manhattan seeking an order to stop FINRA arbitration initiated by a Facebook investor who alleges she took a financial drubbing in the recent Facebook IPO.  Morgan Stanley asserts that the investor, who ordered shares through Vanguard Financial Group Inc., was not Morgan Stanley’s customer. 

     The investor, a widow and retired schoolteacher (but of course!), alleges that Morgan Stanley “informed their own privileged clients” it was downgrading its outlook for the stock, while issuing more shares at the same time.

News: Gerard I. Nierenberg, Founder of The Negotiation Institute, Dies at 89

     The website of The Negotiation Institute describes the institute as “the longest running negotiation skills training organization in the world.”  Its founder, Gerard J. Nierenberg, died on September 19, 2012, as reported in a September 24, 2012 NY Times obituary.  Mr. Nierenberg authored several books, including one entitled “How to Read a Person Like a Book”  -- advice on reading body language.  We liked his wife’s observation that he practiced what he preached at home:  “’I could always rely on reminding him, or he would remind me, about the principles of negotiation,’ she said.”

News: Cowabunga: City of Half Moon Bay Wins $10 Million In Arbitration

Arbitrator Finds Insurance Coverage For Land Use Fiasco

     Famous for its big wave surfing, the City of Half Moon Bay got hit with a big one a while back, when it committed to pay $18M as a legal settlement to a private developer.  That’s a “big wave” for a city reported to have a population of 11,324 in the 2010 census.  Finding coverage for at least part of the problem, retired Supreme Court Justice, Edward Panelli, acting as arbitrator, has now awarded $10M to the City against Insurance Company of the West.  So reports Aaron Kinney on September 21, 2012, in the San Mateo County Times.

News: Federal District Court Strikes Down Delaware Chancery Court Experiment In Private Arbitration

Lost Opportunity to Use Outstanding Sitting Judges in Private Arbitration?

"Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants; electric light the most efficient policeman." – Louis D. Brandeis

     Steven M. Davidoff reports on August 31, 2012 in the New York Times, about “The Life and Death of Delaware’s Arbitration Experiment.”  Thanks to the Delaware legislature’s amendment of its laws, the Delaware Chancery Court, acknowledged by many to be an excellent forum for adjudicating corporate disputes, was empowered to engage in private arbitration.

     The idea was that private companies, never eager to air their dirty linen in public, would seek out the expertise of the Chancery Court in private arbitration.  Arbitrations would also generate arbitration fees ($6,000 a day) and a $12,000 filing fee.  However, the secrecy of the proceedings was challenged in federal district court.  As described by Mr. Davidoff, “the federal court found that the arbitration proceedings were effectively a civil trial” and thus “required to be open.”

     An appeal to the Third Circuit is likely to follow.

News: Roger D. Fisher, Co-Author of “Getting to Yes,” Dies at 90

Mediation Approach Addressed Mutual Interests

     On August 27, 2012, Leslie Kaufman reported in the New York Times, that Harvard law professor Roger D. Fisher died at the age of 90.  Professor Fisher was a co-author with William Ury and Bruce Patton, of the mediation ur-text, “Getting to Yes.”  Professor Fisher also co-founded the Harvard Negotiation Project.  He also advised on resolving conflicts around the globe.

     His New York Times obituary included the following:

“His emphasis was always on addressing the mutual interests of the disputing parties instead of what separated them.”

      And, on the occasion of his 80th birthday, his colleague John Kenneth Galbraith toasted him:

“Whenever I thought ‘Someone should do something about this,’ it eased my conscience to learn that Roger was already working on it.”

News/Celebrities: Oscar Winner Loses Legal Battle; Rep. Dennis Kucinich Criticizes Arbitration of Credit Card Disputes

Actor Nicolas Cage Ordered to Pay Attorney’s Fees in Real Estate Lawsuit After Losing Attempt to Compel Arbitration

     On March 20, 2012, we posted about Lindemann v. Hume, et al., Case Nos. Nos. B226106, B233273 (2nd Dist. Div. 7 filed February 21, 2012) (Perluss, P.J.), a case in which the Court of Appeal affirmed the trial court’s order denying a motion to compel arbitration.  This was a real estate sale/water intrusion/nondisclosure case.   A motion to compel the Buyer to arbitrate raised “a possibility of conflicting rulings on common issues of law and fact if the nondisclosure causes of action against [the Seller] were ordered to arbitration and the litigation against [the Developer] proceeded in superior court” – the basis for denying the motion to compel arbitration.   Actor Nicolas Cage is the beneficiary of the trust acting for the Seller, so we placed the case in our ‘celebrities” sidebar category. 

     The City News Service reported on August 17, 2012, that Superior Court Judge Rolf M. Treu found in favor of the trust set up for the Buyer, and awarded $165,510 in attorney’s fees – a loss for the Oscar winner.

Rep. Dennis Kucinich Writes of His Accomplishment in Getting Banks to Abandon Mandatory Arbitration of Credit Card Disputes

     On August 17, 2012, Rep. Dennis Kucinich authored a short article in the Huffington Post, entitled “Consumers fight Big Banks for a Day in Court.”  He objects to banks’ imposition of mandatory arbitration upon consumers.  Rep. Kucinich bemoans that banks “erect massive structures of red tape that most American families don’t have the timore or money to fight.” 

     “My staff followed up with all the major banks,” writes Kucinich, “and, over the course of several months, nine of those banks abandoned the practice of using arbitration to collect their credit card debts.” 

     Rep. Kucinich’s comments do not mention CompuCredit Corp. v. Greenwood (2011), the recent U.S. Supreme Court case holding consumers who sign credit card agreements with arbitration clauses are bound to arbitrate.  Consumer advocates have criticized the case.        

News: Mediation, Kofi Annan and Syria; Arbitration and the Olympics

“Mission Impossible” Becomes Impossible for Mediator Kofi Annan

     Rick Gladstone reported on August 2, 2012, in the New York Times, that former UN secretary general Kofi Annan, appointed to act as a special representative for the UN and the Arab League to negotiate a peace plan in Syria, has resigned, saying that President Bashar al-Assad of Syria “must leave office.”  Mr. Gladstone quotes Middle East scholar Aaron David Miller: “D.O.A. from the get-go.” 

     Without commenting on the disastrous political and humanitarian situation in Syria, we instead make a small point about mediation:  it is a scalable process, dealing with the world’s little problems, as well as the world’s largest ones – alas, sometimes without success.

Damascus.  Tomb of Saladin.  Felix Bonfils, 1831-1885, photographer.  Library of Congress.

Arbitration and the Olympics 

     On August 2, we read in the Washington Post that French steeplechaser Nordine Gezzar failed in an attempt to run on Friday at the London Olympics because of the results of an anti-doping test.  The decision was made by the “Court of Arbitration for Sport” (or “Tribunal Arbitral du Sport”).  In fact, we have seen mention of this arbitral body several times during this Olympics year, making us curious about just what it does.  Brendan Koerner provides the answer for us in Slate Magazine: 

“The CAS has few limitations on what types of cases it can consider: As long as it involves sports, and both parties agree to the arbitration, pretty much any conflict is fair game. However, the bulk of the court's rather light docket—it ruled on 39 cases last year—is taken up with cases involving either doping or soccer transfer fees (that is, how much one club team pays another to obtain a player). There is also the occasional gripe from an athlete who didn't make his or her Olympic team, as well as a smattering of national quibbles.”

Water Jump in the Steeplechase.  1908 Olympics in London.  Wikipedia.