the amicus view: what they're saying about hall street associates, and why

AlternativesTO THE HIGH COST OF LITIGATION

INTERNATIONAL INSTITUTE FOR CONFLICT PREVENTION & RESOLUTION VOL. 25 NO. 10 NOVEMBER 2007

AlternativesAlternatives to the High Cost of Litigation (Print ISSN 1549-4373, Online ISSN 1549-4381) is a newsletter published 11 times a year by the International Institute forConflict Prevention & Resolution and Wiley Periodicals, Inc., a Wiley Company, at Jossey-Bass. Jossey-Bass is a registered trademark of John Wiley & Sons, Inc.

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TO THE HIGH COST OF LITIGATION

Publishers:Kathleen A. BryanInternational Institute for Conflict Prevention and Resolution

Susan E. Lewis John Wiley & Sons, Inc.

Editor: Russ BleemerJossey-Bass Editor: David FamianoProduction Editor: Ross Horowitz

VOL. 25 NO. 10 NOVEMBER 2007166 ALTERNATIVES

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

vited to do so by the parties, it is not themediator’s job to forecast what the resultwill be if the dispute goes to court. Theminute the mediator expresses an opinionof this kind unsought, he or she will losethe trust and confidence of the party whois unhappy with that opinion. The medi-ator must remain neutral at all times, infact and in appearance.

A mediator who is legally trainedmust understand the legal issues in thecase. The mediator must counsel eachparty to bear the litigation risks attendanton each issue carefully when making offeror counteroffer. Greater experience maymake it easier for a mediator to recognizelitigation risks.

But the size of those risks—as op-posed to their existence—is somethingfor the parties, with the help of their at-torneys, to assess. It is no part of the me-diator’s role, and in the absence of properargument the mediator may get the as-sessment wrong. This is not to say thathighly experienced, confident mediatorsmay choose to do things differently.Good luck to them if they do.

CAN YOUCHANGE ROLES?

The time may come when the parties in-vite the mediator to change roles. As aveteran of more than 40 years of heavilycontested common law litigation—some-times involving hundreds of millions ofpounds, or agonizing life or death is-sues—I would not find it difficult tochange roles. I can think of at least twomediations in the past year when I believeI could have spared the litigants a lot ofexpense and worry at the trial if they hadasked me for an evaluation when the me-diation failed. But the mediator is the ser-vant of the parties, and it is not for himor her to change roles if the parties do notask for it.

So: process is important. For a formerjudge, remembering one’s new role is im-portant. So, too, is obtaining and retain-ing the trust of each party, and theirlawyers.

How this is achieved will vary fromperson to person and from case to case.Some people are so naturally charismaticthat they immediately engender trust andnever lose it. Others, with different person-al characteristics, find it more difficult.

I find it an obstacle when people getup when I enter the room, or refer to meas “the tribunal,” or arrange the seating asif I was chairing a committee meetingrather than sitting down with people towork out a solution to a problem to-gether.

My solution is to remember every-thing I have been trained to do, to getright on top of the papers so that I canunderstand exactly what the problemsare, and where each party is coming from,to listen hard, and to show each party Iunderstand what they are saying andwhat they believe to be important.

At one of my training courses we weretold that mediators place themselves on afour-point spectrum that ranges from theunconsciously incompetent to the uncon-sciously competent. As a veteran of 20mediations, conscious competence(“Point Three” on the spectrum) is all Iaspire to at the moment. Perhaps when Iam 80, with nine more years as a practic-ing mediator under my belt, I will havereached the zenith. It will then be time toretire—again. �

DOI 10.1002/alt.20199

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

Mediator ‘Unlearning’(continued from previous page)

THE AMICUS VIEW: WHAT THEY’RESAYING ABOUT HALL STREETASSOCIATES, AND WHY

The Supreme Court case of Hall Street Asso-ciates v. Mattel, No. 06-989, is a business bat-tle on paper as well as in front of the Court.

The case, which is scheduled to be ar-gued on Nov. 7, pits the petitioner’s beliefthat parties can contract for judicial reviewstandards of arbitration awards against therespondent’s view that ADR finality andcertainty are more important.

The five amicus briefs filed in the case,excerpted below, pose a debate betweenconservative business organizations . . . andmuch more conservative ideological foun-dations and interest groups. The consumergroups that have driven a great deal of ar-bitration litigation with fairness challengesare sitting this case out.

Among the organizations involved are

two leading neutral ADR provider organi-zations—stepping away from their neutral-ity—that separately ask the Court to affirman unpublished Ninth U.S. Circuit Courtof Appeals decision reinstating an arbitra-tion award that had been stricken.

Three opposing business and think-tank friend-of-the-court briefs want a rever-sal. The amicus filers ask the Court to allowthe parties to contract for additional judi-cial assistance after an arbitration award ismade. A reversal would mean that the courtsystem could pass on the award, which pe-titioner Hall Street Associates says was acondition of its acceptance of arbitration.

In the case, lessee Mattel wants to up-hold an award in its favor that absolved itfrom indemnifying lessor Hall Street Asso-ciates for waste-site cleanup. At an earlystage, a trial judge had thrown out the orig-inal arbitrator’s decision as irrational. TheNinth Circuit in Hall Street Associates v.

Mattel Inc., 196 Fed. Appx.. 476, 2006WL 2193411 (9th Cir. Aug. 1 2006)(un-published), reinstated it. For more details,see “Supreme Court Will Address Long-Running Battles Over Arbitration Review,”25 Alternatives 119 (July/August 2007).

Both sides say Federal Arbitration Acthistory and case law strongly back their po-sitions. Both also say a decision goingagainst them will lead to a slippery slopethat reduces or harms arbitration use, clogscourts, and hurts commerce.

In alphabetical order, the amicus filersare:

• American Arbitration AssociationWho? The nation’s largest ADR providerorganization wants the decision affirmed.

What is the association’s interest in thecase? The New York-based nonprofit’s “pre-eminent position in administering arbitra-tions renders it uniquely qualified to pro-

ADR BRIEFS • ADR BRIEFS • ADR BRIEFS

VOL. 25 NO. 10 NOVEMBER 2007 ALTERNATIVES 167


vide a perspective it hopes will assist theCourt in its consideration of the merits ofthis appeal. The AAA believes strongly inthe continued development of arbitrationas a prompt and cost–effective method ofresolving disputes. Through its extensiveexperience in administering arbitrations,the AAA can offer insight into the practicalimpact on the arbitration process of a deci-sion permitting parties to contract for ex-panded standards of judicial review.”

The association is a neutral provider. Whyis it taking a position in this case? Filing am-icus briefs is infrequent, says general coun-sel Eric Tuchmann, but in important arbi-tration cases, it’s not unusual. The associa-tion in its brief notes nine Supreme Courtcases it has entered as amicus, including,most recently, Circuit City Stores Inc. v.

Adams, 532 U.S. 105 (2001)(holding thatthe FAA applies to employment contracts).

Tuchmann explains that important fac-tors in deciding whether to file an amicusbrief are the court’s level, and the possibilityof arbitration law development in the matter.He says that the association’s amicus reviewcommittee also assesses whether the associa-tion can make “a significant contribution” tothe discussion, or whether the parties arewell-suited to vet the issues on their own.Tuchmann says that he and association pres-ident William K. Slate II discuss the “largenumbers” of amicus requests the associationreceives, and present issues for considerationby a law committee of the association’s boardfor final participation decisions.

What is it arguing? That overturningthe Ninth Circuit decision could funda-

mentally change arbitration. Parties are ful-ly autonomous over arbitration, but Con-gress has had its say on judicial oversight,and intrusion would jeopardize awards’ fi-nality, essential for the effectiveness of pri-vate ADR. Party-negotiated provisionswould create a patchwork of judicial stan-dards. Parties seeking review can contractfor an arbitral appellate review process. Al-so, internationally, courts traditionallyhave a limited arbitration role, and chang-ing that domestically would make theUnited States out of step with internation-al business standards.

How did it make its argument? 1. “Am-icus believes that allowing parties to rewritethe FAA to permit enhanced and divergingstandards of judicial review of arbitration

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“IT’S FOR ETERNITY, BUT, WE DO HAVE A WORK RELEASE PROGRAM FOR ATTORNEYS.”



awards would lead to the erosion of manyof the benefits of the arbitral process as en-visioned in the FAA. It would also contra-vene the rationale and plain terms of theFAA, which severely limits the grounds forsuch review.”

2. “If contractual provisions for ex-panded judicial review are permitted bythis Court, parties will be free to demandthat courts engage in detailed review of themerits of the case. The layering of publicand private dispute resolution would trans-form arbitral bodies into mini-districtcourts and federal district courts into qua-si–appellate tribunals. Though this may bethe arrangement to which some partieswould agree, it plainly does not comportwith Congress’s denial of substantive re-view of arbitral awards, and it contravenesa fundamental principle of arbitration: toprovide parties with a quick and cost–ef-fective method of resolving disputes.”

3. “Amicus believes that, facing theprospect of enhanced judicial scrutiny, ar-bitrators will feel obliged to conduct the ar-bitration in a manner similar to traditionallitigation. For instance, arbitrators are like-ly to demand more formalized evidentiaryprocedures and findings of fact, and feelcompelled to create a record and a reasoneddecision that will withstand court review.In turn, in the absence of a reasoned deci-sion and complete and interpretablerecord, a district court tasked with apply-ing a more searching legal or factual reviewof an arbitrator’s award will likely demandmore thorough briefing and submissionsfrom the parties, which could effectivelymean re-trying issues already decided bythe arbitral tribunal.”

[Most citations and footnotes in thequoted briefs material have been droppedthroughout this article.]

Who’s responsible for the filing? Tuch-mann is listed as counsel of record, andSlate’s name is on the brief, along with afour-attorney team at New York’s De-bevoise & Plimpton LLP, led by partner,and AAA Arbitration Law Committeechairman, David W. Rivkin.

• CTIA–The Wireless Association

Who? Formerly the Cellular Telecommuni-cations & Internet Association, which rep-resents the wireless industry—serviceproviders, manufacturers, data and internetcompanies, etc.

What is the association’s interest in thecase? It tells the Court in the amicus filingthat many members have installed arbi-tration in their contracts, and it has de-veloped its own rules that the American

Arbitration Association administers.CTIA states that its members currentlyuse or are considering arbitration provi-sions that reject “the default rules govern-ing judicial review.” The contracts pro-vide that judges may vacate or modifyawards that are based on “an error of law”or are unsupported by the evidence. Itsmembers, the CTIA brief states, “havemade a calculated decision that the risksof an erroneous arbitration award out-weigh the slightly increased proceduralcosts involved in authorizing expandedjudicial review.”

What is it arguing? CTIA wants theCourt to reverse the Ninth Circuit. Itwould enforce Hall Street Associates’ re-quest that the award against it could be

reviewed, or reinstate the trial court re-view that the Ninth Circuit had over-turned. The amicus brief argues that theFederal Arbitration Act mandates en-forcement of arbitration agreements asthey are written–including the judicial re-view provision. It also states that refusingto enforce the agreement will undermineCongress’s FAA goals.

How did it make its argument? 1. “Wesubmit that there is enough play in thejoints of the FAA to allow the parties tocontractually expand the grounds for va-cating or modifying an award. . . . [W]efocus here on demonstrating that thereare no valid policy justifications for af-firming the Ninth Circuit’s decision. Fed-eral arbitration law is animated by twooverarching principles: that contractualarbitration agreements should be en-forced as written and that private partiesshould be encouraged to arbitrate theirdisputes. A ruling for [Mattel] would un-dermine each of these policies.”

2. By not allowing parties to contracton judicial review, the Ninth and TenthCircuit Courts fail “to credit the diversityof forms that privately negotiated arbitra-tion agreements may take, and, in so do-ing, pay[] no heed to Congress’s intent inpassing the FAA. Although limited judi-cial review is a convenient default, partiesmay contract around it without doing vi-olence to the policies served by the[FAA].”

3. “Were this Court to hold that par-ties could not contract for expanded judi-cial review of arbitration decisions, itseems quite likely that some number ofdisputes that otherwise might have pro-ceeded to arbitration will instead be liti-gated ab initio—and there can be no seri-ous question that presiding over thewhole host of pretrial and trial proceed-ings inherent in federal litigation wouldprove more burdensome to a federal dis-trict court than engaging in slightly-moreextensive review of an arbitral award.”

4. A ruling for Mattel “would decreasethe number of disputes sent to arbitra-tion—and will add to the workload ofour already-overburdened courts—anoutcome that is completely antithetical to

(continued from previous page)


Reviewing Awards

The issue: Can parties expand by

contract the ability of courts to

review their arbitration awards?

The significance: The Supreme

Court’s opinion in Hall Street

Associates will affect parties’

comfort level in choosing to

use arbitration.

The hoopla: It’s an ideological

battle between contract-pre-

serving free marketeers v. strict

Federal Arbitration Act con-

structionists.



the national policy favoring the arbitra-tion of disputes.”

Who’s responsible for the filing? A lawfirm at the heart of the wireless industry’sarbitration clause fights, Mayer BrownLLP. Four Washington Mayer, Brown at-torneys appear on the brief—two part-ners and two associates, led by counsel ofrecord Evan M. Tager. Tager is one of theMayer, Brown partners overseeing workfor AT&T in the Ninth Circuit arbitra-tion clause battle in Shroyer v. New Cin-gular Wireless Services Inc., No. 06-55964(9th Cir. Aug.17, 2007)(available athttp://blog.wired.com/27bstroke6/files/cingulardecision.pdf ), which was dis-cussed last month at “Ninth CircuitFinds Waiving Class Arbitration Is Un-conscionable,” 25 Alternatives 155 (Octo-ber 2007). Michael F. Altschul of theCTIA also appears on the brief.

• New England Legal Foundation andthe National Federal of IndependentBusiness Legal Foundation

Who? NELF is a 30-year-old nonprofitpublic interest law firm in Boston thatadvocates for free enterprise “and defend-ing economic rights” on behalf of morethan 130 members, including large andsmall businesses and law firms. The sec-ond organization on the brief is the legalarm of the 64-year-old Washington-basedNational Federation of IndependentBusiness, a nonprofit small business ad-vocacy group.

What are the foundations’ interest inthe case? They “are concerned . . . with se-curing a ruling that the FAA’s narrowstandard of judicial review is a defaultstandard that allows parties to agree tomore expansive judicial review. The FAA’slimited standard of review exposes NELFand NFIB’s member businesses, and busi-nesses generally, to the risk of legally erro-neous arbitral decisions that are unre-viewable on the merits. Since businessdisputes frequently involve high financialstakes, a decision confirming parties’ free-dom to contract for more heightened ju-dicial review may well be a prerequisite tobusinesses’ willingness to arbitrate theirdisputes. By contrast, affirmance of the

Ninth Circuit’s decision may deter thebusiness community from choosing to ar-bitrate, thereby increasing the judiciary’scaseload.”

What are they arguing? The founda-tions also back Hall Street Associates.The FAA was intended to enforce parties’agreements, they argue, “even when thoseterms depart from the FAA’s provisions oraffect the simplicity or finality fo the ar-bitral process.” They also argue policy.

How did they make their arguments? 1. “While expanded judicial review mightlengthen the dispute resolution process,and while the FAA does embody a policythat arbitration should be speedy and ef-ficient, this Court has held that any con-flict between expediency and the parties’intent ‘must be resolved in favor of thelatter in order to realize the intent of thedrafters.’ Dean Witter Reynolds Inc. v.Byrd, 470 U.S. 213, 221 (1985)(enforc-ing agreement to arbitrate state securitieslaw claims even though result was ineffi-cient bifurcation, in separate arbitral andjudicial fora, of state and federal securi-ties laws claims). Therefore, the primacyof the parties’ intent defeats any objec-tion to expanded judicial review on thebasis that it complicates or prolongs thearbitral process[.]”

2. “When businesses cannot resolvetheir disputes through settlement negoti-ations or mediation, expanded judicialreview for arbitral errors of law may bethe sine qua non for them to agree to ar-bitrate their disputes, as the facts of thiscase indicate.”

3. “Recent empirical studies indicatethat sophisticated businesses are rejectingarbitration and are choosing not to includearbitration clauses in many of their com-mercial contracts. While the reasons forthis aversion to arbitration could be mani-fold, other recent data confirm that the ab-sence of judicial review on the merits is asignificant factor causing attorneys to steertheir clients away from arbitration.”

“In light of this aversion to arbitra-tion among many businesses and theircounsel, a decision confirming parties’ability to contract for expanded judicialreview could draw businesses back to ar-

bitration as a viable alternative to litiga-tion, thereby serving the interests of judi-cial economy. Whatever additional judi-cial resources courts might expend in re-viewing substantive arbitral decisionswould be insignificant compared to thejudicial resources consumed in adjudicat-ing entire cases, from the filing of a com-plaint to final judgment, as parties in-creasingly reject arbitration due to the ab-sence of judicial review on the merits.”

Who’s responsible for the filing? The NewEngland Legal Foundation’s counsel ofrecord is senior staff attorney Benjamin G.Robbins; NELF president Martin J. New-house and general counsel Jo Ann ShotwellKaplan also are on the brief. The NFIB Le-gal Foundation’s Karen Harned and Eliza-beth Gaudio are listed.

• Pacific Legal FoundationWho? A 30-year-old nonprofit Sacramen-to, Calif., legal foundation.

What is the association’s interest in thecase? The foundation’s “Free EnterpriseProject defends the freedom of contract,including the right of parties to agree bycontract to the process for the resolutionof disputes between them.”

What is it arguing? That parties havethe freedom to contract as they see fit, be-cause the FAA provides “default rules, notimmutable rules, because the latter inter-pretation would not serve the FAA’s goalof enforcing the contractual rights of theparties who freely choose to adopt an ar-bitration agreement.” (Emphasis is thefoundation’s.)

How did it make its argument? By em-phasizing contractual freedom on everypage. There are 36 uses of the word “free,”“freedom,” or close variations in thebrief ’s 22 pages. The foundation argues:

1. “Freedom of contract is a funda-mental principle of American law and so-ciety. It is not only a practical instance ofconstitutionally protected liberty, but it isprobably the element of that liberty mostfrequently relied upon by ordinary Amer-icans. As an aspect of individual liberty,freedom of contract “guarantee[s] to indi-





viduals a sphere of influence in whichthey will be able to operate, without hav-ing to justify themselves to the state or tothird parties. Richard A. Epstein, ‘Un-conscionability: A Critical Reappraisal,’18 J.L. & Econ. 293 (1975). At its core,freedom of contract simply is individualautonomy, and interference with thatfreedom constitutes an obstruction of theindividual’s freedom to pursue his or herhappiness.”

2. “Contract law creates default rulesto ensure that if parties forget to includecertain terms in their contracts, thosecontracts still will be enforced along withcertain ‘gap fillers’ for the unspecifiedterms which usually are designed to mim-ic what contracting parties would havewanted, had they considered the subject.See, e.g., U.C.C. § 2-305 (1998)(allow-ing parties to contract even where noprice term has been determined). Whilethe law also creates certain binding limi-tations on contracts which parties maynot negotiate around—civil rights laws,for example, or criminal laws which makecertain contracts illegal—the more com-mon sort of rule is a default rule, aroundwhich parties may freely devise their ownagreements.”

3. “While arbitration and freedom ofcontract do tend toward greater efficien-cy, the primary goal of arbitration is notefficiency, but the maximization of free-dom of choice.”

Who’s responsible for the filing? Coun-sel of record are foundation in-house at-torneys Deborah J. La Fetra and TimothySandefur.

• U.S. Council for International Business Who? The New York-based organizationadvocates for free trade internationally,representing “U.S. business interests,” ac-cording to its brief, at the United Na-tions, the European Union, and beforelawmakers domestically. The organiza-tion is the U.S. affiliate of several interna-tional organizations including, most sig-nificantly with regard to the SupremeCourt case, the International Chamber ofCommerce.

What is the association’s interest in thecase? Among its many activities are ADRprovider services. And the ICC, throughits 84-year-old International Court of Ar-bitration, is one of the world’s oldest andmost active commercial ADR providers.The USCIB works with the ICC court.

The association is a neutral provider.Why is it taking a position in this case? Theassociation’s communications office didn’trespond to repeated telephone and E-mailrequests on why it filed the brief.

What is the association arguing? Its po-sition is the same as the American Arbi-tration Association’s. It asks the Court touphold Mattel’s Ninth Circuit victory.The brief divides itself over the followingpoints: (I) Finality characterizes arbitra-tion, and this case puts that key feature injeopardy. (II) Hall Street Associates’ posi-tion isn’t supported by the FAA, legisla-tive history, or case law. (III) Additionaljudicial review “will sanction any numberof exotic hybrid forms of dispute resolu-tion,” strain judicial resources, and “pro-liferate costly litigation.” (IV) Permittingcontracting for judicial review of awardswill lead to wide inquiries, eventuallyleading to full-scale judicial review of factfindings and evidentiary issues. (V) Con-tracting for judicial review will put theUnited States out of step with the inter-national community, make it a less desir-able arbitration forum, and hurt U.S.businesses.

How did it make its argument? At 31pages, the USCIB amicus brief is thelongest filed, covering the five areas not-ed above in detail. The Point V interna-tional discussion features analysis of theUncitral Model Law, as well as practicesin France, Switzerland and the UnitedKingdom. Excerpts:

1. “Expanded judicial review is anti-thetical to finality—an indispensable andirreducible characteristic of the arbitralprocess—and undermines arbitration asan efficient alternative means of resolvingdisputes. Many businesses—particularlythose involved in international transac-tions—choose to resolve disputesthrough arbitration because it provides amore efficient alternative to litigation

that yields a final result in the first in-stance and that is subject to judicial re-view only on very narrow grounds. Arbi-tration and litigation are very differentmodes of dispute resolution and one ofthe key distinctions is judicial review. Asthis Court has recognized, a party agree-ing to arbitrate ‘trades the procedures andopportunity for review of the courtroomfor the simplicity, informality, and expe-dition of arbitration.’”

2. “Arbitration cannot provide ameaningful alternative to litigation if theprocess concludes with the losing partysearching for arguable errors of law tobring before the courts. Relitigation ofmatters that were supposed to be resolvedin arbitration is wastefully duplicativeand increases the time and cost of resolv-ing disputes. Increased judicial reviewwill also incentivize losing parties to chal-lenge arbitral awards more frequently,and perhaps on more spurious grounds.”

3. “[A]n important tenet of [arbitra-tion law development] was limited judi-cial review, a feature that was also reflect-ed in the [New York Arbitration Act of1920] and incorporated into the FAA.The other major competing state arbitra-tion act of the era was the Illinois Arbitra-tion Statute of 1917. . . . In stark con-trast with New York law, which providedfor limited judicial review, the IllinoisStatute provided for significant judicialintervention throughout the arbitralprocess on questions of law. . . . As it wasthe other major state arbitration statute,Congress was undoubtedly aware of theIllinois Statute’s more interventionist ap-proach. In declining to adopt the Illinoismodel, and instead enacting an act basedon the reform model, Congress endorseda view of arbitration that provided onlyfor limited judicial review.”

4. “Even where enhanced judicial re-view is an option, the hydraulic effect ofthe U.S. legal culture will be such thatthere will be a proliferation of expandedjudicial review clauses that will signifi-cantly increase the costs of dispute resolu-tion and embroil the courts in complicat-ed issues on review. The courts will beforced to review a large number of arbi-





tral awards in the abstract, often againstthe backdrop of unfamiliar rules and pro-cedures which, by definition, deviatefrom the norms of federal practice. Inmany cases, the courts will have to recon-struct the arbitrator’s findings of fact andlegal reasoning made in proceedings thatmay have taken some time before.”

5. “American businesses conductinginternational business rely heavily on in-ternational commercial arbitration to re-solve disputes. U.S. parties are among thelargest single users of ICC arbitrationservices. U.S. cities are also among thetop venues in the world for internationalarbitration. The latter is in part due tothe fact that the U.S. legal system is per-ceived as being supportive of internation-al arbitration. Awards are viewed as rela-tively easy to enforce, and courts areviewed as having a generally noninterven-tionist approach to arbitrations that rec-ognizes the importance of finality. How-ever, the relatively positive views of theU.S. arbitration system are in contrastwith the negative perceptions held by for-eign investors and businesses of the U.S.legal system generally. While due in partto significant differences in national and

legal cultures, the U.S. legal system isviewed (unfairly or not) as excessively liti-gious, expensive, prone to frighteninglyhigh judgments, and generally unpre-dictable. Thus, the U.S. has become anacceptable jurisdiction for internationalarbitrations in large measure in spite offoreign perceptions of its legal system.

“Although U.S. businesses regularlyparticipate in many international arbitra-tions abroad, the option of having inter-national arbitrations in the U.S. is impor-tant to U.S. companies engaged in inter-national commerce. Accordingly,maintaining the perceptions of the U.S.as a friendly forum for arbitration is im-portant to international businesses in theU.S. If the U.S. legal environment wereperceived to be more interventionist—inother words, if litigation became (orcould be) an important component of ar-bitral proceedings—the negative percep-tions of the U.S. legal system would af-fect the parties’ perceptions of interna-tional arbitrations in the United States.”

Who’s responsible for the filing? Latham& Watkins. The brief acknowledges fourcurrent associates and one former associ-ate, led by counsel of record, New Yorkpartner Mark D. Beckett. �

THE AAA UPDATESITS MEDIATION RULES

The American Arbitration Associationearlier this fall launched an update of itsmediation rules that feature new pricingand administration processes.

The changes, in the works for about ayear, reflect increasing demand and cus-tomer preference. Filing fees have beendropped, with the association drawingfees from the mediators’ hourly rates,which the association posts on its Website.

While eliminating the $325 filing feeis bound to increase interest in the associ-ation’s mediation services, it also modern-izes them by putting more emphasis onparty’s neutrals choices, and less on initialassociation actions to get the matterstarted.

There’s also a beefed up mediatorqualifications section, now called “Medi-ator’s Impartiality and Duty to Disclose.”It requires neutrals to abide by the cur-rent Model Standards of Conduct forMediators, which the association helpedproduce.

The rules demand that associationmediators “make a reasonable inquiry todetermine whether there are any factsthat a reasonable individual would con-sider likely to create a potential or actualconflict of interest for the mediator.”

Not only do the new rules refer to theModel Standards, they also set their own.The association has incorporated a newsix-point set of duties that both regulatesmediator conduct, and sets out processbest practices.

The emphasis on the neutral under-scores the Model Standards’ emphasis onparties’ self-determination, says veteranNew York neutral John Wilkinson, amember of the ad hoc association com-mittee that drafted the revision. “I thinkthat these do move the ball forward,” hesays.

The association formed the ad hoccommittee to draft the revised proce-dures, consisting of three staff and fiveoutsiders, described by association com-munications vice president WayneKessler as “advocates and/or mediators.”The association’s seven-member Com-mercial Practice Committee signed off onthe final version.

Despite the filing fee’s removal, theassociation still will get paid. Rule M-17states that the hourly mediator’s ratescover the neutral’s compensation and “anallocated portion for the AAA’s services.”There is a four-hour minimum charge, inaddition to mediator expenses, which theparties will split evenly.

According to Kessler, the AAA’s cutwill be on a percentage sliding scale, for amaximum of $400. That, he points out,is $250 less than the total filing fees un-der the previous procedures.

Linking the mediator conduct to therecent Model Standards isn’t surprising



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BY JEFF KICHAVENA remarkable thing happened in April at

the spring conference of the American Bar

Association’s Section of Dispute Resolution

in Atlanta. A distinguished lawyer unwit-

tingly proved that the mediation profession

has a spectacular future.It was during a workshopon Corporate America’s ex-pectations of professional me-diators. The moderator askeda panelist, the general counselof a household-name compa-ny, what he looked for in amediator. He responded thathe wanted “a judge” with thisattribute, “a judge” with thatstrength, “a judge” who lacked weakness.

His answer went on for minutes, but he

never mentioned the professional media-

tors who were the subject of the question.

I raised my hand and asked this general

counsel, as innocently as I could, whether

the concept of “Professional Mediator” ex-

isted in his mind and, if so, how he distin-

guished between a Professional Mediator

and “someone who used to be a judge.”

The general counsel answered, after a

long stare and a furrowed brow, slowly and

honestly, “I don’t know. I never thought

about it.”

At first, I felt angry. We “Professional

Mediators” have worked so hard to estab-

lish mediation as an independent profes-

sion! Despite our efforts, this general coun-

sel, highly sophisticated in so many other

respects, was clueless.But then I decided I was pleased. If

lawyers even at that level have no clueabout the benefits of usingtrue Professional Mediators—as opposed to people whomerely used to work asjudges—then our profession,already vital and strong, stillhas lots of room to grow.The initial confusion be-

tween Professional Mediatorsand people who used to be

judges is simple to explain. Mediation of-

ten is mentioned in the same breath as ar-

bitration under the umbrella term, ADR.

Arbitration is a lot like judging. Since

judges generally are good at arbitrating,

many lawyers assume that they must be

good at mediating as well.But that is not so. The principal “skill”

that former judges bring to the mediation

table has limited utility at best. Former

judges are supposed to be able to “value

the case.” Nobody, though, is better able

to “value the case” than the lawyers han-

dling it, who have lived with it for months

or years. So a mediator’s ability to assess “value”

is superfluous. With one exception relating

to client relations, that is critical to the

Professional Mediator but generally lost on

former judges. Because, to paraphrase Jus-

tice Felix Frankfurter’s famous expression

from SEC v. Chenery Corp., 318 U.S. 80,

85 (1943), to say that a case has a “value”

only begins the analysis.

INTERNATIONAL INSTITUTE FOR CONFLICT PREVENTION & RESOLUTIONVOL. 24 NO. 8 SEPTEMBER 2006

DIGEST

COMMENTARY

COMMENTARYMediation is not just inviting a retired

judge into your negotiations to put a price

on settlement. But some sophisticated cor-

porate attorneys still see it in those stark

terms, writes Jeff Kichaven of Los Angeles.

He describes why professional mediators

bring value to cases, rather than merely

setting values for cases ................Page 129CPR NEWSThe board of directors of the International

Institute for Conflict Prevention and

Resolution names a new president and

chief executive officer, the third in its 27-

year history. Also, training and committee

news..........................................Page 130NEGOTIATIONAndrea Kupfer Schneider, of Milwaukee,

and Christopher Honeyman, of Madison,

Wis., preview their comprehensive new

anthology on reaching agreement, “The

Negotiator’s Fieldbook,” which will be

published this month by the American Bar

Association’s Section of DisputeResolution. ..............................Page 131

ADR PROCEDURESRecent changes to rules on expedited emer-

gency relief procedures by three major

providers are compared and contrasted in a

chart by Mark Kantor, of Washington,

D.C...........................................Page 136ADR BRIEFFederal officials finalize work on three ADR-

related guides that focus on confidentiality,

incorporating comments that deal with

agency reporting relationships......Page 140DEPARTMENTSCPR News ..................................Page 130

Reprint Info ................................Page 130

Subscriptions..................Pages 130 & 139

ADR Brief ..................................Page 140

Cartoon by Chase........................Page 141

For Professional Mediators, It’s About

More Than Assessing the Case’s Value

(continued on page 138)

The author is a mediator in Los Angeles, a fellow

of the International Academy of Mediators and an

adjunct professor at Malibu, Calif.’s Pepperdine

University School of Law. He is an Alternatives

editorial board member and a frequent contribu-

tor. Dr. Mark Goulston, of Los Angeles, the senior

vice president of emotional intelligence at Palo

Alto-based Sherwood Partners LLC, participated in

the development of many of the ideas expressed

in this article. This article is adapted from a May

8, 2006, Focus column originally appearing in the

Los Angeles Daily Journal.

AlternativesTO THE HIGH COST OF LITIGATION




given that the association took a leadingrole in their development. See “ModelMediator Standards Are Revised, ButCommercial Applications Are Ques-tioned,” 23 Alternatives 154 (October2005).

But the new “Duties and Responsibil-ities of the Mediator” were developedspecifically for the new process rules.They don’t require anything draconian.They likely will serve to put less-sophisticated parties on notice aboutprocesses rather than restrict what a neu-tral might want to do, such as evaluate.

But their mere presence could come offas extra regulation to mediation purists.The duties, located at Rule M-7, state:

a. The mediator shall conduct the medi-ation based on the principle of partyself-determination. Self-determina-tion is the act of coming to a volun-tary, uncoerced decision in whicheach party makes free and informedchoices as to process and outcome.

b. The mediator is authorized to con-duct separate or ex parte meetingsand other communications with theparties and/or their representatives,before, during, and after any sched-uled mediation conference. Suchcommunications may be conductedvia telephone, in writing, via email,online, in person or otherwise.

c. The parties are encouraged to ex-change all documents pertinent to therelief requested. The mediator mayrequest the exchange of memorandaon issues, including the underlyinginterests and the history of the par-ties’ negotiations. Information that aparty wishes to keep confidential maybe sent to the mediator, as necessary,in a separate communication with themediator.

d. The mediator does not have the au-thority to impose a settlement on theparties but will attempt to help themreach a satisfactory resolution of theirdispute. Subject to the discretion ofthe mediator, the mediator may makeoral or written recommendations for

settlement to a party privately or, ifthe parties agree, to all parties jointly.

e. In the event a complete settlement ofall or some issues in dispute is notachieved within the scheduled media-tion session(s), the mediator maycontinue to communicate with theparties, for a period of time, in an on-going effort to facilitate a completesettlement.

f. The mediator is not a legal represen-tative of any party and has no fiduci-ary duty to any party.

”I don’t think it’s overly controlling,”says AAA neutral John Wilkinson, who isof counsel to New York’s Fulton, Rowe &Hart. “Some of it underscores stuff that isobvious, like the use of caucuses, etc.”

The revised process rules are part of along-running mediation focus. The asso-ciation, the nation’s largest ADRprovider, with $72.3 million in revenuelast year, has emphasized its ability toprovide a variety of conflict resolutionprocesses in recent years. As a result, ithas given more attention to refining andpromoting its mediation services.

In its most recent annual report, theassociation states that its mediation busi-ness increased 14 % last year, from 2005

levels. Association president William K.Slate II in the report attributed the rise tomore mediation activity in construction,commercial and employment areas.

Last year, the association overhauledits employment mediation rules. It alsoboosted its mediation options by addingstaff mediators with immediate availabil-ity at a reduced fee, and emphasizing theavailability of conciliation staff to helpsettle cases. It also reviewed its mediatorpanel, reducing the ranks by 300 neutralsto about 900.

The new rules are available at www.adr.org, the association’s Web site. �

COURT ADDS NEW ARBITRATION CASETO 2007-08 DOCKET

The U.S. Supreme Court will hear a sec-ond conflict resolution case this term. Itadded a case in the last days of the 2006-2007 term, to be argued in the newCourt year.

The Court granted a petition for awrit of certiorari in Preston v. Ferrer, No.06-1463, on Sept. 25. It is expected tohear the case before the term ends inJune. Last spring, the Court agreed tohear Hall Street Associates v. Mattel Inc.,an arbitration case on judicial review,which is discussed above.

The Court took Preston to address apreemption issue involving the FederalArbitration Act, 9 U.S.C. § 1, et seq. ACalifornia appellate court rejected the ap-pellant’s FAA preemption argument.

In the case, the appellant claimed hewas a manager to whom the state’s TalentAgencies Act didn’t apply, and, therefore,his client dispute could be arbitrated un-der their management contract.

But a lower court, and then the ap-peals court, in Preston v. Ferrer, 145Cal.App.4th 44 (Cal. App. 2nd Dist.2006), found that the state law requiringthe matter’s arbitrability to go to thestate’s labor commissioner applied to thecontract.

The agent–whose dispute is with“Judge Alex,” a former Florida state court



New Mediation Rules

The issue: The American Arbi-

tration Association updates

and modernizes its rules, as

part of its ‘00s increased medi-

ation emphasis.

The good news: No more filing

fees!

The fine print: There will be no

surprised parties at the media-

tion table, since the rules speci-

fy the “Duties and Responsibil-

ities of the Mediator.”



judge and now star of an eponymouslynamed daily Fox judge-arbitrator pro-gram–also claimed that the Federal Arbi-tration Act preempted the California tal-ent agencies law.

The appellate decision disagreed, 2-1,noting that Buckeye Check Cashing Inc. v.Cardegna, 126 S.Ct. 1204 (2006), didn’tconsider whether the issue of whether fed-eral arbitration law would preempt a Cali-fornia law requiring the state labor com-missioner to rule on the contract’s legality.

Buckeye held that a challenge to a con-tract’s validity goes to an arbitrator, as op-posed to a challenge directed at the valid-ity of the arbitration clause. The appellateopinion points out that Buckeye “did notconsider whether the FAA preempts ap-plication of the exhaustion doctrine.”

The appellate decision’s dissenter, Sec-ond District, Division 1 Acting PresidingJustice Miriam Vogel, wrote that “[the ma-jority’s] approach ignores the fact that theparties signed a ‘Personal Management Con-tract,’ not a Talent Agent’s Contract, and theonly reason the Talent Agencies Act is rele-vant is that [appelle Alex] Ferrer claims theagreement is not what it appears to be andthat [appellant Arnold] Preston was in factacting as an unlicensed talent agent. Basedon the parties’ agreement, this threshold is-sue . . . must be decided by the arbitrator, notthe Commissioner or the trial court.”

The Supreme Court’s order set abriefing schedule: Petitioner Prestonmust file his brief and serve it on respon-dent Ferrer by the first week of thismonth. Ferrer must file and serve his re-

sponse brief by Dec. 3. If Preston files de-cides to file a reply brief, it will be dueDec. 28. �

CORRECTION

Editor Russ Bleemer provided the wrongfirst name for one of the attorneys in theADR Briefs item, “Ninth Circuit FindsWaiving Class Arbitration Is Uncon-scionable,” 25 Alternatives 155 (October2007). Donald M. Falk—not DavidFalk—is the Palo Alto, Calif., MayerBrown LLP partner in the article. Bleemerapologizes for the misidentification. �

DOI 10.1002/alt.20203

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


CPR NEWS • CPR NEWS • CPR NEWS

School, and Pepperdine UniversitySchool of Law, agreed on the selectionafter reviewing a double-digit numberof nominations.

In addition, Honorable Mentionswere awarded at the Oct. 25 dinner tothe London-based law firms of Ever-sheds, and Herbert Smith, for theiroutstanding achievements in ADR andtheir commitments to conflict man-agement principles.

The review committee focused onprocesses, techniques, systems, com-mitment, and scholarship that addressthe resolution, prevention or creativemanagement of major disputes involv-ing public or business institutions, oramong multiple parties.

Stradley Ronon’s 11-year-old ADRPractice Group, which now consists ofa dozen members with core competen-cies in a wide variety of litigation andcorporate legal matters, conducts firm-wide training on current state-of-the-art ADR practices. The group providesADR consulting both in the firm and

to clients in a wide variety of conflictresolution areas, including providingneutrals, and systems design.

“ADR and mediation,” the firmnoted in a submission to the reviewcommittee, “have now become part ofthe very fabric which defines our lawfirm.”

Stradley Ronon also conducts a va-riety of ADR outreach, including lec-tures, CLE programs, seminars, partic-ipation in national ADR organizations(including award presenter CPR), anddevelopment of practice tools, includ-ing a quarterly newsletter. Thenewsletter was profiled in these pagesin “ADR Group Tests Quarterly Out-reach,” 15 Alternatives 164 (December1997).

Stradley Ronon was first nominatedby Phillip M. Armstrong, senior coun-sel–litigation and ADR, of Atlanta’sGeorgia-Pacific LLC. Armstrong’s nom-ination was supported by letters fromtop counsel at Philadelphia’s Glaxo-SmithKline; Air Products and Chemi-cals Inc.of Allentown, Pa.; AIG in New

York, and the Montreal law firm of Fras-er Milner Casgrain LLP.

The CPR award review committee“agreed that Stradley Ronon demon-strated a firm-wide commitment and aculture promoting the principles ofconflict resolution.” It also cited thefirm’s ADR training, as well as theADR Practice Group’s communitywork to promote ADR.

In a statement, CPR noted that,via the CPR Awards for Excellence inADR presented each January, as well asthe four-year-old Corporate Leader-ship Award, it has long rewarded aca-demic and corporate entities for iden-tifying and promoting novel ways forresolving disputes without litigation.Stradley Ronon’s recognition, however,is CPR’s first award acknowledging alaw firm that has displayed leadershipand commitment to conflict manage-ment principles.

“The CPR Institute is proud tohonor Stradley Ronon,” said Kathleen

(continued from page 162)


the amicus view: what they're saying about hall street associates, and why

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