The National Arbitration Forum Responds to Inaccurate Views of Arbitration

The National Arbitration Forum’s Managing Director provided the real story in a Counterpoint article that appeared in today’s Minneapolis Star-Tribune.

Arbitration is a solution that's fair to everyone

A recent article unfairly assailed a firm that helps settle cases outside of court.

The article "Arbitrary concern for the National Arbitration Forum" (Business, May 11) provided an unfair, unbalanced and inaccurate view of the way that the National Arbitration Forum handles consumer cases in arbitration. The story relied heavily on the impressions of a few academics and trial-lawyer advocacy groups, not on the facts

Here is the real story.

With the Forum, disputes are resolved more quickly and less expensively than in court, benefiting everyone, including consumers and businesses. The Forum's rules and procedures ensure that outcomes are the same as in court, that consumers are afforded access to justice and that decisions follow the law.

Arbitration outcomes are fair. Arbitrators on the Forum panel are experienced attorneys and former judges who must follow the law when deciding cases. Research of Forum arbitration outcomes shows that consumers win in arbitration at the same rate they win in court. Moreover, court judges review arbitration decisions before they become enforceable.

The Forum's arbitrator-selection process is fair. Parties have the right to remove one arbitrator without providing a reason. This is identical to the procedure for removing a judge in dozens of states' courts, including Minnesota's. Removing an arbitrator is not an invitation to bias: The replacement arbitrator will be another experienced legal professional who will fairly decide the case based on the merits.

The Forum created specific rules to level the playing field for consumers. The availability of document-based hearings benefits consumers because it enables them to bring or defend a claim without missing work and losing wages. This is especially beneficial for consumers of modest means; in studies of court proceedings, borrowers often cite their inability to miss work as a reason for their failure to appear in court and contest a claim.

Allegations of bias contained in the article are not new and not true. For example, in 2000 a Texas federal court rejected nearly identical bias accusations, stating "[t]he Court is satisfied that NAF will provide a reasonable, fair, and impartial forum within which plaintiffs may seek redress for their grievances."

These bias accusations against the Forum are promoted by vested interests whose goal is to limit arbitration for consumers, forcing them to use expensive and lengthy litigation. The largest association of trial lawyers in the world put the fight against arbitration at the top of its agenda.

One-sided rhetoric from biased interests opposed to arbitration needs to be balanced with facts about how Forum arbitration works. The fact is, Forum arbitration provides access to fair and affordable civil justice to all parties, consumers and businesses.

Roger Haydock is managing director of the National Arbitration Forum in St. Louis Park.

Read about the benefits of arbitration, here.

How Does ADR Help Taxpaying Citizens?

Marvin Schuldiner of the Sanns Mediation World of ADR blog advanced the ongoing analysis of arbitration’s implications for taxpayers in What are the costs of Civil Lawsuits and Litigation in NJ?

"In a state with among the highest tax burdens in the country and no shortage of underfunded solutions for societal problems, moving cases out of the courts and into far less costly ADR forums such as arbitration and mediation can help far more than just the litigants involved. It can help every person in the state."

He notes that litigants are responsible for attorney fees, experts fees, filing fees and more, and that the estimated cost for taxpayers for each contested civil case in the New Jersey court system is $3,112.36. The evaluation came from National Arbitration Forum analysis of court data.

Bottomline: Arbitration can ease the burdens on the courts and save taxpayers thousands of dollars per dispute. Privately administered arbitration is self-funding, no need for state aid. In arbitration, the disputing parties pay the fees, not the taxpayers.

In a previous post he noted the New Jersey judiciary’s tightening budget, and its dependence on court-mandated ADR.

Arbitration Experts on the Case That Everyone Is Talking About

Alternatives Editor Russ Bleemer asked arbitration experts and theorists around the nation and around the blogosphere to comment on the recent "case that leaves a chunk of arbitration law open for speculation."

His conclusion? Practitioners seem to be taking the U.S. Supreme Court’s decision in Hall Street Associates L.L.C. V. Mattel Inc. quite calmly.

The Calm and the Storm: Arbitration Experts Speak out on Hall Street Associates appeared in the May Alternatives magazine put out by the International Institute for Conflict Prevention and Resolution (CPR). It is or will be available on Wiley Interscience, Lexis, and Westlaw

The arbitration experts cited include:

Mark Fellows, a National Arbitration Forum Blog contributor, and legal counsel and manager of legal research and education at Forthright in Minneapolis, where the majority of his work is done on behalf of the National Arbitration Forum (FORUM).

Mr. Fellows’ analysis resonates largely with a past post on the case, Mattel Decision Arguably Bolsters the Rule against Waiver of First-Level Judicial Review.

John Townsend, a partner in the Washington, D.C., office of Hughes Hubbard LLP, and past chairman of the American Arbitration Association.

S. Elaine McChesney, a Boston partner in Bingham McCutchen LLP.

James H. Carter, partner, Sullivan & Cromwell in New York, and chairman of the board of the American Arbitration Association.

Ross Runkel, editor of http://www.lawmemo.com/, focusing on employment and arbitration law, and a Professor of Law Emeritus at Willamette University College of Law, in Salem, Oregon.

Robert B. Davidson, Executive Director of JAMS Arbitration Practice, based in the firm’s New York office.

Eric Tuchmann, American Arbitration Association’s general counsel, in New York.

Sarah Rudolph Cole, a professor, and director of the Program on Dispute Resolution at Ohio State University’s Michael E. Moritz College of Law in Columbus, Ohio, who also blogs on ADR issues at http://www.indisputably.org/.

Kathleen M. Scanlon, Heller Ehrman LLP, New York, and former CPR Institute senior vice president.

Hans Smit, a law professor at the Columbia University Law School in New York.

J. Andrew Heaton, a principal in the General Counsel’s Office, Americas, of Ernst & Young LLP in Washington, D.C.

Eleventh Circuit: Arbitration Act Does Not Encompass Mediation

According to the Eleventh Circuit Court of Appeals, mediation does not constitute arbitration under the Federal Arbitration Act (FAA) because there is no adjudication by an independent third party. Accordingly, an aggrieved party cannot invoke the FAA as a means of enforcing the obligation, in an ADR agreement, to mediate.

The Court’s decision, while helping to clarify the fundamental distinction between arbitration and mediation, leaves the more difficult question unanswered. Does the FAA apply to an agreement to submit disputes to non-binding arbitration? The Supreme Court’s recent decision in Hall Street Associates, L.L.C. v. Mattel, Inc., 128 S.Ct. 1396 (2008) implies that the answer is no since a non-binding arbitration agreement necessarily supplements the statutory grounds for vacating an arbitration award.

Additional commentary on the case can be found on the CKA Mediation & Arbitration Blog and the ADR Prof Blog.

The case is Advanced Bodycare Solutions, LLC v. Thione International, Inc., No. 07-12309, 2008 WL 1775001 (11th Cir. Apr. 21, 2008).

Recent Series of Arbitration Articles on CreditCards.com

Late last month CreditCards.com, a website that "brings consumers and card issuers together", ran a series on credit card arbitration. The National Arbitration Forum was named.

One article, 6 tips for dealing with binding credit card arbitration, shares advice from various legal professionals on how to get a fair shake in arbitration:

1. Don't ignore letters.
2. Get a lawyer.
3. Keep track of correspondence.
4. Make them prove it.
5. Ask for copies.
6. Go face-to-face.

Much of this advice can be helpful, depending upon an individual’s situation. However, in an accompanying longer piece, Credit card mandatory arbitration: What it is, how it works, several portions are inaccurate or misleading.

The CreditCards.com article inaccurately states that arbitrators are not required to follow the rule of law. The fact is that some arbitration administrators, such as the National Arbitration Forum, require that arbitrators apply the law in deciding cases. Some administrators do not.

Another myth relayed by the article is that arbitration favors parties who file many cases over time. In fact, there is no evidence that repeat players have any greater advantage in arbitration than they do in court litigation. And any repeat player that does exist in arbitration or court litigation is most likely evidence of increasing knowledge of which cases are winners and which cases are losers that determines which cases are filed, rather than any indication of a biased decision-maker.

Moreover, the available research on win rates in arbitration compared to court litigation shows that individuals and consumers fare just as well if not better in arbitration than they do in court litigation.

Both arbitration articles were written by Amy Buttell Crane, and were published on April 21, 2008.

About the National Arbitration Forum

The National Arbitration Forum (FORUM) is a world leader in dispute resolution. The FORUM provides fair, affordable, and accessible civil justice to all through recruitment, selection and management of a highly experienced and distinguished panel of over 1,600 former judges and seasoned lawyers. Expert FORUM arbitrators and mediators apply reasonable rules and substantive law to resolve disputes. The FORUM is the faster, lower cost and superior alternative to litigation, that ensures parties receive the same outcomes they would in court. For more information visit the National Arbitration Forum website at www.adrforum.com.

The blog can be reached at media[at]adrforum.com. All comments to the National Arbitration Forum Blog are moderated and must include an identity more than 'anonymous' to be approved by the blog editor.

The FORUM Reaches Out to Female ADR Community

At Minnesota’s first ever luncheon for female arbitrators, a representative and a neutral from the National Arbitration Forum addressed current and would-be female arbitrators.

Held on Friday, April 18, 2008 at Dorsey & Whitney in downtown Minneapolis, the event was organized by National Arbitration Forum neutral Madge Thorsen, along with Leslie Sinner McEvoy, Jocelyn Knoll, and Bernice Fields. About 30 women were able to network locally and to learn about opportunities in the ADR field.

Representatives from groups like the Minneapolis-based National Arbitration Forum and the American Arbitration Association spoke with attendees about the arbitration process and how to go about becoming an arbitrator, reported a Minnesota legal publication.

The National Arbitration Forum applauds and encourages outreach efforts about alternative dispute resolution and arbitration.

States Propose Arbitration for Sports Television Disputes

State legislators are proposing private arbitration as a solution to seemingly intractable disputes that have arisen between sports television networks and cable television operators.

According to an Ohio report, the NFL Network wants football programming included in basic cable packages, but Time Warner says that including football will increase the cost consumers pay regardless of whether consumers want football games or not.

Legislation pending in the Ohio House, known as the Cable Anti-Discrimination and Dispute Resolution Act of 2007 (H.B. 377), would create a mandatory dispute resolution mechanism via arbitration in situations where cable operators and programmers can't negotiate an agreement about programming.

The South Carolina Senate Judiciary Committee yesterday held a hearing on the Cable Anti-Discrimination and Dispute Resolution Act of 2008 (S. 989). Members of the SC Senate introduced the bill to provide commercial arbitration to resolve disputes involving cable programmers and carriage of a competing programming channel.

Likewise, a bill in the Wisconsin State Senate would allow video programmers doing business in Wisconsin an opportunity to take their dispute with cable carriers to arbitration (AB 604).

See Also:
Will Arbitration Knock out Wisconsin's TV Problems?

The FORUM Partners with New Company Forthright

In a statement today, the National Arbitration Forum (FORUM) announced its partnership with Forthright, a global provider of transaction processing and resolution systems. The new company, Forthright, serves as the exclusive provider of all necessary services to optimize the process and the administration of arbitration and mediation claims for the FORUM. By mirroring the court system’s separation of case administration and case decision-makers, the National Arbitration Forum is taking a bold leadership position in the dispute resolution industry.

As stated in Forthright’s press release, Forthright was spun off from the FORUM in late 2007. Forthright is the nation's premier provider of transaction processing and claims administration services in the dispute resolution market. The new, stand-alone company will serve businesses of varying sizes and structures who work across a variety of business-to-business and business-to-consumer audiences.

International Herald Times on Domain Tasting and Cybersquatting

The National Arbitration Forum was recently mentioned in an article about domain name disputes, and a new trend in cybersquatting: domain tasting. Domain tasting, as defined in the article, is when domain names are registered by the millions and tested for their advertising prospects without charge during a five-day grace period.

Read the article, Internet squatters facing eviction (Doreen Carvajal, International Herald Tribune, 4/27/2008), here.

Hall Street Analysis: Out of the Blogosphere and into the Courtroom

As the dust settles on the Supreme Court's influential decision in Hall Street, we have been eagerly awaiting a court ruling on the continued validity of the heretofore non-statutory grounds for vacating or modifying an arbitration award (e.g., public policy). We already have a judicial foray into those uncharted waters – no doubt the first of many.

In Chase Bank USA, N.A. v. Hale, No. 601044/07 (N.Y. Sup. Ct. Mar. 31, 2008), the aggrieved party argued that the arbitration award should be vacated for manifest disregard of the law, violation of public policy, and irrationality. In addressing this argument, the court examined whether those grounds for vacatur remained viable in wake of Hall Street.

The court found that manifest disregard of the law remained a valid basis for vacatur, though one with statutory underpinnings. Given the continued validity of this standard, the court "resort[ed] to existing case law to determine its contours." The court did not reach any firm conclusions with respect to the other grounds argued for vacatur – namely, public policy and irrationality. Instead, for sake of analysis, the court proceeded as though these grounds are likewise statutory in nature and thus remain valid. Ultimately, the court confirmed the award.

Coincidentally, the New York case also examined our industry-leading Code of Procedure. Specifically, the court ruled that the arbitrators had authority under the Code to sanction a party for bringing a frivolous claim that the party’s attorney/husband had unsuccessfully pursued in several previous cases.

Georgia Auto Lemon Law to Include Arbitration Provision

GA Governor Sonny Perdue is considering a bill unanimously passed by Georgia lawmakers that would provide for alternative methods of dispute resolution for lemon law claims, as first reported by ADRWorld.com (sub. required).

Lemon laws compensate consumers for cars that repeatedly fail to meet certain standards of quality and performance. The Georgia bill, H. B. 470, would allow consumers to use an informal dispute settlement mechanism and then arbitrate lemon law claims. According to the bill, the inclusion of ADR offers consumers "expeditious resolution". Alternatives to litigation benefit consumers further with expert decision makers and cost savings.

Additional Review of Supreme Court Case

Following an influential U.S. Supreme Court decision focused on arbitration and judicial review, many voices have expressed their opinions on the implications. Here are two interesting reviews that have popped up in the last few days:

"The U.S. Supreme Court's recent decision in Hall Street Assocs. LLC v. Mattel signals that parties can't have it both ways under the Federal Arbitration Act (FAA): If they opt for the benefits of arbitration, they must forfeit some benefits of judicial review. Some Rochester attorneys who practice arbitration said this decision will not have a chilling effect on the growing trend of alternative dispute resolution -- but it could affect the way arbitration agreements are structured."

--From Limiting review by U.S. Supreme Court won't chill ADR an article by Elizabeth Stull in the NY Daily Record.

"The case has, in my view, great implications - - certainly for practitioners in Texas. The reasons are:

(a) the Court holds that the scope of judicial review under the FAA is exclusive – AND - - the parties may not modify the specific scope of the FAA judicial review provisions by contract;

(b) we all know that the reach of the FAA in Texas through the Texas Supreme Court decisions is vast;

(c) hence in any case implicated under the FAA even in Texas state court - - a party who LOSES an arbitration and seeks review under a case governed by the FAA in state court will face this opinion being cited by the prevailing party as limiting the scope of “judicial review” EVEN IF the underlying contract granted a wider scope of judicial review;" Read on…

--From Glen Wilkerson on Hall Street v. Mattel a blog post on Karl Bayer’s Disputing blog.

This Week in ADR Law & Policy

Contents of this week's alternative dispute resolution e-newsletter, the ADR Law & Policy Update:

Federal Cases

• Arbitration Award Confirmed as Party Filing Untimely Challenge Failed to Establish Doctrine of Equitable Tolling Should Apply
• Federal Court Upholds Class Action Waiver Where Bank Agreed to Pay Arbitration Costs in Excess of $125
• Agreement Invoking Arbitration Rules Reserving All Arbitrability Issues to Arbitrator Defeats Default Presumption that Court Decides Arbitrability
• Louisiana Federal Court Engages in Expanded Judicial Review of Arbitration Award
• New York Federal Court Refuses to Compel Arbitration Under Either Direct Estoppel or De Factor Merger Exceptions
• Rescission of Arbitration Agreement Not Warranted When Party Violates Provision Through Filing of Improper Demand

State Cases

• Under Missouri Law, Wrongful Death Claims Now Arbitrable Under Decedent's Arbitration Agreement
• Nursing Home Resident Must Arbitrate As an Intended Third-Party Beneficiary of Agreement She Didn't Sign
• Montana Supreme Court Finds Extensive Pretrial Litigation Constitutes Waiver of Right to Arbitrate
• Arbitration Agreement Unenforceable Because Form Did Not Comply with California Law
• California Court Finds That FAA Does Not Preempt California Law Allowing Courts to Deny Arbitration Based on Possibility of Conflicting Rulings
• Under California Law, a Petition to Compel Arbitration Must Affirmatively Allege the Existence of a Written Agreement to Arbitrate
• Illinois Court Finds Arbitration Affordable for Consumer and Upholds TV Provider's Arbitration Agreement
• Modification of Arbitration Awards Not Reviewable in New Jersey Appellate Courts When Modification Is Properly Granted On Statutory Grounds

ADR Legislation & Regulation