Arbitration and Mediation

Electronic agreements have become a staple of today’s e-commerce world, and such agreements generally are as enforceable as those written on parchment and signed with a quill pen. One notable exception, however, is where the proponent of such an agreement seeks to enforce an arbitration provision. In that case, more may be required than simply having a clause stating that all disputes must be resolved through arbitration at the AAA, JAMS, or some other organization. Indeed, that is the hard lesson the defendants in Cruz v. Jump City Everett LLC (34 Mass.L.Rep. 586) learned earlier this year.

In 2015, after visiting the defendants’ recreational trampoline facility with his two minor children, Elmer Cruz filed suit in Suffolk Superior Court, claiming that he suffered an injury at the establishment. The defendants moved to dismiss that claim, contending that Mr. Cruz had affixed his electronic signature to a “Participant Agreement” that included a clause requiring all disputes to be resolved via arbitration. Mr. Cruz countered by submitting an affidavit in which he asserted that (i) he does not speak English; (ii) his son, who does speak English, led Mr. Cruz to a computer screen, where the son entered various information and … Keep reading

As I noted in a prior post, the differences between arbitration and litigation go well beyond the fact that arbitration generally is a quicker and less expensive process. As such, there are a host of reasons why a company may want certain disputes – including, but not limited to, those brought by its own employees – resolved through arbitration. Similarly, companies almost always want to avoid the risk of being sued in a class action. Recently, the U.S. Supreme Court, in its consolidated decision in Epic Systems Corp. v. Lewis; Ernst & Young LLP v. Morris; and NLRB v. Murphy Oil USA, Inc., ruled that class action waivers are enforceable.

As Justice Gorsuch noted at the outset, while the three consolidated cases had different facts, they each essentially revolved around the same related questions:

Should employees and employers be allowed to agree that any disputes between them will be resolved through one-on-one arbitration? Or should employees always be permitted to bring their claims in class or collective ac­tions, no matter what they agreed with their employers?

In the Ernst & Young case, Stephen Morris entered into an employment agreement with E&Y, stating that (i) all … Keep reading

It’s human nature to engage in an emotional exhale after reaching an agreement in principle to settle a long-standing or hard-fought dispute. While doing so is all well and good, it is critical that you don’t let that deter you from exercising extreme focus on documenting that settlement in a carefully crafted agreement. Indeed, as the plaintiff in Zvi Construction v. Levy found out a few weeks ago, failing to do so can leave your client in a position where it is unable to obtain the fruits that it rightfully deserves.… Keep reading

In 2014, I posted Carefully Craft Your Arbitration Clause if You Want Some, But not All, Disputes Arbitrated.  A decision a few months ago, Trustivo, LLC v. Anthem, Inc. is a reminder that if a contract has a broad arbitration provision, a party may have little chance of getting court intervention – even in situations  where the general validity of the contract is challenged – unless an appropriate carve-out is inserted.… Keep reading

As I discussed in Is Arbitration Quicker, Cheaper and Better for You?, sometimes it is in a party’s interest to have a dispute resolution mechanism that is long, onerous and expensive.  Further, as the recent case Grand Wireless v. Verizon Wireless confirms, if you want some disputes resolved by arbitration and others resolved by a court, it is critical that your arbitration clause spell this out in detail.… Keep reading

Porreca v. The Rose Group was a class action lawsuit brought by Carly Porreca and Charles Walton, alleging that their employer, Applebee’s Neighborhood Grill and Bar, had violated the Fair Labor Standards Act. After Porreca was dismissed from the lawsuit, the restaurant management company that owned and operated the Applebee’s at which Porreca and Walton worked, the Rose Group, sought a stay of the litigation as well as an order (i) compelling Walton to arbitrate his claim individually, and (ii) barring him from pursuing a class action in that arbitration.  In support of this request, the Rose Group relied on the fact that Walton had signed an agreement binding him to the company’s Dispute Resolution Program, which specifically stated the following:

The Company and I agree that all legal claims or disputes covered by the Agreement must be submitted to binding arbitration …. We also agree that any arbitration between the Company and me is of an individual claim and that any claim subject to arbitration will not be arbitrated on a collective or a classwide basis …. 

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Litigation is time-consuming, is costly and, even in a business context, can be emotionally draining.  Thus, it makes perfect sense that in-house counsel and business people, alike, often try to implement mechanisms to avoid having to file or defend suits.  One such method, about which I posted earlier this year, is the use of a liquidated damages provision.  Another that has become increasingly popular is to include a requirement that the parties meet and confer before they can file suit. A typical version of such a clause that I periodically see in contracts is one like the following:

Before a party may file suit, it first must give the other party written notice of the dispute.  After notice is received, representatives of each party shall meet within 5 days in a good faith effort to resolve the dispute.  If the dispute cannot be resolved within 5 days after such meeting, suit may be filed.

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Over three prior posts on the subject of mediation, I have discussed what mediation is and is not, explained the process of how mediation works, and most recently, examined under what circumstances it makes sense to mediate.  Here, I will conclude this series of mediation posts by breaking down how, once you reach an agreement in principle, you limit the risk of losing it.

After a very long day of back and forth with your mediator, you authorize one last proposal for the mediator to take to the other side.  The mediator comes back 20 minutes later and tells you that your offer has been accepted.  The mediator then invites all of the parties and their counsel into the same conference room in which you began the mediation process nine hours earlier, to go over the terms.  One by one, he goes through each of the six settlement terms, and each time both sides indicate that they agree.

While you do and should feel a sense of satisfaction (even if the settlement is not exactly what you had hoped it would be), do not think for one minute that the process is over.  Indeed, one of … Keep reading

After having read Mediation 101 and Mediation 201, you should have a solid understanding of what mediation is and how it works.  Now, let’s discuss when it makes sense to mediate.

While different types of cases get resolved through mediation every day, mediation is not likely to be successful in every case.  As a general rule, when parties agree to mediate, it is implied that they are willing to at least consider some sort of compromise or “outside the box” resolution to the dispute (it is for this reason that I believe court mandated mediation often leads to nothing more than a waste of time and money).  Part of the reason for this is that no matter how reasonable a party’s position may be, mediators are wired to be impartial, and telling one party from the outset that it must capitulate goes against mediator DNA.  Another reason for this is that all but the most inexperienced litigators know that mediation implies some sort of compromise.  Thus, if a party claims at the mediation that it will not compromise one bit, such a position is not likely to be taken seriously – even if it is genuine.  Likewise, a … Keep reading

Hopefully, Mediation 101 gave you a clear understanding as to what mediation is.  Now, let’s discuss how mediation works.

Pre-Mediation Considerations

While selecting a mediator can be critical, unlike when selecting an arbitrator, parties should not be very concerned that a biased mediator might force them to enter into a “bad” settlement.  Because mediation is voluntary, a mediator simply does not have the power to force a party to agree to any settlement with which that party is not completely satisfied.  What is crucial about the selection of the mediator, however, is that s/he has credibility with the ultimate decision makers, i.e., the parties, not counsel.  Without credibility, the parties are not going to give the mediator’s comments the full consideration that might lead them to modify their positions and settle.  Consequently, it is important to ask questions like the following:

  • If industry knowledge is important in understanding the dispute, does the potential mediator have sufficient industry knowledge?
  • Will it impress the parties and increase the persuasiveness of the mediator if s/he is a former judge and/or has some other has special background or experience?
  • How many cases similar to the one at issue did the
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