A few weeks ago, I began a two-part series on alternative dispute resolution. The first column dealt with mediation, which is a voluntary, non-binding proceeding designed to resolve disputes between parties with the assistance of a neutral mediator who assists the parties in identifying issues and resolving them. It has become mandatory in almost every case and is a useful tool.
In civil cases, the trial judge orders mediation, and most judges allow the parties to agree to the person who will serve as mediator. The mediation order will include a date for completion of mediation prior to trial. In federal court, there is a program to have mediation conducted at an early stage in the case. Although we don’t go to federal court very often and our experience is limited, early assessment and mediation is not as successful as mediation that has been conducted after pre-trial discovery has been completed, especially in cases involving expert witnesses
The other tool in the alternative-dispute-resolution toolbox is arbitration. Arbitration results in a final resolution of the case as the parties are bound by the arbitrator’s decision. Litigants can agree to arbitrate a particular case, and voluntary arbitration has definite utility in resolving cases. I have arbitrated a few cases in my career. The value of arbitration is that it takes substantially less time to try a case in arbitration and it is less expensive.
I have arbitrated a couple of injury cases in which the insurance company for the responsible party has suggested that the case be arbitrated. We agreed on the arbitrator, and the case was tried in less than a day. Both cases involved car wrecks, and there was not much of a dispute as to who was at fault. They were both “how much” cases in which the principal issue was the amount of compensation.
One case went very well for my client and probably resulted in a payment that was more than what a jury would have given her. The other case resulted in a lower amount. Another case involved a dispute between two lawyers over division of fees in a very large case, and it was frankly the stubbornness of my client that kept the case from being resolved in the first place. My client was not satisfied with the result, and he blamed the arbitrator. He should have looked in the mirror when pointing fingers.
In most cases, arbitration is conducted because the parties have “agreed” to arbitration. I put “agreed” in quotes because the agreement to arbitrate is usually not an arms-length negotiation. Arbitration provisions are prevalent in many consumer contracts if you will read the fine print. Those agreements are hardly negotiated. They are also used in construction contracts and while commonplace are used because it is a standard practice in the construction industry.
In many cases arbitration is compelled. Arbitration agreements are common in many employment agreements, and those have been routinely upheld by courts. An arbitration provision in an employment agreement is usually a “take it or leave it” proposition. The employee does not have to agree to it, but he or she also is usually left without employment if there is refusal to sign the agreement.
I encountered an arbitration agreement in a nursing home contract that requires any dispute or claim against the nursing home to be resolved in arbitration. In my case, the patient did not actually sign the agreement, but had executed a power of attorney authorizing his sister to make such decisions.
Frankly, no one was thinking about the possibility of a claim when the agreement was signed. My client did not contemplate that the nursing home employees would provide poor care that resulted in extensive pressure ulcers on his buttocks that required extensive treatment. We will learn next month whether the agreement will be enforced by the trial judge.
My principal problem with arbitration agreements aside from the fact that they are not truly voluntary is that they represent an assault on the right to trial by jury guaranteed by the Missouri and U.S. constitutions. If a party has signed an arbitration agreement, that party has given up his or her right to have a jury of peers resolve the case.
If the parties truly agree to arbitrate the dispute as was my experience, then the parties have given up the right to a jury trial purposefully after the reason for the trial has occurred. For example, an employee who has been discriminated against or sexually harassed agreed to arbitration before the offending conduct occurred.
A second reason I abhor arbitration agreements is that the agreement provides for selection of an arbitrator in a manner that favors the party wanting arbitration. The arbitration is less offensive if the party requesting arbitration has a role in selecting the arbitrator. While there are many fine arbitrators, there are some who enter the process with what I call “payment bias.” The employer or nursing home wanting arbitration has to pay for it in most cases, and the arbitrators may have multiple cases with the same employer.
When I attended law school 40 years ago, alternative dispute resolution was not part of our curriculum. Times have changed, and it does reduce expense of litigation and streamlines the process. It works well if it is truly voluntary. Therein lies the problem.
Bob Buckley is an attorney in Independence, www.wagblaw.com . Email him at firstname.lastname@example.org