Arbitration: Department of Corrections
“Anonymous Attorney” is Not Anonymous
In a March 18, 2012 post, we spoke of “the sheer ingenuity of the anonymous attorney who drafted the arbitration clause at issue” in AT&T Mobility v. Concepcion. After poking around the web a bit, we learned that the “anonymous attorney” is actually Archis Parasharami, a partner at Mayer Brown.
Arbitration: Midwife of AT&T Mobility v. Concepcion Very Fond of Case He Delivered
In a May 28, 2012 opinion piece in the National Law Journal, Andrew J. Pincus saw the precedent he had made, and, behold, it was very good. (Cf. Gen. 1:31 King James Version). Mr. Pincus is the attorney at Mayer Brown heralded for arguing and winning Concepcion before the Supreme Court in 2011. He laments that opponents of arbitration, motivated by “reflexive hostility”, are not capitulating. Instead, they are mounting attacks against arbitration in Congress and federal agencies.
Mr. Pincus expresses the argument in favor of arbitration in the strongest declarative terms: “Our courts are expensive, overburdened and virtually impossible for nonlawyers to navigate. For these claims, it is arbitration or nothing.”
Mediation: Fourth District, Division 1, Affirms Trial Court’s Determination Defendant Agreed to “Binding Mediation”
Court of Appeal Concludes Binding Mediation Need Not Be An Oxymoron, Distinguishing Lindsay v. Lewandowski
The trial court enforced a settlement agreement, under Cal. Code Civ. Proc. section 664.6, resulting in a binding mediation award in favor of plaintiffs. Defendant appealed, contending that it never agreed to resolve the dispute through “binding mediation”, that the agreement was uncertain, and that binding mediation is not among the constitutionally and statutorily permissible means of waiving jury rights. Bowers v. Raymond J. Lucia Companies, Inc., Case No. D059333 (4th Dist. Div. 1 May 30, 2012) (McConnell, P.J., author) (certified for publication).
The Court of Appeal affirmed. Though “binding mediation” may at first blush seem like an oxymoron to you and to me, here, there was “substantial evidence” from which the trial court could determine what the parties intended by way of alternative dispute resolution. The evidence included a transcript of counsels’ comments to an arbitration panel, which was informed of the settlement, and a written settlement agreement with a written amendment. Despite the somewhat unusual use of the term “binding mediation,” it was apparent that the parties chose a mediator, that they mediated, that the framework involved each party submitting their “last and final offer which shall be some amount between $100,000 and $5,000,000”, and that “[t]he mediator shall then be empowered to set the amount of the judgment in favor of Plaintiffs against [Defendant] by choosing either Plaintiffs’ demand or Defendants’ offer, such binding mediator judgment to then be entered as a legally enforceable judgment . . . “
When the parties were unable to resolve the dispute themselves, the mediator resolved the dispute by choosing the $5,000,000 amount. (Compare baseball-style arbitration, “in which an arbitrator decides a monetary dispute by selecting from the parties’ final proposals”, which the Court of Appeal cites as “an example of binding mediation”.)
Along the way, the Court had to distinguish Lindsay v. Lewandowski, 139 Cal.App.4th 1618 (2006), a case in which the Court of Appeal refused to enforce an agreement requiring “binding mediation.” However, unlike the appellants in Lindsay, “the defendant in this case never objected to binding mediation or insisted it was entitled to a post-mediation arbitration hearing until after the mediator made an award in plaintiffs’ favor.” Also, unlike the parties in Lindsay, the parties in Bowers “elaborated on what they meant by the alternative dispute resolution method they chose.”
Finally, the Court of Appeal concluded that giving up a right to a jury trial through the ADR method chosen was not forbidden by the Constitution or by statutes. True, statutory rules prescribe how one can waive the right to a jury trial, and end up instead with a court trial. But the parties can choose a dispute resolution mechanism (such as settlement) that avoids trial altogether. And that, according to the Court, is what happened here: “In this case, the parties agreed to settle their dispute through binding mediation in a nonjudicial forum.”
So, unless “binding mediation” is truly an oxymoron in all circumstances, Bowers is indeed distinguishable from Lindsay, and hence, the result is different.
News: California Assembly Rejects Expanding Role of Mediators Before Municipalities Can File For Bankruptcy–At Least For Now
AB 1692 Would Expand AB 506
CBS News reports that the state Assembly has rejected legislation (AB 1692) seeking to expand the mediation process for California cities about to declare bankruptcy.
At the end of last year, AB 506, drafted by Assemblyman Bob Wieckowski (D – Fremont), created a mediation requirement for municipalities before they could file for bankruptcy. Stockton and Mammoth Lakes have engaged in the process.
AB 1692 “would ‘authorize the neutral evaluator to request and control the process of an independent investigation’ and terminate the process ‘upon a specified circumstance,” according to Bloomberg Businessweek.
One possible effect of AB 1692 would be to extend the length of mediation before a municipality could file for bankruptcy. Public employee associations have favored passage of the new bill. The League of California Cities has opposed the new bill, saying that prolonging the mediation process would be prolonged till cities run out of cash.
Whether this is just a temporary setback for the proposed legislation remains to be seen.
We have blogged earlier on mediation in connection with Stockton and Mammoth Lakes financial problems.
California Mediation and Arbitration Has Been Added To The American Bar Association Journal’s Blawg Directory
“All About California Mediation And Arbitration”
We are pleased to inform our readers that as of May 23, 2012, California Mediation and Arbitration has been added to the ABA Journal’s blawg directory under the category “Alternative Dispute Resolution”.
We thank Sarah Randag, Web Editor of the ABA Journal, for informing us.
Arbitration/Fees: Plaintiff’s Request for Fees for Defeating a Petition to Compel Arbitration in Pending Lawsuit Is Unsuccessful, Because Defendant Prevailed In the Whole Lawsuit
Under Civil Code Section 1717, There May Be Only One Prevailing Party Entitled to Recover Attorney’s Fees on Given Contract In Given Lawsuit
The key to our next case, involving arbitration and attorney’s fees, turns on a nice point that may at first seem a technicality but is actually material and dispositive here. That point: a party may petition to enforce an arbitration agreement as an independent lawsuit if there is no pending lawsuit; otherwise, the party must file the petition in the pending lawsuit. Frog Creek Partners, LLC v. Vance Brown, Inc., Case No. A129651, p. 2, n. 4 (1st Dist. Div. 5 May 24, 2012) (Simons, Acting P.J., author) (certified for publication); Cal. Code Civ. Proc., section 1281.2.
In the first example, the petitioner who is defeated may be exposed to attorney’s fees under Civ. Code section 1717 (assuming of course the existence of an attorney’s fees provision), because the petitioner who loses a petition to compel arbitration has lost an action on a contract. One who wants to litigate must now file a lawsuit, and the prevailing party in that lawsuit will have a separate right to recover attorney’s fees. But in the second example, if someone files a petition to arbitrate in an existing lawsuit and loses, no determination of liability for attorney’s fees can be made until the lawsuit is over, because only one prevailing party is entitled to recover fees on a given contract in a given lawsuit. In the second example, the plaintiff successfully defeating the petition to arbitrate brought in the existing lawsuit, but ultimately losing the substantive contract dispute at trial is a loser, and will not be able to collect attorney’s fees. That is the rationale for the outcome in Frog Creek Partners.
The frog who tried to be as big as a bull. Library of Congress.