follow-up: adr domains sell in pre-auction deal

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Published online in Wiley InterScience (www.interscience.wiley.com).Alternatives DOI: 10.1002/alt

FOLLOW-UP: ADR DOMAINSSELL IN PRE-AUCTION DEAL

An Ebay auction scheduled for late Aprilfor two prime Internet ADR addresses wasavoided when the seller accepted offers forboth sites from the same buyer. Arbitra-tion.com and mediation.com each fetchedmore than six figures, according to theirformer owner.

T.K. Read, an entrepreneurial solopractitioner in Conyers, Ga., who used thesites for more than a decade to operate analternative dispute resolution neutrals’ list-ing service, states in an E-mail that shecan’t identify the buyer, who required aconfidentiality agreement for the purchase.

Last fall, Read began to advertise anauction for her entire company, includingthe Web addresses. She sent E-mails, re-peatedly, to big Internet companies andADR providers and organizations. The E-mails offered the firm’s principal site,gama.com—an acronym for Global Arbi-tration Mediation Association Inc.—andbusiness operations, which are largelybased on listings put into the databases onarbitration.com and mediation.com.

Interest appeared to be high, thoughpotential buyers mostly refused to talkabout Read’s proposed sale. See “Key ADR

Web Domains Are in Play–at a SteepPrice,” 25 Alternatives 77 (April 2007). Inher E-mails, Read set an April 23 EBaydate, but stated the auction would beyanked if a buyer for all or part of the as-sets emerged beforehand.

Which is exactly what happened. “Yes,www.arbitration.com and www.media-tion.com each sold for a six-figure price,”stated Read in a late April E-mail. “I havea confidentiality agreement and so [I] can-not tell you the exact price, nor identify thebuyer.”

Read explained that a buyer focusingsolely on the URLs had emerged in themonth leading up to the auction. In fact,the neutrals’ databases associated with theURLs—which Read has said contain about6,000 neutrals worldwide—were givennew addresses and linked to gama.com.

In originally announcing the auction’sopening, Read’s E-mail blast stated, in allcapital letters, “Gama reserves the right tocancel the auction, postpone the auction,modify the auction, auction less than all ofGama’s assets, auction one or more of thedomains without auctioning the entirecompany and/or stop the auction at anytime as per Ebay rules.”

“[A]s noted in the auction posting,”stated Read in an E-mail to Alternatives,

“we could sell at any time, and when we re-ceived an offer too good to refuse, that iswhat we did.”

Instead, a 10-day auction solely for thegama.com URL began on April 23. The re-serve price was $255,000, in an auctionRead conducted under her own Ebay ac-count. It didn’t include the databases,which were still called arbitration.com andmediation.com at links on gama.com, de-spite new internal addresses on thegama.com site. The auction had an inter-esting Ebay pitch and disclaimer, well re-moved from the current ADR purpose:

“‘GAMA’ means ‘lucky toad’ in manyAsian languages. This would be a great por-tal site for the Asian market or a fabulousgeneric name for any market. This auctionis for the domain name only. This auctiondoes not include the website and businesspresently located at this web address.”

Though the auction was limited to onedomain, a last-minute E-mail solicitationoriginally said it would include 11 URLs.In addition to gama.com, arbitration.comand mediation.com, the solicitation listedeight URLs with a variety of Spanish termsfor lawyers, mediation, and arbitration.The E-mail solicitation also said a live Juneauction would be held in New York for un-sold domains.

But the gama.com auction closed onMay 3 with no bidders. It was unclear atpress time how gama.com would go backon the market, and whether the SpanishURLs would be auctioned together or sep-arately, on Ebay or otherwise.

“I have had a lot of interest in Gama(both in the company and simply in thedomain),” Read noted during the auction.She explained that due to the inquiries, shehad set “a respectable reserve.” She added,“We may sell them all together and withthe domain or separately depending onseveral variables, not entirely determinedby monetary considerations.”

Meantime, the transfer of the two ADRURLs took place Monday, April 30, fivedays after the deal closed. “While the saleoccurred outside of the Ebay auction,”Read noted, “the buyer was aware of theauction, and the fact of [an] auction did

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ADR BRIEFS • ADR BRIEFS • ADR BRIEFS

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“HEY! ‘SO SUE ME.’ IS A FIGURE OF SPEECH.”

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add some degree of urgency to concludingthe transaction.”

At press time, mediation.com and arbi-tration.com produced unaffiliated searchpages with apparently advertised links.Neither page indicated that a new site wascoming, nor did they identify the owner.

No new auctions were listed as this is-sue went to press.

FOLLOW-UP: THIS TIME,IT’S JUSTICE ALITO SAYING JUDGE PAY HIKES NEEDED TO HALT AN ADR EXODUS

For the second time in two months, a U.S.Supreme Court associate justice has ap-peared before a Congressional committeeasking for a vote to increase judges’pay–and citing the lure of working forADR provider JAMS as a reason.

This time, the Court’s newest member,Justice Samuel A. Alito Jr., listed several ex-amples of judges who departed the bench,and mentioned Fern A. Smith, now a neu-tral in JAMS’ San Francisco office, as anexample of a departure that could havebeen prevented with more attention to ju-dicial salaries.

Alito made his remarks before theHouse Committee of the Judiciary’s Sub-committee on Courts, the Internet and In-tellectual Property. Alito, who replaced theretired Justice Sandra Day O’Connor lastyear, appeared at an April 19 oversighthearing on federal judicial compensation.

In February, Supreme Court AssociateJustice Anthony M. Kennedy had told theSenate Judiciary Committee that four ofthe nine federal judges departing the benchin 2005 joined JAMS, “where they havethe potential to earn the equivalent of adistrict judge’s salary in a matter ofmonths.” He added, “My sense is that thismay be just the beginning of a large-scaledeparture of the finest judges in the feder-al judiciary. . . .”

JAMS’s Jay Welsh, executive vice presi-dent and general counsel, responded byagreeing that judges’ need to be compen-sated better, but denied that his firm was

part of the problem. He noted, “Every Ar-ticle III judge who has joined JAMS with-in the last several years had reached full re-tirement age, and accordingly did not leavethe bench early.”

For details on Kennedy’s appearance,the media reaction, and Welsh’s completestatement, see “Singling Out JAMS, JusticeKennedy Calls for Better Judicial Pay,” 25Alternatives 78 (April 2007).

On May 1, JAMS issued a similar re-sponse to the Alito testimony, which fo-cused in part on the threat to judicial inde-pendence posed by judges’ departures fromthe bench for financial reasons:

JAMS is in agreement with Justice Ali-to’s recent congressional testimony andsupports a long overdue increase infederal judicial pay. An independentand stable judiciary is essential tomaintaining the strength of our coun-try’s judicial system. JAMS is proud tohave several distinguished retired feder-al judges on our panel, and it is impor-tant to note that all Article III judgeswho have joined JAMS, have done soafter serving full terms of public serviceand reaching full retirement.

In the April House subcommittee testi-mony, Alito examined how pay of federalsector employees other than the judiciary,and in private employment, has exceededjudges’ salaries.

In examining private sector moves, Ali-to provided details on 10 prominent feder-al judges who left the bench. The fourthwas JAMS’ Fern Smith. Said Alito:

In June 2005, Judge Smith retired (atage 71 with 16 years of service) to joinJAMS (a private firm, comprised offormer federal and state judges, thatprovides dispute resolution services).Judge Smith is a former Director of theFederal Judicial Center, the primarytraining and educational institute forfederal judges, where she was one ofthe primary editors of the Manual ofComplex Litigation.

According to its Web site, JAMS cur-

rently counts 21 former federal judges(including Judge Smith) among its me-diator/arbitrators. See Attachment 1. Asimilar organization, called FedNet,counts 15 former federal judges amongits mediators/arbitrators. See Attach-ment 2.

At press time, the attachments had notbeen made available by the House commit-tee nor the Supreme Court.

FedNet is affiliated with another largeprovider, Minneapolis-based National Ar-bitration Forum. NAF declined to com-ment directly on Alito’s remarks. RogerHaydock, NAF’s education director, notesthat NAF established a relationship in2002, “to promote the arbitration and me-diation capabilities of FedNet membersand to add them to our national panel ofneutrals.” Haydock notes that there are 25former federal judges on the NAF’s panel,10 of whom also are affiliated with FedNet.

In a statement, Haydock notes that thefederal judges “are able to provide partieswith the very best of arbitration and media-tion services that efficiently resolve disputes.”

JAMS’ Fern Smith says she doesn’tmind the attention. “Certainly,” she says,“I was flattered. There is no way not to be.I was surprised. But more important thanmy personal reaction to being singled out,I was very pleased to see the justice takesuch a strong stand on behalf of the judici-ary and behalf of my colleagues still on thebench. I would love to see a positive re-sponse from Congress. I would hope thatsuch strong statements on their behalfwould carry a lot of weight.”

Alito concluded his testimony high-lighting federal judges with figures similarto Kennedy’s February comments:

Twenty Article III judges have resignedor retired from the federal bench sinceJanuary 1, 2005. It is our understand-ing that seventeen of these judgessought other employment. Six of thesejudges retired to join JAMS, a Califor-nia-based arbitration/mediation [firm],where they have the potential to earnthe equivalent of the district judgesalary in a matter of months. Five

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neys declined to use arbitration wasthe prospect of challenges and ap-peals. But the top-rated reason forrefusing arbitration for law firm at-torneys was the result. Trailing inboth respondents’ categories for re-fusing to use arbitration was costand time considerations.

• Companies are more likely to trackADR results, with 48% saying theytrack metrics. Only 10% of lawfirms said they chart the results.

The survey was discussed in anApril 27 article in the National LawJournal, and late last month in theNew York Law Journal. �

SPRING AND SUMMERCPR TRAINING EVENTS

The CPR Institute has a full slate of

Spring and Summer 2007 trainingprograms.

First, there are still slots available atpress time for CPR’s ADR Ethics con-tinuing legal education presentation.

On June 12, CPR Senior VicePresident Helena Tavares Erickson willconduct “Excellence in ADR Ethics,”at the CPR Institute’s offices at 575Lexington Ave., in New York.

The brown-bag lunch session willprovide three hours of Ethics creditsunder New York State CLE BoardRules. The CPR Institute has been cer-tified by the New York State Continu-ing Legal Education Board as an Ac-credited Provider of continuing legaleducation in the state of New York[July 2004 - July 2007].

The cost is $275 for individuals atCPR member organizations, and $385for nonmembers. Registration avail-able at www.cpradr.org or by phone at(212) 949-6490.

Due to demand, CPR plans to re-peat this training on July 26 and Nov8. Register early for your session to as-sure a spot.

* * *

On June 28-29, CPR will host “CourtMediator Training” at its New York of-fices. Successful completion of thetraining satisfies the training require-ments of the mediation program at theU.S. District Court for New York’sSouthern District.

Longtime CPR trainer MargaretShaw, of New York, who has been aneutral with national ADR providerJAMS since the firm she co-founded,ADR Associates, merged with JAMSthree years ago, will repeat a success-ful, sold-out training conducted atCPR last fall.

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judges entered the private practice oflaw (presumably at much highersalaries). Two judges resigned to be-come corporate in-house counsels. Onejudge resigned to accept a state judicialappointment (at a higher salary). An-other judge retired to accept an ap-pointment to a quasi-governmental po-sition. One judge recently announcedhis resignation to accept an appoint-ment in higher education. One judgeresigned to accept an appointment inthe executive branch of government.

Smith echoes her current employer’sposition on JAMS’ role in luring judges.“We all left after having reached retirementage, [with] some staying on past that.Some [were on] senior status far longerthan I was. I don’t know of any federaljudge at JAMS who had not reached the el-igibility-for-retirement age.” Smith left theFederal Judicial Center in 2003, after four

years, and returned to California’s North-ern District court in San Francisco, on sen-ior status, before becoming a full-timeJAMS neutral in 2005.

Alito concluded his testimony by noting,

I come here not as one primarily tellingyou to recommend more money, but asone suggesting to you that the judgeswe have are worth keeping. In closing,I hope you will consider the following:(1) Is the current judicial salary fair?(2) Does it aid in maintaining judicialindependence?; and (3) Does the cur-rent judicial salary-fixing process im-prove and not diminish the ThirdBranch of government?

The full text of Alito’s comments canbe found here: http://judiciary.house.gov/OversightTestimony.aspx?ID=830.

Associate Justice Stephen G. Breyer tes-tified on the same day before the House

subcommittee. A complete text can befound at http://judiciary.house.gov/me-dia/pdfs/Breyer070419.pdf. Though hedidn’t single out ADR providers by name,he cited the same statistics invoked by Jus-tice Kennedy in February:

. . . [S]ince just last year, ten Article IIIjudges have departed from the bench.Seven of those ten judges sought em-ployment in other sectors of the legalcommunity. This is not a one-year blip.Indeed, in 2005, nine Article III judgesdeparted from the bench. Four of thenine joined a private firm that providesarbitration and mediation services.

“The judges I know loved being on thecourts,” says Fern Smith, “I don’t think anyof us used the work as a stepping stone.” �

DOI 10.1002/alt.20185

(For bulk reprints of this article, please call (201) 748-8789.)

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CPR NEWS • CPR NEWS • CPR NEWS

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follow-up: adr domains sell in pre-auction deal

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