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Business mediation from all points of view A neutral an advocate and an in-house client on preparing for ADR.

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Susan E. Lewis
John Wiley & Sons, Inc.
Russ Bleemer
VOL. 24 NO. 6 JUNE 2006
Jossey-Bass Editor:
David Famiano
Production Editor:
Chris Gage
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VOL. 24 NO. 6 JUNE 2006
Business Mediation, from All Points of View
A Neutral, an Advocate, and an In-House Client
on Preparing for ADR
Over three issues late last year, Alternatives presented highlights of five continuing legal education seminars presented
by the CPR Institute at its 2005 Annual Meeting in New York.
Below are two more sessions from that January 2005 meeting, on corporate mediation practice and case law.
The 2005 Annual Meeting series in Alternatives began
with the opening session, on resolving business disputes in
China. See 23 Alternatives 148 (October 2005). In
November, two “Hot Topics” sessions were highlighted, on
patent mediation and European commercial mediation. See
23 Alternatives 167 (November 2005). The December 2005
features were negotiation ethics, and tips for
breaking negotiation and mediation impasse. See
23 Alternatives 179 (December 2005).
In future issues, Alternatives will highlight two
other 2005 CPR meetings, as well as the January
2006 Annual Meeting, which included special presentations commemorating the 30th anniversary of
the seminal Pound Conference.
CPR’s 2006 Spring Meeting will be held later
this month, on June 15–16, at the Four Seasons
Hotel in Atlanta. For more information, see CPR News on
page 98.
Bennett G. Picker, a partner at Philadelphia’s Stradley Ronon
Stevens & Young LLP who heads the firm’s alternative dispute
resolution group, moderated a 2005 CPR Annual Meeting
panel that analyzed mediation strategy from three vantage
points. Picker first focused on his own neutral’s perspective,
and with each of two panelists, the group covered the advocate’s
and the in-house counsel’s mediation views.
Picker said that the first mediation advocacy class he attended two decades ago ended with the speaker saying “You can
walk away with the three keys to success in mediation: prepare,
prepare, prepare.”
“Unfortunately,” he continued, “not a word was spoken
about what to do specifically.” He said that the situation, nationally, is mostly unchanged. “Too many advocates and parties
in mediation are simply unprepared,” he said. Throughout the
hour-long continuing legal education seminar, the panel discussed specifics of client, advocacy, and neutral’s preparation.
Besides lack of preparation, Picker said that mediation prac-
tice also suffers from litigators “who focus primarily on the positions and don’t truly understand what developing the underlying interests means.”
He said that the biggest preparation problem is where parties
and advocates come to a mediation without a negotiating plan.
Picker said, “Too many parties are likely to come in and say,
‘Well, we have some idea, but let’s see what the other side says and
then we’ll respond.’” Picker said it was the mediator’s job to coach
parties on preparation processes. He said he will spend more time
preparing than in the actual mediation sessions. “My working
premise is [that] the parties own the dispute,” said Picker.
He discussed pre-mediation conferences, which
he said typically include standard issues of dates,
disclosures, confidentiality, and motivating the parties. He said that he sends a letter after the pre-mediation conference confirming the points, and askTOOLS
ing the parties to write him back with a brief description of the dispute.
Picker said he tells them that he needs this information to design a process that makes sense for the
dispute. “This is not ‘one size fits all,’” he said.
He covered authority issues, noting that he was skeptical
about having decision makers available by phone and not in the
mediation room. When a party or an advocate says that there is
one call needed to be made before an agreement, it could be a
trouble sign. “[T]hat person back home wasn’t at the mediation,” said Picker, and “didn’t get the buy-in, and invariably
says, ‘You’re giving up too much.’ Not always, but often.”
After authority, he said he covers written mediation submissions. He said he may ask for position statements to be exchanged if there are information gaps. A “damage statement”
also “almost always” must be done by each side, he said.
Picker said he believed that “lawyers do a much better job
on liability than they do on damages. . . . [T]he damages is
more the afterthought. But no one should expect to get
paid . . . without having done that damage work—and shared it
with the other side in advance of the mediation.”
He said he requests summary judgment papers and key documents if the mediation occurs near trial.
The key to the preliminary preparatory steps, Picker said, is
that he asks the sides to make all submissions confidential—for
“mediator’s eyes only”—with a promise that they will be destroyed after the mediation.
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He requires the submissions to summarize positions in a few
pages, and provide rebuttal arguments. He said he is “probing”
for the interests involved by requiring submissions, and he asks
the parties to include “any proposals they might have for creative solutions.” He said he also asks about barriers to resolution, like difficult personalities or extrinsic issues. He said he
also asks about the history of the adversaries’ negotiation.
“Every word is a signal in negotiation,” said Picker.
He said he sends out about 10 suggestions in his written
confirmation letter about the mediation ground rules. The letter lays out each side’s possible interests, and discusses factors favoring or opposing resolution.
Picker talked about mediation conduct. He first tackled parties’ bottom line, which he said he never asks for. “[T]here are too
many ways to get to yes without asking that question,” he said.
He said that the process focuses on opening up communication. “Negotiation should be the first path of resolution,” Picker
said, “but there are simply too many barriers. And it’s one of
the reasons that mediation is the magic that we all talk about. It
provides this comfortable environment for parties to let down
some of those barriers and through the mediator . . . work out
some of the problems that the parties can’t do on their own.”
Picker says he begins “almost every” mediation session with
private ex parte meetings, sometimes with just counsel. Mostly,
he said, such meetings can be done on the telephone. He said he
begins the session with open-ended questions such as:
What did you want to tell me that you couldn’t put in writing?
What else do I need to know?
How do you think we can best construct a productive dialogue in this session?
The responses can reveal the basis of the dispute. Picker said
he has heard in the past year at preparatory consultations:
“The problem’s my own client, I need your help”;
“My client hasn’t spoken to the other side,” where the disputing chief executive officers at one time “were so close
they were like family.”
Both sides saying that “our experts say we are dead right,”
where, he said, an effective counter would be to bring the
experts together before mediation to talk to each other in a
mediator-moderated, controlled exchange.
“I’m really trying to see how much advocacy bias, selected
perception, and other distortions like that I’m going to have to
deal with in the mediation,” he said. The objective, he said, is
to build trust, generate options, and create value.
The joint process becomes a challenge to the parties and
counsel. “I hear all the time from parties about what they want,
what they need, what’s fair, what’s right, what’s true,” Picker
said. “And I tell them of course, there’s no such thing as truth—
there’s only a ‘court truth.’” He said he tells the parties and their
attorneys that to get to a certain point, some compromise will
be involved. “We can get to Point X,” he said. “You’ve gotta
compare that X not with what you need or want, but with what
the world will look like if we don’t resolve this case.”
Picker listed a few classic problems that will arise in most
joint sessions: The dispute’s first dimensions revealing differences between the parties, and also between parties and their attorneys; overreaching expectations; failing to report certain issues; interests in the fees; and many internal issues at a party, including the impact of the case and a settlement on different
corporate departments or divisions.
Picker concluded his segment by listing questions he asks
himself during his preparation: “Do I understand the positions?
Do I understand the interests? Do I understand the people?
What roads to resolution will be most productive? Do counsel
and parties know what they need to know and do in order to get
ready for mediation, and if not, how can I help them?” The answers to those questions, he reported, may result in a facilitative
or evaluative approach, and will indicate whether he’s active or
“fairly passive.”
After some audience discussion, Picker summed up by noting that if mediation is described in one word, he would choose
“opportunity.” He said, “There’s an opportunity in mediation
to develop solutions that are simply not available in arbitration
and litigation and are difficult to obtain in direct negotiation.
But in order to seize that opportunity, everyone has to be prepared and have a running start—and I think the mediator has
to coach the parties in advance of the process to get there.”
Panelist Charisse R. Lillie, Comcast Corp.’s human resources vice president, said that she viewed preparing clients
for mediation as needing multiple meetings. Just before the
CPR Annual Meeting, Lillie had joined the Philadelphiabased cable provider and programmer, moving her to the
client’s side from her advocate’s position as a partner at
Philadelphia’s Ballard Spahr Andrews & Ingersoll LLP. The
meetings, Lillie said, have a hefty agenda, including identifying stakeholders and decision makers at the client, meetings
with both, and beginning to determine who will participate
in the mediation.
She gave the meetings and the preparation a title, “How to
Manage Expectations, and to Create By and From Your Clients,
in Order to Have a Successful Mediation.” Said Lillie, “It is important that from the beginning, you are saying to your client
as part of the mediation preparation that they have to
move . . . away from the litigation model of success.”
The preparation process, she said, focuses on developing the
party’s ability to establish the parties’ interests, and work to mutually satisfy them, as opposed to pushing to determine who is
right, and who is wrong.
“I try to focus the client on problem solving,” said Lillie. “It
is a challenge to try and move the client away from the concept
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of either, ‘I am not at fault,’ or ‘The opposing party is at fault.’”
This includes getting the client to think about a successful mediation outcome.
“Ultimately,” said Lillie, “a successful mediation is designed
to develop and to present the best settlement option available,
and to create the opportunity to accept or reject a viable option
to a lawsuit.”
She said the client must be told not to go into mediation
with preconceived absolutes of what it must receive, or what it
must never pay. “You urge the client not to become or remain
so entrenched with . . . the positional anchors that they lack the
flexibility to have a successful negotiation,” she said, adding that
part of that orientation is moving the client away from the bottom line, and to a creative orientation.
Some examples of creative solutions that clients need to be
prepared for, according to Lillie, include structured annuities,
apology letters, and bartered services. The “important thing is
to have the client in the mindset that they would consider these
sorts of alternatives,” she said.
Courts might be restricted to bottom-line money damages,
but mediation lets the parties craft the solutions. So, said Lillie,
“help your client to focus on the specific interest that the client
is trying to protect in the litigation. Try to understand what has
been directly impacted by the dispute, and then you can then
move the client to explore a wide range of possibilities for accommodating those interests.”
During mediation preparation, she said, she lets her client
vent. “Venting can be a good thing.” She said that an emotional
display can become an “great educational tool” for the advocate,
because it can show how much the client has identified with the
facts in the case, and where the emotion is directed.
“Listen to your client,” Lillie emphasized, “and I think you’ll
always learn something.”
Panelist R. Bruce Whitney, assistant general counsel for litigation at Air Products and Chemicals Inc., in Allentown, Pa.,
said that the big commercial disputes his company has with suppliers can continue for three-to-eight years.
He said that the first issue is to identify the stakeholders—
the department responsible for the problem, or the department
blocking a resolution. He called it the “missing staff group.”
That group, he said, must be identified. “Who will actually
make the decision on what we will accept? It may not be the
party who is paying. What group in the company actually created the circumstances?”
For example, engineers might not let a department execute a
settlement, because changes contemplated by the solution would
have a ripple effect on products elsewhere in the company.
One potential problem that he advised monitoring in longrunning disputes is management changes. “Never forget to ask,
‘Are you the person who started this?’ because, as you might
guess, successive managers who inherit it don’t have the same
enthusiasm for the fight as the first fellow who started it.”
After identifying the internal clients, the party’s goal must be
established. “Surprisingly enough,” he said, in industrial and
manufacturing industry businesses, “money is not high on the
list.” Wall Street doesn’t credit companies for big awards, he said,
and it could even create a problem with a need for a write-off.
Whitney said he sets up an ADR team and a trial team consisting of different people. The trial team focuses on “creating
‘settlement events,’” said Whitney, doing things to wear down
the other side. The ADR team enters the dispute picture with
the interest analysis of the opponent which it has developed.
He said that business people, when asked to participate, will
ask “Why do we have a law department? . . . Why don’t we just
hire lawyers and go do this?” But, said Whitney, “once they start
into the process, they become enamored of it because it becomes their process.”
He concluded that his role in the in-house law department
at Air Products is “the de-mystification of mediation,” and to
“champion it in-house.”
The first question from moderator Picker to the panel and
the audience was about building communications within the
mediation session. Whitney said he was “negotiating with everybody in the room.” He explained added, “I’m negotiating with
the mediator. I’m negotiating with my client. I’m negotiating
with the other side. . . . We just let things out as it evolves.” He
cautioned that participants shouldn’t give away trial tactics as
part of the process.
Comcast’s Lillie agreed, noting that she didn’t want to provide free discovery. “[Y]ou give them some, but you don’t give
it all, and you take your time. And I think part of the initial
process is really getting to know the mediator, what that person’s
style is. . . . I begin negotiating as soon as I’ve had that first
phone call.”
“I expect parties to negotiate with me,” replied Picker. “At
the same time, over the course of time, if I’ve done my job and
I’ve earned the trust of the parties, they will open up to me, and
I will become their best hope for reaching a resolution, which is
really what they want.”
An audience member asked about later mediation sessions if
there is no settlement at the first meeting. Bruce Whitney said
at his company, the trial team can “do something to the other
side, to put the dispute back at risk.”
Whitney suggested another technique to open a door to return to the mediation table: Ask for the appointment of neutral
executives from each side where the parties developed animosity
after the first session.
Ben Picker said that he pushes hard at the first session.
“[O]ften parties are coming in from around the country or
around the globe,” he said. “They may never get together again.”
Sometimes, he said, the parties need time to readjust their
sights on the dispute, so a second session is a good idea. Another
factor that would suggest reconvening, said Picker, is when
there is information needed that the parties do not have at the
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mediation table. Whitney agreed, noting that supplying missing
information often can break a mediation impasse and solve—or
prevent—discovery disputes.
An audience member asked about constructing the agreement
between the parties needed to close the mediation. Moderator
Picker backtracked, and said that he hadn’t mentioned everything
he puts into his confirmation letter to the parties before the mediation session. He said that the letter also lays the groundwork
for the deal-closing contract. He said the letter serves as a fee
agreement, a confidentiality agreement, and a scheduling outline.
He said that the letter also includes in bold print a line that
says, “Please Bring a Draft of the Settlement Agreement.” He says
he asks the parties to leave in blanks, and consider all the issues.
Picker told the audience member that the settlement agreement is an essential step. “If we get to yes,” he said, “no good
mediator will let the parties out of the room without, at the very
least, . . . a binding term sheet.”
Even with the warnings, he said, parties still don’t bring
agreement drafts to mediation. So he said that at some point,
he’ll tell the parties’ attorneys to start drafting, “just in case
lightning strikes.”
Bruce Whitney said that he starts writing the settlement
agreement about three hours away from what he senses will be
the settlement. He said that the in-house client “is always astounded,” noting, “this doesn’t look like it’s going to settle.”
“Well,” Whitney said he responds, “if it does, we want to
control the draftsmanship with this [agreement].” He said the
consequences of not doing so are potentially dire. “If none of
that’s done, and you let the parties go,” he said, “They’re gonna
have buyers’ remorse, they’re gonna phone home, they’ll get
overruled. So you have to sit there until they sign something.”
Both Whitney and Charisse Lillie said that they support fees
paid for successful mediation to the lawyers, because the hourly
fee litigators usually try to use encourages conflict.
“Let’s face it,” said Picker, “Litigation is a profit center. If
these cases are resolved in three months instead of four or five
years, with all those hours being burned, the firms are going to
make less money.”
Blaming fee issues for limiting mediation use, Picker concluded by saying that reliance on litigation is bad business.
“[I]t’s responsible lawyering to solve problems,” he said, “and I
think in a relationship business, if you do it, you’ll get more
business. . . . I think it is the law firms who are not running
with this whole idea of mediation.”
In a second-day 2005 CPR Annual Meeting presentation, Hamline
University School of Law Associate Prof. James Coben used video
clips illustrating situations found in ADR law to analyze tough sit-
uation parties, neutrals and advocates find in their practices.
The cases produced a recurrent theme: Absorb yourself fully
in the current, often-changing law where the mediation is taking place, including statutes and court rules. In his 60-minute
session, Coben, who is director of St. Paul, Minn.-based Hamline’s Dispute Resolution Institute, emphasized that the litigation about mediation shows the extent of the field’s evolution,
and that practitioners need to be on top of case developments.
Coben and his institute associates surveyed court cases involving mediation via commercial database Westlaw. He said
they created their own database of more than 1,200 U.S. federal
and state court decisions, from 1999 to 2003, that involve mediation, from more than 8,000 cases mentioning mediation.
He said that courts have struggled with a wide variety of issues in looking at the legality of mediation room conduct. For
example, he opened his presentation noting that in an older
court-ordered family law mediation matter, a court, in order to
analyze customarily private processes, said that the mediator
wasn’t an ordinary third party in the room, but a court official.
He said the number of mediation court cases is relatively
small, but the trend behind the total is “a little bit disturbing.”
Coben explained that only 170 decisions appeared in Westlaw
in 1999, but the number had risen to more than 320 by 2003.
Not surprisingly, the cases emanate from states where mediation
practice is most common, like Texas, California, and Florida.
Categories of mediation litigation, he reported, most often
were commercial contract matters, followed by family law and
employment matters.
The most commonly litigated question, he said, is enforcement of settlements, which predominated in 46% of the 1,200
key mediation cases. The next most frequent problem is the
duty to mediate—that is, enforcing mediation or step ADR
clauses requiring parties to mediate. “[O]nce you pledge, or
contract” for mediation, said Coben, the cases indicate that
“you’re going to probably be held to your pledge.”
Other common mediation case law dispute points include
attorneys fees, confidentiality, and evidence.
The first video clip illustrated, from Caballero v. Wikse, 92
P.3d 1076 (Idaho Supreme Court 2004), the mediation authority issue. In the case, a plaintiff had given an attorney authorization to make a counteroffer and to settle after the plaintiff had
left. “Here’s the obvious, very clear tip,” said Coben, “Don’t let
the decision makers leave the room.”
The attorney and the mediator testified that the departing
plaintiff told the attorney, “You handle it.” Coben said that the
comment “was considered sufficient authority, in addition to
the fact that there were mediation ground rules that had been
communicated to the parties” that said that authority figures
must be present at the mediation.
The second case Coben discussed was Catamount Slate Prods.
Inc. v. Sheldon, 845 A.2d 324 (Vermont Supreme Court 2003),
where a trial court decision backing enforcement of an oral mediated settlement was overturned. But the Court refused to declare
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that a mediation settlement must be in writing to be enforceable.
Coben surprised some meeting attendees by attacking a conventional view of mediation confidentiality. He said, “[A]ny
mediator in this room who begins a mediation by telling people
that mediations are confidential: You are giving them completely erroneous legal advice.” He added that attorneys providing such advice “are probably going to be liable,” though he
noted that there haven’t been any successful suits brought
against mediators. Despite tough court rules and state laws on
confidentiality, he described mediation practice as “a sieve.”
The video and discussion examples covered for most of the
rest of the session illustrated these confidentiality problems. In
Estate of Barber v. Guilford County Sheriff ’s Dept., 589 S.E.2d
433 (N.C. Ct. App. 2003), the parties agreed not to defame one
another in the media about a wrongful death case. Yet soon after
the agreement was final, the plaintiffs lambasted the sheriff ’s department publically. Despite bargaining for the provision–“here,
there’s great chutzpa,” declared Coben—the plaintiffs contended
in court that the provision was an illegal prior restraint, making
the entire agreement unenforceable.
While the court disagreed, it also said it was powerless to
sanction the plaintiff, because the court’s sanctioning power
only extended to mediation rules violations, not the agreement’s
The case showed that “once you dismiss your case with prejudice, as is often the case in court-annexed cases, you can’t go
back to that court for enforcement issues,” explained Coben.
He said that the parties have two options: “You either bring
a new contract action based on your mediated settlement,” or
the party must go to court to try to get withdrawn the voluntary dismissal it had filed to have the case settled in mediation.
Coben said that 560 of the 1,200 mediation cases examined
dealt with enforcement issues. But most problems, he said,
weren’t unique to mediation, but were disputes about basic contract interpretation.
He said 94 of the cases were about the parties’ post-settlement
agreement changed circumstances, or where they had changed
their mind about the settlement. Coben said that the case group
“reinforces the notion that perhaps mediators are pushing too
hard and are over optimistic that settlements can actually occur.”
Coben returned to confidentiality issues, showing a video clip
reflecting the facts in Rojas v. Los Angeles Superior County Court,
93 P.3d 260 (Cal. 2004). In Rojas, the plaintiffs sought to introduce “raw materials” into evidence that showed construction
damages that they had suffered. After mediation between the
apartment complex’s owners and the builders, the flaws had been
remediated, and therefore couldn’t be demonstrated without the
earlier documentary evidence in a subsequent action by the complex’s tenants for damages against both the builders and owners.
For full details on Rojas, see “California’s Top Court Endorses
Mediation Law, but ADR Professionals Remain Split about the
Decision,” 22 Alternatives 127 (September 2004); Jeff Kichaven,
“Commentary: Exalting ‘Absolute Confidentiality’ Hurts the
Practice,” 22 Alternatives 127 (September 2004), and “With Rojas, the California Legal Community Examines the Limits of Mediation Confidentiality,” 21 Alternatives 119 (June 2003).
The California Supreme Court held that there is “an ironclad”
confidentiality protection for “efforts that are done specifically to
prepare for a mediation,” according to Coben. But he discussed
another case, In re Marriage of Malcolm, 2004 WL 2669309 (Cal.
App. Dist. 1 Nov. 23, 2004)(unpublished), which points out a
potential fault in Rojas: It affirmed a denial of a husband’s motion
to disclose mediation communications that the husband claimed
substantiated his attorney’s mediation malpractice.
Coben said that Malcolm indicates courts will not find Rojas exceptions, even where a mediation may be the claim’s only
source of proof.
The Rojas/Malcolm problem isn’t “confidentiality in the suit
that was involved in the mediation,” explained Coben. “It’s the
relation between an earlier suit and a subsequent one involving
the issues or the parties, and under what circumstances you can
get at information.”
In class action settlement approval cases, Coben said courts
often must discuss the bargaining processes that occurred in the
negotiations that brought about the settlement. Still, he reported that he hasn’t seen any cases that have raised the question
of whether “it’s proper for the mediator to offer evidence about
the quality of the bargaining,” including matters where there are
objections to a settlement.
Coben said he had 58 cases in the database he constructed
where neutrals testified about mediation events. “Most often,”
he said, “that happened without any note in the case that any
party was raising an objection to what was going on.”
Coben discussed Fair v. Bakhtiari, 19 Cal.Reptr.3d 591
(Cal. Ct. App. Oct. 12, 2004), which has been briefed for an
appeal in the California Supreme Court. [The case had not been
scheduled for oral argument at press time.] An appeals court
had reversed a lower court decision enforcing a mediation agreement, because the agreement didn’t have the “magic words” it
needed for enforcement. For more on Fair, see “More Mediation Confidentiality Headed for the California Supreme
Court,” 22 Alternatives 195 (December 2004).
Coben explained that a mediation agreement is admissible
for enforcement in a court proceeding if it’s signed, and if it literally says it’s admissible or enforceable. It also can be enforced
if the parties get the agreement into a court record or agree to
disclose it as evidence of a settlement. It also may be enforceable
after it is put into evidence to show fraud, duress or illegality.
“[Y]ou have to have ‘magic words’ in your agreement if you
want it to be in evidence,” he said. The practice point, he added,
is to fully understand what indicia a jurisdiction requires for enforceability. “[M]ake sure you actually have an affirmative statement in your mediated settlement that the document’s admissible in evidence,” he said, “because, believe it or not, there are a
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number of jurisdictions where even the settlement, signed by
everyone, is not going to be admissible in evidence because of
the way that court rules or statutes are drafted.”
Coben said that Furia v. Helm, 4 Cal. Reptr. 3d 357 (Cal.
Ct. App. 2003), was important because “it’s one of the very few
cases in the database involving actual suits against people in the
neutral role.”
In the case, an attorney acting as mediator was held potentially liable for malpractice because he failed to disclose to one
party that he didn’t intend to be entirely impartial, as the other
party was the attorney’s client. The attorney, explained Coben,
was misleading the first party, and could have been held liable
for malpractice. No liability was found in the case, however, because damages weren’t established.
Coben stated that 29 of the database cases involved “lawyer
malpractice acts or omissions,” including failures to schedule
mediations, failures to let people know they were supposed to
be in mediations, and failures to participate effectively. He said
that in 18 cases, specific violations of mediator ethical conduct
were raised.
He said another 11 cases involved judges performing a mediation role–“and unfortunately, parties lose all of those cases,” he
said. “So if you are anticipating you are going to go into a mixed
process with a judicial officer, just be assured that you are probably not going to be very successful getting rid of that officer later.”
Coben said more cases are arising involving joint obligations
of mediation and arbitration. The Fair case involved enforcement of a mediation agreement provision to arbitrate open issues. He said the courts are being asked to look at due process
unconscionability issues, and enforcement of an obligation to
mediate as a precondition to arbitrate.
Interim Awards
(continued from front page)
In deciphering the finality language of FAA
Section 10(a)(4), the Seventh U.S. Circuit
Court of Appeals stated: “We take ‘mutual’
and ‘final’ to mean that the arbitrators must
have resolved the entire dispute (to the extent arbitrable) that had been submitted to
them. . . .” IDS Life Insurance Co. v. Royal
Alliance Associates Inc., et al., 266 F.3d 645,
650 (7th Cir. 2001). The question is
“whether the award itself, in the sense of
judgment, order, bottom line, is incomplete
in the sense of having left unresolved a portion of the parties’ dispute. . . . If this
means that the arbitrators severed the plaintiffs’ specific claims of wrongful conduct
and so failed to resolve the entire dispute
that had been referred to arbitration. . . .,
then they failed to make a mutual, final and
definite award. . . .”
The Seventh Circuit affirmed the district court’s award confirmation, holding
that, even though the award was “incomprehensible,” that did not mean it was not
complete, final or definite under the FAA.
Id. at 651.
As noted above, FAA Section 9 does not
contain the word “final.” Section 9 states in
cause it only partially resolved the dispute
that was before the arbitration panel.
These two articles discuss key cases under the two prongs of the finality dispute,
and show that:
(1) interim awards granting equitable relief such as preliminary injunctions
and requiring bonds for security are
generally “final” awards that can be
confirmed, and
(2) partial awards also may be final and
confirmed if they decided bifurcated issues, decided separate and independent
claims, or in fact fully decided all that
was before the arbitration panel.
Thus, parties who are successful in getting an interim or partial arbitration award
may readily apply to a district court for entry of judgment based upon the above theories. At the same time, a party that has obtained an interim or partial award that is
“final” must be alert so it does not lose its
judgment if that party fails to timely seek
confirmation under FAA Section 9’s oneyear limitations period.
Published online in Wiley InterScience (
Alternatives DOI: 10.1002/alt
DOI 10.1002/alt.20132
(For bulk reprints of this article,
please call (201) 748-8789.)
If the parties in their agreement have
agreed that a judgment of the court
shall be entered upon the award made
pursuant to the arbitration, and shall
specify the court, then at any time
within one year after the award is made
any party to the arbitration may apply
to the court so specified for an order
confirming the award, and thereupon
the court must grant such an order unless the award is vacated, modified, or
corrected as prescribed in Sections 10
and 11 of this title. 9 U.S.C. § 9.
But another Seventh Circuit decision,
Yasuda Fire & Marine Ins. Co. of Europe v.
Continental Casualty Co., 37 F.3d 345,
347–48 (7th Cir. 1994), has held that a district court must apply the same test of finality whether reviewing a petition to confirm
or a petition to vacate:
As mentioned, Yasuda brings its claim
under section 10 as a petition to vacate,
not section 9. While the two statutes
apply to two different procedural postures (the winner of an award may petition to confirm under section 9, and the
loser may petition to vacate under section 10), they are the same as a practi-
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