The Second U.S. Circuit Court of Appeals won’t budge.  It won't be surprising if its new class arbitration decision winds up before the U.S. Supreme Court.  The case already has been there. And the latest decision is the Second Circuit's third in the matter.  On Wednesday, it held that a waiver of class proceedings in an arbitration provision that American Express Co. uses in its agreements with merchants who accept the company’s credit cards is unenforceable. In re: American Express Merchants’ Litigation, Docket No. 06-1871-cv (Feb. 1, 2012). The Second Circuit had struck the class arbitration waiver before the Supreme Court held that commercial parties can’t be forced into class arbitration unless they have agreed to the process, in Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 130 S. Ct. 1758 (2010).   The nation’s top Court accepted Amex, and then remanded it to the appellate court in the wake of Stolt-Nielsen.  The Second Circuit still upheld its decision, but withheld its order so Amex could petition again. Before a decision could be made, the Supreme Court issued AT&T Mobility v. Concepcion, 131 S. Ct. 1740 (2011), which held that the Federal Arbitration Act preempted California law barring the enforcement of class action waivers in consumer contracts. The parties re-briefed, and yesterday the Second Circuit said that AT&T Mobility doesn’t affect Amex either.  “[AT&T Mobility] does not alter our analysis,” notes the opinion, written Circuit Judge Rosemary S. Pooler, “and we again reverse the district court’s decision and remand for further proceedings.” In fact, the only thing that has changed on the Second Circuit in Amex is the court’s composition.  Original panel member Sonia Sotomayor was elevated to the Supreme Court in 2009; Pooler is joined in the two-judge opinion by Circuit Judge Robert D. Sack. The new decision likely will be the subject of a cert petition.  Sotomayor, who joined with Pooler and Sack in the original decision--at 554 F.3d 300 (2009)--almost certainly would have to recuse herself if the Court agreed to take the case.   The current decision finds that the use of a class action waiver in a mandatory arbitration clause is unconscionable where a party can show that it effectively bars the exercise of its statutory rights. The opinion holds that the cost evidence produced--that the case could not pursued by individual plaintiffs--satisfies the requirements of Green Tree Financial Corp.-Alabama v Randolph, 531 U.S. 79 (2000).  As a result, the merchants would have no recourse in their claims against Amex for card agreements they say are too restrictive, and fees that they claim are too high. Green Tree Financial places the burden of proof on the party seeking to invalidate an arbitration agreement on the ground that arbitration would be prohibitively expensive. Since 1999, Amex’s Card Acceptance Agreement has contained a mandatory arbitration clause that widely covers all claims, and prohibits parties from pursuing anything other than individual claims where arbitration has been initiated. In 2006, a New York federal district court recognized the arbitrability of a dispute between Amex and Italian Colors Restaurant, granting Amex’s motion to compel arbitration.  See In re American Express Merchants Litig., No. 03cv9592, 2006 WL 662341 (S.D.N.Y. March 16, 2006) The plaintiffs appealed, and the appellate panel found in its original decision that they met their Green Tree Financial burden of showing that their claims could not be reasonably pursued as individual actions.  The Second Circuit panel found, in reversing the lower court, that the effect of Amex’s arbitration clause, containing the class arbitration waiver, was to immunize itself from claims. The panel invalidated the class action waiver. Unlike Stolt-Nielsen, where the agreement was silent on class arbitration, which had been ordered by arbitrators, in Amex, the parties had agreed to a class arbitration waiver clause.  “The key issue,” according to the new opinion, “was whether the mandatory class action waiver in the Card Acceptance Agreement is enforceable even if the plaintiffs are able to demonstrate that the practical effect of enforcement of the waiver would be to preclude their bringing Sherman Act claims against Amex. In re American Express Merchants’ Litigation, 634 F.3d 187, 196 (2d Cir. 2011).” The Amex plaintiffs’ allegations were based on antitrust claims under the Sherman and Clayton Acts, 15 U.S.C. § 1 et seq., which bar certain anticompetitive business practices. In upholding its earlier decisions and discounting Stolt-Nielsen and AT&T Mobility, the Second Circuit relied on Green Tree Financial, as well as the arbitrability of federal statutory claims allowed in Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 632 (1985), and Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991). Neither of the two recent Supreme Court decisions affected those earlier cases, the new Pooler Second Circuit opinion points out. The latest decision finds that class action suits are appropriate and sometimes the only economically rational choice for vindicating statutory rights. There also is a presumption in favor of the arbitrability of statutory claims, so long as the arbitration allows full recovery as intended by the statute.   But, according to the Second Circuit, such full vindication of statutory rights is not always possible through arbitration where the cost of arbitration can be demonstrated under Green Tree Financial to effectively prohibit such vindication.  In Amex, the statutory remedy was in fact undermined by a class arbitration waver clause, given the parties ‘ circumstances. Although there is broad judicial support for the use of arbitration clauses, the new opinion notes, the rights they provide are not absolute.  They cannot be used as a mechanism to avoid liability. And the case does not declare arbitration waivers per se unenforceable.  Pooler writes, [A]s the class action waiver in this case precludes plaintiffs from enforcing their statutory rights, we find the arbitration provision unenforceable. We again emphasize our holding comes with caveats. See Amex, 554 F.3d at 320 (“We emphasize two important limitations upon our holding.”) Our decision in no way relies upon the status of plaintiffs as “small” merchants. We rely instead on the need for plaintiffs to have the opportunity to vindicate their statutory rights. So if the plaintiffs can't vindicate their rights without a class process, and the Second Circuit can't order class arbitration under Stolt-Nielsen, what's next on remand?  Apparently, litigation.  "We conclude that this arbitration clause is unenforceable," writes Circuit Judge Pooler. "We remand to the district court with the instruction to deny the defendant's motion to compel arbitration." --Russ Bleemer, Editor, Alternatives, & Magda Laszlo, CPR Intern

CPR presented the organization’s third annual “Award for Outstanding Contribution to Diversity in Alternative Dispute Resolution“ to Elpidio (“PD”) Villarreal on January 11, 2012.

The CPR Institute’s Awards Program recognizes exceptional practical achievement and scholarship in the field of alternative dispute resolution. Award criteria focused on processes, techniques, systems, commitment, and scholarship which address the resolution, prevention, or creative management of major disputes involving public or business institutions between corporations, governments, or other parties.

These Guidelines set out the types of issues as to which early disposition may be appropriate and suggest ways they may be addressed and responded to – always providing that early disposition will result in overall efficiencies.

This is an Article that explains new ways to proactively reduce and manage the likelihood of formal disputes. These methods include appointing a standing neutral, establishing a peer review panel program for employee disputes and implementing a planned early negotiation process.

Longtime CPR Institute official Joseph T. McLaughlin passed away on Jan. 9. McLaughlin, a former litigator and banking general counsel, was a full-time neutral when he died, a member of JAMS’ New York office.   McLaughlin served on the CPR Institute’s board of directors for nine years and led CPR’s Executive Advisory Committee for five years. He was the chair of the organization’s Budget, Audit and Finance committee, and is credited with creating CPR’s annual fall Corporate Leadership Award dinner in 2004, a highly successful fundraiser.  He frequently served as master of ceremonies for the black-tie affairs, held each fall in New York. Kathy Bryan, CPR’s president and chief executive officer, said, “Joe McLaughlin was a visionary, a true leader of leaders.  He had the rarest of combinations: A great mind and a huge heart.  CPR and the entire ADR community will mourn his passing.” McLaughlin pioneered ADR use in the financial services industry.  As a neutral, he worked extensively on banking and investment issues worldwide, with a focus on the Far East in recent years.  He used his conflict resolution expertise as an arbitrator and a neutral in accountants’ liability matters, class actions, mass torts, corporate governance issues, and securities and governmental disputes. McLaughlin rose to prominence in the legal profession as a partner and later head of litigation at Shearman & Sterling in New York.  He left the firm in 1997 after nearly 30 years to join Credit Suisse First Boston as Executive Vice President, Legal and Regulatory Affairs for four years.   In 2007, he became a mediator and arbitrator at JAMS.  He later joined Bingham McCutcheon’s New York office as of counsel in addition to his neutraling work. At the CPR Institute, McLaughlin spoke at numerous organizational and public meetings on a wide variety of ADR practice topics.  They included a 2010 CPR Annual Meeting session on dispute prevention, as well as seminars on managing ADR in corporate law departments and government agencies, and using conflict resolution in deals in China. He also was active as a judge for CPR’s annual awards program, and a member of its banking and financial services committee. * * * McLaughlin was a prolific advocate for best conflict resolution practices as an academic, writer, and speaker.  He was an adjunct professor at New York’s Fordham University School of Law, where he taught domestic and international ADR. He was a visiting professor teaching international arbitration at Cornell Law School, where he graduated in 1968 with a specialization in the field in which he lectured.  He also lectured at the American Law Institute and the Practicing Law Institute. * * * McLaughlin made arbitration improvement a public cause at CPR and in his personal work.  He participated in CPR Arbitration Commission rulemaking sessions and advocated for more effective and efficient use of the process for many years. He spearheaded CPR’s public advocacy for improving the Arbitration Fairness Act of 2009, still-pending legislation that restricts arbitration in consumer and employment cases.   Nearly a decade earlier, while at Credit Suisse, McLaughlin had the company file an unusual corporate friend-of-the-Court brief in a Supreme Court employment arbitration case that advocated for ADR.  He said the processes were a necessary tool for corporate law departments. "I was concerned that if we didn't file the brief," McLaughlin told Alternatives at the time, that the Court "wouldn't have the benefit of the practical experience we have had." See “Going Public: Credit Suisse’s ADR Progress,” 18 Alternatives 162 (September 2000). Says Kathy Bryan, “Joe’s support of nonprofits, his love of ADR and his unparalleled intellect, analytical skills, and his gift with people all combined to make him the most powerful advocate and, later, neutral.” * * *       At the November 2007 CLA Dinner Joe McLaughlin received a special award from CPR and the Board of Directors for the positive impact he has had to CPR, the field of Alternative Dispute Resolution and the legal profession. * * * Before immersing himself in conflict resolution practices, McLaughlin used his litigation advocacy and skills for significant pro bono projects.   McLaughlin opposed the death penalty, and argued cases before the U.S. Supreme Court.  One significant case changed the standard for evaluating a defendant’s intent in a felony murder case—and overturned McLaughlin’s client’s death penalty sentence.  Cabana v. Bullock, 474 U.S. 376 (1986). McLaughlin often focused his capital crimes’ advocacy on cases where a death sentence had been imposed against a juvenile defendant.  He filed a significant amicus brief discussing research on the operations of the human brain on behalf of eight medical and mental health organizations in the seminal case of Roper v. Simmons, 543 U.S. 551 (2005), which outlawed the use of the death penalty against individuals under age 18. A summary of McLaughlin’s death penalty work can be found at the Cornell Law School site, here. * * * McLaughlin’s advocacy skills continued to influence and educate even after he devoted his work life to full-time neutraling.   In 2010, Boston College’s Fulton Debating Society inaugurated its Joseph T. McLaughlin Award for Public Debate.  The award, according to BC, is presented to the debating society member “who has demonstrated a commitment to the society's public debate series and has mastered the art of arguing before large audiences.” McLaughlin, a 1965 BC graduate, was a debating champion, competing in national tournaments when he attended the school. A Boston College web page devoted to the award and its history can be found here.   He also was a periodic contributor to CPR’s Alternatives, writing on, among other things, clause drafting and the effects of U.S. Supreme Court arbitration decisions.  Most recently, McLaughlin authored an often-requested two-part series on ADR contracting in China.  See “China's Passage: With ADR Options Increasing, Precise Contract Drafting Is Essential for Arbitration Users,” 28 Alternatives 253 (September 2010), and “Planning for Commercial Dispute Resolution: The View from the People's Republic of China,” 28 Alternatives 137 (July/August 2010). * * * A memorial service has been scheduled for Jan. 28 at 11 a.m. at the Grace Church, 254 Hicks St., Brooklyn Heights, N.Y. In lieu of flowers, the family has asked people to send a donation to Good Shepherd Services, 305 Seventh Avenue, New York, N.Y. 10001; www.goodshepherds.org.

The U.S. Supreme Court issued its second arbitration decision of the 2011-2012 term this morning, offering more evidence of its strong support of the Federal Arbitration Act. In CompuCredit Corp. v. Greenwood, No. 10-948 (Jan. 10), the Court ruled 8-1 that because the Credit Repair Organizations Act is silent on whether claims under the act can be arbitrated, the FAA requires credit card customers'  arbitration agreement "to be enforced according to its terms." The result is that consumers who applied for and received so-called credit repair Visa cards and filed suit against CompuCredit and the card issuer must follow arbitration provisions in their credit agreements.  The cardholders--people seeking to rehabilitate their poor payment histories--had objected to high fees that they claimed ran counter to CROA. Despite the arbitration clause in their credit agreement, the plaintiffs filed suit in court against CompuCredit and the card issuers.  They cited the Credit Repair Organization Act provision that requires issuers to tell customers, "‘You have a right to sue a credit repair organization that violates the [Act].” 15 U. S. C. §1679c(a). Writing for the majority, Associate Justice Antonin Scalia notes that the "mere 'contemplation' of suit in any competent court [under CROA] does not guarantee suit in all competent courts,disabling the parties from adopting a reasonable forum selection clause." [Emphasis in the opinion.] The opinion continues, "[J]ust as the contemplated availability of all judicial forums may be reduced to a single forum by contractual specification, so also can the contemplated availability of judicial action be limited to judicial action compelling or reviewing initial arbitral adjudication.  The parties remain free to specify such matters, so long as the guarantee of [CROA's] §1679g—the guarantee of the legal power to impose liability—is preserved." [Emphasis in the opinion.] Associate Justice Sonia Sotomayor wrote a separate concurrence, joined by Associate Justice Elena Kagan. Associate Justice Ruth Bader Ginsburg dissented, writing that consumers should be able to go to court:  "If the [a]ct affords consumers a nonwaivable right to sue in court, as I believe it does, a credit repair organization cannot retract that right by making arbitration the consumer’s sole recourse." Earlier this term, the Court reversed a Florida appeals court decision that refused to compel arbitration for investment fraud claims.  The five-page per curiam decision in KPMG LLP v. Robert Cocchi, No. 10-1521 (Nov. 7), meant that 19 parties that filed suit against investment funds that in turn invested with disgraced financier Bernard Madoff may have to arbitrate their claims. Details and links, here. --Russ Bleemer, Editor, Alternatives

In a decision that limits the U.S. Supreme Court’s ban on contractual waivers of the right to participate in class arbitrations, the National Labor Relations Board Friday announced that employers can’t force their workers to give up all class claims as a condition of employment. D.R. Horton Inc. and Michael Cuda, Case 12-CA-25764, found that the employer's class arbitration waiver prevents employees from exercising their right to “to engage in . . . concerted activities for the purpose of collective bargaining or other mutual aid or protection” under Section 7 of the National Labor Relations Act (29 U.S.C. Sec. 157). Last spring’s Supreme Court decision, AT&T Mobility v. Concepcion, 131 S.Ct. 1740 (2011)(available here), backed the use of class arbitration waivers in consumer contracts in the context of cellphone contracts.  The Court held that California state consumer protection law interfered with the Federal Arbitration Act.  On Friday, the NLRB announced that the federal protections for organized work activities must coexist with FAA, distinguishing AT&T Mobility, and class arbitration waivers that cut off collective action won’t stand. Moreover,the NLRB’s ruling will apply beyond the executive agency’s traditional focus on unionized workers, to white-collar employees in private companies, who also have the right to act together without employer interference under NLRB Section 8.  The ruling doesn’t apply to government employees or management. Just hours after the NLRB announced the decision on Friday, the New York Times noted that the case “will no doubt anger many companies.”  See coverage here. "The decision is so sweeping," says Jay Waks, a partner in New York's Kaye Scholer who advises management on employment policy.  In considering options on advising clients, he says he is focusing on, among other things, "the implication of simply carving out from an arbitration agreement with employees the possibility of permitting employees to participate in a court class action, but not an arbitration class action," in accordance with D.R. Horton. Plaintiffs' attorney Cliff Palefsky, name partner in San Francisco's McGuinn, Hillsman & Palefsky and the author of an amicus brief on behalf of the Service Employees International Union urging the NLRB to invalidate the class waiver in the case, says the decision will be tough to be appeal.  "When you think about it," Palefsky says, "employers can't prevent you from bringing a class action.  Why is this even a question?" Palefsky has another case before the NLRB on the same issue, and has been pursuing the class waiver issue before the NLRB's general counsel for years. But both Palefsky and Waks expect that the case will be the subject of a petition to the federal courts for review.  In an article updated today on Law.com, Ogletree, Deakins, Nash, Smoak & Stewart partner Ron Chapman Jr., in Dallas, notes that the decision is contrary to the FAA and Supreme Court rulings.  He told Corporate Counsel in a written statement that "if the decision were left to stand, it would merely encourage wasteful, frivolous class and collective actions that primarily serve the interests of plaintiffs' lawyers, not workers." The D.R. Horton case arose in the midst of a furious Beltway and cable news controversy over the NLRB.  It actually was decided last Tuesday, the day the term of one of the Board’s five members, Craig Becker, expired.  Becker joined Board chairman Mark G. Pearce in the decision--the sole board participants--as a third board member, Brian Hayes, recused himself from the decision for unspecified reasons.  The opinion could not have been released the next day without Becker, since the NLRB needs at least three board members to release a decision. The remaining slots have been vacant, with nominees unconfirmed by Congress.  On Wednesday, a day after the D.R. Horton decision and the expiration of Becker’s term, President Obama announced three recess appointments to fill the NLRB board vacancies--as well as the chairman of the new Dodd-Frank Wall Street Reform and Consumer Protection Act’s Consumer Financial Protection Board—heating up election year rhetoric on the airwaves. The opinion remained unannounced until Friday.  The NLRB statement on D.R. Horton, which includes a link to the opinion's full text as well as links to the business and labor amicus briefs, is available here. D.R. Horton strongly states that it does not affect the FAA and arbitration rights, nor does it bar employers from requiring individual arbitrations for their workforces.  In its order, the board barred D.R. Horton, a Fort Worth, Texas -based home builder, from “[m]aintaining a mandatory arbitration agreement that employees reasonably could believe bars or restricts their right to file charges with the [NLRB and] . . . waives the right to maintain class or collective actions in all forums, whether arbitral or judicial.” The concern is that by eliminating employees' ability to pursue claims jointly, their NLRA rights would be cut off.  The board said those concerted-action rights were not procedural, but substantive. The result is that companies will have to alter their employment arbitration requirements.  The opinion is clear that arbitration programs can continue, but the NLRA requires the ability for employees to use collective actions, either in court or ADR. The 14-page opinion and order--tracing the history of the NLRA and its predecessor, the Norris-LaGuardia Act (29 U.S.C. Sec. 101 et seq. (1932)), as well as the FAA--notes that “an agreement requiring arbitration of any individual employment–related claims, but not precluding a judicial forum for class or collective claims, would not violate the NLRA, because it would not bar concerted activity.” "D.R. Horton does not bear on the validity fo arbitration clauses in general," says Kaye Scholer's Jay Waks. "The right to require employees to consent to arbitration employment disputes is well established.  This focuses on the validity of class action waivers, whether or not contained in arbitration." Charging party Michael Cuda stated in his original unfair labor practices complaint that D.R. Horton violated his rights in rejecting his arbitration demand, which he filed under a “Mutual Arbitration Agreement.”   The agreement excluded consolidated and class claims.  Cuda contended that the company was misclassifying the superintendents as exempt from the Fair Labor Standards Act protections, according to the NLRB opinion. --Russ Bleemer, Editor, Alternatives

New York, NY, December 15, 2011 – The International Institute for Conflict Prevention & Resolution (CPR Institute), a nonprofit alliance of global corporations, law firms, scholars, and public institutions dedicated to the principles of commercial conflict prevention, announces the formation of a Task Force to explore ways to improve the use of alternative dispute resolution (ADR) in patent disputes. The Chair of the Task Force is Manny W. Schecter, IBM Chief Patent Counsel. Current patent settlement rates demonstrate that mediation is underutilized in patent disputes.  Therefore, the first project of this group will be the development of an ‘Effective Practices Protocol’ (EPP) for promoting mediation of patent disputes.   The Task Force has formed three subcommittees to begin to examine mediation best practices from each of five stakeholder perspectives: in-house counsel/business people; outside counsel; mediators; judges; and provider organizations.  Each will be analyzed within three distinct areas: 1) pre-mediation; 2) mediation; and 3) issues unique to patent cases.  The work of the subcommittees will be to gather information, conduct surveys and lead focus groups with the goal of completing the protocol in 2013. The subcommittee members are:   Pre-Mediation Harrie Samaras (Chair) Jason Burwell Robert F. Copple Anne B. Kiernan Russell E. Levine Jay Stewart S.I. Strong Phillip C. Swain                Hon. Mary Pat Thynge  Mediation Kevin Casey (Chair) Kenneth R. Adamo Mark Edwards Hon. Edward N. Cahn Dennis Crouch             Hon. John S. Martin Robert T. Tobin  Unique Issues in Patent Cases John M. Delehanty (Chair) Bruce G. Bernstein M. Scott Donahey Don W. Martens Hon. Paul R. Michel Steven W. Miller Maxim (Mac) H. Waldbaum Michael Walker John K. Williamson  According to Kathleen A. Bryan, President and CEO of the CPR Institute, “The CPR Institute has been a pioneer in seeking improvements to private resolution in disputes involving intellectual property and patents.  This new protocol has the potential to find solutions to earlier resolution of patent disputes, which are the most costly cases for many companies.”  Mr. Schecter of IBM agreed, saying “The important work of this Task Force to identify and overcome barriers to mediation of patent disputes could save businesses from wasteful litigation costs.” Since 1987, CPR has convened technology leaders in the U.S. and Europe to consider mediation and other non-binding ADR techniques.  In 2004, CPR created the International Commission on Patent Disputes and significant work was completed in three parallel tracks focused on mediation, arbitration and assisting the judiciary.  In 2006, the mediation subcommittee published a book entitled “Master Guide to Patent Mediation: Better Solutions for Business.”   About the CPR Institute As a think tank and educational not-for-profit organization, the CPR Institute provides thought leadership and innovation as the global resource for conflict management and resolution of complex business-related disputes. Our wealth of intellectual property and published material has educated and motivated General Counsel and their law firms around the world toward an increased reliance on alternative forms of dispute resolution rather than litigation. CPR Institute’s membership is comprised of general counsel and senior lawyers of Fortune 1,000 organizations, partners in the top law firms around the world, as well as leading judges, government officials, neutrals, and academicians. Our proprietary panel of esteemed arbitrators and mediators has provided resolutions in thousands of cases, with billions of dollars at issue, worldwide. Download a PDF of this Press Release here.

Andrew R. (Drew) Byers 1946 – 2011 This tribute to Drew Byers was prepared by Donald S. Trevarthen.  He is Director, Division Counsel at Toro Co., which makes yard and garden equipment. Trevarthen and Toro are longtime participants in CPR Institute initiatives and events. Toro is based in Bloomington, Minn. The Toro Company, the CPR Institute and the legal profession lost a dear friend and colleague this year.  Andrew R. (Drew) Byers, age 64, passed away on Sept. 16, 2011.  Drew served as Toro's Senior Manager of Corporate Product Integrity from 1988–2010. Drew led Toro’s product liability claims resolution program–focusing on safety and prevention, early investigation of accidents, and mediation–for two decades.  Drew was a true pioneer in the alternative dispute resolution field.  He transformed Toro’s approach to resolving its portfolio of product liability claims.  Prior to the implementation of the program, Toro treated injured parties as potential litigation adversaries, instead of “unhappy customers.”  As a result, Toro has been able to amicably resolve virtually every claim, often with $0 outcomes, over the past 20+ years.  The program truly has been a “win-win” – a remarkable feat. Toro takes great pride in its innovative products – and in its innovative product integrity program.  Drew was the man who championed the company’s mediation approach.   He had a keen sense for how to get plaintiffs and plaintiffs’ counsel to come to the table early, how to pick mediators, and how to settle the cases.  He was adept at leveraging the strength of local counsel and had an innate sense for finding the “sweet spot” in getting the plaintiff and plaintiff’s counsel to reach a deal.  He achieved successful settlements in dozens and dozens of claims during his 20+ year career with Toro.  Drew fully supported CPR’s work in the ADR field and admired the companies who committed to using ADR to resolve disputes.  He is deeply missed by all of his colleagues, both at Toro and at CPR. --Donald S. Trevarthen, Toro Co., Bloomington, Minn. * * * Attached in PDF format is a Sept. 2002 Alternatives article summarizing a CPR Institute meeting session at which Drew Byers participated in a role play exercise with his Toro conflict resolution colleagues demonstrating the company's award-winning multistep alternative dispute resolution processes.  "Toro's Approach to Conflict Management:  A Case Study in Advocacy," appears on Page 149 of the PDF. Download this PDF:  byersarticleSept2002.pdf

Part 2: William Ury returns to discuss negotiating with difficult people . The co-author of Getting to Yes this week turns to practice pointers. Here’s what you need to do to get to your “Batna”—your “best alternative to a negotiated agreement.”

Clip length/Date:(27:27min - 11/23/11) Summary: Negotiation legend William Ury joins International Dispute Negotiation host Michael McIlwrath for the first of two parts. Listen now, because Part 2 will be here soon, on Monday, Dec. 5 In this first episode, the co-author of the essential ADR practitioners’ book, “Getting to Yes,” discusses building credibility and trust in negotiations; reducing tensions at the bargaining table, and what happened after President Carter asked him to mediate a standoff in Venezuela between millions of President Hugo Chavez’s supporters and the opposition. Having trouble hearing this podcast? Download the file to your computer by right-clicking here and selecting "save as" or "save target".

The Wall Street Journal 's Law Blog has expanded on yesterday's CPR website story on the Ninth Circuit decision to rehear en banc a panel decision in its veterans disability benefits backlog case, Veterans for Common Sense v. Shinseki, No. 08-16728 (9th Cir. May 10, 2011). Today, Ron Elsberry, managing attorney at Disability Rights Advocates, a Berkeley, Calif., nonprofit advocacy law firm that represents the two plaintiff veterans groups, reports that the hearing has been scheduled for Dec. 13, at 11 a.m. You can read the WSJ Law Blog item here: on.wsj.com/syAF4e --Russ Bleemer, Editor, Alternatives

The Ninth U.S. Circuit Court of Appeals has agreed to rehear en banc a controversial panel opinion holding that the U.S. Department of Veterans Affair’s disability appeals process violated the constitutional rights of military personnel by depriving them of their benefits. The original decision, Veterans for Common Sense v. Shinseki, No. 08-16728 (9th Cir. May 10, 2011), put the VA’s Board of Veterans Appeals under federal court supervision. The now-vacated 2-1 opinion, written by Circuit Judge Stephen Reinhardt, strongly criticized the VA for failing to provide servicemen and -women with timely adjudication of their disability claims.  The rehearing is on a fast track.  Ron Elsberry, managing attorney at Disability Rights Advocates, a Berkeley, Calif., nonprofit advocacy law firm that represents the two plaintiff  veterans groups, says that the case will be argued the week of Dec. 12.  "The Court of Appeals is acting with unusual speed," Elsberry notes in an E-mail, adding, "This action, I believe, shows recognition by the [c]ourt that veterans are in dire circumstances as each day.  . . . We are confident that the en banc panel will reaffirm the Court's prior ruling that the VA's unconscionable delays and bureaucratic dysfunction in providing proper care to veterans violates veterans' constitutional right to due process of law." The appeals board has been plagued with lengthy delays for a decade.  The 79-page Ninth Circuit panel opinion opened by noting that on average, 18 veterans commit suicide each day; citing the district court, the opinion notes that between October 2007 and April 2008, at least 1,467 veterans died while their appeals were pending. Chief Circuit Judge Alex Kozinski dissented, writing that the decision “dramatically oversteps its authority.”  Both the majority and the minority opinion acknowledged the separation-of-powers issues in having a San Francisco federal district court oversee changes to the VA appeals board processes.  Those issues were at the heart of the U.S. Justice Department’s rehearing petition. The full Ninth Circuit issued the rehearing order on Nov. 16.  Kozinski, along with “10 additional judges to be drawn by lot from the active judges of the Court,” are expected to hear the case, under the Ninth Circuit’s rules.  The circuit currently has 24 active judges and 18 on senior status. The May panel was rounded out by Senior Circuit Judge Procter Hug Jr., who backed Reinhardt’s opinion. The decision was the subject of this CPR web article, as well as an analysis of the U.S. Justice Department’s decision to appeal here.  For a more extensive analysis, see “ ‘This Is Their Wake-Up Call’:  Ninth Circuit Trashes the Veterans’ Administration Claim Processes,” 29 Alternatives 130 (July/August 2011)(available here with subscription/membership).   The Ninth Circuit’s information on the case can be found on its en banc page, here.   The government’s successful rehearing petition, as well as the opposition brief by the two plaintiffs veterans’ groups, Veterans for Common Sense and Veterans United for Truth Inc., can be found here. The San Francisco Chronicle's Thursday article on the Ninth Circuit's rehearing order can be found here. --Russ Bleemer, Editor, Alternatives

New York’s top court refused to overturn an arbitration award in an opinion this morning, and in the process, specified its approach in a key practice area in a case that linked an arbitrator with Congressional ties to the parties. In U.S. Electronics Inc. v. Sirius Satellite Radio Inc., No. 185, the New York Court of Appeals clarified that federal law on “evident partiality” applies in New York state in cases invoking the Federal Arbitration Act.  Specifically, the Court adopted a line of cases from the Second U.S. Circuit Court of Appeals, which covers New York. Under the Federal Arbitration Act  (at 9 USC § 10(a)(2)), a federal court can set aside an arbitration award for evident partiality of the arbitrators.  The standard is frequently litigated. Today, the New York Court upheld an award for respondent Sirius in a contract dispute over a deal to supply the satellite radio provider with receivers.  The Court discounted allegations that tribunal chair William S. Sessions—an ADR partner in the Washington, D.C., office of Holland & Knight, a former federal judge, and an FBI director appointed by President Reagan who resigned under strong criticism from the Clinton White House after serving for more than five years—“failed to disclose relationships of interest that affected the impartiality and propriety of the arbitration process.” Manufacturer U.S. Electronics, a New York company with operations based in St. Louis, had alleged that Sessions was biased because his son, Rep. Pete Sessions, R.,Texas, had publicly advocated a merger between Sirius and XM Satellite Radio Inc.   The unanimous 7-0 memorandum opinion found that Sessions’ relationships didn’t amount to evident partiality.  The Court said that the New York Appellate Division had erred by imposing on the claimant the "burden of proving by clear and convincing evidence that any impropriety or misconduct of the arbitrator prejudiced its rights." [Citation omitted.] The Court of Appeals countered that "[n]o such standard can be gleaned from federal precedent." But the high court backed the appeals court ultimate holding in declining to vacate the award.    U.S. Electronics also had alleged that Peter Sessions “was a close political ally” of Rep. Darrell Issa, R., Calif., who is chairman of the powerful House House Oversight and Government Reform Committee.  Issa is the founder of Directed Electronics Inc., now Vista-Calif.-based DEI Holdings Inc., which competes against U.S. Electronics in manufacturing radios. The New York Court of Appeals adopted the Second Circuit’s view of evident partiality, which is a “reasonable man” standard, based on Morelite Constr. Corp. v. New York City Dist. Council Carpenters Benefit Funds, 748 F2d 79 (2d Cir 1984).  The court “would have to conclude that an arbitrator was partial to one party to the arbitration,” the opinion says. That view, however, is different than the U.S. Supreme Court’s Commonwealth Coatings Corp. v Continental Casualty Co., 393 U.S. 145 (1968), in which Associate Justice Hugo Black's plurality opinion likened the arbitrators’ standard to a judge’s standard.  It held that arbitrators should avoid even the appearance of bias in disclosing relationships. A concurring opinion in Commonwealth Coatings by Associate Justice Byron White noted that disclosure should cure the problem, and that arbitrators should not be held to the same standard as judges.  “If arbitrators err on the side of disclosure, as they should, it will not be difficult for courts to identify those undisclosed relationships which are too insubstantial to warrant vacating an award,” wrote White. There is more to come, likely before year-end, from the Second Circuit on evident partiality.  The continuing application of the Morelite holding is at issue in Scandinavian Reinsurance Co. v. Saint Paul Fire & Marine Ins. Co., 732 F. Supp.2d 293 (S.D.N.Y. 2010), appeal pending, No. 10-910-cv (2d Cir.), which was argued early this year.   Richard H. Dolan, senior partner in New York’s Schlam Stone & Dolan, represents U.S. Electronics; New York-based partner Michael S. Oberman, of Kramer Levin Naftalis & Frankel, represents Sirius. --Russ Bleemer, Editor, Alternatives

The U.S. Supreme Court today reversed a Florida appeals court decision that the Court stated didn't follow Federal Arbitration Act caselaw by refusing to compel arbitration for investment fraud claims. Two of four of the investors' claims may have been arbitrable, and without a determination on those claims, the lower court should not have declined to compel arbitration, according to this morning’s opinion. A five-page per curiam decision in KPMG LLP v. Robert Cocchi, No. 10-1521 (Nov. 7), means that 19 parties that filed suit against investment funds that in turn invested with disgraced financier Bernard Madoff may have to go to arbitration with their claims. The Court ordered the Florida courts to analyze the remaining two claims, concluding, specifically, that the Florida Court of Appeal "should examine the remaining two claims to determine whether either requires arbitration." Accounting giant KPMG, which audited the feeder funds, had asked the Florida appellate and trial courts to compel arbitration in claims against the firm. The culpability of the investing funds and Madoff were not at issue in the case decided today.  But the investors' arbitration would be based on the audit services agreement KPMG has with the funds--that is, the companies that provided the investors' money to Madoff--and not with the investors. The Court notes at the outset that the FAA “has been interpreted to require that if a dispute presents multiple claims, some arbitrable and some not, the former must be sent to arbitration even if this will lead to piecemeal litigation,” citing Dean Witter Reynolds Inc. v. Byrd, 470 U. S. 213, 217 (1985). The Court reversed the Florida Court of Appeal decision, which backed a trial court.  The appellate court had held that two of the investors’ claims against the feeder funds--negligent misrepresentation and violating the Florida Deceptive and Unfair Trade Practices Act—were direct claims against KPMG, rather than derivative under its audit services agreement.   “A fair reading of the opinion reveals nothing to suggest that the court came to the same conclusion about the [other two claims,] professional malpractice and breach of fiduciary duty,” the Supreme Court opinion states, adding, “Indeed, the court said nothing about those claims at all.” Therefore, the nation’s top Court concluded today, “By not addressing the other two claims in the complaint, the Court of Appeal failed to give effect to the plain meaning of the [FAA] and to the holding of Dean Witter.” According to the per curiam decision, KPMG's petition to the Supreme Court notes that the firm's auditing agreement with the feeder funds provided that "'[a]ny dispute or claim arising out of or relating to . . . the services provided [by KPMG] . . . (including any dispute or claim involving any person or entity for whose benefit the services in question are or were provided) shall be resolved' either by mediation or arbitration." --Russ Bleemer, Editor, Alternatives

Honorees Recognized for Leadership and Commitment to the Principles of Dispute Management and Resolution New York, NY, November 2, 2011 – The International Institute for Conflict Prevention & Resolution (CPR Institute), a nonprofit alliance of global corporations, law firms, scholars, and public institutions dedicated to the principles of commercial conflict prevention, announces the recipients of the organization’s 2011 Corporate Leadership Award.  This year, the CPR Institute honors GlaxoSmithKline (GSK) and Daniel E. Troy, its Senior Vice President and General Counsel, for dedication to the field of alternative dispute resolution (ADR).  The award will be presented tonight in New York City. Each year, the CPR Institute honors a corporation and its general counsel for demonstrating leadership and commitment to the principles of conflict management and resolution, especially those that have institutionalized ADR principles into their corporate and industry culture. Previous honorees have included: Amgen Inc. and its SVP, General Counsel & Secretary David W. Scott (2010) FMC Technologies Inc. and its SVP, General Counsel & Secretary Jeffrey W. Carr (2010) DuPont Company and its SVP & General Counsel Thomas L. Sager (2009) Pfizer Inc. and its SVP & General Counsel Amy W. Schulman (2009) Microsoft Corporation and its SVP & General Counsel Brad Smith (2008) “GlaxoSmithKline has been an industry leader in bringing innovative alternative dispute resolution approaches to drug industry disputes,” said Kathleen A. Bryan, President and CEO of the CPR Institute.  “Under the outstanding leadership of Dan Troy, GSK has integrated ADR into its operations by devising a systematic approach to early case assessment and by establishing a commitment to ADR education for both its in-house legal team and its outside counsel. GSK has set a successful benchmark against which all companies’ legal departments should be measured.” GSK has deep roots as an advocate of alternative dispute resolution. The company joined the CPR Institute and signed the CPR Corporate Policy Statement on Alternatives to Litigation© in 1988. As head of GSK’s legal team, Dan Troy has demonstrated leadership and dedication to conflict management principles throughout his legal career in private practice, public service and as corporate counsel. Under his leadership, GSK is currently spearheading an effort to develop meaningful corporate data about the efficiency and financial impact of alternative methods of resolving disputes. Such data is integral to developing understanding, across industries and companies, of the tangible and quantifiable benefits of integrating ADR systems and standards as a means to resolve disputes. “I am truly honored to receive this award on behalf of GSK and our legal team,” said Dan Troy, Senior Vice President and General Counsel, GlaxoSmithKline. “The CPR Corporate Leadership Award is a testament to our success in finding new and effective ways to approach litigation matters. By identifying potential disputes before they happen, and by resolving litigation creatively, we are continuing to dramatically reduce our litigation risk.  Our success in ADR is a credit to my talented and dedicated colleagues in the Legal department at GSK, and to the outside counsel that support us.” The 2011 Corporate Leadership Award will be presented at a black tie dinner at New York’s Cipriani 42nd Street.  Jonathan P. Graham, Senior Vice President and General Counsel of Danaher Corporation will serve as this year’s Master of Ceremonies. The event will draw in excess of 500 attendees representing the top corporations, law firms, scholars, and public institutions in the country.  The major corporate sponsors of this year’s Corporate Leadership Awards Dinner include Ballard Spahr LLP, General Electric, DuPont Company, Fulbright & Jaworski LLP, King & Spalding, Pepper Hamilton LLP, Phillips Lytle LLP, Sidley Austin LLP, Williams & Connolly LLP, Danaher Corporation, Debevoise & Plimpton LLP, Greenberg Traurig LLP, Reed Smith LLP, and Ropes & Gray LLP. The funds raised by the Corporate Leadership Award Dinner support the CPR Institute’s educational, research and public policy programs.  For more information about the Corporate Leadership Award, visit here. About GlaxoSmithKline GlaxoSmithKline – one of the world’s leading research-based pharmaceutical and healthcare companies – is committed to improving the quality of human life by enabling people to do more, feel better and live longer.  For further information go to us.gsk.com, follow us on twitter.com/GSKUS or visit our blog (www.morethanmedicine.us.gsk.com/blog/). About Daniel E. Troy Daniel E. Troy joined GlaxoSmithKline as Senior Vice President, General Counsel and a member of the Corporate Executive Team in September 2008. He was previously a Partner at the Washington law firm Sidley Austin LLP, where he represented mainly pharmaceutical companies and trade associations on matters related to the U.S. Food and Drug Administration (FDA) and government regulations. He also served as Chief Counsel for the FDA, where he acted as a primary liaison to the White House and the U.S. Department of Health and Human Services. About the CPR Institute As a think tank and educational not-for-profit organization, the CPR Institute provides thought leadership and innovation as the global resource for conflict management and resolution of complex business-related disputes.  Our wealth of intellectual property and published material has educated and motivated General Counsel and their law firms around the world toward an increased reliance on alternative forms of dispute resolution rather than litigation. CPR Institute’s membership is comprised of general counsel and senior lawyers of Fortune 1,000 organizations, partners in the top law firms around the world, as well as leading judges, government officials, neutrals, and academicians. Our proprietary panel of esteemed arbitrators and mediators has provided resolutions in thousands of cases, with billions of dollars at issue, worldwide. For more information, please visit here. Download a PDF of this Press Release here.

It's here:  the annual Mediation Settlement Day in New York state. This annual commemoration, now a decade old, started as a court system effort to encourage settlements, and has grown to a wide-ranging, month-long promotion for using mediation rather than adjudicative processes involving alternative dispute resolution programs, bar associations, community programs,  public and nonprofit government agencies, the courts, private business and industry, educational institutions and academia, and nonprofit groups. The CPR Institute is proud to return as a sponsor for New York state's Mediation Settlement Day, joining FINRA Dispute Resolution, the New York State Unified Court System and the coalition of more than 100 organizations. Participants are concentrated in the New York City area, but now extend beyond to upstate New York, New Jersey, Illinois, California and Washington, D.C. Mediation Settlement Day's objective is to raise awareness about the many benefits of mediation and the wealth of available resources. The kickoff event is Tuesday, Oct. 18, at the New York City Bar Association, 42 W. 44th St.  It will honor Prof. Maria R. Volpe, director of John Jay College of Criminal Justice's Dispute Resolution Consortium in New York City.  Mediation Settlement Day is Thursday, Oct. 20.  A list of commemorations for 10/20 are below. Volpe is best known for pairing scholarship with practice in her establishment of a New York City ADR-oriented list serv within days of the terrorist attacks of Sept. 11, 2001.  Her online efforts, designed to produce deliverable products and services from ADR professionals to confront the nation's post-9/11 needs, has grown to a worldwide community of more than 2,100 professionals. Last year's award winner was JAMS neutral and veteran ADR trainer, lecturer and author Margaret Shaw. The 2011 Honorary Chairman is Michael Sardo, who is creator and executive producer of the USA Network’s Fairly Legal. Sardo will give a keynote at 6:45 pm. The Mediation Settlement Day events begin with an open house at 4:30 p.m., where representatives of many of the sponsor organizations will have table set up to greet people interested in the mediation, and discuss their efforts.  The CPR Institute will participate in the open house. Attorneys also will be able to earn 1.5 CLE credit hours at a 5:30 pm panel discussion, "Mediation in the Mainstream Panel." RSVPs for the CLE go to shthomas@nycourts.gov. Finra's web page is the go to spot for more information on all of the participants and activities.  Go here. Today, Thursday, October 20, 2011, has been officially proclaimed as Mediation Settlement Day by New York Gov. Andrew M. Cuomo and New York City Mayor Michael M. Bloomberg. Supporting statements have been issued by Chief Judge Carla E. Craig, of the U.S. Bankruptcy Court in the Eastern District, based in Brooklyn, and Ricardo Granderson, Equal Employment Opportunity Officer at New York City's Department of Parks and Recreation. Tonight, in observance of Mediation Settlement Day landmarks statewide will be lit in blue after sundown including, for the second consecutive year: Mediation Settlement Day sponoring organization Albany Law School; both the American and Canadian sides of Niagara Falls, and the Mid-Hudson Bridge in Poughkeepsie. In New York City, for the first time, the Staten Island Ferry Terminals in Manhattan are displaying a Mediation Settlement day message: "Involved In A Conflict?  Try Mediation. October 20, 2011 is Mediation Settlement Day. Learn More About Mediation at www.nycourts.gov/adr." Illuminated in blue for the first time will be: 7 World Trade Center in Manhattan, and The Peace Bridge, which connects Buffalo and New York state to Canada. Today, there is a link on website of the New York State Unified Court System-- www.nycourts.gov--to mediation services provided by the Community Dispute Resolution Centers Program. Finally, the Training and Events Calendar at www.nycourts.gov/adr has details about a variety of Mediation Settlement Day.