ch 03 , continued - RESOLVING DISPUTES RESOLVING Chapter 3...

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Unformatted text preview: RESOLVING DISPUTES RESOLVING Chapter 3, cont. CHAPTER ISSUES • The settlement process The as it pertains to the trial process process • Alternative Dispute Alternative Resolution (ADR) Resolution – – – – – Strategic Considerations Arbitration Negotiation-Settlement Mediation Other forms of ADR Strategic Considerations: The Court System vs. Alternatives to Resolving Disputes (ADR) Disputes • The court system is The adversarial in nature adversarial • Parties argue positions Parties before a court before • Underlying belief: Best Underlying way to discover the truth is through competing evidence evidence • Lawyers represent Lawyers competing claims competing • Judges don’t investigate • Court applies legal rules • What is the probability of What winning? winning? – Can it get defendant Can before the court? before – Is there a justifiable Is defense? defense? – Can it produce necessary Can witnesses/documents? witnesses/documents? – What are the monetary What costs of the case? costs Decision-Making Factors of Business Involving Itself As A Plaintiff Plaintiff • Would the provided relief be Would worthwhile? worthwhile? – Is settlement, arbitration Is or mediation better? or – Will/Can defendant pay? – What is the impact on What company’s goodwill? company’s – Is there a disclosure (i.e. Is trade secret) that may result? result? Business As A Defendant Business • How will lawsuit affect its How goodwill? goodwill? – Concern of publicity or Concern reputation – If the viability of the If company is at stake, it overrides concerns of goodwill, i.e. in the tobacco industry tobacco How important is the How disputed business relationship? relationship? – Is the plaintiff’s Is relationship worth keeping? keeping? • Is there a viable alternative? – Consider settlement, Consider arbitration, etc. arbitration, – Are there indirect costs of Are the lawsuit to consider? the Nuisance Actions – Does it cost less to “pay Does off” than to litigate? off” – Does business wish to Does discourage a lawsuit at any cost? any Rational lawsuits – Better to incur liability Better than to perform on a costly contract costly • • • Resolving Disputes Through Courts Courts • Complex facts and issues – Example of the “5000-page Response” • Greater use of documents and exhibits – Texaco/Borden case: 500,000+ pages in documents • Heavier reliance on expert testimony – Scientists, doctors, economists needed to assist • Longer trials – Takes several years to even get to the trial stage • Large damage awards – Businesses are viewed as “deep pockets” – Sympathy to plaintiff vs. “Corporate America” Negotiation Negotiation • • • Least formal form of ADR Parties decide to settle matter Parties between themselves between Often use lawyers or Often representatives, though not required required – Lawyers, etc. are agents of Lawyers, agents the parties of the dispute the Negotiated settlement is Negotiated usually a contract, which is enforceable, like other contracts, by the courts contracts • Stages of Negotiation Stages • • Stage 1: Study issues; plan Study the negotiation the Stage 2: Exchange of Exchange information information – Different styles: i.e.“tough Different guy” vs. “problem solver” guy” Stage 3: Work your strategy – Usually involves Usually compromise compromise Stage 4: Agreement is Agreement reached; usually a contract is written written Policy of the courts is to Policy enforce negotiated settlements enforce • • • ARBITRATION ARBITRATION • Most widely recognized • Over 200,000 cases filed Over in 2000 with American Arbitration Association Arbitration • 3rd neutral party or 3rd panel (usually expert) panel – Arbitrator/Arbiter • Parties agree upon this Parties ADR in contract or during the dispute during • Arbitrator’s decision is Arbitrator’s binding binding • Usual rule: No right to Usual go to trial (parties to the dispute give up this right) right) – Appeals are very Appeals specific and limited specific • Uniform Arbitration Act Uniform (UAA) upholds the integrity of this process integrity • See “Europe Emerges as See the Arbitration Forum of Choice” of “Europe Emerges as the Europe Arbitration Forum of Choice” • In international business, arbitration is widely used In widely – Jurisdiction problems create the need for an ADR • Many European countries have changed their laws to Many accommodate this ADR accommodate • United Nations Commission on International Trade United Law (UNCITRAL) has rules for effective arbitration Law • Private organizations also have rules for arbitration. Private These private organizations include These – International Chamber of Commerce – London Court of International Arbitration – Stockholm Chamber of Commerce The Arbitration Process The • • • • Decided at time of making the Decided contract or after dispute arises or Begins when party files a Begins submission (See Exhibit 4.2) submission (See Parties agree on arbitrator(s) Parties arbitrator(s) The hearing The hearing – Closed door – Less restrictive procedural Less and evidentiary rules than a trial court trial The award (decision) The (decision) – Usually given in writing Usually within 30 days of close of arbitration hearing – Arbitrators have broad Arbitrators powers to decide remedies powers • Appealing the award Appealing – Attacks on arbitrators are Attacks rarely successful rarely – Errors of fact or law are not Errors reviewable reviewable – Grounds for overturning Grounds appeal: fraud, partiality, serious procedural misconduct, excess use of power by arbitrator power – Arbitrators have wide Arbitrators latitude in awards latitude Generally arbitration award is Generally final final • • Compulsory Arbitration Compulsory (A Required Dispute Resolution Process) • Labor Contracts – Unions – Insurance contracts – Stockbrokers – Pro-baseball, football • Public Sector Public Employment Employment – Police officers – Firefighters – Public school teachers • Court-Annexed Arbitration Court-Annexed a/k/a Judicial Arbitration a/k/a – Some courts require it as Some a pretrial requirement pretrial – Either party may reject Either the decision the – Parties may proceed to Parties trial after arbitration trial – Reduces court backlogs See “Global Acceptance of See Arbitration” Arbitration” See also Cyberlaw: See “International Arbitration and Mediation of Domain Name Disputes” Name • • EEOC v. Waffle House (2002) (2002) • • • • Eric Baker worked as a cook at Waffle House. Signed employment contract requiring arbitration of any dispute. Signed requiring Fired after suffering seizures on the job;complains to EEOC about Fired disability discrimination. disability EEOC sues Waffle House on behalf of Baker; district court allows EEOC suit to proceed; appeals court holds that matter must go to arbitration. arbitration. Supreme Court holds that since suit brought by EEOC, which was Supreme not a party to contract with Waffle House, it did not have to arbitrate. Litigation could proceed. arbitrate. Note: If Baker had sued; he would have had to go to arbitration Note: even though suit is based on a federal right. even • • “Global Acceptance of Arbitration” • Over 100 nations have signed Over the UN Convention on the Recognition & Enforcement of Foreign Arbitral Awards of In some countries, it is harder In to receive enforcement, but trend toward judicial enforcement globally. enforcement – China and India had China reputations for nonreputations enforcement, but enforcement, improving improving – Germany recently Germany adopted laws meeting international standards international • Cyberlaw: “International Arbitration and Mediation of Domain Name Disputes” • • • • • World Intellectual Property Organization (WIPO) in Geneva establishes rules for trademarks and other intellectual property WIPO has domain name resolution service to protect domains (i.e. .mx for Mexico and .edu for education) WIPO has a Uniform Domain Name Dispute Resolution Policy (UDRP) dealing with such problems as “cybersquatting” Parties go to Arbitration and Mediation Center ( where experts handle disputes Fees are assessed – If 1-5 names included in a complaint--$1500 – If 3 panelists are requested -- $3000 Over 1000 disputes/year submitted to the Center for resolution • Mediation Mediation • • • • • • 3rd neutral person (mediator) assists the parties of the dispute dispute Parties mutually decide on a Parties resolution Mediator makes suggestions; Mediator suggestions all discussions confidential. all Mediator’s suggestions are Mediator’s NOT BINDING on the parties NOT Parties may go to trial after Parties this ADR this Mediation often helps to Mediation maintain the relationship between the parties between The Mediator The • Some states have no Some requirements at law requirements • Most people prefer a Most trained or experienced person person • If no requirements, the If mediator may be the choice of the parties choice • If mediator fails to act If professionally, may be subject to liability to one of the parties The Mediation Process The • Mediator collects information, outlines key issues, listens, asks Mediator questions, observes the parties, discusses options, and encourages compromise compromise Mediator often helps to draft the settlement agreement The settlement agreement is enforceable in court Mediator may assist in deciding the confidentiality of the case If confidentiality is agreed upon, which is normal, nothing can be If said in public said Information revealed during negotiation or mediation should not Information be used as evidence if the dispute goes to a later trial be See Paranzino v. Barnett Bank of South Florida See Paranzino • • • • • • Paranzino v. Barnett Bank of South Florida of • • • • Paranzino claims she gave Paranzino $200,000 to bank & received only 1 certificate for $100,000 Bank gave her receipt for Bank $100,000; denies her claim $100,000; Her bank statements reflect Her the bank’s claim Parties attend court-ordered Parties mediation with an agreement that includes a confidentiality statement statement Paranzino offered $25,000 by Paranzino the bank to settle, which she rejects rejects • • She calls the newspaper She which prints story about the case case Bank moves trial court to Bank strike her pleadings and asks for sanctions for breach of confidentiality confidentiality Trial Ct. strikes pleadings; Trial dismisses case w/ prejudice dismisses Paranzino appeals Held: Affirmed order of the Held: trial court. Case dismissed with prejudice. with She “willfully & deliberately She disregarded the confidentiality agreement. . “ confidentiality • • • • • Creative Business Use of Mediation Creative Example of Ford Motor Company • Ford is an example of Ford efforts that try to avoid “bad press” through mediation mediation • First consumers discuss First complaint with dealer & local district office local • Next complaint filed Next with Ford Consumer Appeals Boards Appeals • Board’s decision: Board’s binding on Ford but not binding consumers, who can still seek legal remedies seek • Process encourages Process dealer responsiveness to consumer problems consumer • See also “Creative Dispute Resolution” Dispute Innovative Forms of ADR Innovative • • Alternative Dispute Resolution Act of 1998 directs federal courts Alternative to implement a dispute resolution program, though Congress has not funded the mandate not Minitrial/Private trial: Parties decide a structural settlement Parties process that blends negotiation, mediation and arbitration process – Parties may quit the process at any time – Several federal district courts use “court supervised” Several minitrials minitrials Summary Jury Trial: The jury equivalent of a minitrial – Usually six advisory jurors; witnesses rarely used – Judgment is not binding (though jurors don’t know this) Judgment not (though – Dissatisfied parties may still take the case to court – Courts have held that ADR proceedings are closed to the Courts public and the press public • Expanding the Use of ADR Expanding (Congressional Encouragement) • The Judicial Improvements Act of 1990 – Encourages (sometimes requires) use of ADR by Encourages federal district courts federal – Courts must develop a caseload management plan – 1998 RAND Report indicates there has been little 1998 impact on caseload speed or cost to parties impact • The Administrative Dispute Resolution Act of 1990 – Authorizes use of ADR by federal administrative Authorizes agencies--they must adopt some kind of policy agencies--they – Requirement that all parties (public & private) Requirement must consent to use of an ADR technique must Pros & Cons of ADR To Business Pros • Pro – Avoids high cost litigation – Greater degree of control Greater of the problem of – More control over process More itself itself – Quicker resolution of case – May maintain business May relationship relationship – Outcome and/or Outcome agreement is confidential agreement – See Should Lawyers Agree See Not to Sue? Not • Con – Legal outcomes are Legal better--give direction to future business decisionfuture making – Learn from mistakes of Learn others from public cases others – In arbitration, legal right In to the court system is given away given – Emotional appeal to juries Emotional are not available (in fact, this may be a “pro” for businesses) businesses) Should Lawyers Agree Not to Sue? Should • Little-known negotiated settlement term: “Law firm agrees not to sue a defendant again on behalf of future potential clients.” (Ex: Company privately pays lawyer large sums to settle cases, IF the lawyer agrees not to sue the company again for future clients Unethical? Usually under states’ legal ethics codes HOWEVER: If a company signs the plaintiff’s lawyer up as a “consultant”, then a “conflict of interest” is created in the lawyer who then can’t sue company again. It’s a contrivance, but is within the rules -- Recent cases: – DuPont: pays lawyers $6.4 million arranging to not bring future cases against DuPont—lawyers had great expertise in matter – BellSouth in discrimination lawsuit allowed lawyers to determine their “consulting fees” from the $1.5 million settlement fund of the lawyers’ clients – Warner Lambert (now unit of Pfizer) agreed to pay lawyer $225,000, issue refunds to 90 potential members, etc. if lawyer dropped the clients, kept payment secret, and agreed not to sue Warner Lambert in the future. “Some Lawyers Promise Not to Sue in “Some Exchange for Cash from Firms” Exchange • • • ...
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