Mediation, Arbitration, & Peacemaking

PRIMER ON MEDIATION AND ARBITRATION

by John Runyan (Nickelhoff & Widick, PLLC )

1.  INTRODUCTION

Mediation and arbitration are both forms of what is known as “Alternative Dispute Resolution” or ADR, alternatives to trials for resolving “civil” disputes. “Plea bargaining” could be seen as a similar, “alternative” method for resolving criminal disputes, but my experience is with mediation and arbitration of civil cases. Because having a dispute resolved in court—whether by a judge or jury--is both expensive and time-consuming, as well as somewhat “risky,” various “alternative” methods of dispute resolution have been developed. Mediation and arbitration have grown in popularity because in today’s risk-averse environment, the vast majority of civil cases are settled; state and federal judges in Michigan actually “try” only a handful of civil cases each year.

·       Mediation and arbitration are alternatives to a trial for resolving disputes.

·       Mediation and arbitration are less expensive and quicker than a trial.

·       Mediation and arbitration can help to minimize risk.

In tribal courts, one alternative method for resolving disputes is sometimes described as “peacekeeping,” which usually involves some of the elements of mediation or a negotiated settlement described below. In state and federal courts, the most common methods of alternative dispute resolution are mediation and arbitration. In state courts, another common method of dispute resolution is known as “case evaluation,” which involves a presentation before three experienced attorneys—one Plaintiffs’ attorney, one Defense attorney and one neutral—who evaluate the case and arrive at an “evaluation” of what the case is worth in monetary terms. Advocates for the parties must either accept or reject the panel’s evaluation and if the panel’s evaluation is unanimous, a rejecting party will be taxed penalties if the result reached at trial is less favorable than the panel’s evaluation.

·       Case evaluation is mandatory in some jurisdictions.

·       Case evaluation puts a monetary evaluation on a party’s claim.

·       Case evaluation can result in penalties if the evaluation is rejected.

 2.  MEDIATION

Mediation in particular has grown in popularity because it is risk-free; no penalties are involved. Unlike case evaluation which is mandatory in some jurisdictions, mediation is usually voluntary but can be Court-ordered. An experienced attorney who has undergone specialized training serves as Mediator and assists the parties in reaching a compromise or settlement of their dispute. The compromise or settlement can include terms which are not monetary in nature—reinstatement of a discharged employee, for instance.  Each party submits a written summary of her position to the Mediator—known as a mediation summary—and then appears at a mediation—sometimes called a mediation hearing--at which the Mediator helps to facilitate communication between parties, usually by shuttling back and forth between them with settlement demands and offers. If the parties’ proposals remain so far apart that settlement appears unlikely, a Mediator will sometimes make a “Mediator’s Recommendation” for compromising the remaining difference(s). Unlike case evaluation, however, there are no penalties for refusing to accept a “Mediator’s Recommendation” and unless both parties accept the recommendation, the Mediator will usually not disclose whether one or both parties rejected it.

·   Mediation is usually voluntary.

·   No penalties are involved.

·   Mediator selected by the parties assists them in reaching a compromise or settlement.

·   Mediator can make a recommendation for settling a dispute.

3.  ARBITRATION

Arbitration is the form of alternative dispute resolution which is most like a trial. Arbitration used to be the result of an arms-length agreement reached by and between two parties to a contract—oftentimes an agreement to arbitrate was not even reached until after a dispute arose. As a result of the Supreme Court’s interpretation of a federal law known as the Federal Arbitration Act or FAA, however, an agreement to arbitrate can now be contained in an employment application which an applicant for employment must sign to get a job or in an Employee Handbook which the applicant never sees until after she is hired. These agreements usually provide that in exchange for the agreement to arbitrate, the employee, consumer, etc. agrees to give up her right to bring suit in state or federal court, including her right to a jury trial. The arbitrator is usually but not always an experienced attorney and occasionally arbitration may involve a panel of three attorneys like case evaluation. State and federal courts have developed rules or standards which must be met in order for an agreement to arbitrate to be enforceable.

Arbitration usually begins with a written demand for arbitration, followed by selection of the arbitrator; and a scheduling conference with the arbitrator at which a hearing date is set as well as various other deadlines. These include (1) the period of time during which reasonable discovery will take place, including interrogatories, document requests and depositions; (2) deadlines for the exchange of witness and exhibit lists; (3) deadlines for the submission of pre-hearing motions, briefs, or proposed findings of fact and conclusions of law. These are usually set forth in a scheduling “order,” which also addresses matters like whether the parties will hire a stenographer to prepare a written transcript of the hearing.

The arbitration hearing itself can be conducted in person or via a teleconference service like Zoom. Just as in a trial, the hearing begins with Opening Statements by each party, followed by the presentation of both testimonial and documentary evidence. The complaining party usually proceeds first by calling witnesses, who are sworn and are subject to cross-examination; the complaining party’s case usually includes as well the introduction of exhibits or documentary evidence which support her claim. Arbitrators vary in the degree to which they enforce the rules of evidence. After the complaining party has completed her case and rested, the opposing party has the opportunity to call witnesses and introduce exhibits or documentary evidence. In most circumstances, the complaining party is then given a final opportunity to introduce rebuttal evidence. 

When both parties have rested, they are given an opportunity at the hearing to make closing arguments to the Arbitrator. Often times, the parties will elect instead to submit written arguments or briefs, as well as proposed findings of fact and conclusions of law. If a stenographer has transcribed the proceedings, these written submissions are submitted after a written transcript has been received. The Arbitrator is then required to prepare a written Opinion and Award, which must include findings of fact and conclusions of law. Some arbitration agreements contain time limitations specifying how soon after a hearing the Arbitrator’s Opinion and Award must be issued. 

·   Arbitration is most like a trial.

·   In exchange for an agreement to arbitrate, a party usually gives up the right to a jury trial.

·   Arbitration usually takes longer than case evaluation or mediation.

·   State and federal courts have set standards which must be met in order for an agreement to arbitrate to be enforceable.