DRAFT 2015-06-15
An ArbitrationScheduling Order
Drawing on the Manual for Complex Litigation
for Faster, Less-Expensive Awards
D. C. Toedt III and Maretta Comfort Toedt
(Our last name is pronounced “Tate”)
1.Introduction
Some regard arbitration as the worst of both worlds: essentially the same cost and delay as litigation, along with little or no right to appeal from anadverse decision.See generally, e.g., ThomasJ. Stipanowich, Arbitration: The New Litigation, 2010Ill. L. Rev.1. One vice president of litigation at a Fortune250 company recently told one of the authors that, for just those reasons, his company now prefers bench trials overarbitration.
It wasn’t supposed to be that way. Under typical arbitration rules, such as the American Arbitration Association’s Commercial Arbitration Rules (“AAA Commercial Rules”), arbitrators generally have authority to conduct proceedings in a streamlined way.
Unfortunately,such rules typically leave the drafting of anactual scheduling order and hearing plan asanexercise for the reader. That can drastically reduce the likelihood that a busy arbitrator will actually make use of her authority under the rules.
This article therefore proposes a model scheduling order and hearing plan (“Scheduling Order”). It adapts numerous practical suggestions from the AAA Commercial Rules as well as from the Federal Judicial Center’s Manual for Complex Litigation(“MCL”). Those suggestions were distilled from decades if not centuries of aggregate hands-on experience by seasoned federal trial judges and commercial arbitrators.
The Scheduling Ordersets out a framework for focused discovery, fast-track motion practice, and sensible hearing management, at what should be far less overallexpense. The Scheduling Order could help arbitrators to get many cases, even complex ones, toahearing inas little as 12weeks.
2.Highlights of the Scheduling Order
2.1The Chronologyhelpseveryone focus on the “strike zone”
Chief Justice Roberts famously compared judges to umpires, whose job is to call balls and strikes, not to pitch or bat. But that’s not an umpire’s only job: Whenhome plate starts to get obscured by dirt on it, the umpire takes a small whisk broom and sweeps off home plate, so that the strike zone will be clearly visible to all concerned.
In both litigation and arbitration, the “strike zone” is the set of material facts as to which there is a genuine dispute. In the Scheduling Order below, the function of sweeping off home plate is served by making counsel prepare and update a“Chronology.” The Chronology is asimple, consolidated statement of the parties’ factual contentions– in chronological order to the greatest extent possible– along with supporting evidence, relevant authority, and requested discovery. Preparation of the Chronology will help counsel and the arbitrator to identify and stay focused on theissues in dispute. That in turn should significantly reduce the overall time and expense required for the arbitration– for example, by reducing the need for repetitive briefing and by giving the arbitrator ahead start on writing an award.
(a) The Chronology is not a new thing
The Chronologyrequirement is nothing new. It’s a variation of longstanding disclosure requirements that apply in both litigation and arbitration:
•Early fact disclosure is familiar to federal-court litigators from their experience with Rule26 of the Federal Rules of Civil Procedure.
•Under AAA rules, the arbitrator has authority to require disclosures. SeeAAA Commercial Rules P2(a)(xiii), R22(a), and R47(b).
•MCL 11.11suggests that at the initial pre-trial conference, judges should consider “requiring counsel in advance to discuss claims and defenses” and “directing counsel to submit a tentative statement, joint if possible, identifying disputed issues as specifically as possible.”
•MCL 11.13of theManual for Complex Litigation states (at35) that “[e]ffective use of [early disclosures] without excessive and unnecessary burdens on the parties can streamline the litigation.”
•MCL 11.33 urges that “[r]ather than accept a statement that defendant ‘was negligent’ or ‘breached the contract,’ the judge should require the attorneys to describe the material facts they intend to prove and how they intend to prove them” (at44). It suggests that judges “requiring, with respect to one or more issues, that the parties present a detailed statement of their contentions, with supporting facts and evidence” (at46).
•MCL 11.641 likewise recommends that judges “have each party prepare and submit a statement listing the facts it intends to establish at trial and the supporting evidence. The statement should be informative and complete, but free of argument and conclusions. … Exchanging such statements may help narrow factual disputes and expedite the trial…."
(b) Good litigators prepare a chronology anyway; they might as well start early
Some counsel won’t want to give up their freedom to proceed at their own pace (especially in view of their other commitments). These counsel might balk at being directed to do this preparatory work early in the case. And it’s true that MCL11.641 cautions that detailed, annotated statements “should not be required routinely … because the substantial amount ofwork required for their preparation may outweigh the benefits.”
But in most cases, it likely will make sense for counsel to start pulling their case together sooner rather than later. If nothing else, doing so can help the parties better evaluate their settlement positions. And, of course, if the arbitration goes to hearing, counsel will eventually have to do all ofthat work anyway.
For years, Professor James McElhaney has urged litigators, in every case, to create justsuch an annotated Chronology, which hecalls a “proof checklist”:
The heart of the trial notebook is the proof checklist …. First, analyze your cause of action. Write down every element you have to prove to keep the judge from granting the other side’s motion for a directed verdict. Second, under each element, list the evidence that proves that point. …
James W. McElhaney, Putting the Case Together, ABA Journal, June 2007, at 24, (ABAJournal.com) (internal quotation marks omitted); see also James W. McElhaney, TheTrial Notebook 128-29 (ABA 2005), excerpt available at (books.google.com).
A joint chronology can be even more useful, in that it can eliminate much expensive duplication of effort inbrief-writing and award-drafting.
2.2Direct testimony is mainly by written witness statement
Also under the Scheduling Order, to save hearing time, most direct testimony by “friendly” witnesses is presented mainly by written statement:
- On the stand, each witness adopts and orally recaps the high points of his or her written testimony.
- The witness then can be questioned by opposing counsel and the arbitrator.
- Hostile- or third-party witnesses who refuse to provide a written witness statement can be presented in the traditional way, live or by deposition.
Written witness statements are routinely and extensively used in international arbitrations. They are also increasingly used in federal-court “bench” trials without ajury, such as the U.S. v. Apple price-fixing litigation; see United States v. Apple, Inc., No.12CIV2826, slip op. at5-6 & n.2(S.D.N.Y. July10, 2013) (Cote, J.), at (justice.gov), as well as in anumber of federal judges’ bench rules (Web citations available upon request).
The written-witness-statement procedure is becoming popular because it can:
- significantly reduce the time needed forwitness testimony at the hearing;
- ensure that all desired facts are included in the testimony;
- reduce the stress on witnesses (and on counsel too), in part by reducing the need for advance preparation directed to the witness’s “stage performance”;
- reduce the chances of awkward moments on the witness stand;
- eliminate much of the need for depositions, which would also contribute to reducing the need for stage-performance witness prep.
The use of written witness statements for direct testimony is the very first suggestion in the MCL for non-jury trials, whichobserves that:
… [The witness-statement] procedure … has several advantages. The proponent can ensure that it has made aclear and complete record; the judge and opposing counsel, having read the statement, are better able to understand and evaluate the witness’s testimony; opposing counsel can prepare for more effective cross-examination; and the reduction in live testimony saves time.
MCL12.51.See generally John Anthony Wolf and Kelly M. Preteroti, Written Witness Statements—A Practical Bridge of the Cultural Divide, in Disp. Res. J., May-June 2007, available at (Ober.com, accessed Dec.15, 2014).
Despite the increasing use of written witness statements, some lawyers might bristle at being directed to provide opposing counsel with such statements for their own witnesses. These lawyers likely wouldfear that preparation of the witness statements would entail extra expense for the client, and that thestatements would be a gift-wrapped road map for opposing counsel to use in planning their cross-examination.
Neither of these fears should be an overriding consideration, because:
•It’s an expensive luxury for lawyers to play hide-the-ball in the (often-futile) hope of catching their opponents off guard at the hearing.
•Counsel calling any witness will always spend time preparing the witness to testify, in deposition and at the hearing. Whether the testimony is expected to be long orshort, the extra expense of reducing the planned testimony to writing islikely tobe minimal—and withtheadded benefit of guaranteeing that thewitness won’t botch critical points of direct testimony on the stand (which should also help to reduce any witness anxiety about testifying).
•Written witness statements should reduce costs even further because some depositions likely wouldn’t even be requested if opposing counsel were assured that there’d be nosurprises when the witness testified “on direct.” A written statement setting forth the entirety of the witness’s direct testimony would provide just such assurance.
•A written witness statements will often be less risky for the presenting party than exposing the witness to a deposition by opposing counsel, whose questions might be more far-ranging than the written statement’s direct testimony.
2.3Mini-trial conference call with senior management after initial written disclosures
Some corporate litigation counsel believe that the most cost-effective procedure for alternative dispute resolution is the mini-trial to apanel of senior-management representatives of each party. The Scheduling Order accordingly builds in an early mini-trial, by conference call, in accordance with the AAA’s procedures (available at with the arbitrator serving as the panel chair and neutral advisor.
2.4Discovery is carefully managed
Under the Scheduling Order, the parties can engage in targeted discovery— guided and streamlined by the Chronology and the accompanying exhibits and witness statement— tohelp them support their factual assertions and identify weaknesses in the other party’s contentions. Specifically:
•Requests for production of documents (that were not provided in the Chronology drafting process) are permitted by agreement or with advance approval by the arbitrator, to keep costs down. Quick responses to requests for production are mandated to help keep theprocess moving.
•Parties may conduct informal, voluntary telephonic, 30-minute interviews of adverse-party personnel tohelp identify points that could be stipulated as well as documents of interest. Such interviews can optionally utilize (1)written questions for more-effective use of time, aswell as (2)“conference” interviews of multiple individuals at once. Interviewing anindividual does not preclude the interviewer from later deposing the individual.
•Depositions are allowed on a case-by-case basis for good reason with arbitrator approval.
•Telephone interviews and depositions may (and preferably will) utilize at least some written questions, propounded in advance, to reduce the time required.
2.5Motions are fast-tracked, and mainly done by email
Under the case plan, motions are made, responded to, and decided on an informal fast track by email. (One of the authors uses this approach, so that motions are typically made, responded to, and decided, all by email, within onebusiness day.)
Dispositive-motion proposals are encouraged, but can be filed only with the arbitrator’s approval, per AAA Commercial Rule33, so that the parties won’t incur the expense of briefing without first discussing whether it makes sense to do so.
Motions to modify deadlines or limitations are approved if agreed to by the parties’ inhouse representatives (in most cases); this gives all participants an incentive to keep the case moving.
2.6The hearing and award are expedited
Given that most direct testimony is provided by written witness statement, much of the hearing likely can be conducted in a somewhat-informal, almost-conversational style to save time and clarify testimony.
The arbitrator can choose to circulate a draft final award, to give counsel a chance to comment before the final award isofficially issued: This is modeled on what some California trial courts do with motion-practice decisions; it’s also suggested by MCL11.32 formotion practice.
If so agreed by the parties, “baseball”-style arbitration can be used to determine the amount of damages to be awarded and other numerical-type issues. This can help encourage the parties to get closer to settlement by, in effect, forcing each party toconsider whether the arbitrator might regard the other party’s position as being the more reasonable of the two.
If so agreed by the parties, the award can be appealed to a separate appellate arbitration panel under the AAA’s appellate rules, but only if so agreed by the parties at the outset of the case.
Also if so agreed by the parties, the award can be made non-binding until a short period of time has elapsed, so that a losing party can file suit in court—but with significant incentivesto encourage both parties to accept the award. (This provision is modeled on similar statutory schemes.)
2.7Major modifications must be approved by parties, not just counsel
The Scheduling Order makes it clear that the arbitration process is owned by the parties; it gives the arbitrator discretion to require the parties themselvesnot just their counsel to approve modifications of discovery limitations, postponements of the hearing date, etc. Such a requirement should help to keep costs down and the case moving.
This requirement was inspired by how one Texas arbitrator (not one of the authors) handledan unopposedrequest by one party’s counsel for athird continuance of the hearing date. On a conference call in that case, the arbitrator reminded counsel that therequest came less than four weeks before the hearing, which had been established at the outset as the time frame that would trigger a requirement to pay the arbitrator his standard cancellation fee.
The arbitrator accordingly advised counsel that he would approve the unopposed request for athird continuance, butonly if the parties paid his cancellation fee. At that point, the lawyer for the other party, whose client had been listening in on the conference call, announced that his client now opposed the third continuance request.
The arbitrator accordingly denied the continuance request and left the hearing date as it was—and theparties settled their dispute on the eve of the hearing date. (The arbitrator in question has authorized telling the story here but wishes to remain anonymous.)
3.The goal of the Scheduling Order is to offsetthe cost-increasingincentivesofarbitration
The Scheduling Ordercan help to neutralize the subtle incentivesthat can contribute to delay and expense of the arbitration process. Berkshire Hathaway’s vice-chairman Charles Mungerhas said that “Never a year passes but Iget some surprise that pushes a little further my appreciation of incentive superpower. *** Never, ever, think about something else when you should be thinking about the power of incentives.” Charles T. Munger, The Psychology of Human Misjudgment, at (law.indiana.edu, accessed Nov.23, 2014).
Let’s review some of the incentives that can result in creeping expense and delay in arbitration:
• The parties’ business people and their counsel want to win, and probably equally, toavoid losing. That can incline counsel toward seeking more and more discovery, both to solidify the client’s case and toget alook at the other side’s cards. As aleading arbitration scholar has observed: “For lawyers accustomed to full-fledged discovery, anything less may seem tantamount to inviting claims of malpractice.” Stipanowich, supra, at 12 (footnotes omitted).
•Some litigators like to be perceived asrelentless warriors, thinking it will impress their clients and adversaries. These worthies sometimes force opposing counsel to jump through every possible hoop and decline to stipulate anything, even though this increases the expense for all concerned. (To be sure, that’s sometimes due at least in part to client pressure: “an angry client, rather than the attorney, isoften the person responsible for an ‘admit nothing’ posture in the litigation.” MCL 11.471.)
• Some lawyerssecretly fear going to trial and therefore welcome any excuse for delay. See Stipanowich, supra, at1213.(Even the relentless-warrior types mentioned above can fall into this category.)