Southern California Arbitration Mediation and Conflict Resolution : Settle it Now Dispute Resolution Services : Serving Los Angeles, Beverly Hills, Century City : Settle It Now Negotiation Blog

(pictured:  the bread and circuses part)

Thanks to the SCOTUS Blog for the following resources on the upcoming Kagan hearings.  Follow SCOTUS Blog all week for commentary. 

Why should negotiators be interested in the composition of the Supreme Court?  Because the freedom to negotiate requires a strong rule of law culture.  And because everything we negotiate assumes the enforcement of certain agreements and non-enforcement of others, of particular interest to negotiators and ADR practitioners - arbitration agreements. 

SCOTUS whitepapers below:

Diversity Hiring

Abortion

Diversity on the Court

Gays in the Military

Corporate Rights (Citizen's United)

Conservatives

Executive Power

Kagan's Qualifications to Serve

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Over at Disputing with at least one bill that would mandate mediation (to irritate mediation purists who learned this catechism at their ADR parents' knees- "mediation is a voluntary process . . . ")

Thanks to Timothy R. Hughes - @vaconstruction in my twitter network - for the head's up.

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See the Wall Street Journal article Credit Card Disputes Tossed into Disarray on NAF's settlement with the State of Minnesota and the AAA's decision to "stop participating in consumer-debt-collection disputes until new guidelines are established."

Here's the entire text of the triple A's announcement (h/t to Disputing here)

The American Arbitration Association® Calls For Reform of Debt Collection Arbitration

Largest Arbitration Services Provider Will Decline to Administer Consumer Debt Arbitrations until Fairness Standards are Established

New York, NY– (July 23, 2009) – The American Arbitration Association (AAA), the world’s largest conflict management and dispute resolution services organization, today recommended in a House subcommittee hearing that the process surrounding consumer debt collection arbitration needs major reform and recommended a national policy committee to identify and research solutions. AAA said it will not administer any consumer debt collection programs until those solutions are determined.

AAA senior vice president Richard Naimark told the Domestic Policy Subcommittee of the House Oversight and Government Reform Committee that the AAA “has not administered significant numbers of debt collection arbitrations relative to some other organizations,” and has not handled any since June after it concluded a single high-volume program. However, he said that AAA had independently reviewed areas of the process and concluded that it had some weaknesses. As a result of that review, it is evident to the AAA that “a series of important fairness and due process concerns must be addressed and resolved before we will proceed with the administration of any consumer debt collection programs.” According to Mr. Naimark, areas needing attention from the national policy committee include consumer notification, arbitrator neutrality, pleading and evidentiary standards, respondents’ defenses and counterclaims, and arbitrator training and recruitment.

“AAA has been working with the Domestic Policy Subcommittee to review potential improvements in consumer debt collection arbitration procedures for some time. We believe that arbitration can play a major role in consumer debt collection disputes. A national policy committee dedicated to meaningful reform can enhance an array of due process elements so that there is deeper fairness and transparency. Consumers deserve an alternative to litigation, but they also need to be able to trust that option. Our goal will be to achieve that trust,” Mr. Naimark said after the hearing.

“We have been studying this issue for some time. We made our decision to impose a moratorium on administering consumer debt arbitration independently and not at the behest of any outside entity as has been claimed. We commend the Domestic Policy Subcommittee for its initiatives to protect consumers in debt collection cases, and we will continue to work with it willingly and enthusiastically,” Mr. Naimark said.

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From David Sugarman's Oregon Class Action Blog, Bombshell:  State of Minnesota Sues National Arbitration Forum.

The State of Minnesota filed a lawsuit against National Arbitration Forum, a leading arbitration provider, claiming that NAF is a front for debt collectors and their law firms and not an independent arbitration service.  Here’s a copy of the complaint–it’s long–for anyone who is interested.

For Sugarman's full post, click here.

Though the National Arbitration Forum focuses on the arbitration of disputes, it also administers mediations.  For information on its mediation services, click here.

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O.K., times are tough.  And it takes no small amount of courage to face the financial disaster that credit cards can cause to even those who feel themselves to be the most sober of financial citizens.  Then it takes real courage to pick up a telephone and make a request to a disembodied and not-likely-friendly voice to ask for help bailing you out of a mess you can barely believe you find yourself in.

I have three things to say about this.  First. The country's supposed financial geniuses are unable to pay their debts and are facing bankruptcy.  You are not alone.  Second.  There's nothing to be ashamed of, though there is something to be learned from this painful experience.  I know.  I was there during the recession of the early '90s.  Third.  You are not without remedy.  Take a look at "How to Negotiate with Your Creditors" at Entrepreneur Magazine this week.

Tips to help you negotiate with a creditor or collection agency:

• If you make a request that is denied for whatever reason, ask to speak with a supervisor.

• Don’t agree to pay more than you can afford when negotiating. Know in advance what your financial situation really is, then work within those confines. The last thing you want to do is negotiate a settlement or payment plan that you can’t adhere to.

• During your negotiating process, figure out what the creditor is willing to accept as a settlement. What’s their absolute bottom line? If you’re looking for a settlement, offering between 50 and 70 percent of what’s owed, either as a lump sum payment or through a payment plan, isn’t unreasonable. Achieving this settlement might take several rounds of negotiation, however.

• Avoid becoming intimidated by the person you’re negotiating with, even if they make threats about lawsuits.

• Most successful negotiations require several rounds going back and forth with offers and counter offers. The process could take days or weeks.

• If you can afford to settle an account by paying one lump sum (as opposed to using a payment plan), you’ll have more negotiating leverage.

• The person you’re negotiating with does this for a living and is a trained professional when it comes to debt collections. For them to use legal terminology during a conversation or in writing is a common tactic to confuse or intimidate you. Listen carefully to what’s being said and make sure you understand exactly what you’re committing to. Consult with a lawyer or credit counselor if you have questions.

• Make sure everything you ultimately agree to is put in writing, signed, and dated by both parties.

What to Negotiate for When Dealing with Creditors, Lenders, or Collection Agencies

• a lower interest rate

• the interest accrued to be waived

• the late fees, penalties, and/or legal fees to be waived

• the loan to be extended or restructured, allowing you to skip one or more payments with no penalty

• a payment plan that would allow you to pay off the amount currently owed, but with no added interest or fees added in the future

• a settlement that would include a significantly lower balance due (such as 50 to 75 percent of the total)

• favorable reporting to the credit reporting agencies or the removal of negative information from your credit report pertaining that to that account

Jason R. Rich is the bestselling author of more than 37 books including The Complete Book of Dirty Little Secrets: Money-Saving Strategies the Credit Bureaus Won’t Tell You, available from Entrepreneur Press. His books cover a wide range of topics, including computers, e-commerce, personal finance, career-related topics, and travel and entertainment. He also contributes regularly to major daily newspapers, including the New York Daily News, as well as national magazines and popular websites.

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The American Arbitration Association announces a new set of dispute resolution services for businesses and consumers, including new panel members of which I am one.

Mediation and non-binding arbitration are processes that offer parties opportunities to settle their disputes. Pursuing settlement helps clients to reduce the total cost of conflict management in their organizations, provides flexibility and protects valuable relationships with partners
and customers.

The American Arbitration Association®’s (AAA) Non-Binding Dispute Resolution Services for Businesses and Consumers is a suite of settlement services and solutions that include:

• Mediation

• Non-Binding Arbitration

• Non-Binding Arbitration and Mediation Contract Clauses Guide

An important element of the suite is access to AAA staff facilitators who stand ready to aid parties in selecting the settlement options most appropriate for their needs and the circumstances at hand. To reach a facilitator, simply select the “Contact Us” option below to send an email requesting information
and assistance.

Here are the consumer procedures.  You can also find these rules on the commercial dispute resolution page here.  And here's a .pdf download of dispute resolution clauses geared toward the business and consumer dispute resolution services provided by the AAA.

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This just in on the same day I attended the AAA's Expedited Case training.  As an ADR practitioner I favor party "choice and voice" in all dispute resolution venues, meaning that I frown on adhesion contracts of all types, including those that are unfairly imposed upon consumers and employees.  The devil in the detail, of course, is the meaning of the term "unfairly."  I am unfamiliar with the proposed law subject of this article and neither support nor oppose it.  Just keeping my readers informed.

Democratic Party control could ban mandatory arbitration, expert says

11/17/08

Jan Dennis, Business & Law Editor
217-333-0568; jdennis@illinois.edu

Click photo to enlarge Photo by L. Brian Stauffer Michael LeRoy, a professor of law and of labor and employment relations, says Democratic Party control in Washington could restore lawsuits as an option for workers and consumers now forced to settle disputes through mandatory arbitration that gives employers and businesses an unfair edge.

CHAMPAIGN, Ill. — Democratic Party control in Washington could restore lawsuits as an option for workers and consumers now forced to settle disputes through mandatory arbitration that gives employers and businesses an unfair edge, a University of Illinois labor law expert says.

Michael LeRoy predicts a bill sponsored by Democrats that would bar companies from imposing arbitration will likely be approved next year when Democrats take over the White House and add to their majorities in Congress.

The measure, introduced last year but stalled by the prospect of a Bush administration veto, would halt a shift that has grown since a 1991 U.S. Supreme Court ruling allowing firms to require arbitration rather than courts to resolve disputes, he said.

For full article click here.

Here's the summary of the bill courtesy of the Consumerist:

Arbitration Fairness Act of 2007 - Declares that no predispute arbitration agreement shall be valid or enforceable if it requires arbitration of: (1) an employment, consumer, or franchise dispute, or (2) a dispute arising under any statute intended to protect civil rights or to regulate contracts or transactions between parties of unequal bargaining power.

Declares, further, that the validity or enforceability of an agreement to arbitrate shall be determined by a court, under federal law, rather than an arbitrator, irrespective of whether the party resisting arbitration challenges the arbitration agreement specifically or in conjunction with other terms of the contract containing such agreement.

Exempts arbitration provisions in collective bargaining agreements from this Act.

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Bob Hunt over at Realty Times has a nice consumer-friendly article entitled Californa Court Holds That Mediation Provision "Means What It Says".  /*

As Hunt writes, 

The standard residential purchase contract in California is produced by the California Association of Realtors® (CAR). It contains two sections that are easy to overlook or to take as “boilerplate”, but that can be very important if things go awry between the parties. One of those sections deals with attorney fees, providing that, in the event of any proceeding between buyer and seller, the prevailing party shall be entitled to attorney fees and costs from the non-prevailing party. The attorney fee section contains an exception, however, and that exception is spelled out in the portion of the contract referring to mediation. There it is said that, if either party initiates an action “without first attempting to resolve the matter through mediation, or refuses to mediate after a request has been made, then that party shall not be entitled to recover attorney fees… .” [my emphasis] /*

When Mr. Thrifty and I purchased our house in '02, we were presented with one of these form contracts.  I'm a lazy form contract signator myself.  Negotiation training or not, I generally assume these contracts are "take it or leave it" and I sign them accordingly.  /**

Not Mr. Thrifty.

"What's the procedure?"  I recall him pressing our real estate agent.    "When is the demand for mediation supposed to be made and how are the parties supposed to conduct it and what happens if the parties can't reach agreement on the mediator to conduct the process?"

He was having none of it. 

"I'm crossing it out," he said, as blue ink flowed over the mediation provision and our agent let out of small gasp of dismay.

By that time, everyone was so "bought in" to the sale, that Mr. Thrifty's effort to strike  the form language prevailed.  No mediation necessary in this household!

Beware of Form Contract Language

As Bob Hunt explains, the Lange Court gave the back of its hand to the contention that it was "too difficult" to make the required demand for mediation.  

“If the [sellers] could be found and served with a lawsuit by mail, they could have been sent a mediation demand by mail[,]” [held the Court]  All that the plaintiff had to do was attempt to mediate before he filed suit; and he didn't. Quoting a related case, the court noted that the mediation provision “means what it says and will be enforced.” 

Though it's not surprising to find bare bones ADR provisions in industry form contracts -- bones so bear that their meaning must be litigated -- defeating the purpose of the summary proceedings provided for -- it is surprising to find attorneys continuing to paste form contract language into their client's negotiated agreements.  This is particularly troublesome when what's at stake -- the attorneys' fees -- makes the difference between bringing litigation or not or settling litigation or not.

If it's worth putting a clause into your contract, it's worth spending the time to imagine what might happen if circumstances triggering that clause arise.  If you're practicing in a firm with both transactional and litigation attorneys, I highly recommend that the wordsmiths run the "standard" ADR, attorney fee, choice of law, and venue provisions by the litigators who have undoubtedly already tested these provisions in the fire of conflict.  You won't be sorry you did.       

_______________________

*/  The case -- Lange v. Schilling -- was originally ordered not not to be published.  Had that Order stood, the case would not create precedent under California law.  As the reader of the linked opinion can see, however, it was subsequently ordered published and can be cited as authority. 

**/  The form contract language at issue reads as follows:

Buyer and Seller agree to mediate any dispute or claim arising between them out of this Agreement, or any resulting transaction, before resorting to arbitration or court action. . . . If, for any dispute or claim to which this paragraph applies, any party commences an action without first attempting to resolve the matter through mediation, or refuses to mediate after a request has been made, then that party shall not be entitled to recover attorney fees, even if they would otherwise be available to that party in any such action.

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. . . the Honorable Sam Cianchetti, Los Angeles Superior Court Judge (ret.) for his decision awarding $8.4 million in punitive damages, for a total $9 million award, against Health Net In the Arbitration between Patsy Bates and Health Net, et al. 

Los Angeles Times article here and the opinion itself here.

UPDATE:  For coverage of this case within the industry see The National Underwriter post here.

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This one is Lowden v. T-Mobile USA decided today by the Ninth Circuit.

We conclude that the Washington State Supreme Court’s decision in Scott v. Cingular Wireless, 161 P.3d 1000 (Wash. 2007), establishes that T-Mobile’s arbitration provision is substantively unconscionable and unenforceable under Washington state law, and that there is no federal preemption in light of our decision in Shroyer v. New Cingular Wireless Servs., Inc., 498 F.3d 976 (9th Cir. 2007).

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