California Mediation and Arbitration

Recommended Reading: Anatomy of a Mediation by James C. Freund

“A Dealmaker’s Distinctive Approach to Resolving Dollar Disputes and Other Commercial Conflicts”

     James C. Freund, former Skadden, Arps M&A transactional attorney turned mediator, is the author of the engagingly written and interesting new book Anatomy of a Mediation (Practising Law Institute 2012).  Mr. Freund’s “anatomy” is a clinical tour, by a very wise guide, through the mediation process. 

     The book’s subtitle, “A Dealmaker’s Distinctive Approach to Resolving Dollar Disputes and Other Commercial Conflicts,” reveals the author’s perspective.  Experienced as a dealmaker, Mr. Freund sees mediation as a negotiation, but it is primarily a negotiation between the mediator and the parties.  Unlike many mediators who play shuttle diplomacy, transmitting offers and counter-offers back and forth, Mr. Freund prefers to negotiate with the parties, until he can bring them within the range of magnetic attraction necessary to draw them together to settle their dispute.

     Mr. Freund’s approach is “distinctive” because it is his approach, empirically based on his long career spent negotiating favorable outcomes where business interests clash.  It is an approach that works for him.  His approach is relentlessly evaluative, and assumes a relatively high level of legal and business sophistication among the participants.  He is canny, shrewd, pragmatic, and cerebral, but clearly knows when to apply a dose of humor to ease a tense mediation.

The Supreme Court and Arbitration – 2012 and 2013

     Recommended reading:  two posts by attorney Liz Kramer in Arbitration Nation:  “2012 in Arbitration Law:  Is Class Arbitration Naughty or Nice?” and “Preview of SCOTUS’s 2013 Double Feature on Class Action.”

That Was the Year That Was

     In 2012, the big issue was class arbitration, with several states having pro-class-arbitration decisions reversed based on the Supreme Court’s 2011 ruling in Concepcion.  In the federal courts, divergent views emerged on how to apply Stolt-Nielsen, a SCOTUS case holding arbitrators exceeded their authority under the Federal Arbitration Act by permitting class-wide arbitration under circumstances where the parties had stipulated that their agreement was silent as to the availability of class-wide arbitration.  Ms. Kramer observes that this is a rapidly changing area of law about which SCOTUS seems “passionate”, and concludes, “I can’t wait to see what’s on Scalia’s naughty list in 2013!” 

Double Header in 2013

“Two Games Today.”  Puck.  1913.  Library of Congress.

        Based on the preoccupation with class-wide arbitration, and with the split over Stolt-Nielsen, SCOTUS’s work on the arbitration front is cut out for it in two cases it has accepted for 2013: Oxford Health Plans, LLC v. Sutter, and American Express Co. v. Italian Colors Restaurant (Amex III). 

     On November 20, 2012, I posted about American Express Co. under the heading, “Can An Arbitration Class Action Waiver Be Enforced If The Plaintiff Would Not Be Able To Effectively Vindicate Federal Statutory Rights Through Arbitration?”

     “In my view,” writes Liz Kramer, “the real issue here is will SCOTUS acknowledge any expense-based exception to its arbitration precedent?”  In other words, are economic realities ever a sufficient reason to nix arbitration?  The Second Circuit believed the answer was yes, in the case of antitrust litigation.  But Ms. Kramer opines that this decision is likely to be reversed.

     Oxford Health Plans affords SCOTUS an opportunity to resolve the split over the application of Stolt-Nielsen.  Does class-wide arbitration require express authorization, or can it be implied through the traditional methods of contract interpretation by the arbitrator? 

     Note:  I have added Arbitration Nation to my Blogroll.

 

Review in The Wall Street Journal: Boilerplate

 

End of the Rule of Law, or Useful Legal Fiction?

     Arbitration, like boilerplate, creates a private legal system that displaces the public one.  Whereas the common law depends on the rule of law, and creates a system of precedent that is available to the public, an arbitration award is typically a private affair, and even a mistake of law or fact needn’t lead to the reversal of an arbitration award.  The connection between boilerplate and arbitration is closer still, because often the agreement to arbitrate is an adhesive contract created by boilerplate-like provisions.  Because arbitration is a subject of this blawg, a review of a new book on the unlovable subject of boilerplate in The Law Wall Street Journal resonated for me.

     In the December 21, 2012 edition of The Wall Street Journal, Robert E. Nagel, professor of constitutional law at the University of Colorado, reviews Boilerplate (Princeton 2012), a new book by Prof. Margaret Jane Radin of the University of Michigan Law School.  Prof. Nagel describes Boilerplate as “a sophisticated and thought-provoking treatment of the boilerplate contracts that everyone signs yet few read or understand.”

     “Because the terms aren’t bargained over,” writes Prof. Nagel, summarizing arguments in Boilerplate, “it follows that they aren’t consented to in any traditional sense; there is no meeting of the minds between the parties.”  The “moral basis” for using state power to enforce contracts is lacking in the case of boilerplate, because mutual agreement of the parties is the justification for using “the power of the state to enforce the transfer of one person’s property to another . . . “  But in the case of boilerplate, mutual agreement must be a legal fiction.  Furthermore:  “The party that constructs the boilerplate makes a kind of private legal system that displaces the public one.”

     Prof. Nagel, however, suggests that the contractual treatment of boilerplate may be a useful legal fiction, and that “our bewilderingly complex political system exhibits many contradictions more alarming than the tension between boilerplate and the rule of law.”  He asks rhetorically:  “Can it be that real, bargained-for contracts remain an important practice and ideal because boilerplate removes so many transactions from the realm of law?”

     As a first-year law student, I took Peggy Radin’s real property class at UCLA, and have fond memories of spending the first six weeks reading bewildering cases about foxes, hunters, possession, ownership, and opaque forms of action.  All the best, Prof. Radin, and congratulations on the publication of Boilerplate. 

    
”