The following outline is for BVS – Spring 2008

I outlined by topic, and cut and pasted them. Therefore, they are not in order, or as BVS had them on her syllabus. There are page breaks between each topic. Good Luck

ALTERNATIVE DISPUTE RESOLUTION

Arbitration Clauses

  • Federal Arbitration Act (FAA)
  • arbitration clauses are valid, irrevocable, and enforceable
  • provides stays in district courts when an issue in the proceeding can be referred to arbitration, and for orders compelling arbitration when one party has failed, neglected, or refused to comply with an arbitration agreement
  • these provisions manifest a liberal federal policy favoring arbitration agreements (SC 1983)
  • Statutory claims may be the subject of an arbitration agreement, enforceable pursuant to FAA (examples p. 760)
  • by agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their (statutory rights) resolution in an arbitral, rather than a judicial forum (Mitsubishi)
  • although all statutory claims may not be appropriate for arbitration, “having made the bargain to arbitrate, that party should be held to it unless Congress itself has evinced an intention to preclude a waiver of judicial remedies for the statutory rights at issue” (Mitsubishi)
  • the burden is on P to show that Congress intended to preclude waiver of a judicial forum for statutory claims
  • if such an intention exists, it will be discoverable in the text of the statute, its legislative history, or an inherent conflict b/n arbitration and the underlying purpose of the statute
  • Test of congressional intention to preclude waiver of a judicial forum: intent discoverable in
  • the text of the statute,
  • its legislative history, or
  • an inherent conflict b/n arbitration and the underlying purpose of the statute
  • see Gilmer

Mandated Alternative Dispute Resolution in Federal Court

Under the Alternative Dispute resolution (ADR) Act of 1998, district courts are directed to mandate in their local rules that, subject to certain exceptions, litigants in all civil cases “consider the use of an ADR process at an appropriate state in the litigation. The Act further directs that each district devise and implement its own ADR program, and that it “encourage and promote the use of ADR in its district.” B/c these activities occur in connection with cases proceeding in court, and under the auspices of the court, they are often referred to as court-annexed ADR

  • ADR methods

The Act authorizes the use of mediation, early neutral evaluation, summary jury trial, and, subject to certain limitations, arbitration.

  • Exempted categories of cases

Each district court may exempt categories of cases from the ADR requirements

  • Panel of neutrals

Each district court is to maintain, and arrange for the training and evaluation of, a panel of neutrals to serve in ADR proceedings in the district. A neutral is usually a lawyer experienced in the legal field giving rise to the case.

  • Confidentiality

Each district must, by local rule, provide for confidentiality in ADR proceedings conducted pursuant to the Act

Court Annexed Arbitration

In the late 1970s federal courts in some districts began experimenting with mandatory non-binding arbitration in some cases. In 1988, Congress expressly sanctioned these experiments in 10 districts where such experiments had begun and authorized further experiments in 10 other districts. This authorization was further extended until Congress included arbitration in the 1998 Act, subject to certain limitations.

  • Cases affects
  • Federal court

With the consent of the parties, a federal court may allow the referral for non-binding arbitration of any civil action before it except cases involving civil rights claims, alleges violations of constitutional rights, or damages relief sought in an amount exceeding $150,000.

  • Safeguards of giving consent

District courts that authorize arbitration as an ADR device are required to adopt safeguards (e.g. that the district court judge be informed of the identity of who consented) to ensure that partied who are asked to consent do so freely and knowingly.

  • Presumption re: damages sought

Unless counsel certifies that more than $150,000 is involved, the court may presume that damages do not exceed that amount

  • State courts

In state courts where arbitration is provided for, eligibility may turn on the amount claimed, as in federal courts. In Ca, for example, all civil actions where the amount in controversy in the opinion of the court will not exceed $50,000 are subject to arbitration

  • Timing

Arbitration generally occurs early in the litigation process

  • Hearing

The arbitration decision is based on a hearing, which resembles a trial, but may be more relaxed. The rules of evidence may not be applied with full force, and relaxed rules about the form of presentation of evidence (e.g. narrative answers) may be allowed.

  • Award

After the hearing, the arbitrator is to enter an award, which briefly indentifies the prevailing party and (if necessary) the amount of damages. The award is filed in court and becomes the judgment of the court unless a trial de novo is demanded.

Mediation

Mediation involves a neutral third party who attempts to find a common ground on which the parties can reach an agreement and resolve their dispute. This role is very different from that of a judge or other person who “decides” a dispute.

  • Formal legal rules not binding

B/c the goal is to reach an agreement, the legal rules that might apply in court are not binding in mediation. They may, however, cast a “shadow” over the mediation and influence the result.

  • Creativity in devising solutions

B/c formal legal rules limiting court awards do not apply in mediation, the mediator can attempt to devise a solution that would not be available in an action litigated to judgment

  • Goal is agreement of the parties

If the mediator is successful, the parties will reach an agreement that should be embodied in a K b/n them. These agreements are usually legally binding in accordance with principles of K law.

  • see Woods v Holy Cross Hospital

Other Forms of ADR

  1. Negotiation
  • likely the most common form of dispute resolution
  • two or more parties try to resolve differences without intervention
  1. Med-Arb
  • form of private dispute resolution
  • combines mediation and arbitration into single process
  • dispute is first mediated
  • if unsuccessful, dispute moves to arbitration
  • ex: labor-management agreements and consumer banking
  1. Mini-trials
  • private dispute resolution  aid to settlement
  • parties present their cases in a truncated form to a neutral third party who renders an opinion
  • opinion generally is not binding but provides the basis for settlement discussions b/n the parties (which may or may not include a neutral party)
  1. Summary Jury Trail
  • form of court-ordered mini-trial
  • neutral party rendering opinion is a jury drawn from the same population as they would be in a real trial
  • aid to settlement
  1. Early Neutral Evaluation
  • an evaluator, not the trial judge, is assigned by the judge to meet with the parties to review the case, discuss disputed issues, explore settlement possibilities, and evaluate the parties’ relative chances of prevailing
  1. Multidisciplinary Practice
  • attorneys partner with non-attorneys to provide a range of corporate services
  • problematic: ethical and competitive issues raised by such previously prohibited arrangements
  • an ABA committee has recommended that lawyers be permitted to share fees and join with non-lawyer professionals in a practice that delivers both legal and non-legal professional services, provided that the lawyers have the control and authority necessary to assure lawyer independence in the rendering of legal services

Critical Perspectives on ADR

  • lack of jurisprudence
  • privatizing claims – group of clientele that will be consistently hired by certain industries
  • ADR’s don’t always have set/established procedures or rules
  • pros
  • efficiency
  • informal
  • cons
  • no ensured uniformity
  • structure of FRCP protects
  • due process
  • admissibility of evidence
  • sanctions
  • allowing powerful and wealthy parties to control
  • vast disparities of power b/n litigants (where Ks are clearly biased)

Joinder of Parties

Determining which parties are to be joined as Ps or Ds requires consideration of the rules of permissive and compulsory joinder. Compulsory joinder rules cover parties who must be joined (“indispensible parties”) and those who should be joined if possible (“conditionally necessary parties”). The rules of permissive joinder apply to parties who may be joined (“proper parties”).

Permissive Joinder (Rule 20)

Under the FRs and modern codes, a P may join anyone involved in the transaction that is the subject matter of the suit

  • Parties may join, or be joined in one action, if:

A right to relief is asserted by (or against) them jointly, severally, or in the alternative;

The right to relief arises out of the same transaction or occurrence or series of transactions or occurrences; and

There is at least one question of law or fact common to all parties sought to be joined

  • Relief sought
  • Separate or joint

Each P is not required to have an interest in every cause of action in all the relief prayed for. If there are several Ps, they have the option to seek separate relief or joint relief. Likewise, if several Ds are joined, the relief sought may be against each separately or against them jointly.

  • “In the alternative” – P “in doubt”

Sometimes, a P may be in doubt as to which of several Ds is liable for his injuries (e.g. P is injured by a bullet fired by either D1 or D2). In such a case, it is proper for the P to set a claim against each D in the alternative, so that their respective liabilities can be determined.

  • “Same transaction” requirement

The requirement that the right to relief arise from the “same T/O or series of T/Os” is construed very broadly. Some causal relationships or interrelation among the Ds’ conduct, or in the interest being asserted by multiple Ps, is sufficient. This tends to merge with the common question requirement.

  • Note

Where Ds are joined in the alternative b/c the P is “in doubt” about which one caused his injuries, the injury issue supplies the requisite relationship b/n the claims joined even where the conduct of the two Ds is otherwise factually unrelated.

  • “Common question” requirement

It is sufficient if there is a single question of law or fact common to all parties joined. However, it is not necessary that the “common question” be in dispute.

Example: P1, a driver, and P2, a passenger in the car, sue D for injuries sustained in a car accident. The “common question” is whether D was negligent. This is sufficient for joinder purposes even though there are also many separate questions involved (e.g. injuries sustained by each, any contributory negligence barring P1’s claim, etc)

  • Caution

If the common question is relatively unimportant, the court will tend to define the “transaction” somewhat more narrowly to prevent the joined of claims that have no significant evidentiary relationship to each other. Hence, a practical test for permissive joinder is applied: Are the issues in the two claims factually intertwined with each other in any significant way?

NO

YES

NO

YES

NO

YES

  • Additional claims unrelated

As long as the requirements for joinder of parties are met, each of those parties may assert as many claims she has against the opposing party. (FR 18) The policy of law is to allow unlimited joinder of claims as long as there is a transactional connection among all of the parties.

Example: P joins D1, against whom he claims injuries while a passenger in D2’s vehicle, and D2, against whom he claims for the same in juries in the accident, and also for failure to pay a promissory note that D2 executed in favor of P. This joinder is proper.

  • Power of court to order separate trials

To curb expense or delay, or avoid prejudice that might result from the joinder of numerous parties asserting numerous separate claims against one another, the court may order separate trials for various claims joined, or otherwise regulate the proceedings to minimize the difficulties involved.

  • Attacking improper joinder

Under the FR, a misjoined claim may be dismissed on motion of the party against whom it is asserted; and the whole action may be dismissed as to that party if no claim for relief remains against him. (FR 21) Under code pleading practice, a demurrer will lie for misjoinder of claims

  • Subject matter jurisdiction

In addition to the requirements of personal jurisdiction over Ds, federal subject matter jurisdiction requirement mustbe satisfied as to all parties (whether Ps or Ds) permissively joined. Supplemental jurisdiction does not extend to permissive joinder when the permissively joined matter is not part of the same case or controversy with the claim over which the federal court has original jurisdiction or, in diversity cases, where banned by 1367(b)/1332.

  • Exam Tip

Be sure to remember subject matter limitations when you encounter a question involving permissive joinder in federal courts. Federal subject matter jurisdiction requirements must be met for all parties, and supplemental jurisdiction will not help when joinder is of a matter that is not part of the same case or controversy as the claim over which the federal court has original jurisdiction. E.g. suppose P has a state law claim against D1, who is diverse, for breach of P’s lease of an apartment from D1. Although P may also have a claim against D2, the leasing agent, that arises from the same transaction, there would not be supplemental jurisdiction to add D2 if she were not diverse. On the other hand, if there were also a claim of violation of federal anti-discrimination statutes against D2, the state-law breach of lease claim could be in federal court as supplemental to the federal claim (so long as it arose out of the same C/C). Even then, however, P’s claim that D2 also failed to deliver a $300 table to P in breach of a K unrelated to the lease could not be asserted in federal court, b/c that claim would not be within supplemental jurisdiction, although allowed by claim joinder rules.

Compulsory Joinder (Rule 19)

Joinder is required for any person who has a substantial interest in the case and whose absence would result in substantial prejudice to the absentee or to the other parties before the court. (FR 19)

The rules for compulsory joinder focus on the practical consequences if a party with an interest in that action is not before the court.

  • Persons to be joined if feasible (desired party)

FR 19(a) provides that any person with an interest in the subject matter of a pending action shall be joined as a party if

  • In his absence, complete relief cannot be accorded those already parties (FR 19(a)(1)); or
  • His interest is such that to proceed without him would be substantially prejudicial as a practical matter b/c it would:
  • Impair his ability to protect his interest in later proceedings (FR 19(a)(2)(i)); or
  • Expose the parties already before the court to the risk of double liability or inconsistent obligations (FR 19(a)(2)(ii))
  • Effect of nonjoinder – possible dismissal

If a person to be joined cannot be made a party (e.g. b/c he is not subject to the court’s jurisdiction), the court must determine whether “in equity and in good conscience” the action can proceed without him or whether the action should be dismissed. The court’s determination is based on the following practical considerations (FR 19(b))

  • The extent to which any judgment rendered in the action would be prejudicial to the interest of the absent party, or the interests of those already before the court
  • The extent to which such prejudice could be lessened or avoided by appropriate court action
  • Whether relief rendered without the absent party would be adequate
  • Whether the P has any other adequate remedy if the action is dismissed for nonjoinder of the absent party
  • Application

Situations in which compulsory joinder issues commonly arise involve:

  • Joint obligors
  • Parties to K

Joint promisors under a K (and other joint debtors) should be joined as Ds wherever possible. However, if one cannot be joined the court can still proceed against those before the court

  • Rationale

There is no “substantial prejudice” to the parties before the court that would justify dismissal, since an obligor held responsible on the joint debt has a right of contribution against the other joint obligors

  • Tortfeasors

Although the P may join in one action all Ds potentially liable to her as a result of a given transaction or occurrence, ordinarily she is not required to do so, and a joint tortfeasor is not considered a necessary party.

  • Rationale

The P is the “master of her lawsuit” and can choose to sue as many or as few potential Ds as she desires.

  • Distinguish – Impleader

Often there is a right of contribution among joint tortfeasors. Where this is so, those Ds who are sued can file third-party complaints or cross complaints (depending on the jurisdiction) against the other tortfeasor for indemnity. Note: this maneuver does not make the new party a D on the P’s complaint unless the P amends to assert a claim against the new D. the only claim asserted against the new D is to indemnify the original D.

  • Joint obliges

Where persons are jointly owed a duty under a K, the courts have usually held that they are not only necessary, but also indispensible parties, and have dismissed for nonjoinder

  • Rationale

A promise made to the obligees jointly should be enforced jointly since otherwise there is a risk that the right of the absent obligee to enforce the promise may be prejudiced, that the D might be subjected to inconsistent obligations in an action brought by the absente oblige, and that the court would be unable to afford complete relief b/c it could not provide in its decree for the D’s obligations to the nonparty while enforcing the same for the P.

  • Shareholder’s derivative suit

In a derivative suit by a shareholder (i.e. suing on a cause of action belonging to the corporation b/c the corporation refuses to sue), the corporation is an indispensible party. Its rights are so inextricably involved that no complete judgment can be rendered unless it is subject to the court’s jurisdiction.

PERSONS TO BE JOINED IF FEASIBLE – EXAMPLES
NECESSARRY Parties / NON-NECESSARY Parties
  • Joint obligors
  • Joint obligees
  • Partial assignees and subrogees (one who is substituted for another in having a right, duty, or claim – an insurance company frequently becomes a subrogee after paying a policy claim, as a result of which it is then in a position to sue the tortfeasor who injured the insured)
  • Corporation in a hderivative action
/
  • Joint tortfeasors
  • Original parties to a K when a third-party beneficiary sues
  • Third-part beneficiary when original party to K sues

  • Procedure for compelling joinder
  • Must name all necessary parties

In the complaint, the P should set forth the names of all necessary persons who have not been joined, and the reasons for their nonjoinder