By Louise LaMothe
Originally published in the Los Angeles Daily Journal, April 1, 2008

Litigators have been practicing under the changed Federal Rules of Civil Procedure relating to electronically stored information in federal courts since December 2006. A body of federal case law has mushroomed, explaining how these new obligations affect litigants, and many states have passed similar legislation.

In California, the Judicial Council is proposing both statutory and rule changes, now out for public comment. Almost unnoticed, however, the advent of e-discovery and the handling of ESI in general also have brought challenges to arbitration, which historically has operated in a much more limited discovery and looser evidentiary environment.

How should arbitrators handle ESI when it arises in cases before them? Which lessons from ESI in litigation are applicable to arbitration, and which are not?

Discovery in Arbitration?

Some might ask, Why even discuss this subject? There is no right to discovery in arbitration in the first place, so there is no reason to talk about e-discovery. The average arbitrator probably is used to handling hearing preparation based on some general guideposts – discovery is not generally allowed in arbitrations conducted under the basic commercial rules of the largest ADR provider, the American Arbitration Association, though arbitrators usually order what the parties can agree to.

Sometimes, the arbitrator handles production of documents from a recalcitrant party by convening the arbitration hearing, because the arbitrator has the right to order production of documents at the hearing. The arbitrator acknowledges the production of documents at the beginning of the “hearing,” then recesses the hearing so that the party seeking the documents can review them. Under such a practice, the arbitrator may “reconvene” the hearing weeks later and proceed with hearing the evidence.

Many arbitrators, having found this procedure cumbersome and inefficient, have begun to press the parties to agree to some discovery in advance of the evidentiary hearings. Similarly, some arbitrators prefer to allow limited depositions in order to avoid time-consuming examinations of witnesses for the first time at evidentiary hearings.

Although the AAA rules do not provide for discovery in basic commercial cases, Rule 21 states that, in the exercise of the arbitrator’s discretion, he or she may order an exchange of information, “consistent with the expedited nature of arbitration.” This exchange, the rule states, includes the production of “documents and other information.” This general framework supports the arbitrator who wants to order information produced ahead of the hearing, rather than waiting for documents to be produced there, and ESI certainly falls within the general rubric of “documents and other information.” JAMS Rule 17 also allows for the exchange of information and is more specific about the methods. However, if the average arbitrator approaching the issue of e-discovery looks only to AAA Rule 21 or JAMS Rule 17, neither is particularly helpful.

The AAA’s Large Complex Case Rules and its National Employment Rules are clearer about the right to discovery. The Large Complex Case Rules (applicable to all cases in which the amount in controversy is at least $500,000) give broad authority to the arbitrator to control discovery (L-4(c)), including depositions (L-4(d)). Rule 9 of the Employment Arbitration Rules is even more specific: “The arbitrator shall have the power to order such discovery, by way of deposition, interrogatory, document production or otherwise, as the arbitrator considers necessary to a full and fair exploration of the issues in dispute.”

International arbitration rules, such as the International Centre for Dispute Resolution (ICDR-part of the AAA), generally don’t provide for discovery; even here, pre-hearing procedures can be used to gain access to information. For example, without mentioning discovery by name, ICDR International Arbitration Rules, Article 19 (3) provides, “At any time during the proceedings, the tribunal may order parties to produce other documents, exhibits or other evidence it deems necessary or appropriate.” No guidelines exist for how to manage this process.

A useful template exists in Rule 26(f) of the Federal Rules of Civil Procedure, which requires an early meeting of counsel where ESI is now discussed in detail. Briefly, Rule 26(f) requires a new level of cooperation between the parties before a Rule 16(b) conference with the court. Parties must meet and confer about (among other things) the preservation of discoverable information and the form in which ESI will be produced. The rule can be adapted for use by an arbitrator, as well.

Agenda Order

A well-organized first preliminary hearing with the arbitrator (like the Rule 16(b) conference with the court under the FRCP) has many benefits. It efficiently covers the issues and sets a tone of active management of the arbitration.

Although preliminary hearings are standard fare, the attorneys’ preparation for them can be haphazard. Likewise, lawyers well capable of handling ESI in litigation may become a bit sloppy in arbitration because the rules are looser and the proceedings informal. To avoid this and to promote early cooperation among counsel, arbitrators should send out an agenda order before a first hearing with the parties.

Agenda orders can be tailored to each case, covering all of the issues expected to arise in the first preliminary hearing and taking into account any idiosyncrasies arising from the parties’ arbitration agreement, as well as the amount in controversy. The agenda order includes a direction to the parties, patterned on Rule 26(f), to meet and confer before the first hearing with the arbitrator in order to agree on a plan for exchanging information and, if warranted, a discovery plan.

Here is an example of that portion of an order:

“Exchange of information and discovery: “Counsel for the parties are ordered to meet and confer in advance of the preliminary hearing to exchange information regarding the documents and other information, including ESI, that they believe are likely to be relevant to the issues in the case. Consistent with the expedited nature of arbitration, the arbitrator urges the parties to develop a plan for the exchange of information, and discovery, if provided for in their agreement or otherwise allowed under any applicable rules and statutes.

“Counsel shall jointly report by e-mail to the arbitrator with a copy to the case manager no later than 48 hours before the preliminary hearing as to the agreements reached in their conference, and any remaining areas of disagreement, stating the position of counsel on each contested issue.

“In order to prepare for the conference, counsel for each party shall first meet with the client to determine the nature and extent of the information reasonably likely to be used in the hearings or to be requested in connection with the hearings. The meeting shall identify, in particular, whether electronically stored information (ESI) is likely to be relevant to the case. If ESI is likely to be used in the hearings or requested in connection with the hearings, then counsel shall determine with the client the following information: the types of ESI the client has, the location of the ESI and the identity of its custodian, the format in which the ESI is kept, and what steps are being taken for its preservation during the case. Counsel and the party should also discuss the scope of the production of the ESI that the party is willing to agree to, as well as the form of production, and how privilege and privacy concerns will be addressed in the production.”

It is obvious from these rather detailed requirements that the arbitrator must allow plenty of time between issuing an order to meet and confer and setting the date of the first preliminary hearing. Rushing this aspect of the preparation is counterproductive when parties are trying to locate and understand their ESI in order to be ready to proceed at that preliminary hearing.

First, counsel for each party needs to meet with the client to review thoroughly the types of ESI likely to be relevant to the case. In that meeting, counsel should be inquiring of the client in detail about the type of information technology systems that the client maintains, where the ESI is located, who the custodians of the data are and what steps are necessary to preserve the data. Then counsel needs to determine in consultation with the client how much of the ESI will be offered for production and in what type of format the production should occur. This type of analysis can take anywhere from a few days to several weeks, and the arbitrator needs to allow for it.

Counsel also needs to inquire of the client how to define what ESI most likely will be relevant in the case. Counsel may need to determine whether the arbitrator likely will allow discovery of ESI after considering the amount in controversy in the case and the difficulty of producing the ESI. The objective of both sides should be to avoid overbroad requests for information, which results in mountains of ESI, which must be reviewed. And when they meet, counsel should establish a joint protocol, if possible, for review of the information received.

Additional issues frequently arise, of course, depending on the type of case and the amount in controversy. The arbitrator will have to assess the cost of production of the ESI and weigh the parties’ arguments on how that expense should be borne. In some cases, such as trade secret and many employment matters, it may be necessary to gain access to ESI on home computers, handheld devices and elsewhere, some of which may belong to third parties. Here, the important differences between arbitration and litigation crop up, of course. Arbitrators do not have the same power as judges and lack the power to enforce subpoenas. Arbitrators also do not discipline parties by issuing sanctions orders. They rely on persuasion, party agreements and other devices to achieve compliance.

The suggestions made here are a first step only, but one that, at the outset of the case, helps the parties and the arbitrator know where ESI issues may arise and begins to provide a way of dealing with them. And if the arbitrator in your next case does not seem inclined to get an early grip on the ESI, at the first opportunity, you as counsel should suggest that the parties use a Rule 26(f)-type conference. Many arbitrators, still computer-illiterate and unfamiliar with ESI, welcome help from well-prepared counsel to identify and get ESI under control.

Louise A. LaMothe, an arbitrator and mediator, practices private dispute resolution throughout California. She is based in Santa Barbara.

By Louise LaMothe
Originally published in the Los Angeles Daily Journal, January 10, 2008 (PDF)

One of the advantages of arbitration is its flexibility. The parties can design their own process, which may contribute to a result that is better received by the clients. Importantly, the proceeding can be flexible for receiving evidence. Most providers have a rule similar to the American Arbitration Association’s: “Conformity to legal rules of evidence shall not be necessary.” Rule 31(a) AAA Commercial Rules. As a result, the parties in arbitrations frequently request the arbitrator to allow testimony of witnesses who cannot appear in person at the hearing.

In the past, we arbitrators have been used to receiving testimony offered in the form of a declaration or affidavit, though that makes cross-examination impossible. Rule 32, AAA Commercial Rules allows this practice, though it admonishes that “[the arbitrator] shall give it such weight as the arbitrator deems it entitled to after consideration of any objection made to its admissibility.” See also JAMS Comprehensive Rules and Procedures, Rule 22(e).

Frequently, the party offers a deposition, which itself may be either in hard copy or by videotape. The problem with this is that no follow-up questions are possible. And sometimes, live testimony is taken by the telephone. In my experience as an arbitrator, not being able to see a witness testify in person is not a very satisfactory situation. It is also impossible to know whether others are in the room with the witness. Moreover, the court reporter may object, concerned that there is no way positively to identify the person testifying.

In the past, these unsatisfactory methods of taking testimony were endured, but fortunately forgoing live testimony is no longer necessary, even if the witness is at a very great distance, thanks to videoconferencing. Moreover, a party’s representative may be unable to attend all or part of a hearing in person. That person, too, can participate instead from a remote location by videoconferencing. In fact, as happened in a recent case before me, parties located in two European cities were connected to our Los Angeles hearing site simultaneously. They were able not only to hear the proceedings but also to see everyone else involved, contributing to their satisfaction with the arbitration process.

Although surprisingly few parties suggest the use of videoconferencing, when I mention its use they are uniformly enthusiastic. I predict that videoconferencing will be used in arbitrations with increasing frequency very soon. The high cost of travel and the busy schedules of managers who are loath to take time away from the office make videoconferencing an ever more viable alternative to appearing at the hearing location, especially if the witness is not central to the case. In arbitrations over which I have presided, the parties have presented video testimony from many locations in both the United States and Europe, without significant interruption or problems. The low cost of the technology allows videoconferencing to be used in virtually every case.

Though the taking of testimony by videoconference vastly improves the quality of the evidence the arbitrator receives, many parties neglect to consider this technique in advance of the hearings. In my experience, it is precisely in advance of the hearings that the parties need to think about employing videoconferencing and discussing it with the arbitrator. In the presentation of video testimony, advance preparation is crucial.

In preparing for the taking of video testimony, I recommend to the arbitrator and the parties that the subject be raised at the first management conference in the case. Once the idea is discussed, and the parties see how much they can accomplish in using it, they frequently decide to build the hearing schedule around the videoconference. In one case, the hours of the hearing were adjusted because the witnesses to be heard were located in several time zones. Because some witnesses testified from Belgrade, Serbia, we started the hearings early in the morning, Pacific time, in order to account for the eight-hour time difference. We also concluded our sessions earlier, when we noticed the witnesses were becoming tired. These witnesses, who were also claimants in the case, were able not only to testify but also to hear the testimony presented by other witnesses at our location.

Several items that the parties need to work out in advance can and should be handled by the arbitrator’s scheduling orders: The parties need to agree on a schedule for creating a joint list of exhibits to be used at the hearing. If a hard copy of exhibits is going to be used, once the exhibit binders are assembled, the parties need to allow sufficient time to send a set of the exhibits to the location so that the witnesses located there have access to them while testifying.

Sometimes, a witness invokes a privilege, one of the evidentiary rules that is followed in arbitration. See, for example, Rule 31(c) AAA Commercial Rules. If it is obvious in advance that privilege may be invoked or if there is a need to prepare the witness or to explain questions, the smoothest way to handle the issue is to have a lawyer at the site of the witness. Either a lawyer may be dispatched there, or, as is the case with global law firms, the witness can travel to one of the firm’s offices, where a firm attorney is present. With that arrangement, testimony can be taken from that remote location for the arbitration occurring elsewhere.

No system is perfect, and videoconferencing is not yet seamless. The television monitor sometimes shows faces moving but with annoying lags in verbal responses. The witness frequently appears to be looking off center, which can be distracting, as well. (The camera location can be fixed with a little adjustment most of the time.) Glare on the television monitor can make looking at it for long periods uncomfortable. Occasion-ally, those of us at the hearing site lost our connection with the remote location altogether; this technical glitch, however, was more distracting than really problematic. Redialing reconnected us in every case.

Sometimes, in addition to the distance, language issues need to be confronted. Arranging in advance for the services of an interpreter at the witness’s location is necessary. Moreover, during the questioning, the arbitrator should be sensitive to al-locating additional time for the interpreter to translate questions and answers.

I highly recommend that the court reporter retained for the hearings be experienced in the taking of testimony from a remote location. Because of the need to watch the television screen, located a distance from the reporter, and because of the speech time lag that sometimes occurs, court reporters have told me that they find taking the testimony somewhat more difficult. This is especially aggravated if there is a person simultaneously talking, either at the remote location or at the hearing site. I find that more-frequent breaks are necessary to allow the reporter to rest.

Finding locations at which videoconferencing is offered is not difficult. The American Arbitration Association offices in Los Angeles have the equipment, and many locations around the United States are also available. FedEx Kinko’s, for ex-ample, advertises that it has 120 locations at which videoconferencing facilities are available.

None of this, however, can be done on the ? y. In the past, I have sat facing a black screen because the lawyers involved in the arbitration had not set up the videoconference properly, and curing the problem on the spot was impossible. Finally, I had to take the testimony by telephone. Now, my first order setting an agenda for the first teleconference in a case routinely asks the parties to consider whether they may wish to present some witnesses by videoconference. Uniformly, they are pleased to have the opportunity presented to them.

Louise A. LaMothe, an arbitrator and mediator, practices private dispute resolution throughout California. She is based in Santa Barbara.

Name:

Affiliation: Independent, American Arbitration Association

Rate: $375 per hour in Santa Barbara, $500 per hour outside Santa Barbara

Location: Santa Barbara

Areas: Mediation and arbitration of employment, entertainment, intellectual property and construction disputes

Cases: In February, LaMothe arbitrated an employment dispute involving a national retailer in which an employee claimed she was forced to quite due to same-sex sexual harassment by a woman she claimed was her supervisor. LaMothe found in favor of the retailer for an undisclosed amount. Earlier this year, LaMothe was appointed sole arbitrator in a securities class action brought by account holders seeking refunds from an investment advisor who allegedly calculated his fees illegally. That case is still pending. In January, she mediated a case pitting a 99 Cents Only store against its landlord over when the property became inhabitable. LaMothe determined the date the store should start paying rent to the landlord and awarded a settlement for an undisclosed dollar amount.

Background: Partner, Riordan & McKinzie

Quote: “She was able to cut through the Gordian knot and get to the heart of the issue.” Dan Stormer; Hadsell & Stormer

Originally published in the Top 50 Neutrals section of the Daily Journal Extra, December 6, 2004.
]]> http://www.dispute-solutions.com/top-50-neutrals/feed/ 0 http://www.dispute-solutions.com/the-sedona-conference-on-complex-litigation/ http://www.dispute-solutions.com/the-sedona-conference-on-complex-litigation/#comments Tue, 07 May 2002 21:09:32 +0000 Website Administrator http://www.dispute-solutions.com/?p=204 Sedona Conference Complex Litigation (PDF)

I . INTRODUCTION

The settlement of complex disputes frequently can be advanced by the employment of an independent mediator. The skills of the mediator must go beyond the creativity of a good negotiator, shuttling offers and counter offers between two caucus rooms. The processing of the settlement of a complex case involves custom-designed, rather than off the shelf, dispute resolution. A framework must first be created in which settlement may be facilitated. The lawyers for the parties are central to the success of this process. They need to cooperate to find someone whose management skills are innovative and flexible enough to encompass a complicated case. Advance planning of the many steps involved will pay dividends.

By complex litigation, I mean matters in which the monetary stakes are high, or there are multiple parties or constituencies, or there is intense media interest. Any of these situations typically needs multiple sessions to mediate to conclusion.

This article provides a rough timeline, based on my experience, of the steps that a mediator in a complex case might follow in working with the parties and their counsel to design a dispute resolution process and manage it to conclusion. In a post script, it also recounts my experience participating as a mediator/arbitrator in a class action settlement.

II. The lawyers’ central role

The role that the lawyers can play in making the mediation productive can not be over emphasized. Likewise, the mediator should see her role as supporting and enhancing the lawyers’ ability to represent their clients as effectively as possible.

The lawyers will advance settlement the most by keeping their own lines of communication open. Even if the animosity among the parties is great, the lawyers must not lose their own ability to dialogue. If they have laid the groundwork, the mediator has a much easier time of it.

The lawyers should discuss the type of mediator they need—and should carefully review the strategies they think will be most fruitful for settlement discussions. When looking for a mediator, the lawyers should have a preliminary conference call with a few candidates. Find out not only the mediator’s experience in complicated or high stakes litigation, but also how much time the mediator has available to devote to your case. Get some references and call them. Once you settle on a candidate, begin with a telephone conference with the lawyers and mediator only to introduce the case and the participants briefly to the mediator. Agree on a timetable for a first in-person session and what will be done by each participant to prepare for it.

Lawyers are used to supplying the court with a single document in the context of discovery disputes. That device can be modified for use in the mediation context. For example, whenever possible, I ask the parties to submit a joint statement of the case, with separate statements setting out the position of each side on critical issues. I also encourage the parties to share as much information as possible. Instead of keeping their mediation briefs confidential, they should exchange all that they can, and put the confidential information in a separate letter to the mediator only.

III. The first session–logistics

The first session may most fruitfully be conducted with the lawyers and mediator only. Its purpose is to begin the design of the process now that the mediator has learned enough about the parties and the dispute to be helpful.

The types of processes to be designed depend, for example, on the number of plaintiffs and the number of defendants, whether class or individual actions (or both) are involved, and whether there are federal or state (or both) actions pending. Most cases need to be broken down into many manageable pieces, and on many dimensions. For example, if it’s a construction case with many subcontractors, dividing the various parties into groups and figuring out the insurance nuances is a major first step.

The parties may need assistance in developing necessary information not only to share with the other parties, but to inform their own litigation risk analysis. The lawyers and mediator could as a first step agree on what information will be located, how, and where and with whom it will be exchanged. These agreements can be formalized, if desired, either in a mediator’s letter or an order to all parties.

IV. Using experts

In complex cases, it is common for the mediator to encounter subject matter in which s/he has no expertise. In fact, I use that lack of knowledge as a strength by telling the parties and their counsel that I rely on their expertise. While it helps to be a quick study, the mediator who is too facile in professing knowledge about the subject matter should cause the parties to suspect bias.

Of course, the lawyers will assemble documents for the mediator to review, arrange a site visit, and provide other ways to acquaint the mediator with the subject matter. The mediator may also decide to seek the parties’ agreement to employ the services of an independent expert to assist her. In one multi-party case involving the extent of required accommodations under the Americans with Disabilities Act, I suggested to the parties that they give up their already retained experts to the mediation process and allow them to be used to help create a solution. The parties’ experts visited the site together with the parties, counsel and me to view the actual working conditions. They conferred, exchanged ideas and came up with proposed solutions for the parties’ consideration.

In an appropriate case, the expert can act as an advisor to the mediator, or even as a co-mediator. These possibilities can be discussed as early as the first session the attorneys have with the mediator.

V. Structuring the process

Another early decision is who should participate in the discussions and when. First, the mediator will want to determine whether all stakeholders in the dispute are already in the discussions. The mediator will want to ensure that all stakeholders have spokespersons. If a group of people with common interests does not have a lawyer to speak for it, the mediator can encourage the group to hire one, or at least to appoint someone to act as spokesperson. In some cases, a corporate party may pay for counsel to represent a group with adverse interests since settlement discussions may be thereby facilitated.

In cases with large groups of parties, the mediator can limit the number of people at the table so that a constructive dialog can happen. A course can be charted in which numerous subgroups work on different aspects of the matter. In later sessions, the group convened may change depending on the circumstances. The mediator may pick out a small group of people (after getting the consent of the group) to help draft a text or to list options, or take on some other limited task.

In my experience, it is the exceedingly rare case in which the participants in the mediation do not feel the need to justify their decisions to others—the boss, the division vice president, the Board, the spouse or family business partners. As the mediator, I want to provide to the participants the time and tools for this consultative process to occur.

The mediator might decide to structure the process to limit the need for very senior executives to attend many sessions, while keeping them apprised of the developments. At the outset, I secure their commitment to attend the sessions in which the most critical decisions will occur. Frequently we agree to let middle managers first lay the groundwork, participate in the information exchange and the develop alternatives. Those steps can be reported to the senior people during the time between sessions, allowing time for consultation and strategizing. This strategy may maximize their involvement when it counts the most. When it’s time to “close,” I get the actual decision makers there. The settlement process is speeded up if they don’t participate from a distance since momentum grows as the session goes on.

Operating in a planned pace, session by session, has other advantages in driving toward settlement. The mediator helps the parties set achievable goals for each session. Reaching those goals build increases the confidence of the lawyers and parties in the process and in turn creates building blocks for further discussions. I find that if the parties’ representatives can get agreement on the easy matters first; they then can move to more difficult issues.

The mediator plays many roles, depending on the issues and participants in the case. The mediator may at some points be scribe and note taker, cheerleader and coach. The mediator is also the natural central repository for the proceedings, keeping the discussions on track, figuring out where the discussions have led and what the next step or steps might be.

VI. Dealing with the court and the media

If all participants agree, the mediator can communicate to the court, and having the mediator perform this function is particularly helpful if the case is on a fast track. Of course, without the explicit agreement of the parties, the mediator would not advise the court (or anyone else) about the substance of the mediation. The California Supreme Court 2001 decision inFoxgate Homeowners’ Assoc. v. Bramlea California, Inc., 26 Cal. 4 th 1 (2001) is a well-known endorsement of this rule. The lawyers should be aware, however, that the procedures of some courts seem to provide for the mediator to report to the court about the progress of the mediation.

If the media is interested in the case, the mediator may be used as the spokesperson. All parties can agree that the mediator will issue all statements to the press, and refer all inquiries to her. The participants can develop with the mediator the general content of the messages. The mediator may deliver written or oral statements that fit the situation.

VII. Communications between sessions

I have had a website, www.dispute-solutions.com, for several years and I continually experiment with ways to use it more effectively. In the process, I have greatly increased my use of the Internet, particularly email, in mediations. Parties expect those in business to use email and lawyers are increasingly comfortable with using the Internet to communicate and share files with their clients. A mediator who has demonstrated familiarity with the Internet probably also has the level of innovation and creativity necessary to make a significant contribution to settlement efforts in a complex case.

In between session, I keep thinking about the case. Some of my best ideas come when the bigger picture comes into focus after a session concludes. When a session is over, I think about the roadblocks that seem to me to be appearing and strategize about how to reduce or eliminate them.

When cases are complicated, it’s easy for comments made during a session to slide by without my having a chance to follow up then and there. Sometimes, I need clarification from one of the participants. Sometimes, I want to follow up to be certain that a promised piece of information has indeed been shared since the session concluded.

The mediator can seek permission to communicate directly with the parties between sessions, of course, but I find that it is less threatening for the lawyers if the mediator communicates through them instead. That way, they are in control of what is passed on to their clients, and how.

I see one important function of a mediator to coach the parties to put their perspectives forward in such a way as to best avoid alienating the other parties. The Internet is a great tool for that mediator function. As the mediation process continues, I send suggestions for strategies parties could consider based on what has already been revealed. For example, if a party representative expresses that party’s unwillingness to make another offer because to do so would be “bidding against ourselves” I send out an article after the session to the party’s attorney to assist the party in working through what might otherwise be an impasse to bargaining at the next session.

To stay in contact with the parties, I use the Internet to give “homework” to any or all sides, in separate messages. While email is quicker than sending snail mail, it is better than the telephone for follow up since it allows the mediator to frame each observation or proposal carefully and get the party’s studied, rather than off the cuff, reaction to it. Another good bit of homework is a revision of a party’s litigation risk analysis as a result of newly-obtained information or hypothetical scenarios posed by the mediator.

One important point for the mediator and parties to remember when using email is to get permission of the participants and to be aware of confidentiality issues. The use of email and the difference between using “reply” and “reply to all” should be discussed and understood by everyone. The mediator’s email message should contain a confidentiality message as a footer, patterned on those found on fax cover sheets. It should state that the communication is confidential and direct any person who has erroneously received it to delete it and notify the mediator of the incorrect transmission.

VIII. Other issues: Avoiding the loss of mediation confidentiality

There may be statutes impacted by settlement negotiations that stretch out over several sessions. One important consideration is confidentiality. In California, for example, Evidence Code § 1125 governs when the mediation “ends” and therefore impacts the confidentiality of mediation communications. Section 1125 provides in part:

“(a) For purposes of confidentiality under this chapter, a mediation ends when any one of the following conditions is satisfied: …

(5) For 10 calendar days, there is no communication between the mediator and any of the parties to the mediation relating to the dispute. The mediator and the parties may shorten or extend this time by agreement.”

In states with statutes such as California’s, the mediation confidentiality agreement signed at the beginning of the mediation should explicitly provide that the parties waive the restriction on confidentiality so that the communications, whether by email or otherwise, will remain covered by the mediation confidentiality privilege even if several weeks have elapsed since the last communication.

IX. When it’s not working

The parties need to know that the mediator is tireless; a “never give up” attitude is essential because the mediator is also a creative generator of ideas. Of course, it’s the parties’ case, but the mediator has to take some ownership of the settlement process. The mediator may enlist one or more of the participants to help in this process.

Sometimes, the answer is to reach agreement on a further process to decide some open issue first; in order to break open the rest of the case. The mediator may suggest that the parties convert all or a portion of their dispute to an arbitration, or find another process to decide the point on which they can’t agree. Sometimes, negotiations break down because someone’s needs are not being met. A good mediator will go back over the terrain to see what has been overlooked.

If negotiations stall even after all of these efforts, the mediator may be well advised to call a “recess.” Even then, the good mediator follows up and checks in with the parties periodically. I am surprised by the number of mediators who don’t follow up with a phone call after the mediation is over to see if there is anything else that can be done. Situations change and when they do, that might create the opportunity to pick up discussions again. Some mediators do not charge the parties for follow-up phone calls–only for in-person sessions. Find out and let the mediator follow up if she wants to.

X. Get it in writing

There is a strong temptation at the conclusion of a lengthy mediation to let the settlement drafting wait to a later day. A good mediator will not allow this to happen. As the case begins to get close to final resolution, I frequently give as a task to the party sitting in one caucus room the task of writing the “deal memo,” the essential terms of a settlement, leaving the unresolved terms and amounts blank. That document can be finalized when the remainder is agreed to. If the mediation has already stretched over several sessions, the document can be brought by the lawyer on a laptop computer, or at least on disk, ready to be updated at the final session. The scope of the releases and dispute resolution and attorneys fees provisions are also natural items to agree on at this point.

The wisdom of such a course is obvious to anyone who has had to renegotiate a settlement when one side backed out after the mediation. In California, consider Code of Civil Procedure §664.6, for example. If the deal memo provides that the parties agree that CCP §664.6 applies to the agreement, then the court may enter judgment on the settlement. Beware of trying to use this device if there is no civil action pending between the parties, however. A California appellate court found that the trial court did not have the power to enforce a settlement in the absence of pending litigation. The Housing Group v. United National Insurance Company, 90 Cal. App. 4d 1106 (1 st Dist. 2001).

Do not assume that the mediator will do any of your settlement drafting for you. Many mediators, believing that this activity might be later construed as the practice of law, resist or refuse to draft settlement documents for, or even with, the parties. Check to see if the mediator is willing to be involved in the drafting of settlement language.

XI. POST SCRIPT: How the settlement plays out

In a class action with thousands of individual claimants, a structure for dispute resolution after settlement of the common issues must also be designed. This is of the utmost importance, as a carefully thought-out system for dispute resolution enhances the opportunity for settlement of individual claims, thereby reducing the time and expense of the process. Most of these settlements categorize and value individual claims using a grid system.

An instructive model comes from the life insurance class actions of the last 5 or 6 years. An important part of these settlements was establishing the structure for handling individual claims utilizing a nationwide panel of ADR neutrals. My experience in serving on one such panel is detailed here.

XII. one worm’s eye view of settling a complex dispute

I served as one of a nationwide group of 20 panelists in the settlement of one of the many class actions challenging sales of universal life insurance policies. The parameters of the class settlement had been agreed to in advance. The company set up an internal claims resolution office to process the class members’ claims under agreed-upon rules, rather than use an independent claims administrator.

The parties chose the neutral panelists from a list of qualified arbitrators provided by the American Arbitration Association. The panelists were trained collectively at a central location at which presentations were made by the lawyers for the class and the company. We were then were assigned to hear and resolve claims arising out of certain geographic regions, for the most part. Most claims were heard by a single arbitrator. Large claims were handled by three-arbitrator panels.

The class member policy owners were allowed a period of time within which to file proofs of claim, with supporting documentation, if they had any. Those policy owners who refused to accept the standard settlement package for their type of policy, were required to file appeals. The policy owners also had access to a policy owner representative—independent lawyers paid by the company to assist them in presenting their claims. The system had what was incorrectly named a “mediation” component, followed by arbitration.

Once the appeal of the proof of claim was filed, the company responded to it and the file thus created was first evaluated by an internal company team. If the policy owner appealed that team’s decision, the file was mailed to the arbitrator assigned to handle claims arising in that geographic area. (Other class action settlements have instead involved emailing the file to the panelist.) After reviewing the file, the panelist contacted the claims administrator to set up a conference call among the policy owner claimant (and his or her own private counsel, if any), the policy owner representative, the company representative and the arbitrator.

The purpose of this first telephone conference was in large part to explore settlement. The policy owner representative and the company representative as well as the policy owner (and counsel, if any) were all on the call with the arbitrator acting as mediator. The parties were frequently at numerous different locations, so caucuses were possible only if the other participants put down their telephones for a predetermined period of time, then picked them up again. These sessions sometimes were quite lengthy, with offers and counter offers going back and forth for up to ½ hour.

The parties chose most intelligently in including this mechanism in their settlement. I calculated at the end of the process that 70 % of the 100 cases assigned to me settled at or within a few days after this conference. Other panelists reported similar rates of settlement at this stage. I think that there were a couple of overriding reasons for that high settlement rate:

• The importance of allowing a forum for venting. The policy owners who cared enough about their loss not only to file a proof of claim but also to pursue an appeal of the first decision on their claim had one opportunity to tell their story to some neutral person whom they viewed as being in authority. That person was the arbitrator. The policy owner frequently did not have the documents necessary to support a claim for more generous relief on the grid. Nonetheless, s/he felt strongly that s/he had been misled by the statements made by the life insurance sales person or by the printed material received in connection with the sale. Once the policy owner vented to the sympathetic ear of the mediator/arbitrator, s/he was frequently willing to accept the offered settlement when reminded that, due to the lack of documents, the claim had been evaluated at a prescribed level with correspondingly prescribed relief.

• The limited relief generally available. Except for unusual claims involving many policies purchased at the same time by corporations, agencies and other organizations, which as a result were able to bargain for a more generous or specialized recovery, most claims were awarded only limited relief. The categories had been clearly spelled out in the settlement documents and the arbitrators were given no leeway to introduce considerations of equity in their rulings. Once the arbitrator explained this to the policy owner, the policy owner usually decided to settle, since the amount to be gained by going ahead with the claim process was only marginally better than what the company offered in settlement at the first telephone conference.

If the case failed to settle at the telephone conference, the arbitration process continued and the parties chose a date and time for an in-person or telephone or documents-only hearing. The hearing procedures were also closely controlled by ground rules set by the parties when the class action settlement framework had been established. The in-person hearing lasted no longer than 20 minutes and the time allotted to each side was prescribed in advance. The arbitrator’s decision was set out in a form letter following the agreed-on guidelines and there was no right of appeal. In this way, the company and the policy owner representative could both be sure of the arbitrator’s decision, within a very limited range. If an arbitrator departed from the established range of relief, the parties had earlier agreed that the company could remove that arbitrator from hearing any further cases.

The claimants’ representatives and the company both reported satisfaction with the procedures in practice. The settlement of all claims was concluded a little more than one year from the date processing began.

This article originally appeared in the program materials for The Sedona Conference on Complex Litigation, May, 2002.

Indeed, some would argue that the lawyers themselves may be able to use a mediator’s cooperative style of dispute resolution to settle their case without employing a mediator. See, e.g., Selig, Mediation Principles, AAA Dispute Resolution Jo. 72 (Feb./April 2002).

See, e.g., U.S. District Court, Central District of California, General Order No. 01-04 (5/01) In the Matter of the Attorney Settlement Officer Panel, § 8, Sanctions for Failing to Comply with Requirements, and Attachment D; www.cacd.uscourts.gov .

For a good overview of the use of the Internet in dispute resolution, see Melamed, Mediating on the Internet: Today and Tomorrow, 1 Pepperdine Dispute Resolution. L. Jo. 11 (2000)

A recent decision of the United States Court of Appeals for the Ninth Circuit for the first time upheld the use of email to serve process on a defendant when no physical address could be found. Rio Properties, Inc. v. Rio Int’l Interlink , ___ F.3d ___ (9 th Cir. 2002)(#01-15466).

A related problem can occur in California with partial settlements reached in mediation. The same statute section provides:

“ (b) For purposes of confidentiality under this chapter, if a mediation partially resolves a dispute, mediation ends when either of the following conditions is satisfied: (1) The parties execute a written settlement agreement that partially resolves the dispute. (2) An oral agreement that partially resolves the dispute is reached in accordance with Section 1118.” Either way, confidentiality will be lost, perhaps without the parties and the mediator knowing it.

Confidentiality and other issues affecting mediation are covered in the Uniform Mediation Act, passed by the Commissioners on Uniform State Laws in 2001. The Act was approved by the ABA House of Delegates in February, 2002. The full text of the Act is available atwww.nccusl.org. Useful commentary is found in articles located at www.mediate.com.

See, e.g., Resolution on Mediation and the Unauthorized Practice of Law, ABA Section of Dispute Resolution adopted 2/2/02 ), available at www.mediate.com/articles/

An example of the use of the grid system in a personal injury context can be found in the Settlement Facility, Dow Corning Trust, which covers claims due to breast and other silicone implants. Information on the details of the settlement, including all procedures for processing claims, can be found at the Trust’s website, www.sfdct.com.

In three short years, neutral Louise LaMothe has distinguished herself as someone with a comprehensive grasp on employment law, particularly on discrimination, disability issues.

Navigating the muddy waters of employment law in California requires the skill of a neutral well-versed in new case law. Touting her knowledge of recent decisions that have complicated employment law in California is how Louise LaMothe distinguishes herself from the hundreds of others neutrals in the state. And hooking up with a well-known case handler like New York’s American Arbitration Association doesn’t hurt either.

Nonetheless, after only three years in the field, LaMothe has won the praise of employment law attorneys on both sides of the fence. Plaintiffs’ attorney Dan Stormer of Pasadena’s Hadsell & Stormer has called LaMothe a “rising young star.”

LaMothe has spent most of her professional life at various law firms in Los Angeles law. During her 20 years in private practice, LaMothe practiced primarily with Irell & Manella as a commercial litigator.

She then set her sights on Riordan & McKinize and tried her hand at employment law. She finally launched her alternative dispute resolution practice when she joined the law firm of Bird Marella Boxer & Wolpert.

In 1999, LaMothe set up her own mediation shop in Santa Barbara where LaMothe, 54, lives with her husband, David Kaplan, and their 12-year-old son, Danny.

One recent afternoon, California Law Business reporter Liz Valsamis talked with LaMothe about her long career and the trends facing neutrals in labor and employment law.

Liz Valsamis: Do you expect the ADR community to get more employment cases in light of the recent layoffs in corporate America?

Louise LaMothe: I do think that there are more cases coming to employment ADR due to the layoffs. The problem for many of the laid-off employees, though, is that the employer is out of business. For that reason, though they may have claims, they may not be able to obtain relief.

Valsamis: What type of employment law disputes are you seeing more of?

LaMothe: The typical cases are failure to accommodate a physical disability, though I have seen a few psychological disability cases. The psychological disability claims seem to be the ones growing most rapidly.

Valsamis: Is there any recent court ruling that is affecting the ADR employment practice dramatically?

LaMothe: Yes, I’m seeing a lot more Americans with Disabilities Act cases. We are going to have to tease apart the impact of the U.S. Supreme Court’s decision in Circuit City as it is related to Armendariz, which was decided in the California Supreme Court. [Circuit City Stores Inc. v. Adams, 2001 DJDAR 2849 (U.S. March 21, 2001); Armendariz v. Foundation Psychare Inc., 24 Cal.4th 83 (2000).]

I think there is a conflict there based on the fact that the Circuit City case would seem to say that efforts on the part of the state to change the rules for employment arbitration might be trumped by federal law. And so we are just now beginning to understand how we read those cases together.

Valsamis: Is there any type of employment law dispute that you think belongs in court, rather than before a neutral?

LaMothe: The cases that belong in court are those with constitutional implications or those that test important legal precedent. The vast majority of employment cases I see are not in those categories. For them, ADR is quicker and more satisfactory.

Valsamis: How do the parties in employment disputes usually respond to the ADR process? Do you use a special technique to calm their nerves?

LaMothe: The individual parties in employment cases are frequently emotional. They feel wronged and even betrayed. I find that if given a chance to explain their positions, they feel better. I allow this to happen even in the arbitration context; the ability to vent their feelings sometimes helps them to let go of their dispute.

Valsamis: What’s your philosophy for mediating and arbitrating employment cases?

LaMothe: As an arbitrator, I just listen, ask clarifying questions to be sure I understand every point, and then issue an award that is fair based on the law and the unique situation before me. I explain my decisions fully. As a mediator, my mantra is patience, good humor and tenacity. I frequently tell stories from my own experience to give perspective to the parties in their own dispute.

Valsamis: Is there anything that lawyers do in mediation or arbitration that annoy you?

LaMothe: Any lawyer working with me should avoid disrespect to the other side – as is often said, we need to be “tough on the problem and easy on the people.” Personal animosity between lawyers degrades the entire process.

Also, every lawyer working with me needs to be prepared and make sure her client is prepared, too. It’s very difficult to make progress as a mediator in helping parties settle a case when they have not completed their own homework and have no real basis for the value they place on the case.

Valsamis: When did you first become interested in employment law?

LaMothe: My interest in employment law started in the 1970s. When I went to law school there were no women professors, none, and very few female law students. Back then, we were interested in civil rights and the Vietnam War. But when I got into the work force, I immediately saw what happened to women in terms of employment issues. And so, I think my first interest in this whole area of employment law really started with these gender equality issues in the ’70s.

I wrote about the advancement of women in law firms a lot. I spoke on it and I gave lectures on it constantly. All of those issues dealt with discrimination, and so from there I really branched out into other components of employment law. But it was really that early work that I did on the advancement of women in law firms and gender equality that gave me this very strong interest in this whole area of discrimination.

Valsamis: Did you ever face discrimination firsthand?

LaMothe: Yes, in the employment context when I first began to practice. I ran into discrimination from judges in a very early federal court case that I worked on in the district court in Los Angeles. I had not previously been admitted to practice in the Los Angeles district court though I had been admitted to practice in the other district courts around the country. So the partner in my law firm, which was Irell at the time, wanted to move my admission before the district court at the beginning of the motion calendar in federal court that day. He didn’t think there would be any difficulty at all.

But when he stood up and asked to move my admission, and the courtroom was full of lawyers on our case, [the judge] looked down and asked, “Why did you pick me to get admitted before? Everyone knows how I feel about women practicing law.”

And then I got, what I have referred to in years since, the barefoot-and-pregnant speech. It was 1974. You can imagine how humiliated I was. I couldn’t do or say anything because I didn’t want what I said to [lead to] the detriment of our client. So I just had to take it.

At that point, I was a third-year associate. I was about 27.

Those types of early experiences in the practice were not only disappointing but very critical to my development.

Valsamis: What was your area of expertise when you were in private practice?

LaMothe: Mostly large-scale commercial litigation. But what happened, starting in the late ’80s, I began to do some employment litigation on the management side and, including, some in the entertainment area. And so I began to work my way into the employment area. … I did a lot of internal investigation for employers when there were claims of harassment.

Valsamis: Why did you leave private practice to become a neutral?

LaMothe: I really do love the law and I didn’t want to get out of it. There was a time in my life when a lot of people would have chosen to go on the bench. But, given my family circumstances, it made a lot more sense to have a lot more flexibility in my professional life. So becoming a neutral allowed me to use the legal skills that I have developed while at the same time having this flexibility. As you’ve noticed the life of a lawyer is very frenzied.

Valsamis: How do you set yourself apart in this competitive field?

LaMothe: I think one thing that separates me from other ADR neutrals in the employment area is my experience on both sides of employment law as it relates to discrimination. Most lawyers, in my experience, have represented only one side in employment disputes. I have lectured and written extensively about discrimination, particularly as it relates to women, and I have represented management.

Valsamis: What do you most enjoy about your work?

LaMothe: I particularly enjoy the mediation that I do in the employment area. When you are successful in helping parties settle, the happiest person is the employer because I think the people tend to be very invested in their employment cases. It is, after all, a very important relationship for most people.

© The Daily Journal Corporation. All rights reserved.

Plaintiffs’ attorneys often select neutral Louise A. LaMothe, despite her defense background.

They said they wanted a businessman’s divorce. What they really wanted was someone to salve old wounds.

In one of the first cases Louise A. LaMothe mediated, a breach of contract dispute between twin brothers who jointly owned a retail store, they left the first session and never returned.

“They framed their dispute as a legal matter, when they really had jealousies and a lot of rivalry,” recalls LaMothe. “That was very frustrating for me. I just didn’t have the tools necessary to help them,” she says.

LaMothe is the first to point out that she’s not a psychologist. But according to her colleagues, she brings to the alternative dispute resolution process compassion, insight, seemingly boundless energy and the intellectual diligence to do whatever it takes to resolve a matter.

And these qualities have been recognized in some surprising quarters.

“She comes from the defense side,” says Bill Rehwald, a partner in Rehwald Rameson Lewis & Glassner of Woodland Hills. “For me to use someone from the defense side as a mediator, they have to demonstrate to me that they have some compassion for the plaintiff who has been harmed.

“And she does do that,” he says.

Other plaintiffs’ lawyers agree.

“I don’t think she comes across as being on one side or the other,” says Scott Radovich, a sole practitioner from San Luis Obispo. “She’s a good neutral arbitrator.”

These perceptions jibe with LaMothe’s focused approach to ADR.

“The essence of what makes a good mediator is someone who can connect with people in all positions,” explains LaMothe.

But connecting with client and their counsel takes more than just being warm and friendly, she adds.

“There is a concern that some lawyers have, particularly on the plaintiffs’ side, and I think of employment cases because I handle a good many of them, they worry about people who have handled management interests having a tendency to minimize the concerns of plaintiffs, to make them seem less deserving in some way,” she notes.

LaMothe is especially sensitive to the plaintiffs’ bar’s concerns on this issue.

“I think that a lot of plaintiff lawyers need convincing that using someone from the defense side will nonetheless provide a just result,” she says.

According to LaMothe, the overriding issue in ADR is the neutral’s facility with interpersonal communications.

“Anyone who is a good mediator has to have the ability to connect, she says. “It doesn’t mean you accept that person’s position hook, line and sinker. It just means you can empathize and try to move that person to a just resolution.”

Radovich, recalling a dispute LaMothe mediated for him, praises LaMothe’s techniques in the mediation process.

“I found her outstanding in the way she conducted the meeting and kept it, on track,” he says.”

Before turning to private judging full time, LaMothe, 54, spent 25 years arguing complicated business cases in state and federal courts.

Her caseload at the time included securities class actions, professional negligence matters, business torts, entertainment transactions, insurance bad faith, partnership disputes, fraud, auto product liability, sexual orientation discrimination and allegations of sexual, harassment.

By 1996, however, law practice had lost its luster for LaMothe.

“I felt the tenor of law practice changing to become not so much adversarial but more confrontational,” she says.

Litigation did not appear to LaMothe to be about problem solving.

“The whole practice of law seemed toxic to me: throwing up barriers, being argumentative, she says.

According to LaMothe, this was not what she wanted to do when she decided to attend law school.

“I looked in the mirror and said, ‘I want to use this training. I don’t want to abandon the law just because finding the atmosphere increasingly unpleasant’” she says.

So LaMothe began winding down a full-time career as a litigator and building a second one as an arbitrator and mediator. After three years of preparation, study and concentration, she was ready to go out on her own. In 1999, she opened her own office as a full-time neutral, operating from Santa Barbara, where she lives.

Change was nothing new to LaMothe, who grew up in a Navy family and moved around a lot, eventually settling in Monterey.

As an undergraduate majoring in history at Stanford University, the law was the furthest thing from her mind. Her fast love was history. The dilemma was what to do with that background after graduation.

“I started casting around for things to do. There was no career counseling at the time for young women in college,” so options were limited, she recalls.

“I didn’t want to be a nurse or teacher. So, it looked for awhile like I was going to be a secretary,” she says.

However, some of her friends at school who were law students encouraged her to apply to their program.

Although legal studies turned out to be LaMothe’s career path, her interest in history affords her a unique perspective.

“It gave me an insight, into people’s stories and a vantage point to see where stories differ, she says. “Because of the huge tapestry of human experience [history] showed, it helped to flesh out the stories.”

A year after earning her law from Stanford in 1971, she took a teaching job at the University of Kansas Law School in Lawrence, Kan.

That summer, while attending a four-week training session in Boulder, under the auspices of the National Institute for Trial Advocacy, she met her mentor, Prentice Marshall, who later became a federal judge.

“He was a very inspirational kind of guy,” LaMothe said. “[As a trial lawyer,] he had the ability to communicate with people and to connect with people. He was able to draw on universal human experiences to enable a jury to see the rectitude in his clients’ case.”

In much the same manner, LaMothe draws on her own experiences to bring parties together in mediation.

“You look for a hook, a way to have your experiences, your stories resonate with the parties. Then you use the rapport you establish in helping them craft a solution,” she says.

But this technique has its limits, according to LaMothe.

“You can’t be predisposed to impose a solution on people. [In mediation,] you have to try to the fullest extent possible to draw it out of them,” she says.

The following summer, LaMothe returned to Boulder as an instructor at the institute.

“It was a very important part of my training as a lawyer and my legal life,” she says.

In 1974, she returned to California and took a position with the Los Angeles firm of Irell & Manella.

In 1978, she became a partner — a ground breaker. At the time, she was one of only a handful of female attorneys working there. Today, the firm employs mere than 50.

“I felt very validated. It was great breakthrough,” she says. “I knew no other woman was asked to become partner in that firm.

“It was a great challenge because the standards of that firm are very high. I also felt I was gaining a toehold in the club.”

Longtime friend Joan Caplis called LaMothe “a force of nature.”

“She was a great role model for me when I was starting out in my real estate career,” Caplis says, “She always told me I could do it.”

Seeking more management experience, LaMothe Ieft Irell & Manella in 1992 to become a partner at Los Angeles’ Riordan & Mckinzie. There, she represented emerging companies in intellectual property matters.

When she decided to wind down her practice in 1996, she became of counsel with Bird, Marella, Boxer & Wolpert, also in Los Angeles.

At the same time, she gained experience as a mediator and arbitrator by serving on American Arbitration Association, U.S. District Court and Los Angeles Superior Court neutral panels.

All of this experience working directly with clients and their counsel taught LaMothe one of the most important lessons any neutral can ever learn.

“I try to empower the parties to take charge of their disputes and not just rely on their lawyers,” she says.

© The Daily Journal Corporation. All rights reserved.