148 Alternatives CPR Institute for Dispute Resolution Third Circuit Short Circuits An Arbitration Case An unusual procedural maneuver by the US. Third Circuit Court ofAppeals has derailed a major arbitration case. Last summer, after the court’s 12 judges vacated a panel decision and agreed to hear an en banc appeal soon after the decision was issued, the court reversed itself and sent the case back to the three-judge panel that decided the case. The case, Martin u. Dana Corp., may have been headed to the U.S. Supreme Court. It raises issues under several major arbitration cases, including Gilmer v. Interstate/Johnson Lane Corp., 111 S.Ct. 1647 (1991), which sent an employee who had an employment contract to arbitration over a statutory age discrimination claim. Martin arises in a union context. The plaintiff, a welder at Dana’s Reading, Pa., plant, filed a discrimination suit after getting an Equal Employment Opportunity Commission rightto-sue letter about three years ago. Dana successfullymoved for dismissal, based on the fact that a collective bargaining agreement required arbitration of employment claims. On June 12, a three-judge Third Circuit panel affirmed a lower court ruling dismissing the suit. 114F.3d 421 (3rd Cir. 1997).In an opinion byJudge Robert E. Cowen, the court upheld the decision because both the employee and the union, the United Steelworkers of America, could compel the arbitration under the collective bargaining agreement. Cowan wrote that the situation was different from the many precedents involving union employees and arbitration. The worker had relied in part on a Supreme Court “It hurts when I throw the book at someone. ” Vol. 15, No. 10 November 1997 case-Alexander u. Gardner-DenverCo., 94 S.Ct. 1011 (1974)-that said that a union employee did not forfeit his 1964Civil Rights Act Title VII discrimination claim even though he had lost a collective bargaining agreement arbitration. In Martin, however, Cowan wrote that Gilmer, not Alexander, controlled, because there was no disparate power between the employee and the union since the employee didn’t have to persuade the union to arbitrate and could initiate arbitration on his own. Less than three weeks after the panel decision, the Third Circuit vacated the opinion. It granted a hearing en banc onJuly 1,and it tentatively scheduled the case for argument before the full circuit on Oct. 29. But the argument never took place. On Sept. 12, the Third Circuit, on its own motion, canceled the rehearing and sent the case back to the three original judges, Cowen, Richard L. Nygaard, and Anthony J. Scirica. A few days later, Cowan asked plaintiff‘s attorney Kingsley A. Jarvis, who operates his own practice in Norristown, Pa., to brief the issue of whether his client had the right to submit a grievance to arbitration without the union’s approval. William Bradley, calendaring supervisor for the Third Circuit in Philadelphia, said that the court hasn’t pulled a case off its en banc schedule in his 10 years in the job. “It probably has happened in the past,” he says. Cowan has not set a re-argument date, and in fact there is no Third Circuit rules requirement that the case be argued again. It is questionable, in light of the procedural move, whether Martin will make the impact that appeared possible when the Third Circuit took the case en banc last summer. In September, Dana announced a major layoff at the Reading plant. At press (continued on following page) Vol. 15. No. 10 November 1997 Briefs (continued from preuious page) time, the union and the company were holding collective bargaining talks; the union, which has supported the plaintiff, has asked the company in the negotiations to change the language that suggests that individuals have a right to submit cases to arbitration without the union’s backing. Dana in-house legal counsel Gary Golden, however, says that the case is not going to go away. ‘‘I believe it will not get washed out in the negotiations,” he says, noting that the current labor agreement expires Nov. 2. Golden adds, “The parties will let the courts deal with the issue.” Jarvis says he hadn’t addressed the question of the employee’s right to go to arbitration without the union fully in his papers. He says he filed the brief that the court requested in late September; at press time, no decision had been issued. Both the EEOC and the Steelworkers union had filed friendof-the-court briefs in the case disputing the company’s position and interpretation of the collective bargaining agreement’s arbitration provision. Dana, which makes automobile parts, is based in Toledo, Ohio, and is a member of the CPR Institute for Dispute Resolution, which publishes Alternatives. Minnesota Finalizes Neutrals’ Code The Minnesota State Supreme Court has adopted a far-reaching code of ethics for neutrals. The code was added to Rule 114 of the state’s General Rules of Practice in an August 27 order. The code consists of seven general rules, and one rule directed specifically at mediation neutrals. It is based on recommendations of the Court-appointed ADR Review Board, which based its report in part on the American Bar Association’s model mediator conduct standards. The debate over the issues involved in writing the code was the subject of Altcrnatives 149 (:PR Institutr for Disoult, Rrsolutioii four articles over three issues of Alternatives in a series that began a year ago. See “Minnesota Takes up ADR Ethics Challenge,”14Alternatives 121 (November 1996); two articles at “Lessons Learned: Minnesota Courts and Practitioners Tackle ADR,” 14 Alternatives 135 (December 1996);and “Decisions Standards Raise Policy Issues as Minnesota Drafts and ADR Code of Ethics,” 15 A1tmative.y 3 (January 1997). Some of the key issues covered in the code that were raised in the debate over the texts, and discussed in the Alternatives articles, include: There is no direct link in the new code between neutral’s actions and professional responsibility rules. In its introduction, the code states that a violation “shall not create a cause of action nor shall it create any presumption that a legal duty has been breached. Nothing i n this [clode should be deemed to establish or augment any substantive legal duty on the part of neutrals.” But the introduction also provides that if the code is violated, the state court administrator can remove individuals and organizations from the state neutrals’ listing, and that violators also are subject to “suchother action as may be taken” by the Court. The ADR Review Board approves neutrals for court-referred cases. The Court adopted in its entirety the proposal drafted by the board on conflicts. Rule I1 states that ‘‘ ... Without the consent of all parties, and for a reasonable time under the particular circumstances, a neutral who also practices in another profession shall not establish a professional relationship in that other profession with one of the parties, or any person or entity, in a substantially factually related matter.” Some Minnesota attorneys felt that the board’s recommendation was too rigid on its ban on subsequent relationships, which they believe can be extended too easily to a neutral’s firm or organization from the individual neutral. A proposed special rule requiring arbitrators and consensual special magistrates to issue opinions “based upon the law,” suggested by the (continued on page 151) CPR 0 i s on w ww. cprad r. org Visit CPR‘s web site when you want ... To analyze a business dispute for i t s ADR potential (CLICK ON M R PRACTICE TOO&) To select a highly qualified CPR Panelist (CLICK ON NEUTRALS) To get a quick response t o an ADR question (CLICK ON MEMBERS ONLY) To download a sample clause or mediation procedure t h a t you can adapt t o your needs (CLICK ON ADRPRACnCE TOOLS) To f i n d out if parties t o a dispu e are among t h e 4,000 firms who‘ve committed t o explore ADR (CLICK ADR PLEDGES) To stay up t o date i n ADR (CLICK ON W N S NEW, PUBLICATIOB AND I N D U m & W C E AREAS) I CPK Institute for Dispute Kesolution Vol. 15, No. 10 November 1997 Briefs (continuedfrom i page 149) Minnesota State Bar Association’s Conflict Management and Dispute Resolution section, was not adopted. Besides the rules noted above, the Court adopted rules on impartiality, competence, and the quality of the process. A rule on confidentiality also is linked to two other general practice rules that deal with evidence, adjudication, and neutral’s records. In writing “that is made or prepared for the purpose of, or in the course of, or pursuant to, a mediation or a mediation consultation,” without the parties’ consent. The bill, AB-939, which changes nine sections of the California code that relate to mediation, removes ambiguities about mediators’ testimony if the settlement is challenged. The principal changes are in the Evidence Code section. Neither mediators nor anyone assisting them in the media- California’s new law requires parties’ consent before mediation proceedings can be part of discovery in a subsequent suit. 1 addition, a comment to a rule on advertising and solicitation notes that neutrals on the state roster “may use the phrase ‘qualified neutral under Rule 114 ...,”’ but they may not identify themselves as “certified”neutrals. Finally, the mediation rule on selfdetermination states that “ ... The primary responsibility for the resolution of a dispute and the shaping of a settlement agreement rests with the parties. A mediator shall not require a party to stay in the mediation against the party’s will.” Nevertheless, a comment leaves the door open for evaluative mediators, noting that “[ilt is acceptable for the mediator to suggest options in response to parties’ requests, but not to coerce the parties to accept any particular option.” ~ ~ California Passes New Law on Mediator Confidentiality D A new California law beefs up state code sections that keep mediation proceedings confidential. On Oct. 7, California Gov. Pete Wilson signed a bill banning discovery disclosure of a communication or a tion session may be called to testify regarding the events unless the testimony requested is mandated by law or all mediation parties agree. The amendment provides that “[n]o evidence of anything said or any admission made” in a mediation or a mediation consultation is admissible or subject to discovery in an arbitration, civil action or other civil proceedings. The law, however, does not permit “[elvidence otherwise admissible or subject to discovery outside of a mediation or mediation consultation” to become inadmissible by virtue of the fact that the evidence had been introduced in the mediation. The bill was written by the California Law Revision Commission, which updates statutes, after a case last year conflicted with a 1994 California appellate decision. The two cases “created confusion in the enforcement of oral settlement agreements in mediation proceedings and left uncertain the confidentiality of those proceedings,” according to a California state Senate Judiciary Committee report on the bill. The California Legislature has more on the way. Senate Bill 19, which proposes to increase the powers of courts to refer cases to mediation and clari- Alternatives 151 fies arbitrator immunity is expected to get to Wilson’s desk before the next session, which reconvenes in January, concludes at the end of 1998. Andrea Rosa-Tedla, legislative counsel to the Senate’s president pro tempore, bill sponsor Bill Lockyer, says that discussions on 33-19 already have taken place with the governor’s office. The bill has passed the Senate and is in the state Assembly Appropriations Committee. The sticking point has been the standard of court review for arbitration cases. Business interests have lobbied heavily against the current proposal, which allows consumers to vacate arbitration awards where there is a mandatory arbitration provision and the consumer can show that an arbitrator’s legal error has resulted in a miscarriage of justice. Consumers are broadly defined in the current proposal, and include individuals with medical malpractice claims that are subject to arbitration; employees in an employment dispute; and health maintenance organization plan participants. The draft also provides that the law’s provisions to get an award overturned cannot be waived. From the sponsor’s view, however, there is wiggle room. Says Rosa-Tedla, “The senator is willing to entertain proposals to help the bill pass.” @ U Alternatives to the High Costs of Litigation Alternatives publishes an index for the preceding year every February. The index includes listings by subject and author. Newer and back issues are searchable on WESTLAW’ and L E X I S-NEXI S@. See back page for online details.