Information provided by: Charles Rumbaugh

ADR Offices of Charles Rumbaugh                                                                                          Arbitrator/Private Judge/Mediator/ADR Consultant                                                                                 PO Box 2636, Rolling Hills (Los Angeles), CA 90274                                                                          Tel: (310) 373-1981 / Fax: (310) 373-4182                                                                                                 Toll Free 1-888-ADROffice (888-237-6334)                                                                                              ADROffice@rumbaugh.net     www.rumbaugh.net

Alternative Dispute Resolution (ADR) Tip - December 20, 2006

Interesting ADR cases/articles, etc. from the net include…

• Confidentiality in mediations

• Should “time is of the essence” be in certain ADR agreements in order to “require” that awards be issued within a certain timeframe?

• Attacking the arbitration clause (but not the entire agreement) as being unconscionable—who decides?

• Using the same experts in a mediation and a subsequent arbitration may be a problem.

• No duty on an arbitrator to disclose a prior uncompensated mediation involving one of the attorneys in the arbitration?

• And if your attorney does not physically possess the “entire” agreement, i.e. the ADR “part,” that may not be deemed a waiver of the ADR part.

• Must one wait to the end of an arbitration to challenge an arbitrator for bias?

• Failure of an arbitrator to award attorney fees may be reversed?

• More….

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(From ADRWorld.com. When is it confidential? Who is drafting the agreement? Who is “practicing” law by drafting the mediation settlement agreement?--ed)

California Court Reinforces Strict Mediation Confidentiality

“California's top court on Dec. 14 ruled that mediated settlement agreements are admissible in subsequent proceedings only when they are unequivocally binding and enforceable, outlining the sole exception to the state's strict mediation confidentiality standards.

“California's evidence rules strictly limit disclosure of mediation communications, but they make an exception for signed mediated settlement agreements that are enforceable or binding, subject to disclosure, or contain "words to that effect."

“The California Supreme Court in R. Thomas Fair v. Karl E. Bakhtiari et al. (No. S129220, 12/14/2006) said it intends to protect confidentiality through clear drafting guidance, ruling the that term "words to that effect" and by extension the only exception to mediation confidentiality, may only be satisfied by language that explicitly expresses the parties' intent to be bound by the settlement agreement they reached in mediation….”

http://www.adrworld.com/si.asp?id=2094

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(And from Carl Ingwalson, attorney/arbitrator/mediator, in San Diego)

R. THOMAS FAIR v KARKL E. BAKHTIARI, 121 Cal. App. 4th 1286 (08/31/04) Parties to pending litigation mediated, reached an agreement, and drafted Settlement Terms with nine succinctly stated bullet points, one of which was - "any and all disputes subject to JAMS arbitration rules."

“Attempts to reduce the Settlement Terms to a Settlement Agreement failed, Defendants requested a trial, and Plaintiff filed a Motion to Compel Arbitration offering a copy of the Settlement Terms in evidence. The trial court agreed with Defendants that the Settlement Terms were not admissible since Evidence Code §1123 had not been satisfied and its exceptions weren’t relevant. That section provides that a written settlement agreement prepared in the course of, or pursuant to, a mediation, is not made inadmissible, or protected from disclosure, by provisions of this chapter if it’s (1) signed by the settling parties and (2) provides that it’s "enforceable or binding or words to that effect."

“Held: Reversed. The court saw two issues: (1) whether the Settlement Terms were admissible and, if so, (2) whether an arbitration agreement existed (with only the first issue having been addressed by the trial court):

(1) The Settlement Terms were admissible. While they didn’t say "enforceable" or "binding," there were "words to that effect" (ie. the reference to arbitration "contemplated that an arbitrator would, in the event of any disputes related to the settlement terms document, consider and resolve such disputes. In other words, inclusion of the arbitration term demonstrates that the parties necessarily intended the settlement terms" to be enforceable).

(2) While details were to be embodied in a Settlement Agreement, the court felt there was enough direct and extrinsic evidence to show the parties intended the Settlement Terms to be binding (ie. it included all material terms of the settlement; it was signed by all parties; all counsel told the court the case had been settled and they were drafting a formal Settlement Agreement; it included an enforcement mechanism).

"The fact that an agreement contemplates subsequent documentation does not invalidate the agreement if the parties have agreed to its existing terms." Ersa Grae Corp. v. Fluor Corp., 1 Cal. App. 4th 613, 623 (1991).

Note: “The opinion seems to miss the point. While arbitration is generally recognized as a binding process, it could be argued that there was nothing among the bullet points to clearly indicate the parties’ intent that the bullet point arbitration provision, itself, was to be "enforceable" or "binding. Many Mediators are reluctant to draft mediated agreements but, recognizing that most parties and counsel cannot be expected to know "mediation law" as well as Mediators, will often ask questions of the drafters (eg. "Do you want to provide that the Memorandum of Agreement is to be binding and enforceable?" "If so, do you want to say so?").

“The Supreme Court was unanimous in deciding the Memorandum did not sufficiently demonstrate an intent that it be binding and enforceable. To satisfy the statute, the court said "a settlement agreement must include a statement that it is 'enforceable' or 'binding' or a declaration in other terms with the same meaning. The statute leaves room for various formulations." Trying to satisfy the statute by implication by alluding to the arbitration provision wasn't enough. …”

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(Does your ADR agreement have a “time is of the essence” provision? Perhaps certain employment agreements should/could?—ed)

Arbitration Award Timeframes Are Discretionary, Court Says

By Staff Reporters, ADRWorld.com

“Arbitrators in Colorado have new flexibility in issuing awards under a state court ruling that contractual and statutory deadlines are discretionary, not mandatory, unless a "time is of the essence" provision is included in an arbitration agreement.

“The Colorado Court of Appeals has concluded that given the state's public policy favoring arbitration, strict contractual and statutory timeframes could lead courts to unnecessarily vacate arbitration awards issued beyond a certain timeframe ( H. Michael Sopko v. Clear Channel Satellite Services, Inc., 05CA1811, 11/30/2006).

“The court provided that parties can require arbitrators to issue an award in a specific timeframe by including a "time is of the essence" provision in their agreement, but it said that a party opposing a late award would have to show that a delay prejudiced them in some specific way….”

http://www.adrworld.com/si.asp?id=2092

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