Guide to Judicial Management of

Cases in ADR

Robert J. Niemic

Donna Stienstra

Randall E. Ravitz

Federal Judicial Center

2001

This Federal Judicial Center publication was undertaken in furtherance of the Center’s

statutory mission to conduct and stimulate research and development for the improvement

of judicial administration. The views expressed are those of the authors and not necessarily

those of the Federal Judicial Center.
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Guide to Judicial Management of Cases in ADR

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Contents

Acknowledgments, ix

Preface, xi

I. ADR in the Federal Courts, 1

A. Authority to refer cases to ADR processes, 2

1. U.S. district courts, 2

2. U.S. bankruptcy courts, 4

B. Scope of this guide, 7

C. Definitions of the principal types of federal court-based ADR, 8

D. Some key ADR concepts, 9

II. Considering the Use of ADR: How and When, 11

A. How and when might the court raise the subject of ADR with the

parties? 12

B. At what stage of the litigation might an ADR referral be made? 13

1. Mediation, 14

2. Early neutral evaluation (ENE), 15

3. Arbitration or summary jury trial, 15

C. Will ADR interfere with the overall schedule set for the case? 16

D. How much, if any, discovery is necessary before or during the ADR

process? 17

E. What might the court do if it appears that a ruling on a particular

issue would facilitate use of ADR? 18

F. What might the court do if a dispositive motion has been filed? 18

III. Selecting Cases Appropriate for ADR, 20

A. Party characteristics, 21

1. Can the parties benefit from ADR? 21

2. Who are the parties and their attorneys, and can they use ADR

effectively? 23

3. Is there a pro se party in the case? 24

4. Is a governmental entity a party? 25

5. Does settlement depend on information that parties want to

keep confidential? 26

B. Case characteristics, generally, 26

1. Does the case involve novel legal issues, ambiguous precedent,

constitutional issues, or public policy? Would a judgment

contribute to development of the law? 26
Guide to Judicial Management of Cases in ADR

iv

2. Should the public have information about the case and its

resolution? 27

3. Does the case have many issues or few issues? 27

4. Are there multiple parties? 28

5. Have the parties already attempted settlement and failed? 30

6. Is the case of a type that would generally be decided on the

papers? 30

C. Complex cases, 30

1. What if the case is a class action? 32

2. What if the case is a mass tort case? 33

D. Bankruptcy matters, 36

IV. Matching the ADR Process to the Case, 38

A. Who might select the ADR process? 38

1. Selection by the parties, 38

2. Selection by court ADR staff, 39

3. Selection by the judge, 39

B. What criteria can the court use to match a case to an ADR

process? 39

1. Mediation, 40

2. Arbitration, 40

3. Early neutral evaluation (ENE), 43

4. Summary jury trial, 44

5. Minitrial, 45

V. Deciding on Party Consent, Client Attendance, and Degree of Party

Participation, 48

A. Referring cases to ADR with or without party consent, 48

1. Considerations in making a mandatory or voluntary referral, 50

2. Sources of authority for making a referral without party consent,

52

3. If the court prefers party consent, what can be done to ensure

informed consent? 55

B. Requiring client attendance at ADR sessions, 56

1. Attendance by clients generally, 56

2. Attendance by insurance companies when not the primary party,

58

3. Attendance by officials from governmental entities or large

organizations, 58

4. Authority to require client attendance at ADR sessions, 61
Guide to Judicial Management of Cases in ADR

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C. What type and degree of participation might be required of parties

who attend ADR sessions? 63

D. What materials might the parties submit to the neutral before the

ADR session begins? 65

VI. Selecting the Neutral, 67

A. What qualifications and standards of conduct should the neutral

meet? 68

B. If the parties select the neutral, what assistance might the court

provide? 69

C. Might the court staff or the judge select the neutral? 70

D. Some factors to consider in identifying the appropriate neutral, 72

1. ADR training and experience, 72

2. Reputation and personal characteristics, 73

3. Subject-matter expertise, 73

4. Legal training and experience, 74

E. Might judges, special masters, or examiners be ADR neutrals? 75

1. Senior judges, 75

2. Magistrate judges, 75

3. Special masters, 77

4. Examiners, 77

F. Might the assigned judge serve as the ADR neutral? 78

G. When should the neutral be disqualified for conflicts of interest or

bias? 80

H. Will a nonjudicial neutral have immunity? 82

VII. Compensating the Neutral, 85

A. Determining the neutral’s fee, 86

1. Options in setting the fee for the neutral, 87

2. Questions to consider in setting the fee, 88

B. Dividing the fee among the parties, 89

1. Letting the parties decide, 89

2. Equal division among the parties or the sides, 89

3. Unequal division among the parties, 90

4. Payment from the bankruptcy estate in bankruptcy cases, 90

C. Fee issues in voluntary vs. mandatory referrals, 91
Guide to Judicial Management of Cases in ADR

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VIII. Confidentiality of ADR Communications, 93

A. What does confidentiality mean? 94

B. What are some approaches to help safeguard ADR

communications? 96

1. What might the judge do at the time a case is referred to

ADR? 96

2. What might the judge do when disclosure issues arise after ADR

communications have been made? 98

C. What exceptions to confidentiality protection might be

recognized? 99

D. What statutes and rules govern whether ADR communications

should be protected from disclosure? 102

1. Statutes, 102

2. Federal Rules of Evidence, 102

3. Federal Rules of Civil Procedure, 103

4. Local Rules on ADR, 103

E. Are sanctions appropriate for breaches of confidentiality? 103

IX. Elements of the Referral Order, 105

A. Authorization for referral, 106

B. Identification of the type of ADR to be used, 106

C. Identification of the neutral or description of the neutral selection

process, 106

D. The neutral’s responsibilities, 107

E. Compensation of the neutral, 107

F. Submission of materials, 107

G. Attendance and settlement authority, 108

H. Good faith participation, 108

I. Deadlines, 108

J. Interaction with trial processes, 108

K. Confidentiality, 109

L. Communications between the neutral and the judge, 109

M. Ex parte communications between the neutral and the parties, 109

N. Reporting of problems or ethical issues, 110

O. Sanctions, 110

P. Conclusion of the ADR process, 110
Guide to Judicial Management of Cases in ADR

vii

X. Managing Cases in the ADR Process, 111

A. Are communications between the judge and the neutral

appropriate? 111

1. Restrictions on communications, 112

2. Suggested safeguards for necessary communications, 113

B. How can the court keep the ADR process on track? 114

C. Might the court impose sanctions for nonattendance, attendance

without settlement authority, or absence of good faith

participation? 115

D. How might the judge respond if the parties ask for a decision on an

unresolved issue that is impeding settlement? 117

E. How might the judge handle a dispositive motion that is filed

while ADR is under way? 117

F. How might the court respond to requests for public access to ADR

sessions and outcomes? 118

G. When might the court withdraw a case from ADR? 121

1. Reasons for withdrawing a case, 121

2. Procedures for withdrawing a case, 122

3. Alternatives to withdrawing a case, 122

H. What ethical issues may arise for the neutral or parties, and how

might the court respond? 123

I. How should the ADR process be concluded? 125

1. Conclusion of ADR when settlement has been reached, 126

2. Conclusion of ADR when there is no settlement, 127

3. Conclusion of ADR when a decision is rendered by the neutral,

127

Appendix A: Descriptions of the Principal Court-Based ADR

Processes, 128

1. Mediation, 128

2. Arbitration, 130

3. Early neutral evaluation, 132

4. Summary jury trial, 133

5. Minitrial, 134

6. Settlement week, 134

7. Case evaluation (“Michigan mediation”), 134

8. Med-Arb, 135
Guide to Judicial Management of Cases in ADR

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Appendix B: Alternative Dispute Resolution Act of 1998

(as codified), 136

Appendix C: Summary of the Alternative Dispute Resolution Act of

1998, 142

Appendix D: Guidelines for Ensuring Fair and Effective CourtAnnexed ADR: Attributes of a Well-Functioning ADR Program

and Ethical Principles for ADR Neutrals, 152

Appendix E: Discussion of Case Law on the Confidentiality of ADR

Communications, 165

1. To what extent have courts found ADR communications

inadmissible? 166

2. To what extent have courts found ADR communications not

discoverable? 170

3. To what extent have courts found ADR communications

privileged? 172

4. To what extent can local rules protect confidentiality in ADR

proceedings? 178

5. Should the neutral be allowed to testify about ADR

sessions? 179

Table of Cases, 181

Index, 187
Guide to Judicial Management of Cases in ADR

ix

Acknowledgments

We would like to thank the following people for their significant contributions to this publication:

Advisory Committee for the Guide to Judicial Management of Cases in

ADR:

Chief Judge R. Allan Edgar, U.S. District Court for the Eastern District

of Tennessee

Judge Ivan L.R. Lemelle, U.S. District Court for the Eastern District of

Louisiana

Judge David W. McKeague, U.S. District Court for the Western District

of Michigan

Judge Jerome B. Simandle, U.S. District Court for the District of New

Jersey

Judge Elizabeth L. Perris, U.S. Bankruptcy Court for the District of

Oregon

Nancy E. Stanley, Director of Dispute Resolution, U.S. District Court

for the District of Columbia

Summer law clerks at the Federal Judicial Center (1998, 1999, and 2000):

Andre R. Imbrogno

Joshua S. DeCristo

Jason R. Gilbert

Colin S. Ray

Staff at the Federal Judicial Center:

Joe S. Cecil

Meghan A. Dunn

Phillip A. Egelston

Marie Leary

Angelia N. Levy

Dean Miletich

Elizabeth C. Wiggins

Thomas E. Willging

We would also like to thank Magistrate Judge Wayne D. Brazil, U.S. District Court for the Northern District of California, and Professor Ellen E.

Deason, University of Illinois College of Law, for their comments on an

earlier draft of section VIII and Appendix E.
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Guide to Judicial Management of Cases in ADR

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Preface

The purpose of this publication is to offer guidance to federal trial and

bankruptcy courts on when and how to refer appropriate cases to ADR and

how to manage cases referred to ADR. We wrote this guide for a number of

reasons. First, district, magistrate, and bankruptcy judges have stated a need

for it. Second, the Alternative Dispute Resolution Act of 1998 heightens that

need. In addition, our research found that although much has been written

about basic ADR concepts, little comprehensive, easily accessible advice on

ADR referrals had been written from the court’s perspective.

As we drafted this guide, we received advice and direction from an

advisory committee consisting of five federal judges and a director of a

federal court ADR program, all experienced ADR users. Throughout the

guide we try to present a balanced discussion of the issues. For many issues, we present a range of views on how the issues could be handled and

provide several options. In a few instances, the guide, with concurrence of

our advisory committee, identifies a preferred practice that falls squarely

within well-accepted judicial norms or that clearly appears preferred in light

of developments in the ADR field. Nonetheless, readers should keep in mind

that the guide does not represent an official position of the Federal Judicial

Center or any member of the advisory committee.

To facilitate use of the guide as a reference work, we have included a

comprehensive Table of Contents at the beginning of the book and a detailed outline at the beginning of each section. We hope these will serve as

checklists to guide judicial practice in ADR at the same time that they point

to more detailed discussions of the various topics.

Although the guide is suggestive of important elements of a well-designed court ADR program, such as establishing a panel of qualified ADR

neutrals, it is not a guide for designing and implementing court ADR programs. Other sources are available that speak directly to that point, including guidelines developed by the Judicial Conference’s Committee on Court

Administration and Case Management, which are reproduced infra Appendix D.

As with the introduction of any new procedure, there are likely to be

bumps along the way as judges incorporate ADR into their case management practices. We hope this guide will help minimize those bumps.

 The guide reflects research through late 2000.
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1

I. ADR in the Federal Courts

A. Authority to refer cases to ADR processes

1. U.S. district courts

2. U.S. bankruptcy courts

B. Scope of this guide

C. Definitions of the principal types of federal court-based ADR

D. Some key concepts

During the 1980s and 1990s, many federal courts implemented alternative

dispute resolution (ADR) procedures and began providing services such

as mediation, arbitration, and early neutral evaluation. These developments occurred in all three types of courts—district,1

 bankruptcy,2 and

appellate3

—and reflected both a general societal trend toward greater use

of ADR and specific statutory authorization to use ADR.4

 By 1997, the

courts’ experience with ADR prompted the Judicial Conference to recommend, at least with regard to the district courts, “that local districts

 

1. For a district-by-district description of ADR and settlement programs in the

federal district courts, see Elizabeth Plapinger & Donna Stienstra, ADR and Settlement in the Federal District Courts: A Sourcebook for Judges and Lawyers

(Federal Judicial Center & CPR Institute for Dispute Resolution 1996).

2. For a description of bankruptcy mediation programs, see Robert J. Niemic,

Mediation in Bankruptcy, the Federal Judicial Center Survey of Mediation Participants: Report to the Advisory Committee on Bankruptcy Rules (Federal Judicial

Center 1998); Ralph R. Mabey, Charles J. Tabb & Ira S. Dizengoff, Expanding the

Reach of Alternative Dispute Resolution in Bankruptcy: The Legal and Practical

Bases for the Use of Mediation and the Other Forms of ADR, 46 S.C. L. Rev. 1259,

1314–28 (1995).

3. For a description of appellate court programs, see Robert J. Niemic, Mediation and Conference Programs in the Federal Courts of Appeals: A Sourcebook

for Judges and Lawyers (Federal Judicial Center 1997).

4. The Civil Justice Reform Act of 1990 required thirteen district courts to

adopt ADR programs and required all other district courts to “consider” using

ADR. Civil Justice Reform Act of 1990, Pub. L. No. 101-650, § 103(a)–(b), 104

Stat. 5089, 5090–96 (amended 1991, 1994, 1996, 1997, 2000) (CJRA). The Judicial

Improvements and Access to Justice Act of 1988 authorized arbitration in twenty

districts. Judicial Improvements and Access to Justice Act, Pub. L. No. 100-702, §

901(a), 102 Stat. 4642, 4659–63 (1988) (amended 1993, 1994, 1997) (previously

codified at 28 U.S.C. §§ 651–658 (1994)); see also infra Appendix A.2.
Guide to Judicial Management of Cases in ADR

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continue to develop suitable ADR programs . . . .”5

 Based in part on the

courts’ experiences with ADR, in 1998 Congress passed and the President

signed the Alternative Dispute Resolution Act of 1998 (ADR Act).6

Although the ADR Act appears to give federal courts substantial

authority to use ADR, some questions remain, and therefore we begin

with a discussion of the sources of authority under which district and

bankruptcy courts may refer cases to ADR. We will then provide some

basic definitions and concepts regarding ADR before turning, in section

II, to the process of referring cases to ADR.

For a reproduction of the ADR Act as codified, see infra Appendix B,

and for a summary of the ADR Act, see infra Appendix C.

A. Authority to refer cases to ADR processes

Because the sources of authority to use ADR differ for district and bankruptcy courts, we discuss them separately below. In addition, for a discussion of authority to refer cases to ADR without party consent, see infra section V.A.2. For a discussion of authority to require client attendance at ADR sessions, see infra section V.B.4.

1. U.S. district courts

The ADR Act of 1998 requires that “[e]ach . . . district court shall

authorize, by local rule . . . , the use of alternative dispute resolution

processes in all civil actions, including adversary proceedings in bankruptcy, in accordance with [the ADR Act].”7

 Twenty district courts retain

authority to refer cases to arbitration under a 1988 Act.8

 See infra Appendix A.2 for a discussion of these statutory provisions for arbitration.

Before the effective date of the ADR Act, district judges looked to

various sources for authority to refer cases to ADR, including Federal

Rule of Civil Procedure 16, local rules, inherent authority, and the cost

 

5. Judicial Conf. of the U.S., The Civil Justice Reform Act of 1990 Final Report: Alternative Proposals for Reduction of Cost and Delay, Assessment of Principles, Guidelines & Techniques 38 (1997) [hereinafter CJRA Final Report].

6. Alternative Dispute Resolution Act of 1998, Pub. L. No. 105-315, 112 Stat.

2993 (codified at 28 U.S.C. §§ 651–658 (Supp. 1998)).

7. 28 U.S.C. § 651(b) (Supp. 1998).

8. Section 901(a), 102 Stat. at 4659–63 (previously codified at 28 U.S.C. §§

651–658 (1994)).
I. ADR in the Federal Courts

3

and delay reduction plans required under the Civil Justice Reform Act of

1990 (CJRA).9

 Under these authorities, many district courts established

ADR procedures for civil cases.

Under the ADR Act, “an alternative dispute resolution process includes any process or procedure, other than an adjudication by a presiding judge, in which a neutral third party participates to assist in the

resolution of issues in controversy, through processes such as early neutral evaluation, mediation, minitrial, and arbitration . . . .”10 The list of

ADR types authorized by the ADR Act appears to be illustrative, not exclusive. Those who may serve as ADR neutrals under the ADR Act include, “among others, magistrate judges who have been trained to serve

as neutrals in [ADR] processes, professional neutrals from the private

sector, and persons who have been trained to serve as neutrals in [ADR]

processes.”11

Although the authority given in the ADR Act is broad, inherent

power is a source of authority for circumstances not proscribed or specifically addressed in the Act.12 To invoke inherent power in the context

of ADR referrals, the judge or court needs to determine that the steps

being contemplated are necessary to the effective and efficient administration of justice, which can be done either case by case or on a courtwide basis through local rules.13 The extent of inherent power in the area

of ADR is evolving.14

 

9. § 103(a), 104 Stat. at 5090–96. Although sections of the CJRA relevant to

cost and delay reduction plans (previously codified at 28 U.S.C. §§ 471–475,

477–478 (1994)) have sunset, the statutory requirement for semiannual reporting

remains in effect (see 28 U.S.C. § 476 (1994)).

10. 28 U.S.C. § 651(a) (Supp. 1998).

11. Id. § 653(b).

12. See Chambers v. NASCO, Inc., 501 U.S. 32, 46–47 (1991) (finding that the

existence of a statute that governs a certain area of the law does not necessarily

divest the court of its inherent power in that area).

13. Federal Rule of Civil Procedure 83 governs the promulgation of local

rules and practices, requiring that they be consistent with acts of Congress and

national rules. Fed. R. Civ. P. 83.

14. See Bouchard Transp. Co. v. Florida Dep’t of Envtl. Protection, 91 F.3d

1445, 1448–49 (11th Cir. 1996) (determining that the district court abused its discretion by using its inherent authority to require the State of Florida to participate

in mediation before ruling on the State’s claim of Eleventh Amendment immunity); Tiedel v. Northwestern Mich. College, 865 F.2d 88, 94 (6th Cir. 1988)

(holding that “a district court is not empowered to enact a local rule giving itself
Guide to Judicial Management of Cases in ADR

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Although the ADR Act now provides broad authority to use ADR, it

does not necessarily address the concerns of some that ADR may undermine the right to a jury trial.15 A number of cases, all decided before passage of the ADR Act, have held that the right to a jury trial is not infringed when cases are referred to properly structured, nonbinding ADR

procedures.16

2. U.S. bankruptcy courts

The extent to which the ADR Act applies to bankruptcy matters is subject

to interpretation. One interpretation is that the ADR Act does not apply to

bankruptcy matters in the bankruptcy courts but rather to bankruptcy

matters where the reference has been withdrawn, that is, where the district court has withdrawn a case or proceeding that the district court had

previously referred to the bankruptcy court under 28 U.S.C. § 157. This

interpretation rests on the ADR Act’s repeated mention of district courts.

There are only two mentions of adversary proceedings; both are made in

the context of explaining the term civil action.

17 A second interpretation is

that the parties to an adversary proceeding in a bankruptcy court may

use any ADR program established by the district court if the bankruptcy

court does not have its own ADR program. A third interpretation is that

 

the authority to award attorneys’ fees” as part of its “Michigan mediation” program). See also infra notes 129–30 and accompanying text for pre-ADR Act cases

on inherent power in the context of the summary jury trial and infra notes

159–61 and accompanying text for cases on inherent power in the context of pretrial conferences.

15. See, e.g., G. Thomas Eisele, Differing Visions—Differing Values: A Comment on Judge Parker’s Reformation Model for Federal District Courts, 46 SMU L.

Rev. 1935, 1972–79 (1993); see also Dwight Golann, Making Alternative Dispute

Resolution Mandatory: The Constitutional Issues, 68 Or. L. Rev. 488, 493–94,

505–10 (1989). But see id. at 552–56. See also infra text accompanying note 236.

16. See, e.g., Rhea v. Massey-Ferguson, Inc., 767 F.2d 266, 268–69 (6th Cir.

1985) (holding that the district court’s local rule providing for referral to

“Michigan mediation” did not violate the Seventh Amendment right to jury trial,

because it did not infringe on the fundamental right to have a jury ultimately

determine unresolved issues); New Eng. Merchants Nat’l Bank v. Hughes, 556 F.

Supp. 712, 714 (E.D. Pa. 1983) (holding that referral under a mandatory,

nonbinding pretrial arbitration program with a provision for a trial de novo did

not violate the Seventh Amendment right to a jury trial).

17. 28 U.S.C. §§ 651(b), 654(a) (Supp. 1998).
I. ADR in the Federal Courts

5

the ADR Act’s requirements, including that of setting up a separate ADR

program, apply to both bankruptcy and district courts because bankruptcy courts are units of the district courts. The Judicial Conference has

neither considered the question of whether the ADR Act’s requirements

apply to the bankruptcy courts nor suggested how the requirements

should be interpreted. What is clear, however, is that the ADR Act does

not prohibit bankruptcy courts from establishing ADR programs.

About a third of the ninety bankruptcy courts have local rules, general orders, or other guidelines that govern the referral of bankruptcy

matters to mediation.18 In addition, other bankruptcy courts use the ADR

programs of their respective district courts or refer bankruptcy matters to

ADR on an ad hoc basis without the structure of an ADR program.

Although the bankruptcy courts cannot with certainty look to the

ADR Act for authority to use ADR, for many years prior to the ADR Act

they found such authority in several other sources.19 These include, for

example, Federal Rule of Bankruptcy Procedure 7016, which makes Federal Rule of Civil Procedure 16 applicable in adversary proceedings, and

Federal Rule of Bankruptcy Procedure 9014, under which the bankruptcy

court may make Bankruptcy Rule 7016 applicable in contested matters.

Other sources of authority include sections 105(a)20 and 105(d)21 of the

 

18. See Niemic, supra note 2, at 5–6.

19. See generally In re Sargeant Farms, Inc., 224 B.R. 842, 847 (Bankr. M.D.

Fla. 1998) (stating that “it is quite apparent the bankruptcy court has the authority and power to promulgate rules associated with court-annexed mediation and,

where necessary, to require the parties to participate in same”); Robert B. Millner

& Elizabeth L. Perris, Bankruptcy Disputes, in Alternative Dispute Resolution: The

Litigator's Handbook 327, 328-30 (Nancy F. Atlas et al. eds., American Bar Association, Section of Litigation 2000) (describing sources of authority for bankruptcy

courts to require mediation and other nonbinding ADR techniques).

20. Congress has given bankruptcy courts a functional equivalent of inherent

power in section 105, which provides that “[t]he court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of

[the bankruptcy statute].” 11 U.S.C. § 105(a) (1994 & Supp. 1998); see In re Rainbow Magazine, Inc., 77 F.3d 278, 284 (9th Cir. 1996) (stating that “Congress impliedly recognized that bankruptcy courts have the inherent power to sanction

that Chambers recognized exists within Article III courts”); Jones v. Bank of Santa

Fe (In re Courtesy Inns, Ltd.), 40 F.3d 1084, 1089 (10th Cir. 1994) (holding that

section 105 is “intended to imbue the bankruptcy courts with the inherent power

recognized by the Supreme Court in Chambers”). See supra notes 12–13 and accompanying text.
Guide to Judicial Management of Cases in ADR

6

Bankruptcy Code, Code provisions authorizing the use of examiners,22

and Code provisions governing the confirmation of plans of reorganization.23 The Federal Rules of Bankruptcy Procedure provide that a bankruptcy court may authorize a matter to be submitted to final and binding

arbitration on the stipulation of the parties.24

Federal Rule of Civil Procedure 16(c) authorizes the judge to “take

appropriate action” at a pretrial conference with respect to “settlement

and the use of special procedures to assist in resolving the dispute when

authorized by statute or local rule.”25 The advisory committee’s note accompanying the 1993 amendments to Rule 16(c) indicates that the term

special procedures includes such processes as “minitrials, summary jury

trials, mediation, neutral evaluation, and nonbinding arbitration that can

lead to consensual resolution of the dispute without a full trial on the

merits.”26

Because settlements in bankruptcy cases can affect the rights of entities that are not parties to the immediate dispute, ADR settlements in

 

21. Section 105(d) provides broad authority regarding any bankruptcy case

or proceeding to “issue an order at any [status] conference prescribing such limitations and conditions as the court deems appropriate to ensure that the case is

handled expeditiously and economically . . . .” 11 U.S.C. § 105(d) (1994 & Supp.

1998); see 140 Cong. Rec. H10764 (daily ed. Oct. 4, 1994) (providing section-bysection analysis of provisions of Bankruptcy Reform Act of 1994).

22. 11 U.S.C. §§ 1104, 1106 (1994). See infra notes 195–97 and accompanying text for a discussion of the issues involved if an examiner serves as a mediator.

23. 11 U.S.C. § 1123(a)(3)–(4), (b)(6) (1994). Sections 1123(a)(3) and (4)

require a plan of reorganization to specify and provide for the treatment of classified claims. Section 1123(b)(6) allows the plan to “include any other appropriate provision not inconsistent with the applicable provisions of [the bankruptcy

statute].” Bankruptcy courts have confirmed plans of reorganization that include

nonbinding ADR processes to determine the amounts of creditors’ claims. See

Mabey, Tabb & Dizengoff, supra note 2, at 1291–93; infra note 87 and accompanying text.

24. Fed. R. Bankr. P. 9019(c).

25. Fed. R. Civ. P. 16(c)(9).

26. Fed. R. Civ. P. 16(c) advisory committee’s note (1993 amendments).

Note that the Advisory Committee specifies nonbinding arbitration. But see supra

note 24 and accompanying text.
I. ADR in the Federal Courts

7

some bankruptcy matters are subject to the notice and hearing provisions

of Federal Rule of Bankruptcy Procedure 9019.27

B. Scope of this guide

In this guide we discuss issues that may arise before, during, and after

the referral of cases to ADR. When we use the term ADR, we are using it

in the broad sense in which it was defined in the ADR Act of 1998. As

stated earlier, the Act defines ADR as “any process or procedure, other

than an adjudication by a presiding judge, in which a neutral third party

participates to assist in the resolution of issues in controversy, through

processes such as early neutral evaluation, mediation, minitrial, and arbitration . . . .”28 Among these procedures are those that are relatively

familiar and frequently used, such as mediation, and those that are perhaps less familiar and less frequently used, such as the minitrial.

Arguably, judicial settlement conferences are the most familiar and

frequent of all settlement processes. They have been an invaluable tool

for many years and will continue to be so. Even so, we do not include the

traditional judicial settlement conference in our definition of ADR or in

our discussions in the guide. We recognize, however, that many judges

use ADR techniques when they conduct settlement conferences; some

magistrate and bankruptcy judges, for example, are trained in and use

mediation techniques to settle disputes. See infra section VI.E.2 for a discussion of magistrate judges serving as ADR neutrals. For purposes of

this guide, when a judge conducts a settlement conference and uses ADR

techniques, we consider that conference to be ADR.

Our discussion is limited to ADR that is court-based, which, like the

terms court-connected and court-annexed, refers to programs that are

authorized, implemented, and administered by a court. The guide does

not include ADR conducted by parties on their own initiative outside the

 

27. Fed. R. Bankr. P. 9019(a) (“On motion by the trustee and after notice and

a hearing, the court may approve a compromise or settlement.”); Fed. R. Bankr.

P. 2002(a)(3); see also 11 U.S.C. §§ 901(a), 1123(b)(3)(A) (1994) (stating that

under Chapter 9 or 11 the plan may provide for “the settlement of any claim or

interest belonging to the debtor or to the estate”); 11 U.S.C. §§ 1222(b)(11),

1322(b)(10) (1994) (stating that under Chapter 12 or 13 the plan may “include

any other appropriate provision not inconsistent with [the Bankruptcy Code]”).

28. 28 U.S.C. § 651(a) (Supp. 1998). Arbitration in this definition refers to

arbitration as provided in sections 654–658 of the ADR Act.
Guide to Judicial Management of Cases in ADR

8

context of federal court litigation or proceedings, nor does it cover arbitration conducted pursuant to an arbitration clause in a contract.

C. Definitions of the principal types of federal

court-based ADR

The definitions below give the basic purpose and nature of the principal

types of ADR procedures used in the federal courts. For a more detailed

discussion of how and when each procedure is used, see infra Appendix

A. For a discussion of the types of cases typically identified as suitable for

each ADR procedure, see infra section IV.B.

Mediation. In court-based mediation, a neutral third party facilitates

discussions among the parties to assist them in finding a mutually acceptable resolution of the case. The goal of the mediator, who may meet

with the parties jointly and separately, is to help them identify their underlying interests, improve communications, and generate settlement options. Mediation sessions are informal, confidential, generally attended by

both attorneys and clients, and may occur at any point in the litigation.

Arbitration. In a hearing attended by attorneys and their clients, one

or three arbitrators hear adversarial presentations by each side in the

case, then issue a decision based on the facts and applicable law. The

parties may accept the decision, in which case it becomes the judgment

of the court, or they may request a trial de novo. Arbitration generally

occurs after at least core discovery has been completed. Although witnesses frequently are not called and the Rules of Evidence may be relaxed, the arbitration hearing is a fairly formal process.

Early Neutral Evaluation. In a confidential session attended by attorneys and their clients, a neutral third party hears presentations by each

side in the case, then gives the parties a nonbinding assessment of the

strengths and weaknesses of their positions. The evaluator, who is often

an attorney with expertise in the subject matter of the case, also may assist the parties in settlement discussions or development of a discovery

plan. Early neutral evaluation is generally used early in the litigation and

is aimed more at streamlining the case than at settlement.

Summary Jury Trial and Summary Bench Trial. The summary jury

trial and summary bench trial are distinguished from each other by the

presence or absence of a jury. In this trial-like proceeding, presided over

by a judge, each party presents an abbreviated version of its case, usually
I. ADR in the Federal Courts

9

relying on exhibits rather than live witnesses. After receiving an advisory

verdict from a jury or the judge, the parties may use the verdict as a basis

for settlement discussions or may proceed to trial. This form of ADR is

generally used after discovery is complete.

Minitrial. In a court-based minitrial, each side presents a brief version of its case to party representatives who have settlement authority. A

judge or other third party may preside and may assist in settlement negotiations if asked to do so after the presentations are made. The goal is to

put the case before each party’s decision makers, such as the senior executives of corporate parties, who may be relatively uninformed about

the case.

Settlement Week. During a settlement week, the court sets aside all

trial activity and uses the courthouse space for mediation of trial-ready

cases. Volunteer mediators conduct the confidential mediation sessions.

Case Evaluation. In this arbitration-like process, each side presents its

arguments at a hearing before a panel of three neutral attorneys. The

panel then issues a written, nonbinding assessment of the case. Parties

may accept the assessment as the settlement value of the case, use the

assessment for further negotiations, or ask to proceed to trial. Used by

the federal courts in Michigan, this process is often referred to as “Michigan mediation.”

Med-Arb. This process begins with mediation and, if the parties reach

impasse, proceeds, with their agreement, to arbitration.

D. Some key ADR concepts

Understanding the distinctions described below can be important in using

ADR effectively.

Voluntary vs. Mandatory Referrals to ADR. These words describe the

method by which cases enter ADR. If a judge or court refers cases to ADR

only with consent of the parties, the referral is voluntary. If participation

in ADR is required by the court, whether by an individual judge’s order

or by a court rule that certain types of cases will automatically be referred

to ADR, the referral is presumptively mandatory. We say “presumptively”

because local rules generally provide a mechanism by which the parties,

individually or jointly, may request to have their case removed from ADR

after a mandatory referral. For a discussion on whether to make an ADR

referral with or without party consent, see infra section V.A.
Guide to Judicial Management of Cases in ADR

10

Binding vs. Nonbinding. These words describe the type of outcome in

ADR. Federal court ADR processes are nonbinding; that is, parties are not

bound by the outcome unless they agree to be bound by it. In adjudicatory processes such as arbitration and summary jury trial, where a decision is rendered, the decision has no force unless the parties agree to accept it.29 Likewise, in a process such as mediation, referral to the process

does not require the parties to settle the case but only to meet to discuss

settlement. Whether a settlement is reached is fully in their control.

Interest-based vs. Rights-based. Interest-based dispute resolution

processes expand the discussion beyond the parties’ legal rights to look at

underlying interests, deal with emotions, and seek inventive solutions.

The focus of these processes is on clarifying the parties’ real motivations

or underlying interests in the dispute. Mediation, for example, is a process that traditionally focuses mainly on underlying interests. Rights-based

processes, on the other hand, narrow issues, streamline legal arguments,

and predict judicial outcomes or render decisions based on assessments

of fact and law. Arbitration is a rights-based process. ADR processes can

contain both interest-based and rights-based elements, depending on the

structure of the process (e.g., a summary jury trial can involve both outcome prediction and facilitated negotiation) or the style of the neutral

(e.g., some mediators predict legal outcome as well as facilitate negotiations).30

 

29. Parties might agree beforehand to be bound by the decision rendered in a

process such as arbitration, but this would be solely at their initiative. See, e.g.,

N.D. Cal. ADR R. 4-13.

30. Judge’s Deskbook on Court ADR 33 (Elizabeth Plapinger, Margaret L.

Shaw & Donna Stienstra, eds., Center for Public Resources/CPR Legal Program

1993) (photo. reprint Federal Judicial Center 1993) [hereinafter Deskbook]. This

paragraph was extracted from the Deskbook and modified with permission.
11

II. Considering the Use of ADR: How

and When

A. How and when might the court raise the subject of ADR with the parties?

B. At what stage of the litigation might an ADR referral be made?

1. Mediation

2. Early neutral evaluation (ENE)

3. Arbitration or summary jury trial

C. Will ADR interfere with the overall schedule set for the case?

D. How much, if any, discovery is necessary before or during the ADR process?

E. What might the court do if it appears that a ruling on a particular issue would

facilitate use of ADR?

F. What might the court do if a dispositive motion has been filed?

In this section, we discuss when and by what means the court might initiate consideration of ADR and at what stage of the case the court might

make an ADR referral. Most judges decide which cases should be referred

to ADR on a case-by-case basis, although some courts automatically send

specified types of civil cases to ADR.31 See infra sections III and IV, respectively, for discussions on selecting cases appropriate for ADR and

matching the ADR process to the case. See infra section V.A for discussion on deciding whether to refer cases with or without party consent.

As the judge weighs the various factors that go into a decision to refer a case to ADR, the judge might consider how and when the court’s

ADR staff can be of assistance. The ADR Act of 1998 requires each district court to “designate an employee, or a judicial officer, who is knowledgeable in [ADR] practices and processes to implement, administer,

oversee, and evaluate the court’s [ADR] program.”32 This individual,

whom we will refer to as the ADR administrator, can be helpful in many

ways; where relevant we will note the role they can play.

 

31. See infra notes 46–48 and accompanying text.

32. 28 U.S.C. § 651(d) (Supp. 1998).
Guide to Judicial Management of Cases in ADR

12

A. How and when might the court raise the subject of ADR with the parties?

If the decision whether to refer a case to ADR is made on a case-by-case

basis, the court will need to know something about the case before making this decision. An initial Rule 16 conference, either in person or by

telephone, provides an excellent opportunity for making an early assessment of a case’s readiness for and the attorneys’ posture toward ADR.

Knowing about the case and the lawyers will make it easier for the court

to decide whether and how to raise the use of ADR. The discussions at

this conference may suggest that early use of ADR might be helpful. Even

if the court decides that use of ADR should occur later in the case, discussion of ADR at the earliest possible moment in the case will signal to

the attorneys the court’s willingness to help them find an appropriate

method for resolving the case, will help the judge and the attorneys incorporate ADR effectively into the case schedule, and will provide an

opening for attorneys to discuss ADR. Such an opening may be especially

helpful if the attorneys are unfamiliar with ADR or are worried that raising the use of ADR might suggest lack of confidence in their case.

Keep in mind that the ADR Act of 1998 directs district courts to “require [by local rule] that litigants in all civil cases consider use of an alternative dispute resolution process at an appropriate stage in the litigation.”33 To ensure that parties think about whether and when ADR may

be useful, the court could, for example, include consideration of ADR on

the list of items the parties must address in their case management

statement or at the first case management conference.34

If the judge does not hold an early Rule 16 conference, consider assessing the appropriateness of an ADR referral based on the complaint or

other written materials submitted by the parties. These materials may be

limited in their usefulness, however. Consider also whether a brief telephone conference with the attorneys might be worthwhile.

 

33. Id. § 652(a).

34. See, e.g., N.D. Ala. Civ. R. 16.1 (allowing a judge, in a scheduling order

or separate order, to direct litigants to engage in ADR procedures); W.D. Mich.

Civ. R. 16.1 (identifying deadlines for ADR as one of the deadlines a judge may

set in the case management order).
II. Considering the Use of ADR: How and When

13

To help the parties consider the use of ADR in a particular case, the

judge might ask at a conference some of the questions listed below.35

• Have the parties considered using ADR, as required by the ADR

Act?

• Do the parties know what ADR options the court offers and how

each one works?

• Have the parties made a decision about use of ADR?

• If the parties have decided to use ADR, what process do they prefer?

• Do the parties have a particular ADR neutral in mind?

• If the parties have decided against ADR, what has led to that decision?

• If some issues are not appropriate for ADR, might some of the

other issues be appropriate?

• Have the parties already tried to settle the case?

• Are any rulings needed before an ADR process can be productive?

• Is there certain information that, if exchanged promptly, would

make an early ADR process more productive?

• Have the attorneys spelled out for their clients the potential cost

and time commitments of litigating the case?

To encourage litigants and attorneys to use ADR, some judges try to

educate them about ADR and its potential benefits.36 Others might ask the

court’s ADR administrator—if such responsibilities have been assigned to

the administrator—or a properly selected neutral to meet with the parties

to explain ADR and answer their questions.

B. At what stage of the litigation might an ADR referral be made?

When ADR first began to be implemented in court settings, the prevailing

view was that ADR procedures should not be used until discovery was

well under way, if not completed. This view was based on a belief that

 

35. See generally Wayne D. Brazil, For Judges: Suggestions About What to Say

About ADR at Case Management Conferences—and How to Respond to Concerns

or Objections Raised by Counsel, 16 Ohio St. J. on Disp. Resol., 165 (2000).

36. See, e.g., Patrick F. Kelly, Mediation: A Settlement Conference Format

That Works, in ADR and the Courts: A Manual for Judges and Lawyers 133, 133

(Erika S. Fine ed. & Elizabeth S. Plapinger asst. ed., CPR Legal Program 1987)

[hereinafter ADR and the Courts].
Guide to Judicial Management of Cases in ADR

14

each party had to have a solid understanding of its case before ADR

could be effective.37 In that context, by the time the case was “ripe” for

ADR, the judge would have substantial information about the case to

help him or her decide whether to make a referral. If the judge wanted to

consult with counsel about a referral, a late-stage status or pretrial conference provided an opportunity to do so.

Although this view may still be appropriate for adjudicatory ADR

processes such as arbitration and summary jury trial, the prevailing view

appears to be shifting with regard to other processes, like mediation. To

some extent, the timing of an ADR referral depends on the type of ADR

that the court or the parties think is most suitable for the case, as described below. See also infra section II.D for a discussion of staying or

limiting discovery.

1. Mediation

Mediation, with its goal of helping parties find the best resolution of their

case, can occur at any point in the litigation. Conventional wisdom has

held that mediation is more likely to be effective if key discovery has

been done, and later rather than early referral appears to be the more

typical practice in the federal courts. Some district courts, however, specifically authorize early referral to mediation.38 Because there is some

evidence that early referrals can be beneficial,39 the court might want to

 

37. See, e.g., Marvin E. Aspen, Special Masters as Mediators: Intensive Ad Hoc

Mediation, in ADR and the Courts, supra note 36, at 225, 228.

38. See W.D. Mo. Civ. R. app., para. II.B. (providing, in section dealing with

Early Assessment Program, for initial early assessment meeting to be held within

thirty days after completion of responsive pleadings); E.D. Pa. Civ. R. 53.2.1(4)(a)

(providing for initial mediation conference to be held within sixty days of first

appearance for a defendant).

39. Note, for example, the experience of the Early Assessment Program

(EAP) in the Western District of Missouri, where the mediation session is held

thirty to sixty days after the answer is filed and where the court employs a mediator on staff: 38% of referred cases settled at the EAP session, an additional

19% settled within thirty-one days after the session, and another 17% settled

within thirty-two to ninety days after the session. See Donna Stienstra, Molly

Johnson & Patricia Lombard, Report to the Judicial Conference Committee on

Court Administration and Case Management: A Study of Five Demonstration Programs Established Under the Civil Justice Reform Act of 1990, at 244–45 (Federal

Judicial Center 1997). Median disposition time for cases mandatorily referred to
II. Considering the Use of ADR: How and When

15

consider the feasibility of early referral. Earlier use of mediation may

bring about earlier settlements, and cost and time savings may be greater

when considerable resources have not yet been sunk into the case, especially if costly discovery procedures can be avoided. An early referral

may also catch the parties at a point where they are not firmly entrenched in their positions on certain issues and thus can be more flexible

in negotiations. See infra Appendix A.1 for a description of the mediation

process.

2. Early neutral evaluation (ENE)

If the parties would benefit from an early evaluation of the strengths and

weaknesses of their case, consider referral to early neutral evaluation,

perhaps even before the first Rule 16 conference. The court might determine the appropriateness of this referral by examining the complaint. A

short telephone conference with the attorneys also could help the court

assess the value of such a referral. If ENE is conducted early in the case,

it probably will be most productive in cases where the neutral’s evaluation is not dependent on substantial discovery. See infra section IV.B.3

for a discussion of the types of cases in which ENE might be effective.

See infra Appendix A.3 for a description of the ENE process.

3. Arbitration or summary jury trial

Adjudicatory processes such as arbitration and summary jury trial require

sufficient discovery to enable the attorneys to present a well-argued and

documented case to the decision maker. If the case would benefit from

such an advisory decision the judge might want to schedule the ADR

process after discovery necessary for the ADR process has been completed. See infra sections IV.B.2 and IV.B.4 for a discussion of the types

of cases in which arbitration or summary jury trial might be effective. See

infra Appendix A.2 and A.4, respectively, for descriptions of arbitration

and summary jury trial.

 

the court’s mediation program was 7.0 months, and median disposition time for

cases not permitted to use the court’s mediation program was 9.7 months. See id.

at 242–44. Eleven percent of attorneys who participated in the mediation process

said it occurred too early in the case. See id. at 237.
Guide to Judicial Management of Cases in ADR

16

C. Will ADR interfere with the overall schedule

set for the case?

A widely held view is that cases referred to ADR should continue to be

subject to the pretrial schedule set by the assigned judge; under this

view, parties generally would not be precluded from filing pretrial motions or pursuing discovery during the ADR process.40 The objective is to

complete the case without undue delay or cost. Furthermore, if parties

know that deadlines are fast approaching for discovery, motions, hearings, conferences, or trial, the existence of the schedules can be an inducement to settlement.

Some courts do not require parties to proceed with the litigation

process while engaged in ADR; in these courts, for example, the pretrial

and discovery periods may be tolled for a specified time or until completion of ADR.41 The purpose of such an approach is to permit complete

concentration on the ADR process without the distraction of other activities in the case. This may be particularly useful if the ADR process is

likely to be short or the prospect of settlement is high.

A number of courts have adopted local rules that establish time periods within which the ADR session must be held.42

 

40. See, e.g., E.D. Mo. Civ. R. 16-6.02 (referral to ADR does not delay or defer

scheduled dates, including trial date, unless otherwise ordered); W.D. Mich. Civ.

R. 16.3(f) (cases referred to voluntary facilitative mediation shall continue to be

subject to management by the assigned judge; parties may file motions and engage in discovery).

41. See, e.g., D.N.J. Civ. R. 301.1(e)(5) (all proceedings, including motions

and discovery, shall be stayed for sixty days after date of referral to mediation).

42. See, e.g., W.D. Mich. Civ. R. 16.3(e) (providing that: within fourteen days

of issuance of the referral order, the mediator shall set the time and place for the

mediation session; the first mediation session shall be held within sixty days of

the referral order; and the mediator shall determine the length and timing of the

session(s)); D.R.I. Amended ADR Plan § IX.D.2.a (stating that, unless ordered

otherwise by the court, the mediation session must be held within thirty days of

the mediator’s receipt of the notice of designation as mediator); D. Neb. Civ. R.

53.2(d) (requiring the mediation session to be held no later than sixty days after

entry of the referral order).
II. Considering the Use of ADR: How and When

17

D. How much, if any, discovery is necessary before or during the ADR process?

Whether to permit Rule 26 discovery/disclosure before or during the ADR

process depends on the facts and circumstances of the case.

Reasons for permitting at least limited discovery before ADR begins

include:

• Discovery/disclosure may help the parties evaluate the soundness

of their positions and those of their opponents and give parties

more confidence in their ability to recognize a reasonable settlement offer.

• Targeted discovery can be done, with an objective to give parties

the most critical information they need.

• As discovery costs go up, parties may feel a greater incentive to

settle.

• Some believe that, without enough information, a case generally

cannot settle for fair value, and any settlement for other than a fair

value may not endure.

Considerations with respect to permitting some discovery during the

ADR process, in addition to those listed above, include:

• ADR neutrals, particularly mediators and early neutral evaluators,

might be able to help the parties make informal exchanges of discovery materials.

• Discovery during ADR allows the parties to return to litigation

without undue delay if ADR does not result in full settlement.

The amount of discovery permitted may depend on the type of ADR

process:

• Mediation: If mediation is scheduled early in the litigation, consider

limiting discovery to production of certain key documents needed

for the mediation or to a small number of depositions of critical

persons. Having the parties negotiate or specify such documents

may establish a positive foundation for further agreement.

• Early neutral evaluation: Somewhat more discovery may be necessary for an evaluative process like ENE, where the attorneys must

give a fairly comprehensive presentation of the issues in the case.

• Arbitration: Because arbitrators must decide the merits of the case,

the parties must be permitted sufficient discovery to give a sound

presentation of their case. To conserve party costs, consider limit-
Guide to Judicial Management of Cases in ADR

18

ing discovery to certain critical witnesses and issues that are necessary for arbitrators to make a decision.43

• Summary jury trial, summary bench trial, and minitrial: Generally

these ADR processes will require full discovery.

Reasons for staying discovery during the ADR process include:

• The discovery schedule will not distract the parties from focusing

on settlement or create additional disputes during the ADR process.

• Impending discovery costs could provide an incentive for parties to

settle, whereas pre-ADR discovery costs could work as an incentive

or commitment to litigate.

• If the case settles, there would be little need for the information

obtained during discovery or the costs incurred.

Some judges stay discovery only if both parties want it stayed.

E. What might the court do if it appears that a ruling on a particular issue would facilitate

use of ADR?

Sometimes parties may be reluctant to use ADR because they believe

ADR has potential only if they know how the court will rule on a particular issue in the case. The judge can ask the parties—during a Rule 16

conference, for example—if there are any issues keeping them from using

ADR. If there are, the court might ask for briefing of those issues, decide

them, and then consider the use of ADR for the remaining issues in the

case.

F. What might the court do if a dispositive motion has been filed?

Cases in which a dispositive motion has been filed may or may not be

appropriate for referral to ADR at the time the motion is pending. Should

the judge decide the motion first or go ahead and make the ADR referral?

The court could refer the case to ADR and continue to deliberate on

the motion. Under this approach, the court could place a time limit on

the ADR process or inform the parties that the judge intends to hand

 

43. See Edward F. Sherman, The Impact on Litigation Strategy of Integrating

Alternative Dispute Resolution into the Pretrial Process, 168 F.R.D. 75, 81–83

(1986).
II. Considering the Use of ADR: How and When

19

down a ruling on the motion by a specific date. See infra section X.B for

a discussion of setting deadlines and infra section X.E for a discussion of

ruling on a dispositive motion that is filed while ADR is under way. On

the other hand, the court could refer the case to ADR with a stay on

briefing and deliberation.

Issues to consider in deciding whether to stay a decision on a dispositive motion are set out below.

• If the motion is stayed, the parties and their attorneys will not be

distracted by motions practice and may be better able to focus on

the ADR process.

• A stay permits the parties to negotiate without concern that a decision on the motion could make their settlement efforts fruitless; a

stay also could preclude the possibility of settlement and a ruling

occurring simultaneously.44

• A stay could increase the overall time and expense of the litigation

if the dispositive ruling would end the litigation quickly.

• In the absence of a stay, however, a party’s concerns about the

possibility of an adverse ruling may be an incentive to settle the

case.

 

44. See, e.g., Sheng v. Starkey Labs., Inc., 117 F.3d 1081, 1084 (8th Cir. 1997)

(holding that, where a summary judgment decision is handed down just before

the parties reached an agreement on all material aspects of a settlement, the

agreement is binding on the parties, notwithstanding the fact that they reached

the agreement while unaware of the summary judgment decision).
20

III. Selecting Cases Appropriate for

ADR

A. Party characteristics

1. Can the parties benefit from ADR?

a. Is ADR likely to lead to a better outcome for the parties?

b. Is ADR likely to save the parties time and money?

c. Do the parties have and wish to maintain a personal or business

relationship?

2. Who are the parties and their attorneys, and can they use ADR effectively?

3. Is there a pro se party in the case?

4. Is a governmental entity a party?

5. Does settlement depend on information parties want to keep confidential?

B. Case characteristics, generally

1. Does the case involve novel legal issues, ambiguous precedent,

constitutional issues, or public policy? Would a judgment contribute to

development of the law?

2. Should the public have information about the case and its resolution?

3. Does the case have many issues or few issues?

4. Are there multiple parties?

5. Have the parties already attempted settlement and failed?

6. Is the case of a type that would generally be decided on the papers?

C. Complex cases

1. What if the case is a class action?

2. What if the case is a mass tort case?

D. Bankruptcy matters

In the federal courts, the most common approach for selecting cases appropriate for ADR is to refer them on a case-by-case basis.45 Thus, the

judge will very likely be a key participant in the decision about whether

to use ADR.

Most federal courts with ADR programs define by local rule the types

of cases eligible for referral to ADR. A common practice, at least with

regard to mediation, is to define most case types as eligible, with cases

such as Social Security appeals and pro se cases exempt from the ADR

 

45. See Plapinger & Stienstra, supra note 1, at 7–8.
III. Selecting Cases Appropriate for ADR

21

process.46 The ADR Act permits each district court to exempt specific

cases or categories of cases from ADR.47

In some courts, limited for the most part to courts authorized to refer

cases to mandatory arbitration, eligibility for referral is based on specified

objective criteria, such as the nature or size of damages. See infra Appendix A.2; infra section IV.B.2. Some argue that basing the referral of

cases on objective criteria, such as nature or size of damages, is not the

preferred approach because such criteria lack an individual assessment of

which ADR process best meets the needs of the particular case and litigants.48

In this section, we outline the many case and party characteristics the

court might consider in deciding whether to refer a case to ADR. No

characteristic is an absolute indicator that ADR should or should not be

used; rather, the characteristics are factors to weigh when deciding

whether to use ADR. Identifying an appropriate case and selecting a suitable ADR process will very likely occur almost simultaneously. For a discussion of matching the ADR process to the case, see infra section IV. For

a discussion on deciding whether to refer cases with or without party

consent, see infra section V.A.

A. Party characteristics

1. Can the parties benefit from ADR?

a. Is ADR likely to lead to a better outcome for the parties?

In ADR, especially mediation and, to some extent, early neutral evaluation, the neutral can probe beneath the legal issues, rights, and positions

to help identify interests that can give rise to solutions more satisfactory

to the parties. The claimant in a sexual harassment case, for example,

 

46. See, e.g., S.D. Fla. Civ. R. 16.2(C) (listing types of cases not subject to

mediation); see also Plapinger & Stienstra, supra note 1, 36–56 tbls.4–7, 71–308

(providing court-by-court descriptions of case eligibility criteria).

47. See 28 U.S.C. § 652(b) (Supp. 1998). In defining these exemptions, the

court must consult with the bar, including the U.S. attorney.

48. See, e.g., Carrie J. Menkel-Meadow, Judicial Referral to ADR: Issues and

Problems Faced by Judges, FJC Directions, Dec. 1994, at 8, 8 (noting that the

problem with objective criteria is that, unless there exists a procedure for “opt-in”

or “opt-out,” there is little case-by-case assessment of which ADR processes will

be better for particular case types or litigants).
Guide to Judicial Management of Cases in ADR

22

may be more interested in stopping offensive conduct and retaining his or

her job than in pursuing litigation to a final outcome, whereas the employer may be most interested in avoiding the costs and adverse publicity

of litigation. Other outcomes that generally do not result from litigation

include defendant contributions to charities or public interest organizations, exclusive contracts for some defined period, and apologies.

b. Is ADR likely to save the parties time and money?

Generally one would not want to refer a case to ADR unless the parties’

costs for ADR and the time spent in the process promise to be no more

than the costs and time spent litigating the case. Among the cost-related

factors are the neutral’s fees, the costs of counsel during the ADR process, the costs of party attendance at ADR sessions, and whether pro bono

services are available. Research findings regarding ADR’s effects on litigation time and costs have been mixed, with some studies finding positive effects49 and others finding little effect.50 The research findings are so

inconclusive in the aggregate that one should probably not rely on them

as a guide for a particular case, especially since ADR’s effects are very

 

49. See, e.g., Joshua D. Rosenberg & H. Jay Folberg, Alternative Dispute Resolution: An Empirical Analysis, 46 Stan. L. Rev. 1487, 1505–10 (1994) (reporting

that, in the authors’ study of the Northern District of California’s early neutral

evaluation (ENE) program, “ENE shortened the pendency time in almost half the

cases that went through the process”); Stienstra et al., supra note 39, at 215-18,

240-53 (reporting, in FJC study of CJRA demonstration programs, that median

disposition time for cases mandatorily referred to the court’s mediation program

was 7.0 months, and median disposition time for cases not permitted to use the

court’s mediation program was 9.7 months, in the Western District of Missouri’s

mediation program where cases are referred shortly after answer is filed and are

mediated by a staff mediator); Barbara S. Meierhoefer, Court-Annexed Arbitration

in Ten District Courts 6–7 (Federal Judicial Center 1990) (finding that

“[a]rbitration programs can, but do not always, reduce disposition times”).

50. See, e.g., James S. Kakalik, Terence Dunworth, Laural A. Hill, Daniel

McCaffrey, Marian Oshiro, Nicholas M. Pace & Mary E. Vaiana, An Evaluation of

Mediation and Early Neutral Evaluation Under the Civil Justice Reform Act 4 (Institute for Civil Justice, RAND Corporation 1996) (reporting no statistically significant impact, either positive or negative, of ADR on litigation costs or time in

RAND’s evaluation of four mediation and two early neutral evaluation pilot programs under CJRA). For comment and recommendations made by the Judicial

Conference with respect to the FJC and RAND research findings on CJRA cited

above, see CJRA Final Report, supra note 5, at 35–38.
III. Selecting Cases Appropriate for ADR

23

likely closely linked to how a particular program is designed and managed. At a minimum, however, the court will want to avoid making referrals that would increase the parties’ overall time and costs, unless there is

a compelling reason for using ADR. Some commentators have been particularly critical of courts that have, in their view, adopted procedures

that increase litigants’ costs in order to save court resources.51 See infra

sectionVII.C.

c. Do the parties have and wish to maintain a personal or business

relationship?

In many cases, there may be more at stake than the monetary value of

the claim. In a dispute over a business contract, for example, assess

whether the parties place any value on continuing the business relationship. Where they do, use of ADR rather than traditional litigation may

reduce hostility between the parties, help them find a resolution that

benefits both sides, and thus help them maintain their business relationship.

2. Who are the parties and their attorneys, and can they use ADR

effectively?

When deciding whether to refer a case to ADR, assess the attitudes and

capabilities of the attorneys and their clients. If one or both attorneys are

known to be exceedingly uncooperative or to skirt ethical propriety, consider whether they would try to subvert the ADR process. Run-of-the-mill

lack of cooperation, however, should not necessarily make a case ineligible for ADR. All mediators tell stories of settlements achieved even when

the attorneys maintained, well into the proceedings, that the case could

not be settled.

In some cases, it may be the clients who appear incapable of using

ADR effectively because, for example, they refuse to cooperate with the

other side or are “out of touch with reality.” In such situations ADR may

 

51. See, e.g., Lisa Bernstein, Understanding the Limits of Court-Connected

ADR: A Critique of Federal Court-Annexed Arbitration Programs, 141 U. Pa. L.

Rev. 2169, 2215 (1993) (noting that, unless they strongly discourage requests for

a trial de novo, court-based arbitration programs reduce neither the potential litigation costs nor the amount of delay the parties can threaten to inflict on each

other and may well increase such costs).
Guide to Judicial Management of Cases in ADR

24

be especially helpful to the attorney who is looking for a way to help a

client face the facts realistically.

Sometimes clients lack the mental capacity to engage effectively in

the ADR process. This is not necessarily an argument against an ADR

referral, although it may suggest that the party should not be required to

attend the ADR session. When such a party is not represented by counsel, of course, different considerations apply. See infra section III.A.3.

If a party is willing to use ADR, the court might be more inclined to

make a referral, but one should not assume that such willingness is always well-motivated. For example, an attorney who is not ready for trial

may propose the use of ADR as a delay mechanism. Or a defendant who

sees an unfavorable judgment coming may propose ADR to delay the

judgment or to achieve a settlement more favorable than the ruling expected from the court. Other attorneys, even though they are convinced

ADR is inappropriate and would be wasteful in their case, may agree to

ADR because they want to please the court.

3. Is there a pro se party in the case?

For a number of reasons, most courts do not refer cases with a pro se

party to ADR, especially if the other side is represented. The principal

concern is that the ADR provider’s neutrality will be compromised if a

pro se party seeks legal advice from the neutral. Neutrals may find it

difficult to withhold such advice because pro se litigants often are at a

serious disadvantage in terms of legal skills and other resources. Whether

or not such assistance is actually given, if the other side thinks the neutral is advising or showing sympathy to the pro se litigant, the ADR process may break down altogether or be perceived as unfair.

The process also may appear to be unfair—at least to the pro se litigant—if counsel on the other side appears to be friendly with the neutral,

which may be the case if both practice in the same jurisdiction. Actual

unfairness is also a risk if, for example, the pro se litigant accepts a settlement that is not in his or her best interest or agrees to a settlement

without really understanding its terms. Finally, the pro se party may

breach confidentiality because he or she does not understand the

confidentiality rules and their significance.

On the other hand, to deny a pro se party access to a court ADR program, especially a pro bono program, also may be perceived as unfair.
III. Selecting Cases Appropriate for ADR

25

One approach to address this is appointment of counsel for the limited

purpose of representation during ADR proceedings.52

Some believe that ADR may be appropriate for cases involving two

pro se parties of roughly equal legal sophistication and a small amount in

controversy. The pressures on the neutral may be greater, however, if

both parties press the neutral for legal advice.

Some bankruptcy courts routinely refer certain types of matters to

mediation—for example, certain types of dischargeability matters—even

if one party is pro se.

4. Is a governmental entity a party?

Some judges have found it productive to refer cases involving the government to ADR, whereas other judges have not. Federal government

entities and U.S. attorneys may be more receptive to use of ADR in their

cases as a consequence of an Executive Order encouraging greater use of

ADR in government cases.53 Also, in 1995 the Attorney General created

the Office of Dispute Resolution within the Department of Justice to promote broader appropriate use of ADR in cases litigated by that department and other federal agencies.54 See infra section V.B.3 for a discussion

of requiring attendance by a governmental official with settlement

authority.

 

52. Two districts—the District for the District of Columbia and the Northern

District of California—are establishing special pro bono panels for representation

of pro se litigants in ADR proceedings. Representation will not extend to other

matters in the case.

53. Exec. Order No. 12,988, 61 Fed. Reg. 4729 (1996) [hereinafter Executive

Order] (“Where the benefits of [ADR] may be derived, and after consultation with

the agency referring the matter, litigation counsel should suggest the use of an

appropriate ADR technique to the parties. It is appropriate to use ADR . . . [if

warranted and] such use will materially contribute to the prompt, fair, and

efficient resolution of the claims.”); Memorandum of Guidance on Implementation of the Litigation Reforms of Executive Order No. 12,988, 62 Fed. Reg. 39,250,

39,252 (1997) [hereinafter DOJ Regulations].

54. Janet Reno, Attorney General of the U.S., Order OBD 1160.1, dated April

6, 1995, Promoting the Broader Appropriate Use of Alternative Dispute Resolution

Techniques (visited Sept. 5, 2000) <http://www.usdoj.gov/crt/adr/agorder.

html>[hereinafter DOJ Order].
Guide to Judicial Management of Cases in ADR

26

5. Does settlement depend on information that parties want to keep

confidential?

The court may want to refer a case to ADR when the case involves sensitive information and the dispute resolution process will be aided by privacy. In ADR sessions, parties often feel they can speak candidly because

their comments will not be heard by a jury, become part of the official

record, or be reported by the media. In some cases, they may want to

convey to the other side information or emotions that should not be

heard by the trier of fact because they are sensational or irrelevant to the

issues of the case. ADR also may be appropriate where the case involves

trade secrets or persons intimidated by a formal, public court proceeding.

For a discussion of balancing the need for confidentiality and the need for

disclosure of information to the public, see infra sections VIII.C and X.F.

B. Case characteristics, generally

1. Does the case involve novel legal issues, ambiguous precedent,

constitutional issues, or public policy? Would a judgment

contribute to development of the law?

Consider whether the benefits of ADR are outweighed by such factors as

the need to protect or address the scope of constitutional rights or the

need to set legal precedent in a particular area of law. Some statutes,

court rules, and individual judges exclude from ADR cases involving constitutional issues and statutory rights related to public policy.55 One rationale for excluding these cases is that privatization of these disputes

may impede the vindication of important rights.56 A primary function of

 

55. Under the ADR Act of 1998, for example, a case may not be referred to

federal court-based arbitration if the action is based on alleged violations of a

constitutional right or if jurisdiction is based on alleged deprivation of civil or

elective franchise rights. 28 U.S.C. § 654(a) (Supp. 1998). Also, district courts

may exempt cases or categories of cases from ADR. Id. § 652(b).

56. See generally National Standards for Court-Connected Mediation Programs § 4.2 & commentary (Center for Dispute Settlement & Institute of Judicial

Administration) [hereinafter National Mediation Standards] (setting out national

standards to assist courts in the design and operation of mediation programs). See

also José A. Cabranes, Arbitration and U.S. Courts: Balancing Their Strengths,

N.Y. St. B.J., Mar.–Apr. 1998, at 22, 23–24 (“Particularly where important public

policy questions reaching beyond the narrow interests of the parties to the case

are at issue, there is some danger that pervasive arbitration of disputes will begin
III. Selecting Cases Appropriate for ADR

27

federal courts is to issue rulings that declare and apply the law, and this

function is especially important with respect to constitutional and some

statutory claims.

However, the needs of the litigants who have to bear the economic

and emotional burden of the case may sometimes be in tension with

broader public policy concerns. Although at first glance ADR may seem

inappropriate for cases with novel legal questions or that present an opportunity to set or clarify existing precedent, the need for precedent can

run counter to the specific needs of the litigants, many of whom, for

financial or personal reasons, do not want to proceed to trial. Judges will

want to consider whether a case should be used as an instrument for establishing precedent when parties would prefer an ADR referral.

2. Should the public have information about the case and its

resolution?

The court may want to consider whether a confidential settlement will

limit public dissemination of critical facts or issues, such as the safety of

certain products or devices. Because ADR is usually a confidential process driven by the parties’ needs, it can place the public decision-making

function of the courts in the hands of individuals who act outside the

public’s direct purview. For a discussion of balancing the need for

confidentiality and the need for disclosure of information to the public,

see infra sections VIII.C and X.F.

Concerns such as these have always been the reality of litigation

since traditionally most cases, even some of public importance, have

been resolved by lawyer-negotiated settlements. Judges would not generally require parties to litigate these cases for the purpose of generating

public awareness.

3. Does the case have many issues or few issues?

At first glance, it may seem that a case with few issues is most amenable

to ADR, but settlement is sometimes easier when there are more issues in

a case because this can increase the settlement options and bargaining

possibilities available to the parties. Also, ADR can bring to the table dis-

 

to impoverish the body of legal doctrine whose development and gradual refinement is a primary responsibility of the federal judiciary.”).
Guide to Judicial Management of Cases in ADR

28

putes and bargaining positions from outside the case at hand, whether

they be other pending cases between the parties, other unresolved issues,

external trade-offs, or new business arrangements between the parties.

In some cases with many issues, the court may decide to refer only

some of the issues to ADR. This approach could be useful, for example,

when there is a threshold issue, the resolution of which might make further proceedings unnecessary. There may, for instance, be many issues

before a bankruptcy court when deciding whether to confirm a plan of

reorganization. Some of these issues may take significant time to try. A

useful approach might be to refer to ADR only valuation or interest rate

issues where it might be easier for the parties to reach agreement. If they

reach agreement on these issues, it could reduce the time and expense of

trial. Also, after reaching agreement on some of the issues, the parties

may then be more willing to mediate the other issues.

4. Are there multiple parties?

Despite logistical and other challenges, ADR has been used in multiparty

cases with positive effects. In the 1970s, many maintained that ADR

should not generally be used when more than two parties are involved.

This thinking has changed for certain types of cases, and ADR processes

in recent years have been used for cases involving several to hundreds

and even thousands of claimants.

If ADR is voluntary, however, it may be difficult to get all the parties

to agree to an ADR procedure. Some considerations in a case with multiple parties are set out below.57

• From the standpoint of defendants, group settlements are generally

less expensive than individual ones.58

• By joining together in the ADR process, the parties, including parties on the same side who might have conflicting interests, have an

opportunity to work together to evaluate their claims and develop a

cohesive settlement strategy. This opportunity might not have been

 

57. See generally CPR Model ADR Procedures and Practices: Multiparty ADR

& Cost-Effective Practices 33–54, pt. III-8 (CPR Institute for Dispute Resolution

1990 & Update 1994) [hereinafter Multiparty Practices] (describing the late-1980s

settlement process—and the lessons learned therefrom—in the Dupont Plaza Hotel Fire Litigation in the District of Puerto Rico).

58. Cf. id. pt. I-4 to I-9 (Update 1994) (discussing the pros and cons of collaborative defense efforts in multiparty litigation).
III. Selecting Cases Appropriate for ADR

29

available or encouraged without ADR. When the resolution of one

set of claims may have an effect on another set of claims within the

case, a mediator can help define these linkages and factor them

into the mediation.

• If some but not all of the parties agree to pursue ADR, the court

can refer those parties to ADR. Sometimes all that is needed to

move the settlement process forward is for one set of litigants to

break off from the others and pursue ADR. Other co-parties may be

prompted to join the ADR effort as a result of discomfort and

speculations about decisions being made without them.

• Because of the need for a detailed agreement acceptable to all parties, a mediation process in a multiparty case can involve long, arduous negotiations, depending on the number of parties and the

complexity of issues. The court will have to consider this when

determining how much time to allow for ADR.

• The court might consider proposing that the parties use a multistep

settlement process, with each individual claimant and the defendant engaging initially in a series of offers and counteroffers. If this

first stage fails, mediation could follow. If mediation does not produce a settlement, the parties might proceed with a third step, such

as arbitration. If the parties decline to arbitrate a particular claim,

those parties can take that claim to litigation. This process has been

used in bankruptcy reorganization proceedings where a bankruptcy

trustee must settle similar, but separate, multiple claims.59 It also

has been used in employment discrimination class action cases60

and mass tort cases.61

For a discussion of complex cases, see infra section III.C.

 

59. See infra note 89 and accompanying text.

60. See, e.g., Margaret L. Shaw & Lynn P. Cohn, Employment Class Action

Settlements Provide Unique Context for ADR, Disp. Resol. Mag., Summer 1999, at

10, 11.

61. See Deborah Hensler, A Glass Half Full, a Glass Half Empty: The Use of

Alternative Dispute Resolution in Mass Personal Injury Litigation, 73 Tex. L. Rev.

1587, 1617 (1995); In re A.H. Robins Co., 88 B.R. 742 (E.D. Va. 1988) (confirming

plan that provided for submission of Dalkon Shield personal injury claims to ADR

for resolution), aff’d, 880 F.2d 694 (4th Cir. 1989).
Guide to Judicial Management of Cases in ADR

30

5. Have the parties already attempted settlement and failed?

Although some view a failed settlement effort as a sign that ADR will be

futile, others see it as an indicator that ADR should be used. Sometimes

litigants and attorneys become so locked into their adversary roles that

the assistance of a third party neutral may be necessary to move them to

further negotiation.

At the extreme, of course, some parties may be so intractable that a

referral to ADR would appear to be a waste of everyone’s time. Even

then, some would refer the case to ADR, in the hope that exposure to an

ADR process will soften the parties’ resistance. Where the court is convinced, however, that the parties are absolutely deadlocked, the case

should not be referred to ADR. See the discussion of good faith participation infra section V.C.

6. Is the case of a type that would generally be decided on the papers?

The federal courts seldom refer to ADR the types of cases that are usually

decided on briefs or other papers without a hearing, such as cases involving habeas corpus or extraordinary writs. In many of these cases,

there may be a pro se party, which some consider to be another reason

for not referring such cases. See supra section III.A.3 for a discussion of

pro se parties.

C. Complex cases

A number of published papers and reports are available describing how

ADR has been used in complex cases. These sources provide a wealth of

information on the use of ADR in complex cases generally,62 class actions,63 employment discrimination class actions,64 and mass tort cases.65

 

62. See generally Manual for Complex Litigation § 23.1 (3d ed. 1995) [hereinafter MCL 3d] (discussing settlement of complex cases generally, with subsections

on mediation, summary jury trial, and minitrial); id. § 33.73 (discussing settlements under the Comprehensive Environmental Response, Compensation, and

Liability Act (CERCLA)). See also Francis McGovern, Strategic Mediation: The

Nuances of ADR in Complex Cases, Disp. Resol. Mag., Summer 1999, at 4, 5–6

(providing examples of the use of ADR methodologies in five complex cases).

63. See generally infra notes 67–72.

64. See MCL 3d, supra note 62, § 33.55 (discussing settlement in employment

discrimination class actions); see also, Shaw & Cohn, supra note 60, at 10–12.
III. Selecting Cases Appropriate for ADR

31

For a discussion of cases that involve multiple parties but are not complex, see supra section III.B.4.

When deciding whether to use ADR in a complex case, the following

might be considered.

• The court could refer all issues in the case to ADR or only some issues.

• The court could use dispute resolution processes that incorporate

one or more forms of ADR.66

• The court could appoint more than one neutral.

• The possibility of reducing costs through ADR may have only a

small influence on the parties’ willingness to use ADR if the

amount in controversy is disproportionately larger than the potential legal fees.

• The parties may want or need a neutral with special, technical

knowledge, who may be helpful in providing an opinion or determining the information necessary to assess any unclear issues relevant to the case. This may allow the parties to better evaluate their

relative positions and the merits of resolution. See infra section

IV.3 and Appendix A.3 for a discussion of ENE. See infra section

VI.D.3 for a discussion of selecting a neutral with subject matter

expertise and infra section VI.E.3 for a discussion of appointing a

special master. A neutral with special, technical knowledge is likely

to demand fairly high fees, so the court should carefully assess the

parties’ willingness to assume the costs. Expert neutrals also may

have strong views about the subject matter of the case; thus, the

court will want to ensure the neutral’s ability to remain unbiased.

• Even if a case is not settled in ADR, the ADR process can help the

parties and the court establish priorities for pretrial development,

including identification and possible resolution of some important

issues, such as medical, scientific, or critical liability issues.

• Parties may decide that the case will require such a long trial and

will present such complicated legal issues and facts that jury confusion is a real possibility, making the outcome of the case difficult

to predict even when the parties have great confidence in their legal positions.

 

65. See generally infra notes 72–85.

66. See supra notes 59–60 and accompanying text.
Guide to Judicial Management of Cases in ADR

32

1. What if the case is a class action?

Some additional considerations apply in class action cases, such as those

listed below.67 See infra section III.C.2 for a discussion of mass tort cases.

In recent years, ADR has been used with increasing frequency to

manage and resolve individual causation issues and damages in class

actions.68 Parties in a class action can, for example, use an outside neutral to help develop an administrative process to assess potential claims.

That process itself might include one or more ADR procedures. A neutral

evaluator could be used, for example, to prescreen claims; upon reviewing the evaluator’s findings, the defendant could decide which claims it is

willing to pay. Or the parties could agree to a multistep claims process

that uses several ADR procedures69 or that includes the use of a damages

table linking settlement amounts to certain characteristics of individual

damage claims.

Efforts toward a comprehensive resolution of a class action may be

delayed significantly if the defendant is uncertain about its ability to fund

a settlement. ADR can assist defendants and their insurers in assessing

potential coverage issues that might affect early resolution of the case.

For a discussion of whether a representative of the insurer should attend

the ADR sessions, see infra section V.B.2.

Conflicts among the plaintiffs’ lawyers relating to fees, ego, involvement in settlement, or other nonsubstantive matters can decrease the

likelihood that ADR will produce a settlement. ADR is unlikely to be successful, for example, if entered into while the plaintiffs’ lawyers are still

seeking more clients and fear that an early settlement could affect their

future revenue.

Given the multitude of parties involved in most class actions, the real

parties to the dispute often will have to count on their legal representatives to protect their interests while the case is in ADR, which may appear to be in conflict with the notion of actual party participation that is

viewed as an important component of the traditional ADR process.70

Some have argued that claimants have accepted inadequate settlements

 

67. See generally MCL 3d, supra note 62, § 30.4 (discussing settlement of

class actions).

68. See Herbert B. Newberg & Alba Conte, Newberg on Class Actions §§ 9.67,

20.16 (3d ed. 1992).

69. See supra notes 59–60 and accompanying text.

70. See generally MCL 3d, supra note 62, § 30.43.
III. Selecting Cases Appropriate for ADR

33

in class actions when faced with the uncertainty of a long, expensive trial

and no way to participate directly in the ADR process.71 At least one

study suggests that claimants in one large class action had to look to

sources other than their lawyers and the courts for information about the

settlements being negotiated on their behalf.72

2. What if the case is a mass tort case?

Mass tort73 litigation places significant burdens on both the litigants and

the judicial system in terms of financial costs, duplicative litigation, and

the potential for inadequacy of judgment.74 In most of the major mass tort

cases that have produced group settlements, either a special settlement

master or a settlement-oriented judge helped in the process. See infra

section VI.E.3 on the use of special masters for ADR. Some believe that

dispute resolution processes that incorporate one or more forms of ADR

can be attractive options for courts and parties involved in mass tort litigation.75 There also can be difficulties in using ADR in these cases. Re-

 

71. See generally John C. Coffee, Jr., Class Wars: The Dilemma of the Mass

Tort Class Action, 95 Colum. L. Rev. 1343 (1995). But see Georgene M. Vairo, The

Dalkon Shield Claimants Trust: Paradigm Lost (or Found)?, 61 Fordham L. Rev.

617, 634 (1992) (noting that the $725 payment the trustees offered under one

settlement option “provided a speedy mechanism for paying those with de minimis injuries”). See also Newberg & Conte, supra note 68, § 11.01–.75 (discussing

class action settlements).

72. See, e.g., Karen M. Hicks, Surviving the Dalkon Shield IUD: Women v.

the Pharmaceutical Industry 51, 103 (1994).

73. The term mass tort generally refers to litigation involving cases, often

numbering in the thousands, that arise from widespread exposure to an allegedly

harmful product or substance. See MCL 3d, supra note 62, § 33.2. The key concept in these cases is the presence of similar factual issues connected to the design and manufacture of a product or substance that leads to a high volume of

repetitive litigation. See id.

74. See Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 597–99 (1997) (discussing asbestos litigation and the problems such cases pose to courts and litigants).

75. See, e.g., George Friedman, Task Force on Alternative Dispute Resolution

and Mass Torts, Insurance Coverage Litigation: Recovery in the 1990s and Beyond,

577 Practising L. Inst./Litig. 395, 405 (1998) (discussing recommendations of task

force consisting of lawyers and judges from around the country, which recommendations were intended to encourage an expanded role for ADR in managing

and resolving mass tort litigation); Howell Heflin, Using the ADR Toolbox to Re-
Guide to Judicial Management of Cases in ADR

34

cent mass tort experience suggests that the primary use of ADR has been

the administration of large settlement funds or the resolution of individual damages claims after scientific questions relating to causation have

been resolved.

In addition to the considerations discussed above for complex cases

and class actions, a number of other issues should be kept in mind when

weighing the use of ADR in mass tort cases.76 These issues are discussed

below.

Assuming the scientific issues have been adjudicated—or that scientific evidence is relatively clear from the outset—many agree that ADR

can play a major role in resolving individual claims for damages alleged

to have been caused by individual exposure to defective products or substances.77 A recent example of such use can be found in the Dalkon

Shield Claimants Trust.78

 

pair Mass Torts, Disp. Resol. J., Feb. 1998, at 25; William L. Norton, Jr., Norton

Bankruptcy Law and Practice 2d § 146:16 (1997) (discussing the use of ADR for

mass claims against the Chapter 11 estate).

76. See generally MCL 3d, supra note 62, § 33.29 (mass tort settlements generally); id. § 33.73 (CERCLA settlements); Thomas E. Willging, Mass Torts Problems and Proposals: A Report to the Mass Torts Working Group, 187 F.R.D. 328,

381–87 (1999); S. Elizabeth Gibson, Mass Torts Limited Fund & Bankruptcy Reorganization Settlements: Four Case Studies, in Advisory Comm. on Civil Rules &

Working Group on Mass Torts, Report on Mass Tort Litigation app. E, at 26–27,

44–45 (1999); ADR Recommendations for Mass Torts, Disp. Resol. J., Spring 1997,

at 78-82 (setting forth guidelines adopted by American Arbitration Association

Task Force on Alternative Dispute Resolution and Mass Torts); CPR Model ADR

Procedures and Practices: Product Liability and Toxic Torts ADR (CPR Institute

for Dispute Resolution 1994); Hensler, supra note 61.

77. Cf., e.g., Jack B. Weinstein, Some Benefits and Risks of Privatization of

Justice Through ADR, 11 Ohio St. J. on Disp. Resol. 241, 288 (1996) (discussing

ADR’s place in resolving the “residual disputes” that remain after an aggregated

settlement, such as allocating shares of responsibility among defendants or arbitrating individual damage claims against a settlement fund); Barry F. McNeil &

Beth L. Fancsali, Mass Torts and Class Actions: Facing Increased Scrutiny, 167

F.R.D. 483, 506 (1996) (stating that “valuation of claims is perhaps particularly

suitable for mediation and arbitration,” because “a facilitator can commit time

and attention to reviewing considerable data and understanding the basis of each

claim, in a manner and on a schedule simply unavailable to the court”); Carrie

Menkel-Meadow, Ethics and the Settlement of Mass Torts: When the Rules Meet

the Road, 80 Cornell L. Rev. 1159, 1204–05 (1995) (recommending use of “fasttrack ADR procedure[s]”); Coffee, supra note 71, at 1439 (suggesting “combining

the class action with arbitration (and/or other alternative dispute resolution tech-
III. Selecting Cases Appropriate for ADR

35

Use of ADR in mass tort cases may permit some complex issues to be

resolved before trial, thus leaving fewer issues for juries to consider, but

there is no consensus on this type of use in dealing with issues of the

capacity of a product to cause the alleged injuries. Although some suggest

that unclear scientific and medical issues should be addressed and perhaps resolved through ADR, others stress that taking up these issues in

ADR can have adverse consequences for mass tort litigants. A concern for

some parties, for example, is that any effort to resolve scientific or medical issues at an early stage in the litigation process would be prejudicial

because scientific understanding of the claims, or evidence thereon, is

incomplete.79 Others oppose the use of evaluative ADR processes to assess scientific or medical evidence on the ground that such processes do

not provide for full presentation and consideration of scientific evidence.80 These concerns have constrained the use of ADR for causation

issues in mass tort litigation.

Cases involving latency issues—that is, cases where the injuries alleged may not manifest themselves until long after the plaintiff has been

exposed to the product—may be ill-suited to ADR, but recent developments suggest a possible role for ADR. Mass tort defendants have traditionally been reluctant to negotiate a settlement that leaves them exposed

to future claims.81 But recent Supreme Court decisions invalidating class

settlements82 may change defendants’ postures concerning settlement in

 

niques) on the limited issues of damages and individual causation”). See generally

Willging, supra note 76, at 383–87.

78. See Georgene M. Vairo, Georgine, the Dalkon Shield Claimants Trust, and

the Rhetoric of Mass Tort Claims Resolution, 31 Loy. L.A. L. Rev. 79, 153–56

(1997).

79. See ADR Recommendations for Mass Torts, Disp. Resol. J., Spring 1997, at

78, 81 (setting forth guidelines adopted by AAA Task Force on ADR and Mass

Torts).

80. See id.

81. See Coffee, supra note 71, at 1422 (noting that “[t]he utility of the mass

tort class action to the defendant today probably hinges on its ability to resolve

future claims”).

82. See, e.g., Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 625–26 (1997)

(holding that the district court improperly granted settlement class certification

because the proposed class did not meet the common issue predominance and

adequacy of representation requirements of Fed. R. Civ. P. 23).
Guide to Judicial Management of Cases in ADR

36

other cases.83 At the same time, however, any process that seeks to address both present and future claims has to contend with certain conflictof-interest and fairness issues. Using funds to settle present claims may

result in smaller funding for potential future claims. The same conflict of

interest can exist between currently injured plaintiffs and exposure-only

categories of plaintiffs who have already filed suit.84 The presence or absence of future claims also can affect the timing of ADR. The greater the

number of unknown and unknowable future claims and the more

difficult it is to predict the injuries future claimants will sustain, the more

difficult it might be to achieve early settlement through ADR.

Some argue that using ADR to resolve mass tort cases is inappropriate because it results in the privatization of public issues.85

D. Bankruptcy matters

Generally in bankruptcy cases, the considerations for referring an adversary proceeding or a contested matter to ADR are similar to those discussed above for non-bankruptcy cases. The issue of ADR in the bankruptcy courts, however, has special pertinence because bankruptcy itself

is a form of alternative dispute resolution. By design, bankruptcy is a

summary process for the resolution of multiple claims in a single forum.

Some consider routine bankruptcy matters to be especially suited for

mediation.86 However, judges also have referred bankruptcy matters to

 

83. See In re Diet Drugs Prods. Liab. Litig., MDL No. 1203, Civ. No. 99-20593,

2000 WL 1222042, at *69–*72 (E.D. Pa. Aug. 28, 2000) (certifying and approving

a nationwide settlement class, including intermediate and back-end opt-out options for future claimants in fen-phen litigation); Bowling v. Pfizer, Inc., 143

F.R.D. 141, 170 (S.D. Ohio 1992) (approving settlement in which a future claimant did not have to exercise a right to reject the settlement terms and litigate until

after that individual’s heart valve fractured); Jay Tidmarsh, Mass Tort Settlement

Class Actions: Five Case Studies 39–40 (Federal Judicial Center 1998) (describing

handling of future claimants in Bowling).

84. In Amchem, the U.S. Supreme Court pointed to the fact that the interests

of those within the class were not aligned, noting that the interests of the currently injured plaintiffs differed significantly from those of exposure-only plaintiffs. Amchem, 521 U.S. at 626. The former were primarily interested in immediate and generous payments, whereas the latter sought an inflation-protected fund

for the future. See id.

85. See Menkel-Meadow, supra note 77, at 1162.
III. Selecting Cases Appropriate for ADR

37

mediation to settle complex disputes and, occasionally, to formulate or

help resolve disputes over reorganization plans.87 For some plan impasses, the court has asked another bankruptcy judge to function as the

mediator.88

In some Chapter 11 cases where the bankruptcy trustee needs to settle similar, but separate, multiple claims, some bankruptcy judges have

proposed that parties use a multistep settlement process. Such a process

might include negotiation, mediation, and, if no settlement is reached on

an individual claim, arbitration.89 See supra section III.B.4.

For a discussion of authority to use ADR in bankruptcy courts, see

supra section I.A.2 and infra sections V.A.2.b, V.B.4. For a discussion of

certain other issues relating specifically to bankruptcy courts, see infra

sections V.A, VI.E.4, VII.B.4, VIII.A, X.F, X.I.1, and supra section III.B.3.

 

86. See Millner & Perris, supra note 19, at 351-56 (describing a broad range of

bankruptcy disputes that may be suitable for ADR). See also Steven Hartwell &

Gordon Bermant, Alternative Dispute Resolution in a Bankruptcy Court: The Mediation Program in the Southern District of California 2–4, 39–41 (Federal Judicial

Center 1988); Norton supra note 75, § 146:2; William J. Woodward, Jr., Evaluating Bankruptcy Mediation, 1999 J. Disp. Resol. 1, 5 (reporting on evaluation of

bankruptcy mediation in the Eastern District of Pennsylvania).

87. See Norton, supra note 75, section 146:17. See also Niemic, supra note 2,

at 33 (reporting that in bankruptcy mediation 19% of mediator-respondents indicated that they formulated a plan or facilitated plan negotiations).

88. Chapter 11 Theory and Practice: A Guide to Reorganization § 36.33

(James F. Queenan, Jr., et al. eds., 1994 & Supp. 1998) [hereinafter Chapter 11

Theory and Practice].

89. See id. § 36.27–32. See also Lisa Hill Fenning, Using ADR Tools to Resolve

Litigation-Driven Chapter 11 Cases, Norton Bankr. Law Adviser (forthcoming Feb.

2001) (describing claims resolution facilities used in recent bankruptcy cases);

Francis Flaherty, The Greyhound ADR Process, 10 Alternatives to High Cost Litig.

119, 119 (1992) (describing claims resolution process that required thousands of

bankruptcy claimants to participate in ADR before pursuing their claims in court);

Greyhound Lines, Inc. v. Rogers (In re Eagle Bus Mfg., Inc.), 62 F.3d 730, 733–34

(5th Cir. 1995) (referring to ADR process in confirmed plan of reorganization);

Kubicik v. Apex Oil Co. (In re Apex Oil Co.), 884 F.2d 343, 345 (8th Cir. 1989)

(describing a procedure that required either mediation or negotiation and, failing

resolution, either binding arbitration or trial).
38

IV. Matching the ADR Process to the

Case

A. Who might select the ADR process?

1. Selection by the parties

2. Selection by court ADR staff

3. Selection by the judge

B. What criteria can the court use to match a case to an ADR process?

1. Mediation

2. Arbitration

a. Voluntary arbitration

b. Mandatory arbitration

3. Early neutral evaluation (ENE)

4. Summary jury trial

5. Minitrial

In selecting an ADR process for a particular case, the court faces two decisions: first, who might select the process; and second, which process

would be most effective, assuming the court does not automatically assign certain types of cases to specified types of ADR?

A. Who might select the ADR process?

1. Selection by the parties

Allowing the parties the opportunity to discuss among themselves the

appropriate ADR process may foster a spirit of cooperation that could be

a catalyst toward settlement. If the parties are well-informed about their

ADR options and the potential benefits or drawbacks of each, the parties

may be the best ones to decide on the process.90 The court can help the

parties in this process by describing the various ADR options or by providing a written description. If the parties cannot agree on an ADR proc-

 

90. In a district with multiple ADR processes, research found that the ability

to choose was related to attorney evaluations of the ADR program. Attorneys who

were permitted to select their process were more likely than attorneys whose

process was selected by the court to report that the ADR process lowered litigation costs, that it reduced the amount of discovery and number of motions, that

the process was fair, that the case settled because of the process, and that the

benefits of the process outweighed the costs. See Stienstra et al., supra note 39, at

22.
IV. Matching the ADR Process to the Case

39

ess or the judge disagrees with their choice, the court may want to help

them make the selection. Some courts have developed brochures that

describe ADR options available through the court or in the community.91

2. Selection by court ADR staff

One way to assist parties is to have trained and experienced court ADR

staff advise them in their selection. One court’s ADR administrators, for

example, hold conference calls with parties to provide guidance, while

leaving final decisions concerning ADR to the parties themselves.92 ADR

administrators in some courts have very sophisticated legal and ADR

skills and are capable of a broad range of responsibilities. Some argue,

however, that once court staff responsibilities go beyond merely identifying cases within certain categories, judges themselves need to be involved, particularly if the selection of a process affects case scheduling or

discovery.

3. Selection by the judge

Judicial selection of the ADR process may legitimize the process in the

eyes of the parties and help the court maintain greater control over the

case. The judge also may know more about the case than the court staff

and thus be able to make a better and quicker decision about an ADR

referral. In making the decision, the judge may find it helpful to consult

with the parties about which ADR process to use, even when the judge

intends to compel use of ADR.93

B. What criteria can the court use to match a case

to an ADR process?

Although it is difficult to generalize, certain types of cases are usually

seen as more suitable than others to particular kinds of ADR processes.

Below we identify the types of cases typically viewed as suitable for each

 

91. See, e.g., Your Day in Court: The Federal Court Experience (E.D. Ark. &

W.D. Ark. 1992); Mediation in the United States District Court for the District of

Columbia (D.D.C.); Dispute Resolution Programs (D.D.C.); Alternative Dispute

Resolution Procedures Manual (E.D. Mo.).

92. See N.D. Cal. ADR R. 3-5(f).

93. See supra note 90.
Guide to Judicial Management of Cases in ADR

40

of the major types of court-based ADR.94 Treat these lists as rough guidelines only. Experience with ADR and consultation with parties will be the

best guide in selecting appropriate ADR processes. For a more general

discussion of whether ADR is beneficial for certain types of cases (e.g.,

cases with a pro se party), see supra section III.

1. Mediation

Mediation is considered appropriate for most kinds of civil cases, and in

some district courts, referral to mediation is routine in most general civil

cases. In other courts, use of the process is targeted at specific kinds of

disputes or is determined by the judge on a case-by-case basis. Most

courts exclude certain categories of cases from mediation, such as cases

involving a pro se party, prisoner civil rights cases, and Social Security

cases. Some bankruptcy courts, however, routinely refer some types of

matters to mediation, such as certain dischargeability matters, even if one

party is pro se. See infra Appendix A.1 for a description of the mediation

process.

2. Arbitration

Although mediation has become the favored ADR method in federal

courts, a number of courts offer arbitration. Since 1988, arbitration programs in the federal courts have been regulated by statute. Within that

statutory context, the distinction between voluntary and mandatory arbitration was and remains important. See infra Appendix A.2 for a description of court-based arbitration processes and a discussion of the authorizing statutes. See supra section I.D for a discussion of the distinction

between voluntary and mandatory ADR.

 

94. For further discussion of the types of factors to consider in matching

cases to particular ADR processes, see Frank E.A. Sander & Stephen B. Goldberg,

Fitting the Forum to the Fuss: A User-Friendly Guide to Selecting an ADR Procedure, 10 Negotiation J. 49 (1994). For a summary of this article, in the context of

a framework for judicial analysis of ADR choices, see Deskbook, supra note 30, at

53–60. See also Elizabeth Plapinger & Margaret Shaw, Court ADR: Elements of

Program Design 19–36 (CPR Institute for Dispute Resolution 1992) [hereinafter

Elements of Program Design].
IV. Matching the ADR Process to the Case

41

a. Voluntary arbitration

Referral to voluntary arbitration is now authorized, with certain exceptions, for all district courts. Under authorization granted by the ADR Act

of 1998, a district court may refer any civil case to nonbinding arbitration

where consent to arbitration is freely and knowingly obtained and where

no party or attorney is prejudiced for refusing to participate in arbitration,95 with the exceptions listed below.96

The action is based on an alleged violation of a right secured by

the U.S. Constitution.

Jurisdiction is based in whole or in part on 28 U.S.C. § 1343.97

The relief sought consists of money damages in an amount

greater than $150,000.

There is a provision of law to the contrary.

In addition, certain courts were authorized to provide voluntary arbitration under a 1988 Act. See infra Appendix A.2. Those courts may

refer to nonbinding arbitration any civil case—not exempted under procedures established by local rule—where consent to arbitration is freely

and knowingly obtained and where no party or attorney is prejudiced for

refusing to participate in arbitration unless there is a provision of law to

the contrary.98

Listed below are examples of cases traditionally considered appropriate for voluntary arbitration:

• Cases involving small money damages claims; and

• Cases in which technical or scientific questions are involved and an

arbitrator with expertise in the field would be beneficial to resolution and is available to serve as arbitrator.

Cases that are traditionally considered inappropriate for voluntary

arbitration include the following:99

 

95. 28 U.S.C. §§ 654(a)–(b), 652(b) (Supp. 1998).

96. Id. § 654(a).

97. This statute grants the district courts original jurisdiction over certain

actions involving civil rights and elective franchise rights. Id. § 1343 (1994).

98. Judicial Improvements and Access to Justice Act, Pub. L. No. 100-702, §

901(a), 102 Stat. 4642, 4659–60 (1988) (amended 1993, 1994, 1997) (previously

codified at 28 U.S.C. § 652(a) (1994)).

99. Deborah R. Hensler, Court-Annexed Arbitration, in ADR and the Courts,

supra note 36, at 23, 42–43; Elements of Program Design, supra note 94, at 27–29;
Guide to Judicial Management of Cases in ADR

42

• Cases exempted by statute or local rules;100

• Cases in which the parties want help in improving communications, finding common ground, or arriving at a creative solution to

the dispute;

• Cases in which equitable relief is sought;

• Cases involving complex or novel legal issues;

• Cases where legal issues predominate over factual issues;

• Class actions;101 and

• Administrative agency appeals.

b. Mandatory arbitration

Ten district courts were authorized to establish mandatory arbitration

programs under the 1988 Act.102 Under the ADR Act of 1998, no additional courts may establish mandatory arbitration programs, but authorization continues for the ten originally authorized district courts.103 Some

of these courts no longer use this authority, however. See infra Appendix

A.2. Courts authorized to have mandatory arbitration programs may order nonbinding arbitration of any civil case not exempted under procedures established by local rule, with the statutory exceptions listed below.104

The action is based on an alleged violation of a right secured by

the U.S. Constitution.

Jurisdiction is based in whole or in part on 28 U.S.C. § 1343.105

 

Judges Guide to ADR § 68 (California Center for Judicial Education and Research

1996) [hereinafter California ADR Guide].

100. See supra note 96 and accompanying text.

101. But see supra section III.C.1 for a discussion of claims procedures that

might include arbitration.

102. Section 901(a), 102 Stat. at 4659–63 (previously codified at 28 U.S.C. §§

651–658 (1994)); see infra Appendix A.2; see generally Meierhoefer, supra note

49.

103. 28 U.S.C. § 654(d) (Supp. 1998); see also infra text accompanying notes

315, 321.

104. See § 901(a), 102 Stat. at 4659–60 (previously codified at 28 U.S.C. §

652(a)–(c) (1994)). See, e.g., E.D. Pa. Civ. R. 53.2.3.A (all cases of specified types

are referred to arbitration).

105. See supra note 97.
IV. Matching the ADR Process to the Case

43

The relief sought consists of money damages in excess of the

amount set by the statute or local rule.

There is a provision of law to the contrary.

3. Early neutral evaluation (ENE)

Like mediation, ENE is generally thought to be applicable to civil cases of

varying kinds and complexity. Some courts select cases for ENE according to case type; types of cases targeted include not only routine cases,

but also more complex cases, such as fraud, antitrust, banking, environmental, copyright, patent, trademark, and labor/employment cases.106 See

infra Appendix A.3 for a description of the ENE process.

Listed below are examples of the kinds of cases generally considered

appropriate for ENE:

• Cases in which subject matter expertise may be helpful in narrowing issues or simplifying them at trial;

• Cases in which issues raised in papers filed in the case indicate that

one or more of the attorneys in the case are inexperienced or

poorly prepared;

• Cases in which a party refuses to confront the weaknesses in its

case and has unrealistic expectations regarding the amount of

damages involved;

• Cases with complex legal issues;

• Cases involving multiple parties with diverse interests and numerous cross claims, as opposed to merely multiple defendants with

the same or similar interests; and

• Cases in which discovery will be substantial.

Examples of cases generally considered inappropriate for ENE include

the following:

• Class actions;

• Cases in which there are significant personal or emotional barriers

to settlement that might be better addressed in mediation;

• Cases in which the decision will turn primarily on the credibility of

witness testimony; and

• Cases needing substantial discovery before an evaluation can be

made .

 

106. See D.Vt. Civ. R. 16.3(b) (listing cases that are subject to the court's

ENE procedure).
Guide to Judicial Management of Cases in ADR

44

4. Summary jury trial

Because the summary jury trial (SJT) is a resource-intensive ADR process, it is most often used for fairly large cases that would involve long

jury trials. Generally, the more complex and potentially protracted a case

is, the greater the potential that a summary jury trial will result in reduced costs for the parties when compared with traditional litigation.

Some proponents of the process believe, however, that it also can be

used effectively in cases expected to have short trials. The process has

been used in a wide variety of cases from simple negligence and contract

actions to complex mass tort and antitrust suits.107 See infra Appendix

A.4 for a description of the summary jury trial.

In considering whether to use a summary jury trial, the decision may

turn more on case-specific dynamics than on the substantive legal aspects

of the controversy.108 The Manual for Complex Litigation, Third offers the

following advice: “Because of the time and expense involved, and because the process is less likely to be productive with unwilling parties, it

is not advisable to hold an SJT without the parties’ consent.”109 In addition, a practice committee in the Second Circuit advised that, to ensure a

more effective summary jury trial, the parties should have completed or

have nearly completed discovery.110

Listed below are examples of the kinds of cases generally considered

appropriate for a summary jury trial:

• Cases in which the parties disagree substantially over how a jury

will view the evidence or apply the legal standards to the facts;

• Cases in which one or more of the parties have an unrealistic view

of the merits of the case or of the damages;

• Cases in which strong party emotions pose an obstacle to settlement and where a summary jury trial, by providing litigants with

an abbreviated “day in court,” may prove cathartic; and

 

107. See Thomas D. Lambros, Summary Jury Trial: A Flexible Settlement Alternative, in ADR and the Courts, supra note 36, at 79, 80.

108. See id.

109. MCL 3d, supra note 62, § 23.152. See infra notes 123–30 and accompanying text for a discussion of the ADR Act’s limitations on mandatory referral.

110. See Standing Comm. on the Improvement of Civil Litig., Judicial Council

of the U.S. Court of Appeals for the Second Circuit, Settlement Practices in the

Second Circuit 82 (1988) [hereinafter Settlement Practices Report].
IV. Matching the ADR Process to the Case

45

• Cases in which a defendant-insurer concedes liability but wants an

advisory verdict on the question of damages before it can approve

or disapprove a settlement.

Cases that are generally considered inappropriate for a summary jury

trial include the following:

• Cases in which there appears to be little possibility of settlement

and the costs required by a summary jury trial should be avoided;

• Cases in which the amount at stake does not warrant the time and

resources that a summary jury trial would demand;

• Cases in which less expensive ADR processes have not yet been

explored; and

• Cases in which abbreviated presentations of complicated evidence

are not feasible.

• Cases in which the dispute turns on the credibility or persuasiveness of expert or lay testimony, unless the summary jury trial is

structured to include their live or taped testimony.

When referring a case to summary jury trial, the court will have to

decide whether or not to tell the jurors, who are selected from the court’s

regular venire, that they are serving in an advisory capacity. If the judge

tells the jurors, they may not approach their task as seriously, but if they

are not told until they return their verdict, they may feel deceived by the

entire process.

5. Minitrial

Although some judges have developed their own version of the minitrial,

the process is rarely used in the federal courts. Based on experience in

the private sector, however, some generalizations are possible regarding

the kinds of cases in which the minitrial is and is not likely to be effective.111 See infra Appendix A.5 for a description of the minitrial.

Listed below are examples of cases generally considered appropriate

for a court minitrial:

 

111. See California ADR Guide, supra note 99, § 45; Settlement Practices Report, supra note 110, at 86 n.93; CPR Model ADR Procedures and Practices:

Minitrial pt. I-3 (CPR Institute for Dispute Resolution 1994); cf. The Effectiveness

of the Mini-Trial in Resolving Complex Commercial Disputes: A Survey 41–42

(Subcommittee on Alternative Means of Dispute Resolution, American Bar Association 1986).
Guide to Judicial Management of Cases in ADR

46

• Cases involving potentially long trials, since minitrials are elaborate

and fairly resource-intensive processes;

• Cases in which the principal decision makers for each party have

the time and willingness to listen to presentations, perhaps detailed, about the case and to negotiate with each other;

• Cases in which the parties are having difficulty communicating

constructively with each other;

• Cases in which one or both of the parties are not assessing their

positions realistically;

• Large commercial cases that could, because of the dispute’s technical complexity and the parties’ resources, turn into a “battle of experts” at trial; and

• Cases that arise out of complex, long-term, and ongoing undertakings, such as joint ventures, major construction projects, and technology arrangements, where the parties have an interest in resolving the dispute amicably and quickly, with as little damage to the

business relationship as possible.

Cases generally considered inappropriate for a court minitrial include

the following:

• Cases in which the amount at stake does not warrant the time and

resources necessary for a minitrial;

• Cases in which resolution hinges primarily on questions of law or

on an assessment of witness credibility; and

• Cases in which one or more of the decision makers in the process—for example, executives of two disputing companies—will be

individuals who were personally involved in the events giving rise

to the dispute.

Keep in mind that, in the process of matching cases to ADR processes, any single factor, such as case complexity or number of parties, is

usually not determinative. To some extent the choice of process may depend on the stage at which ADR is used in the case (see supra section

II.B), the parties’ preferences and resources, and the availability of suitable neutrals. The choice also will depend primarily on the judge’s goals

and the parties’ goals in using ADR. Each ADR process was designed for

a different purpose. See infra Appendix A. Consider what the court and

the parties wish to achieve through ADR and select the process that is

most likely to help reach that goal. In some cases, more than one process
IV. Matching the ADR Process to the Case

47

may be useful, but more typically a single, well-chosen process will be

most effective.
48

V. Deciding on Party Consent,

Client Attendance, and

Degree of Party Participation

A. Referring cases to ADR with or without party consent

1. Considerations in making a mandatory or voluntary referral

2. Sources of authority for making a referral without party consent

a. U.S. district courts

b. U.S. bankruptcy courts

3. If the court prefers party consent, what can be done to ensure informed

consent?

B. Requiring client attendance at ADR sessions

1. Attendance by clients generally

2. Attendance by insurance companies when not the primary party

3. Attendance by officials from governmental entities or large organizations

4. Authority to require client attendance at ADR sessions

C. What type and degree of participation might be required of parties who attend

ADR sessions?

D. What materials might the parties submit to the neutral before the ADR session

begins?

In this section we discuss several other factors the court might consider

in making the ADR referral—for example, whether to make the ADR referral with or without party consent, who should attend the ADR sessions, whether to require good faith or meaningful participation, and

what materials the parties might prepare for the ADR neutral.

A. Referring cases to ADR with or without party

consent

For judges whose local rules give them discretion over the ADR referral,

one of the key decisions they must make when referring a case to ADR is

whether the referral will be with or without consent of the parties—that

is, whether ADR will be voluntary or mandatory. Many district courts’

local rules give individual judges authority on a case-by-case basis to order cases to ADR sua sponte or on motion of a party, whereas some

courts provide for presumptively mandatory and automatic referral of

specified types of cases to ADR, and a few courts permit referral only
V. Deciding on Party Consent, Client Attendance & Degree of Party Participation

49

with consent of all parties.112 See supra section I.D for a discussion of the

distinctions between voluntary and mandatory referrals to ADR.

A number of bankruptcy courts, by local rule or general order, permit

judges to order cases to ADR with or without the consent of all parties.113

In some reorganization plans in bankruptcy cases, claimants have been

required to participate in ADR procedures.114

For the discussion below, it is important that we distinguish between

mandating use of ADR and compelling party acceptance of a settlement.115 All ADR procedures in the federal courts, even those where participation is mandatory, are nonbinding. Whether or not they consent to

 

112. See, e.g., S.D. Fla. R. 16.2(D) (every civil case not on the list of excepted

cases is referred to mediation); D. Mass. R. 16.4(C)(4) (the judge may refer cases

to mediation only with consent of all parties); E.D. Mo. R. 16-6.02 (the judge

may, sua sponte or on motion of a party, order a case to ADR); E.D. Pa. Civ. R.

53.2.3.A (all cases of specified types are referred to arbitration). See generally

Plapinger & Stienstra, supra note 1, at 36–56 tbls.4–7, 71–308 (providing districtby-district descriptions of court rules on referral of cases to ADR).

113. See, e.g., Second Amended General Order No. 95-01 para. 5.2 (Bankr.

C.D. Cal. Aug. 24, 1999 (authorizing referral over objections of the parties); E.D.

Pa. Civ. R. 53.2.3.A (district court rule on mandatory referral to arbitration, including referral of “adversary proceedings in bankruptcy” that meet the referral

criteria); Bankr. E.D. Pa. R. 9019.2 (related bankruptcy rule); see also Form of

General Order on Mediation in Bankruptcy § 2.0 & cmt. (American Bar Association May 27, 1997) [hereinafter Form of General Order] (providing for sua sponte

referral); Niemic, supra note 2, at 28–31 (finding that in bankruptcy mediation

34% of counsel-respondents indicated that a bankruptcy judge referred at least

one matter to mediation without a request from a party and that 8.5% indicated

referral over the objection of a party).

114. See, e.g., Greyhound Lines, Inc. v. Rogers (In re Eagle Bus Mfg., Inc.),

62 F.3d 730 (5th Cir. 1995). (requiring thousands of claimants to participate in

ADR before pursuing their claims in court); Kubicik v. Apex Oil Co. (In re Apex

Oil Co.), 884 F.2d 343, 345 (8th Cir. 1989) (describing a procedure that required

tort claimants to participate in either mediation or negotiation and, failing resolution, either binding arbitration or trial); Dore & Assocs. Contracting, Inc. v.

American Druggists’ Ins. Co. (In re Dore & Assocs. Contracting, Inc.), 43 B.R. 717,

718 (Bankr. E.D. Mich. 1984) (stating that the confirmed plan of reorganization,

which provided for referral of all claims to a “Michigan mediation” panel, is

binding). But see In re Filex, Inc., 116 B.R. 37, 40 (Bankr. S.D.N.Y. 1990) (stating

that a proposed liquidation plan was “patently unconfirmable” under Chapter 11

because claims would be resolved by an arbitrator and not the court).

115. For a discussion of constitutional issues, see supra notes 15–16 and accompanying text and infra text accompanying note 236.
Guide to Judicial Management of Cases in ADR

50

participate, parties are free to reject settlements proposed in court-based

ADR116 and, in the federal court-based arbitration programs, parties have

a right to a trial de novo. See supra section I.D.

1. Considerations in making a mandatory or voluntary referral

Judges generally make decisions on whether referrals are to be mandatory or voluntary on a case-by-case basis. Some judges are not reluctant

to order cases to ADR without the consent of all parties, making such

orders either sua sponte or on the motion of one of the parties.117 Judges

recognize, for example, that a litigant’s lack of consent may not constitute a refusal to use ADR or to settle the case. Lack of familiarity with

ADR, fear of appearing weak in the eyes of the opponent, as well as personal animosity and distrust between attorneys or parties, cause many

litigants to be hesitant about suggesting or consenting to ADR.

Many believe that parties often benefit from ADR even when their

participation is not voluntary.118 Many, if not most, professional mediators

can recall cases where the parties announced at the beginning of their

first mediation session that they were not participating voluntarily and

were unwilling to compromise their positions in any way. Despite these

initial expressions of intransigence, such mediations often result in settlements acceptable to both sides. Some research has found that party

satisfaction and other measures of program effectiveness can be high

 

116. See, e.g., Kothe v. Smith, 771 F.2d 667 (2d Cir. 1985) (declaring that

“pressure tactics [involving a pretrial judicial settlement conference] to coerce

settlement simply are not permissible”); Dawson v. United States, 68 F.3d 886,

897 (5th Cir. 1995) (holding that the district court abused its discretion by requiring settlement offers from parties); Fed. R. Civ. P. 16(c) advisory committee’s

note (1983 amendment). See generally Nancy H. Rogers & Craig A. McEwen, Mediation: Law, Policy & Practice § 7:05 (2d ed. 1994).

117. See supra notes 112–13; see generally Donna Stienstra & Thomas E.

Willging, Alternatives to Litigation: Do They Have a Place in the Federal District

Courts? (Federal Judicial Center 1995) (discussing pros and cons of mandatory

referral of cases to ADR); Elements of Program Design, supra note 94, at 13-17

(discussing pros and cons of voluntary and mandatory referral).

118. See, e.g., Edward F. Sherman, Court-Mandated Alternative Dispute Resolution: What Form of Participation Should Be Required?, 46 SMU L. Rev. 2079,

2088 (1993); see also Eric R. Max, Bench Manual for the Appointment of a Mediator, 136 F.R.D. 499, 504 (1990).
V. Deciding on Party Consent, Client Attendance & Degree of Party Participation

51

even when there is a presumption or requirement that parties will use

some form of ADR.119

Although some judges believe that judges should not hesitate to order or encourage participation in ADR, others believe that judges should

do no more than make parties aware of ADR options. Some question the

fairness of compelling litigant participation in ADR and believe that it

burdens a litigant’s constitutional right to a jury trial.120 Some judges are

uncomfortable about compelling participation in ADR when the parties

have to pay fees to the mediator as well as to their attorneys for the process. See infra section VII.C for a discussion on requiring ADR use and

requiring parties to pay fees. The quality of the neutral becomes particularly important if referral to ADR is mandatory. See infra section VI.A for

a discussion on qualifications and standards of conduct for the neutral.

 

119. See, e.g., Stienstra et al., supra note 39, at 22, 199–207, 238–52, 273–79

(finding that the “mandatory nature [of three district court ADR programs appears] not to be an impediment to program effectiveness”); Meierhoefer, supra

note 49, at 5-8, 11, 63-64, 77-81 (finding, in a study of mandatory arbitration programs in ten federal district courts, 80% of parties reported that procedures used

overall were fair, 81% of parties and 92% of attorneys reported that the arbitration hearing was fair, and 84% of attorneys reported that they approved of the

arbitration programs implemented in their districts). See also Roselle L. Wissler,

The Effects of Mandatory Mediation: Empirical Research on the Experience of Small

Claims and Common Pleas Courts, 33 Willamette L. Rev. 565, 601 (1997) (finding,

in two state court mediation settings, that “the manner in which the case entered

mediation produced few differences in parties’ assessments of the mediator, the

mediation process, and the outcome”). But see infra notes 120-21.

120. Cf. Eisele, supra note 15, at 1979. See also Richard C. Reuben, Constitutional Gravity: A Unitary Theory of Alternative Dispute Resolution and Public Civil

Justice, 47 UCLA L. Rev. 949, 963-69, 1091-99 (2000) (contending that the informal structures and absence of certain procedural safeguards in ADR can serve to

reinforce power imbalances between the parties); Woodward, supra note 86, at 4-

8 (suggesting that “dispute processing costs” and power imbalances are reasons

why mandatory referral might not be appropriate for certain bankruptcy matters).

But cf. Wissler, supra note 119, at 565-566 (1997) (finding, in two state court mediation settings, that there is little support for concerns about pressures to accept

unfair settlements in mandatory mediation); Meierhoefer, supra note 49, at 119-

20 (finding that mandatory referral in the federal district court arbitration programs did not present significant barriers to trial); see also supra note 119.
Guide to Judicial Management of Cases in ADR

52

Some argue that parties who consent to ADR are more likely to approach the process in good faith.121 Some judges, however, are skeptical

about the emphasis placed on party consent because some parties, even

when they consent to or request ADR, may do so for reasons unrelated to

a desire to settle. A party might, for example, consent only because it

wants to impose on the other party additional attorneys’ fees or another

procedural hurdle.

Another view is that party consent may reduce the likelihood that

parties will later criticize the process or challenge it by appeal. And consent may lessen any public perception that the courts, by referring cases

to ADR, are abrogating their constitutional role as adjudicators or compromising litigants’ rights for the sake of judicial efficiency. See infra

section V.A.3 for a discussion on ensuring informed consent when referrals to ADR are made only with party consent.

Although some judges or courts may prefer a uniform approach (i.e.,

all referrals of certain types of cases will be mandatory or all will be with

consent), most judges might find a mandatory referral appropriate in

some cases and not in others and exercise their discretion accordingly.

 Although some judges prefer to limit the use of ADR in their cases,

the ADR Act instructs the district courts that they must, by local rule,

require litigants in all civil cases to consider the use of ADR at an appropriate stage in the litigation.122

2. Sources of authority for making a referral without party consent

Some may ask what the basis is for making a referral without party consent. Because the sources of authority to mandate ADR differ for district

and bankruptcy courts, we discuss them separately below. For a discus-

 

121. See Elements of Program Design, supra note 94, at 13-17 (discussing

pros and cons of voluntary and mandatory referral). Some research has found

somewhat higher settlement rates under voluntary, as opposed to mandatory,

mediation. See, e.g., Jeffrey M. Senger, Turning the Ship of State, 2000 J. Disp.

Resol. 79, 90 (stating that in voluntary mediation the Department of Justice settled 71% of its cases, while in court-ordered mediation only 50% have settled);

Wissler, supra note 119, at 581 (finding “[m]andatory mediation cases were marginally less likely to settle (46%) than were voluntary mediation cases (62%)”).

But see supra note 119.

122. 28 U.S.C. § 652(a) (Supp. 1998).
V. Deciding on Party Consent, Client Attendance & Degree of Party Participation

53

sion of whether courts have the authority to require parties to pay for

mandatory ADR processes, see infra section VII.C.

a. U.S. district courts

The ADR Act permits the district courts to refer cases to ADR without

party consent but restricts this authority to certain forms of ADR. The

ADR Act states that “[a]ny district court that elects to require the use of

alternative dispute resolution in certain cases may do so only with respect to mediation, early neutral evaluation, and, if the parties consent,

arbitration.”123 The Act is particularly emphatic that arbitration is to be

used only with party consent and emphasizes that consent must be

“freely and knowingly” given.124 These provisions parallel the Judicial

Conference’s longstanding opposition to authorizing mandatory arbitration for any courts other than the ten courts originally authorized by the

1988 Act.125 The ADR Act of 1998 does not affect the authority granted

under the 1988 Act to require the use of arbitration in certain cases in

these ten courts.126 See infra Appendix A.2 for a discussion of the ten

courts authorized by the 1988 Act to use mandatory arbitration.

Some commentators interpret the ADR Act to mean that courts may

require parties to use mediation and early neutral evaluation, but not any

other ADR process.127 This interpretation implies that under the statute

judges and courts do not have authority to order cases to summary jury

trial without party consent. The House of Representatives report on the

ADR Act states: “If a court requires the use of ADR by local rule, it may

 

123. Id.

124. Id. § 654(b)(1).

125. See, e.g., Alternate Dispute Resolution and Settlement Encouragement

Act; Federal Courts Improvement Act, and Need for Additional Federal District

Court Judges: Hearing on H.R. 2603 & H.R. 2294 Before the Subcomm. on Courts

and Intellectual Property of the House Comm. on the Judiciary, 105th Cong. 13–17

(1997) (statement of Hon. D. Brock Hornby, Chief Judge, U.S. District Court for

the District of Maine). The Alternate Dispute Resolution and Settlement Encouragement Act (H.R. 2603) was an earlier version of the ADR Act of 1998.

126. 28 U.S.C. § 654(d) (Supp. 1998).

127. See, e.g., John Bickerman, Great Potential: The New Federal Law Provides Vehicle, If Local Courts Want to Move on ADR, Disp. Resol. Mag., Fall 1999,

at 3, 4; William W Schwarzer, A. Wallace Tashima & James M. Wagstaffe, California Practice Guide: Federal Civil Procedure Before Trial ch. 15-B, § 15:89.2

(Steven J. Adamski contrib. ed., 1999).
Guide to Judicial Management of Cases in ADR

54

only do so with respect to mediation or early neutral evaluation. Courts

may not require litigants to participate in minitrials or arbitration.”128 See

infra Appendix A for a discussion of the distinctions and similarities between summary jury trial, minitrial, and other ADR procedures. Before

the 1993 amendments to Federal Rule of Civil Procedure 16, case law was

split over whether a court had authority to order parties to summary jury

trial.129 Subsequently, a court found that the 1993 amendments to Rule 16

authorized mandatory referral to summary jury trials, but this case predated the ADR Act.130

b. U.S. bankruptcy courts

Since the bankruptcy courts cannot with certainty look to the ADR Act

for authority to order parties to use ADR,131 these courts might look to

other authorities when they believe it appropriate or necessary to refer a

case to ADR without party consent.

One source is Federal Rule of Bankruptcy Procedure 7016, which incorporates by reference Federal Rule of Civil Procedure 16.132 Subdivision

(c) of Civil Rule 16 authorizes the court to “take appropriate action” at a

 

128. H.R. Rep. No. 105-487, at 8 (1998).

129. Compare In re NLO, Inc., 5 F.3d 154, 157–58 (6th Cir. 1993) (holding

that the district court’s “[r]equiring participation in a summary jury trial, where

such compulsion is not permitted by the Federal Rules, is an unwarranted extension of the judicial power” and that “[r]eliance on the pure inherent authority of

the court [to justify mandatory summary jury trials] is . . . misplaced”), and

Strandell v. Jackson County, 838 F.2d 884, 886–88 (7th Cir. 1987) (holding that

the parameters of Rule 16 and inherent authority do not permit the court to compel parties to participate in a summary jury trial), with Arabian Am. Oil Co. v.

Scarfone, 119 F.R.D. 448, 448–49 (M.D. Fla. 1988) (holding that, under Rule 16,

the court may require parties to participate in a summary jury trial), and Federal

Reserve Bank v. Carey-Can., Inc., 123 F.R.D. 603, 606–07 (D. Minn. 1988) (holding that, under Rule 16, the court has power to compel attendance at nonbinding

summary jury trial).

130. See In re Southern Ohio Correctional Facility, 166 F.R.D. 391, 395,

397–98 (S.D. Ohio 1996) (denying motion to vacate summary jury trial, and stating that 1993 amendments to Rule 16 effectively overruled decision in In re NLO

and provide courts authority for mandatory referral to summary jury trial).

131. See supra note 17 and accompanying text.

132. Federal Rule of Bankruptcy Procedure 7016 applies in adversary proceedings, and the court may direct that it apply in any contested matter under

Federal Rule of Bankruptcy Procedure 9014.
V. Deciding on Party Consent, Client Attendance & Degree of Party Participation

55

pretrial conference with respect to “settlement and the use of special procedures to assist in resolving the dispute.” See supra section I.A.2. The

Advisory Committee on Civil Rules stated that the phrase “appropriate

action” was added to Rule 16(c) in 1993 “to clarify the court’s power to

enter appropriate orders at a conference notwithstanding the objection of

a party” and also noted that the 1993 amendment “acknowledges the

presence of statutes and local rules or plans that may authorize use of

[ADR processes], even when not agreed to by the parties.”133 Rule 16

does not, however, attempt to resolve questions about the extent of a

court’s inherent authority to require parties to participate in ADR procedures,134 is not intended to limit the reasonable exercise of the court’s

inherent powers, and does not limit the powers of the court to compel

ADR participation when authorized to do so by statute.135

At a status conference regarding any bankruptcy case or proceeding,

the judge has broad authority to issue an order that the “court deems

appropriate to ensure that the case is handled expeditiously and economically . . . .”136 Some commentators have said that this provision can

be interpreted to provide authority for the use of mandatory, nonbinding

ADR procedures.137

3. If the court prefers party consent, what can be done to ensure

informed consent?

If the court prefers not to refer a case to ADR unless all parties consent,

consider whether consent has been freely and knowingly given. By statute, if the referral is to arbitration in a district that is not one of the ten

 

133. Fed. R. Civ. P. 16(c) advisory committee’s note (1993 amendments).

134. See supra note 20 for discussion of bankruptcy court inherent power.

135. Fed. R. Civ. P. 16(c) advisory committee’s note (1993 amendments); see

also H.R. Doc. No. 103-74, at 123 (1993) (communication from the Chief Justice

of the United States transmitting amendments to the Federal Rules of Civil Procedure and Forms).

136. 11 U.S.C. § 105(d) (1994 & Supp. 1998). See supra note 21 for discussion of the legislative history.

137. See, e.g., Mabey, Tabb & Dizengoff, supra note 2, at 1289. Millner &

Perris, supra note 19, at 328-330 (describing sources of authority for bankruptcy

courts to require mediation and other nonbinding ADR techniques). See also In re

Sargeant Farms, Inc., 224 B.R. 842, 847 (Bankr. M.D. Fla. 1998) (stating that “it is

quite apparent the bankruptcy court has the authority . . . , where necessary, to

require the parties to participate in [mediation]”).
Guide to Judicial Management of Cases in ADR

56

districts authorized to compel arbitration, the court must make sure that

consent is freely and knowingly given.138

The question of what information about the case and the ADR process is required for informed consent is a difficult one. If a gap in information can be reduced through limited discovery or disclosure under Rule

26, the court may wish to postpone ADR while more discovery/disclosure

is undertaken. See supra section II.D.

Pro se parties present a particular problem if the court wishes to get

informed consent. A pro se party may not, for example, understand what

the ADR process is and how it relates to the litigation track. Pro se parties

generally lack legal sophistication and therefore may be at a disadvantage

in ADR, especially if the opposing side is represented by counsel. Yet

ADR can be advantageous to pro se parties because of its potential for

cost savings as well as its less formal nature as compared with traditional

litigation. See supra section III.A.3 for a discussion of referring pro se

cases to ADR.

B. Requiring client attendance at ADR sessions

It is widely believed that client attendance at ADR sessions is essential to

their success. At minimum, clients bring to the sessions settlement

authority that might otherwise be lacking. On the other hand, compelling

client attendance may cause additional expense and could cause complications—for example, when settlement authority rests in the hands of

high-level officials of large organizations. In sections below we discuss

who should attend ADR sessions and judges’ authority to require attendance.

1. Attendance by clients generally

Typically, court ADR programs require that the attorney primarily responsible for the case attend the ADR sessions; many local ADR rules

also require attendance by the clients or other party representatives with

full settlement authority.139 Some local rules leave to the neutral’s discre-

 

138. See supra notes 95, 98 and accompanying text.

139. See, e.g., M.D. Fla. Civ. R. 9.05(c) (mediation); N.D. Cal. ADR Civ. R. 6-

9(a) (mediation), 5-10(a) (ENE); W.D. Mich. Civ. R. 16.3(e)(iv) (voluntary facilitative mediation); N.D. Ohio Civ. R. 16.6(f) (mediation); S.D. Tex. Civ. R. 20(F)
V. Deciding on Party Consent, Client Attendance & Degree of Party Participation

57

tion whether to require attendance of the attorney primarily responsible

for each party’s case as well attendance of a party representative with full

settlement authority.140

Consider the following arguments for and against requiring client

attendance at ADR sessions:

Benefits of requiring client attendance:141

• Gives clients an opportunity to tell their stories in their own words,

thus providing the “day in court” many seek.

• Directly informs clients of the strengths and weaknesses of the arguments on both sides of the case.

• Directly informs clients of the strengths and weaknesses of the attorneys and party witnesses in the case, including their own.

• Provides information to help each side identify opportunities for

creative problem solving and resolution.

• Improves the likelihood of prompt resolution, because the ultimate

decision maker is present.

Risks in requiring client attendance:142

• May increase tensions and harden positions through direct party-toparty communications.

• May be inconvenient and costly for clients who have to travel long

distances.

• May create a perception that a voluntary ADR program is, in fact,

coercive.

It is generally believed that client attendance has a beneficial effect,

for many of the reasons listed above. In one study of two districts, a size-

 

(ADR generally); see also Form of General Order, supra note 113, § 8.3.1 & cmt.

(stating that most bankruptcy court mediation rules require party attendance with

special provisions for government entities). Some local rules also provide procedures for persons to be excused from attending. See, e.g., N.D. Cal. ADR R. 6-9(e)

(mediation), 5-10(d) (ENE). Other rules provide procedures for persons to participate by telephone. See, e.g., N.D. Cal. ADR R. 6-9 (mediation), 5-10(e) (ENE).

140. See, e.g., D.N.J. Civ. R. 301.1(e)(3) (counsel and parties shall attend all

mediation sessions unless otherwise directed by the mediator); see also Amended

General Order M-143 para. 3.2 (Bankr. S.D.N.Y. Oct. 20, 1999) (mediator has

“discretion to require that the party representative or a non-attorney principal of

the party with settlement authority be present at any conference”).

141. See generally Leonard L. Riskin, The Represented Client in a Settlement

Conference: The Lessons of G. Heileman Brewing Co. v. Joseph Oat Corp., 69

Wash. U. L.Q. 1059, 1099–1102 (1991).

142. See id.
Guide to Judicial Management of Cases in ADR

58

able majority (70%) of attorneys reported that client attendance was

helpful, although in one of the two districts there were occasional complaints about inconvenience and cost.143 Of course, there will be cases

where requiring attendance of the litigant would not be practical, such as

cases where final authority rests with a body such as a board of directors

or city council.

2. Attendance by insurance companies when not the primary party

A common practice in court ADR programs is to require attendance by an

insurance company if its agreement is necessary to achieve a settlement.144 Efforts at resolution of a case may be delayed significantly if the

defendant is uncertain about its ability to fund a settlement or is unsure

of the extent of its insurance coverage. Similarly, the defendant and its

insurer may disagree as to their respective liabilities. Some argue that this

kind of disagreement between defendants and their insurers can itself be

successfully addressed through the ADR process.145 In any case, involving

the insurer in the ADR process at an early stage might help remove

doubts about coverage, thereby facilitating settlement.

3. Attendance by officials from governmental entities or large

organizations

Requiring attendance may become problematic when the case involves a

governmental entity or large organization. Government attorneys, for example, often cannot secure in advance sufficient authority to negotiate

 

143. See Stienstra et al., supra note 39, at 21, 250–51, 277.

144. See, e.g., N.D. Cal. ADR R. 6-9(c) (mediation), 5-10(c) (ENE); S.D. Fla.

Civ. R. 16.2(E) (mediation); W.D. Mich. Civ. R. 16.3(e)(iv) (voluntary facilitative

mediation); S.D. Tex. Civ. R. 20(F) (ADR generally). See also In re Novak, 932

F.2d 1397, 1408 (11th Cir. 1991) (concluding that “[b]ecause . . . nonparty insurers have a real stake in the litigation . . . district courts may rely on their power to

order named parties to produce individuals with full settlement authority at pretrial conferences to coerce cooperation from nonparty insurers”) (citation omitted); In re La Marre, 494 F.2d 753, 756 (6th Cir. 1974) (concluding that the court

had the power to order insurance company representative to attend pretrial session and, on refusal, to enforce the order by contempt proceedings).

145. See generally Harold J. Moskowitz & David S. Sheiffer, Evaluating Mediation for Coverage Cases, 14 Alternatives to High Costs Litig. 107 (1996).
V. Deciding on Party Consent, Client Attendance & Degree of Party Participation

59

and settle a case.146 Such problems also may arise for corporations, universities, or other large organizations where ultimate settlement authority

lies with a board or commission. Furthermore, many governmental bodies are subject to “open meetings” or “sunshine” acts that would require

the ADR process to be open to the public if the sessions are likely to involve persons with ultimate settlement authority and are likely to lead to

a settlement or decision.147

Nonetheless, some local rules do require in-person attendance by a

government representative with full settlement authority.148 If the judge

thinks that a case would benefit from ADR and an attorney from a government or large organization argues that it is impossible to have someone with full settlement authority present, the judge might try to get assurances from the attorney that a person with full settlement authority

will at least be available by telephone during the ADR sessions.149 Alternatively, in situations where a high-level board or commission has to decide the settlement, the court might set a deadline for responding to a

settlement offer.

In a case concerning settlement conferences, the U.S. Court of Appeals for the Fifth Circuit recognized the unique position of the Attorney

General and the special problems that the Department of Justice faces in

 

146. See, e.g., DOJ Regulations, supra note 53, at 39,252 (stating that “litigation counsel . . . normally should not be expected to have the authority to bind

the government finally. . . . Final settlement authority is governed by regulations

and may be exercised only by the officials designated in those regulations.” (citing Fed. R. Civ. P. 16(c) advisory committee’s note)).

147. See infra notes 293, 295 and accompanying text.

148. See, e.g., W.D. Mich. Civ. R. 16.3(e)(iv) (when a “government entity is

a party to the litigation, a person other than outside counsel and who has the

authority to settle and to enter stipulations on behalf of the party must attend”

voluntary facilitative mediation sessions). U.S. Department of Justice regulations

provide: “Some courts, . . . by local rule or by order, may require that persons

with full settlement authority be present at settlement conferences. Nothing in

[this] Order should be construed to relieve litigation counsel or agencies of their

obligation to comply with such a requirement.” DOJ Regulations, supra note 53,

at 39,252.

149. See, e.g., In re United States, 149 F.3d 332, 334 (5th Cir. 1998) (recommending that the district court consider, as an alternative to ordering the United

States to be represented at mediation by a person with full settlement authority,

ordering the United States to have a person with full settlement authority available by telephone to discuss settlement at the time of mediation).
Guide to Judicial Management of Cases in ADR

60

handling the government’s large volume of litigation. The court of appeals concluded that the district court abused its discretion in routinely

requiring a representative of the government with ultimate settlement

authority to be present at all pretrial and settlement conferences.150 Although the court did not suggest that the district court could never issue

such an order, it declared that the district court should consider “less

drastic steps” before doing so.151

The court of appeals set forth examples of less drastic steps that the

district court should consider, such as requiring the government to declare whether the case could be settled under the authority of the U.S.

attorney and, if so, ordering the U.S. attorney either to attend the conference personally or to be available by telephone to discuss settlement at

the time of the conference. In those cases in which routine litigation cannot be settled under the authority of the U.S. attorney, “and the failure of

the government to extend settlement authority is a serious, persistent

problem, substantially hampering the operations of the docket,” the district court could take additional action, such as “requiring the government to advise it of the identity of the person or persons who hold such

authority and directing those persons to consider settlement in advance

of the conference and be fully prepared and available by telephone to

discuss settlement at the time of the conference.”152

Finally, the court indicated that if the district court’s reasonable efforts to conduct an informed settlement discussion in a particular case are

thwarted because a government official with settlement authority will not

communicate with government counsel or the court in a timely manner,

the district court, “as a last resort,” can require the appropriate officials

 

150. See In re Stone, 986 F.2d 898, 904–05 (5th Cir. 1993). Cf. United States

v. City of Garland, No. Civ.A. 3:98-CV-0307, 2000 WL 1597901, at *2 (N.D. Tex.

Oct. 25, 2000) (upholding required attendance by mayor and two (less than quorum) city council members and stating that “[t]he requirement of Stone that the

district court ‘give individualized attention to the hardship that the order will

create’ has . . . been satisfied”); Schwartzman, Inc. v. ACF Indus., 167 F.R.D.

694, 699 (D.N.M. 1996) (ordering sanctions against U.S. Department of Justice,

because government lawyers failed to comply with pretrial conference order, including failing to send lawyers with final settlement authority or to arrange a

means to reach others with that authority during the conference).

151. Stone, 986 F.2d at 905.

152. Id.
V. Deciding on Party Consent, Client Attendance & Degree of Party Participation

61

with full settlement authority to attend a pretrial conference.153 Although

this case involved settlement conferences—not an ADR procedure—and

is precedent in only one federal circuit, we cite it because of the guidance

it may give to trial courts.

In general, in cases involving the federal government much depends

on the culture and regulations of the agency and often on the culture and

ADR experience of the regional or district office handling the case. Some

judges continue to report success in referring cases involving certain

agencies to ADR, whereas judges in other parts of the country report resistance from the same agencies. Keep in mind the advice of the Advisory

Committee on Civil Rules:

Particularly in litigation in which governmental agencies or large

amounts of money are involved, there may be no one with onthe-spot settlement authority, and the most that should be expected is access to a person who would have a major role in

submitting a recommendation to the body or board with ultimate

decision-making responsibility.154

Recent changes in federal government policies concerning ADR may

have an impact on the effectiveness of ADR when the government is a

party.155 See supra section III.A.4 for a discussion of selecting a case for

ADR when a governmental entity is a party.

4. Authority to require client attendance at ADR sessions

The ADR Act is silent on the question of whether the court may compel

clients to attend ADR sessions. District, as well as bankruptcy, judges

thus must look to other sources, such as Federal Rule of Civil Procedure

16, for such authority.

 

153. Id.

154. Fed. R. Civ. P. 16 advisory committee’s note (1993 amendments to subdivision (c)); see Local 715, United Rubber, Cork, Linoleum & Plastic Workers v.

Michelin Am. Small Tire, 840 F. Supp. 595, 597 (N.D. Ind. 1993) (ordering a vote

of union membership on settlement proposals so that the union could send a person with authority to participate in settlement discussions).

155. See, e.g., Executive Order, supra note 53; DOJ Regulations, supra note

53, at 39,252; DOJ Order, supra note 54.
Guide to Judicial Management of Cases in ADR

62

Rule 16(c) states: “If appropriate, the court may require that a party

or its representative be present or reasonably available by telephone [at

any conference held under Rule 16] in order to consider possible settlement of the dispute.”156 “Whether [a party or its representative] would be

the individual party, an officer of a corporate party, a representative from

an insurance carrier, or someone else would depend on the circumstances . . . .”157 Rule 16’s authority is limited, however, because its subject is the pretrial conference, which may include discussion of “settlement and the use of special procedures”158 but is not by itself an ADR

procedure.

The advisory committee’s note accompanying the 1993 amendments

to Rule 16(c) states that “[t]he explicit authorization in the rule to require

personal participation in the manner stated is not intended to limit the

reasonable exercise of the court’s inherent powers . . . .”159 The advisory

committee cited a 1989 court of appeals opinion, G. Heileman Brewing

Co. v. Joseph Oat Corp.,

160 which held that a district court has inherent

power to order represented parties to appear at a pretrial settlement conference despite the fact that Rule 16(a) provides only that a court could

direct the parties’ attorneys and unrepresented parties to attend the conference.161 G. Heileman Brewing was decided in the context of a pretrial

judicial settlement conference, not ADR.

 

156. Fed. R. Civ. P. 16(c).

157. Fed. R. Civ. P. 16(c) advisory committee’s note (1993 amendments).

158. Fed. R. Civ. P. 16(c)(9).

159. Fed. R. Civ. P. 16(c) advisory committee’s note (1993 amendments). See

supra section I.A.1 for a discussion of district court inherent power and supra

note 20 for a discussion of bankruptcy court inherent power.

160. 871 F.2d 648 (7th Cir. 1989) (en banc).

161. Id. at 650–53 (relying on Link v. Wabash R.R., 370 U.S. 626, 629–33

(1962) (holding that a court’s inherent power to manage its docket includes the

power to sanction a party for failure to prosecute, as evidenced in part by the

failure of that party’s attorney to attend a pretrial conference)). See also In re Novak, 932 F.2d 1397, 1407 (11th Cir. 1991) (concluding that “the power to direct

parties to produce individuals with full settlement authority at pretrial settlement

conferences is inherent in the district courts”). But see In re Stone, 986 F.2d 898,

903–05 (5th Cir. 1993) (holding that a standing order requiring federal representatives to be present at pretrial conferences was an abuse of discretion because of

“major inconvenience” to at least one of the parties). Although decided before the

1993 amendments to Rule 16, the court in Stone acknowledged that “subject to

the abuse-of-discretion standard, district courts have the general inherent power
V. Deciding on Party Consent, Client Attendance & Degree of Party Participation

63

Another source of authority for compelling litigants to attend ADR

sessions is the court’s local rules, to the extent that they conform with

the requirements of Federal Rule of Civil Procedure 83.162 Currently, in

many district and bankruptcy courts, the local ADR rules require attendance by the attorney primarily responsible for each party’s case and a

party representative with full settlement authority, usually the client.163

Any district court local rule compelling attendance at ADR sessions must,

of course, be consistent with the ADR Act as well. See supra section V.A

for a discussion on referring cases with and without party consent.

Absent statutes, national rules, or case law that speak directly to the

question of compelled client attendance at ADR, inherent authority and

local rules appear to be the primary sources of authority currently available to district and bankruptcy courts. Case law on inherent authority

and the scope of local rules in the ADR context continues to develop.164

C. What type and degree of participation might be required of parties who attend ADR sessions?

Some local rules require “good faith participation”165 or “meaningful participation”166 by those involved in an ADR process. Some commentators

 

to require a party to have a representative with full settlement authority present—or at least reasonably and promptly accessible—at pretrial conferences.

This applies to the government as well as private litigants.” Id. at 903; see supra

notes 12–14, 20 and accompanying text.

162. Fed. R. Civ. P. 83(a); see also Fed. R. Bankr. P. 9029.

163. For examples of local rules requiring attorney and client attendance, see

supra note 139.

164. See Robinson v. ABB Combustion Eng’g Servs., Inc., No. 93-3626, 1994

WL 404557, at *1–*2 (6th Cir. Aug. 2, 1994) (finding an abuse of discretion because the district court dismissed the case without a specific finding that plaintiff’s failure to attend mediation, where plaintiff’s counsel did attend, was willful

and without considering less drastic sanctions). See also supra notes 12–14, 20

and accompanying text.

165. See, e.g., S.D. Ala. Civ. R. 16.6 (stating that a judge may order parties to

participate in good faith in ADR procedures); D. Ariz. Civ. R. 2.11(i)(3) (providing for sanctions for failure to participate in good faith at arbitration hearing);

N.D.N.Y. Civ. R. 83.11-5(3) (stating that parties shall participate in good faith in

mediation process).

166. See, e.g., D.N.J. Civ. R. 201.1(h) app. M, pt. IV (providing for sanctions

for failure to participate in arbitration in a “meaningful manner”); D.N.J. Civ. R.

301.1(f) app. Q, pt. III (providing for sanctions for failure to participate in media-
Guide to Judicial Management of Cases in ADR

64

maintain that ADR would be a futile exercise without good faith participation,167 that such a requirement can enhance the judge’s enforcement

ability, and that it is flexible enough to allow the judge to handle unforeseen actions that go against the spirit of ADR. See infra section X.C for a

discussion of sanctions for lack of good faith participation.

Others, however, see a host of problems with a good faith requirement. Not only is the good faith standard vague and subject to differing

interpretations, in the view of some, 168 but a party’s claim of bad faith

participation might require the court to examine the substance of the

ADR sessions and the party’s motives, thus compromising confidentiality.

Especially problematic is the risk that the neutral would be compelled to

testify.169 See infra section VIII for discussion of the risks associated with

breaches of confidentiality and infra Appendix E.5 for discussion of compelling a neutral’s testimony. Others maintain that a good faith requirement for ADR could interfere with each party’s choice of how to present

its case because the stronger the requirement for good faith participation,

the greater the coercion on a party to present its case in a manner that

the party might not have selected on its own.170 Requiring good faith participation also may undermine the philosophy and purpose of most forms

of ADR—that is, that ADR is voluntary and nonbinding.

 

tion in a “meaningful manner”); see also Gilling v. Eastern Airlines, Inc., 680 F.

Supp. 169, 171–72 (D.N.J. 1988) (imposing sanctions after mandatory nonbinding

arbitration, because party merely summarized evidence and read from depositions, frustrating the local rule requirement for participation in “a meaningful

manner”).

167. See Aspen, supra note 37, at 226. See also Kimberlee K. Kovach, Good

Faith in Mediation Requested, Recommended, or Required? A New Ethic, 38 S. Tex.

L. Rev. 575, 621–22 (1997) (concluding that, “[w]hether called good faith,

‘meaningful participation,’ or another similar term, some action to require a specific conduct conducive to the mediation process must be required” and setting

forth model rules).

168. See Hess v. New Jersey Transit Rail Operations, Inc., 846 F.2d 114, 116

(2d Cir. 1988) (holding that party could not be held in criminal contempt for failing to comply with court order that it make “bonafide offer of settlement,” and

holding that order requiring good faith offer was too vague).

169. See National Mediation Standards, supra note 56, § 11.2 commentary.

170. See, e.g., Sherman, supra note 118, at 2094.
V. Deciding on Party Consent, Client Attendance & Degree of Party Participation

65

D. What materials might the parties submit to the neutral before the ADR session begins?

Before the ADR session begins, some courts require that each party send

the neutral a short statement or other submission which might include

the information listed below.

• The facts of the case.

• A written explanation of the interests and positions of the party.

• An explanation of the legal or factual issues in dispute.

• An identification of issues whose early resolution might reduce appreciably the scope of the dispute or significantly contribute to settlement.

• An identification of discovery that could facilitate meaningful discussions.

• A history of past settlement discussions.

• An estimate of the cost and time that would be expended for further discovery, pretrial motions, and trial.

• A list of witnesses and important exhibits.

• A list of upcoming events in the litigation.

Some local rules specify what should be included in the submissions.171 Under other procedures, the neutral determines the extent and

nature of the submissions after considering the size and nature of the

case and often after preliminary discussions with the parties.172

The court or neutral may ask the parties to limit the length of ADR

submissions (e.g., to ten pages).173 Local court rules vary in whether the

parties should exchange their statements with each other or submit them

only to the neutral. Clearly, if counsel know the submissions are going to

be seen by the opposing side, they may be more restrained in what they

say, but they also may be more honest about factual matters. Furthermore, this practice removes from the neutral the burden of remembering

just what is confidential and what is not. On the other hand, counsel may

 

171. See, e.g., N.D. Cal. ADR R. 6-7(c) (mediation), 5-8(c) (ENE); W.D. Mich.

Civ. R. 16.3(e)(ii) (voluntary facilitative mediation), 16.4(c)(ii) (ENE); N.D. Ohio

Civ. R. 16.5(e) (ENE), 16.6(e) (mediation).

172. See generally D. Neb. Civ. R. 53.2(d)(2) (mediation); M.D. Pa. Civ. R.

16.8.6(a) (mediation); N.D. Cal. ADR R. 4-8 (arbitration).

173. See, e.g., W.D. Mich. Civ. R. 16.3(e)(ii) (voluntary facilitative mediation); D.N.J. Civ. R. 301.1(e)(2) (mediation); N.D. Ga. Civ. R. 16.7.G(1)(c) (ENE

and mediation).
Guide to Judicial Management of Cases in ADR

66

be more revealing of their clients' underlying interests and needs if the

statements are prepared only for the neutral. In any case, these statements should never be filed with the court or given to the judge.174

 

174. See, e.g., N.D. Cal. ADR R. 6-7(b) (Mediation statements “shall not be

filed and the assigned Judge shall not have access to them.”); E.D.N.Y. Civ. R.

83.11(b)(4) (Mediation statements “are not filed with the Court, nor shall the

assigned Judge or Magistrate Judge have access to them.”).
67

VI. Selecting the Neutral

A. What qualifications and standards of conduct should the neutral meet?

B. If the parties select the neutral, what assistance might the court provide?

C. Might the court staff or the judge select the neutral?

D. Some factors to consider in identifying the appropriate neutral

1. ADR training and experience

2. Reputation and personal characteristics

3. Subject-matter expertise

4. Legal training and experience

E. Might judges, special masters, or examiners be ADR neutrals?

1. Senior judges

2. Magistrate judges

3. Special masters

4. Examiners

F. Might the assigned judge serve as the ADR neutral?

G. When should the neutral be disqualified for conflicts of interest or bias?

H. Will a nonjudicial neutral have immunity?

Although a number of factors influence the effectiveness of the ADR

process, the quality of the ADR neutral is one of the most important factors. The quality of the neutral becomes even more important if participation in ADR is required, if the parties must select a neutral from the

court’s panel of neutrals, or if the parties must pay a fee to the neutral.

Most federal courts that have established ADR programs have created

and manage their own panels or rosters of neutrals.175 Many courts encourage parties to use neutrals from these panels when a case is referred

to an ADR process, but most will also accept party selection of a neutral

who is not on the court’s panel. In addition, many courts rely on their

magistrate judges to conduct settlement sessions, which often involve

ADR techniques such as mediation. A few courts employ ADR professionals on staff who serve as neutrals.

 

175. See Plapinger & Stienstra, supra note 1, at 71–308 (providing court-bycourt descriptions of many aspects of federal district court panels, including

qualifications and training requirements to be on the panel, procedures for appointing neutrals to cases, and whether fees must be paid and by whom).
Guide to Judicial Management of Cases in ADR

68

A. What qualifications and standards of conduct should the neutral meet?

By whatever process the neutral is chosen, it is important that courts ensure the quality of the neutrals on their panels. Furthermore, the ADR Act

of 1998 requires that “[e]ach person serving as a neutral in an alternative

dispute resolution process should be qualified and trained to serve as a

neutral in the appropriate [ADR] process.”176 Each district court that

authorizes arbitration must certify arbitrators in accordance with courtestablished and statutory standards, including making arbitrators subject

to the disqualification rules under 28 U.S.C. § 455.177 The ADR Act also

requires each district court to adopt “appropriate processes for making

neutrals available” to litigants for each category of ADR process offered

by the court and to “promulgate its own procedures and criteria for the

selection of neutrals on its panels [of neutrals].”178

Local rules might specify eligibility qualifications that the court requires prospective neutrals to meet before serving as a neutral. There are

also a number of references the court might consult when seeking to

identify appropriate qualifications for neutrals appointed in an individual

case or for neutrals appointed to court panels or rosters.179 Most courts

have established qualification requirements for membership on their

panel of neutrals, such as ADR training, subject matter expertise, and a

certain length of time in one’s respective profession. Most district court

panels are limited to attorneys, but some courts are expanding their panels to include other professionals. See infra section VI.D.

Also important are the rules or standards of professional conduct that

will govern the neutral. It is important for the neutral and the parties to

know what rules govern when the neutral is faced with, for example,

 

176. 28 U.S.C. § 653(b) (Supp. 1998). See also ADR Task Force of the Court

Admin. & Case Management Comm., Guidelines for Ensuring Fair and Effective

Court-Annexed ADR: Attributes of a Well-Functioning ADR Program and Ethical

Principles for ADR Neutrals (1997), reproduced infra Appendix D, pt. II.3 (stating

that a court, when establishing a panel of neutrals, “should define and require

specific levels of training and experience for its ADR neutrals”).

177. 28 U.S.C. § 655(b) (Supp. 1998).

178. Id. § 653(a).

179. See, e.g., National Mediation Standards, supra note 56, § 6.0; Ensuring

Competence and Quality in Dispute Resolution Practice (Society of Professionals

in Dispute Resolution 1995); Norma Jeanne Hill, Establishing and Defining Mediator Qualifications, 8 World Arb. & Mediation Rep. 226 (1997).
VI. Selecting the Neutral

69

disqualifying him or herself for a conflict of interest or disclosing ADR

communications to persons outside the ADR session. Again, local rules

might specify some standards. There are also a number of other references the court might consult when deciding what standards of conduct

to set for the neutral or for organizations that provide neutrals.180 See infra sections VI.G, VIII.B, X.H.

A description of the processes that can be used to formulate eligibility

qualifications and conduct standards for neutrals who serve in courtbased programs is outside the scope of this guide. We urge courts that

have not already done so to give close attention to these matters in their

ADR programs and local rules.

B. If the parties select the neutral, what assistance might the court provide?

Very likely, local rules include information about how the neutral should

be selected. And very likely the rules direct the parties to make the selection, as this is the most common practice in the federal courts. Selection

by the parties themselves offers several benefits. Most important, it can

 

180. See ADR Task Force of the Court Admin. & Case Management Comm.,

Guidelines for Ensuring Fair and Effective Court-Annexed ADR: Attributes of a

Well-Functioning ADR Program and Ethical Principles for ADR Neutrals (1997),

reproduced infra Appendix D, pt. III (stating eight ethical principles for court ADR

neutrals). See also Model Standards of Conduct for Mediators (American Arbitration Association, American Bar Association & Society for Professionals in Dispute

Resolution 1995) [hereinafter Model Standards for Mediatiors]; National Mediation Standards, supra note 56, §§ 8.0, 9.4, 12.3. See generally Center for Prof’l

Responsibility, Draft Rules and Explanatory Memos for Public Comment (visited

Sept. 12, 2000) <http://www.abanet.org/cpr/cover0500.html> [hereinafter

Draft ABA Rules] (proposing revisions to ABA Model Rules of Professional Conduct that would govern the conduct of attorneys who act as ADR neutrals or who

represent parties in ADR proceedings); CPR-Georgetown Comm’n on Ethics and

Standards in ADR, Proposed Model Rule of Professional Conduct for the Lawyer as

Third Party Neutral (visited June 22, 2000) <http://www.cpradr.org/cpr-george.

html> [hereinafter CPR-Georgetown Comm’n Proposed Model Rule] (proposing

rule for adoption into the ABA Model Rules of Professional Conduct); CPRGeorgetown Comm’n on Ethics and Standards of Practice in ADR, Principles for

ADR Provider Organizations (visited Oct. 24, 2000) <http://www.cpradr.org/

providerprinciples.htm> (proposing principles for responsible practice for ADR

provider organizations, including courts); see also infra text accompanying notes

302–04.
Guide to Judicial Management of Cases in ADR

70

enhance party confidence in the neutral, increase party satisfaction with

the ADR process, and help avoid any appearance of judicial favoritism

that might arise if the court selects the neutral. It also may open lines of

communication that can serve as a foundation for future compromises

and an early investment in the process. If the parties will be paying a fee

for the neutral, it may be particularly wise to let the parties select the

neutral. See infra section VII.C.

In most federal courts, the parties can select the neutral from a panel

established by the court or, in a few districts, from a panel maintained by

the local bar or the state courts. See supra section VI.A; infra section

VI.D. Local rules generally spell out how the parties make the choice

from the panel. Parties may, for example, be permitted to choose any

name from the panel, or they may be limited to a subset of names chosen

randomly by computer or more selectively by the court’s ADR administrator. Such local rules generally also set out the steps to be taken when

the parties cannot agree on the neutral. One possibility in these circumstances is that the court will have to make the selection. See infra section

VI.C.

Although many courts provide a panel of neutrals, few limit party

choice entirely to the panel. Thus, there should be little reason for the

judge to object if the parties prefer to select their own neutral. If the court

does not provide a panel and the parties have no person in mind, the

court can instruct them to find a neutral on their own, especially if the

court has ordered them to ADR. Letting them cast about has the potential

to delay the process, provoke further disagreement between the parties,

and reflect poorly on the court. At a minimum, the court should guide the

parties to resources in the community, such as a list of not-for-profit ADR

organizations or for-profit ADR providers. To avoid an appearance of impropriety, the court will want to give the parties a number of options,

rather than direct them to a single provider.

C. Might the court staff or the judge select the neutral?

Some courts have decided to retain authority to select the neutral for

some, if not all, ADR procedures.181 Usually, these districts have a spe-

 

181. See N.D. Cal. ADR R. 4-4(a) (providing procedure for parties to narrow

down list of arbitrators, with final selection made by the clerk), 5-3(a) (providing
VI. Selecting the Neutral

71

cialized ADR office and leave the selection of the neutral to their experienced ADR administrators. One rationale for this approach is that in certain situations the courts are in a better position than the parties to determine who is qualified for a specific dispute. Court selection of the

neutral also may lend legitimacy to the ADR process. However, it will do

so only if the neutrals are well-qualified, the appropriate neutral is appointed to a case, and the parties are persuaded that the court is not

serving its own interests, the interests of the neutrals, or the interests of

the opposing party.

Such concerns constitute perhaps the strongest argument against

putting the selection decision in the hands of the judge who is hearing

the case. If the court selects the neutral from an approved panel or if the

judge happens to know someone who is well-qualified, this creates the

potential for speculation and concern that the court has made the appointment to favor the neutral or the judge. This is especially true if the

case involves matters of public interest or the possibility of large fees for

the neutral. If parties think the judge has his or her own interests in

mind, they may question the wisdom of the decision to refer the matter

to ADR, the quality of the neutral, and the promise of confidentiality.

Furthermore, if the court selects the neutral, parties may assume that the

court is taking responsibility for the quality of that neutral. Absent compelling reasons, the court should leave the selection of the neutral to others.

Few courts, however, would bar a judge completely from selecting

the neutral. Under special circumstances, tied to specific policy considerations, judicial selection may be appropriate. For example, the court

may want to select the neutral when there is significant inequality in the

knowledge or experience of the parties or where party selection of a neutral would cause significant and undesirable delay.182 Likewise, a case

may be of such complexity or size that the court needs to appoint a person with very specialized skills and abundant experience. Even in such

circumstances, it is wise to select from a pool of candidates who have

 

procedure for ADR administrators to select early neutral evaluators), 6-3(a) (providing for ADR administrators to select mediators); E.D.N.Y. Civ. R. 83.10(e)(4)

(clerk of court will select panel of arbitrators at random from court’s list of certified arbitrators), 83.11(b)(2)(a) (clerk’s office will appoint mediator from the

court’s panel of approved mediators).

182. See National Mediation Standards, supra note 56, § 7.1.
Guide to Judicial Management of Cases in ADR

72

had an opportunity to make known their interest in serving or who have

been identified by the parties.

If the judge decides to select the neutral, it is best to first look to the

court’s panel for a candidate. If there is no panel or the judge decides to

go outside the panel, the court will need to look for a neutral locally, regionally, or even nationally. The court might contact the bar association,

other professional associations, or specialized dispute resolution providers in the private or public sector. Many professional organizations have

established panels of ADR neutrals and will provide a list of suitable candidates.

In selecting the neutral, the court takes on a greater responsibility for

the quality of the neutral and for making sure the neutral is appropriate

for the case. The first step should be to assess the case and the parties to

know what kind of neutral is appropriate. This is best done in consultation with the parties. As the court seeks to identify an appropriate neutral, consider the attributes discussed in the next section. See also supra

section VI.A.

D. Some factors to consider in identifying the appropriate neutral

Below we discuss some of the key attributes to consider when appointing

a neutral. These attributes are not only relevant when appointing neutrals

to court panels but also when selecting the neutral for individual cases.

1. ADR training and experience

Because the ADR Act requires that each neutral providing ADR in a court

program be “qualified and trained” in the appropriate ADR process,183 the

court should not select or appoint someone without appropriate ADR

training. The basic training course provides a foundation of ADR skills,

specialized skills for the specific ADR process, and exposure to some of

the ethical problems that can arise in ADR.184

Although it is widely believed that ADR neutrals should receive substantial training, many ADR skills, such as generating creative solutions

and improving communication between the parties, are best acquired by

 

183. 28 U.S.C. § 653(b) (Supp. 1998).

184. Elements of Program Design, supra note 94, at 69–70.
VI. Selecting the Neutral

73

experience or are natural to some individuals. It is advisable to determine

how often and in what kinds of cases the prospective neutral has served

as a neutral. When checking the neutral’s experience, emphasis should

not be placed on the neutral’s “settlement rate.” Although settlement may

be the goal in the ADR process, making it one of the criteria for selecting

neutrals invites them to pressure parties into settlement.

2. Reputation and personal characteristics

A potential neutral may have an excellent reputation or personal characteristics that make him or her more effective and more acceptable to the

parties. In some cases, the viability of the ADR process can hinge on

this.185 An essential personal characteristic is skill in communicating,

which includes, in the mediation context for example, the ability to facilitate dialogue between the parties. Another highly desirable characteristic is the neutral’s ability to generate innovative solutions beyond the

remedies available through adjudication. The neutral should also, of

course, meet high standards of integrity. Because it may be difficult to

determine whether the neutral has such personal characteristics and

skills, the court may have to rely on reputation and experience as indicators.

3. Subject-matter expertise

Discussions with the parties may point to the need for an expert in the

subject matter of the case. If the parties in a patent case, for example,

want an evaluation of the case, the subject matter expertise of the neutral

will be important. If the patent case centers on the business relationship

 

185. See Stienstra et al., supra note 39, at 207–08:

[A]ttorneys who ranked the neutral near or at the excellent end of the

scale were significantly more likely to report that the ADR process reduced litigation cost and time, that their case settled through the ADR

process, that the outcome was satisfactory and the process fair, that the

benefits of using ADR outweighed the costs, and that they would volunteer a case for this form of ADR.

See also Rosenberg & Folberg, supra note 49, at 1529 (“Interviews and focus

group discussions made it clear that the evaluator’s individual characteristics had

a noticeable impact on the ENE process and, consequently, on participant satisfaction levels.”).
Guide to Judicial Management of Cases in ADR

74

between the parties, however, and not on the patent law issues raised in

the claim, the appropriate neutral may be one who can facilitate communication and help generate options that will preserve the relationship.

Generally, if the neutral will not be required to express an opinion about

the case, subject matter expertise is less important.186

4. Legal training and experience

In nearly all federal courts, membership on ADR panels requires a law

degree and substantial legal experience.187 Although there are many advantages to appointing an attorney as neutral,188 one should not take for

granted that an attorney is the best choice. A fundamental role of an attorney is that of advocate. Not all attorneys have difficulty shedding this

role, but some do, which could cause problems in a process like mediation. A further disadvantage of requiring legal training is that it shrinks

the pool of eligible neutrals, which may be a problem in small districts or

districts that cover a large but sparsely populated geographic area. Restricting the pool to lawyers also may exclude many individuals who are

exceptionally skilled in ADR and who could be helpful in cases where

legal issues are not at the core of the dispute.

 

186. See Stienstra et al., supra note 39, at 238–40 (indicating that, in a mediation program that handled cases ranging from routine to complex, 14% of attorneys thought the mediation process would have been more effective if the mediator had had subject matter expertise, while 61% did not).

187. See, e.g., W.D. Mich. Civ. R. 16.3(b)(ii) (providing that, to be certified

as a mediator, one must be an attorney with at least five years of practical experience, general peer recognition, demonstrated interest, sufficient training, a willingness to serve pro bono, and beneficial personal characteristics, such as good

communication skills, sensitivity, objectivity, cognitive ability, and dignified behavior); D. Ariz. Civ. R. 2.11(e) (providing that an arbitrator must have been

admitted and qualified to practice for not less than five years; must be member in

good standing of the bar of any federal district court; and either must have committed at least 50% of his or her professional time to litigation for at least five

years, must have substantial experience serving as a neutral, or must have substantial experience negotiating consensual resolutions to complex problems).

188. See Glen Sato, The Mediator-Lawyer: Implications for the Practice of Law

and One Argument for Professional Responsibility Guidance—A Proposal for Some

Ethical Considerations, 34 UCLA L. Rev. 507, 514 (1986).
VI. Selecting the Neutral

75

E. Might judges, special masters, or examiners be ADR neutrals?

1. Senior judges

A retired judge’s stature can bring immediate benefits to an ADR session

in certain situations. The role of an arbitrator, for example, is closely parallel to that of the judge. Retired judges also may be effective in ENE,

where evaluation of the case is the purpose of the process. In these ADR

processes, a retired judge’s decision or evaluation may earn greater

credibility and help the parties size up their case more quickly. One

problem, however, in appointing a former judge as a neutral is that he or

she may have trouble adapting to a role other than that of arbitrator or

evaluator.189 Before appointing a former judge to serve as a mediator, the

court might want to determine that the judge is able to step outside the

role of judging. Keep in mind, too, that the ADR Act requires that each

neutral who serves in a court ADR process should be trained in the ADR

process that the neutral will be asked to provide.190

2. Magistrate judges

In describing the qualifications and training required for neutrals serving

in court-based ADR processes, the ADR Act states that a “district court

may use, among others, magistrate judges who have been trained to

serve as neutrals in [ADR] processes . . . .” See 28 U.S.C. §653(b) (Supp.

1998). Using magistrate judges to conduct ADR procedures holds both

promise and pitfalls. Some parties may prefer the authority and experience of a magistrate judge. Furthermore, in some districts magistrate

judges may be readily available and appropriately trained for serving as

ADR neutrals. Use of magistrate judges trained in ADR also can save a

court the effort and concerns that can arise when setting up and using a

panel of neutrals from the private sector. For a discussion on ensuring the

quality of neutrals on court panels, see infra section VI.A.

Some caution might be considered, however, before turning to magistrate judges for ADR services. Perhaps the greatest concern, at least to

parties, is the magistrate judge’s proximity—or perceived proximity—to

 

189. See Wayne Brazil, Effective Approaches to Settlement: A Handbook for

Lawyers and Judges 21–22 (1988).

190. 28 U.S.C. § 653(b) (Supp. 1998).
Guide to Judicial Management of Cases in ADR

76

the assigned judge.191 Parties who expect and desire a confidential process may believe that the magistrate judge and assigned judge will discuss

the case and that there will be unfavorable consequences when the assigned judge makes subsequent decisions in the case. Courts can prevent

this problem to some extent by having a strong local rule on ADR

confidentiality that specifically addresses this issue.192 Or the judge could

place a strong confidentiality clause in the referral order. See infra section

IX.K.

Using magistrate judges also may present a resource issue, particularly for courts with a small number of magistrate judges. If, for example,

a case referred to a magistrate judge for ADR does not settle, and if the

court’s practice is to have magistrate judges handle pretrial matters, the

court may find it necessary to refer the case to a different magistrate

judge for the remaining pretrial matters—if, for example, the magistrate

judge’s decisions on legal matters might be affected by confidential information learned during ADR. Or referral to a different magistrate judge

may be necessary for those matters where such confidential information

might bias or taint the decision.

Courts also should keep in mind that magistrate judges are by training and experience accustomed to making judgments. They may find it

difficult to suspend judgment and play a purely facilitative role in processes like mediation. In many cases, evaluative or decision-making skills

may not be as effective or appropriate as other ADR techniques. For a

discussion of similar concerns regarding senior judges, see infra section

VI.E.1.

Courts may want to address the concerns identified above by training

magistrate judges in ADR techniques and training all judges in the

confidentiality issues that might arise when magistrate judges are used as

ADR neutrals.

 

191. See Frank E.A. Sander, A Friendly Amendment, Disp. Resol. Mag., Fall

1999, at 11, 22.

192. See, e.g., N.D. Okla. Civ. R. 16.3.E (“The settlement judge will not discuss the substance of the conference with the judge to whom the case is assigned.”).
VI. Selecting the Neutral

77

3. Special masters

In a large case where settlement efforts may involve many parties or

where someone is needed to administer a class action settlement, the

court might consider appointing a special master under Federal Rule of

Civil Procedure 53.193 Because appointments such as these can involve

considerable cost for the parties, the judge should consult with them before such an appointment. The judge also will want to keep in mind the

Rule 53 provision that the special master submit a report to the court. If

the judge decides to request a report from the special master, the judge

should make sure the scope of the report is not inconsistent with any

confidentiality assurances that might be made in the ADR process.194 The

order appointing the special master might set out any constraints the

court wishes the special master to observe in this regard. The order also

might provide guidance on what kinds of ex parte communications, if

any, are appropriate between the judge and the special master and between the special master and the parties. See infra sections IX.M; X.A for

discussions on ex parte communications.

4. Examiners

Prior to the 1990s when the appointment of mediators in bankruptcy

matters became more widespread, bankruptcy courts occasionally appointed examiners to serve as mediators.195 Some commentators have

stated that the appointment of an examiner to serve as a mediator is un-

 

193. See generally MCL 3d, supra note 62, § 21.52. See also Thomas E.

Willging, Laural L. Hooper, Marie Leary, Dean Miletich, Robert Timothy Reagan

& John Shapard, Special Masters’ Incidence and Activity: Report to the Judicial

Conference’s Advisory Committee on Civil Rules and Its Subcommittee on Special

Masters 22–24, 25–27 (Federal Judicial Center 2000) (describing the use of special

masters for settlement in a sample of closed federal district court cases); Margaret

G. Farrell, Special Masters, in Reference Manual on Scientific Evidence 575 (Federal Judicial Center 1994) (describing the appointment process and issues related

to the use of special masters in cases that involve scientific and technical evidence).

194. See Fed. R. Civ. P. 53(e). See also Willging et al., supra note 193, at

44–55 (discussing judges’ instructions to special masters, ex parte communications with special masters, and special masters’ reports, including discussion of

cases where special masters were mediators).

195. See generally 11 U.S.C. §§ 1104(c), 1106(b) (1994).
Guide to Judicial Management of Cases in ADR

78

necessary because other authority exists for appointment of a mediator.196

In addition, commentators have raised concerns about the appointment

of an examiner to mediate because an examiner’s investigative functions

and duty to report to the court would undermine the impartiality and

confidentiality of the mediation process.197 In the future, it is unlikely that

courts will rely on the examiner provisions in the Bankruptcy Code for

authority to appoint a mediator since other authority exists. If an examiner is appointed and the examiner’s duties include some form of mediation, care should be taken to ensure that the scope of the examiner’s report is not inconsistent with any confidentiality assurances that might be

made in the ADR process. See supra sections I.A.2 and V.A.2.b for a discussion of the authority to refer bankruptcy matters to ADR.

F. Might the assigned judge serve as the ADR neutral?

The Code of Conduct for United States Judges provides that “[a] judge

may, with consent of the parties, confer separately with the parties and

their counsel in an effort to mediate or settle pending matters.”198 The

Code of Conduct also provides that “[a] judge shall disqualify himself or

herself in a proceeding in which the judge's impartiality might reasonably

be questioned . . . .”199

Nothing in the Code of Conduct specifically addresses the practice of

a judge in the role of a neutral in joint ADR sessions with the parties in a

case over which that judge will preside at trial. Advisory Opinion No. 95

by the Judicial Conference’s Committee on Codes of Conduct does, however, address the practice of judges acting in a “settlement” capacity in a

case and subsequently presiding over a trial in that case. That opinion

states:

 

196. See Norton, supra note 75, § 146:6; Chapter 11 Theory and Practice,

supra note 88, § 36.33.

197. Chapter 11 Theory and Practice, supra note 88, § 36.33; Norton, supra

note 75, § 146:17.

198. Committee on Codes of Conduct, Judicial Conf. of the U.S., Code of

Conduct for United States Judges Canon 3A(4) (1999) [hereinafter Code of Conduct].

199. Id. Canon 3C(1); see also 28 U.S.C. § 455(a) (1994).
VI. Selecting the Neutral

79

Since the drafters of the Code believed it was necessary to expressly permit ex parte settlement discussions between judges

and parties with their consent, it is reasonable to infer that joint

settlement discussions do not contravene the Code. We read the

Code of Conduct to acknowledge that judges may engage in a

range of permissible settlement activities, and that recusal follows from those activities only where a judge’s impartiality might

reasonably be questioned because of what occurred during the

course of those discussions.200

The advisory opinion raises several concerns with respect to a

judge’s dual role in settlement and trial:

Settlement practices must be examined on a case-by-case basis to

determine their ethical propriety. Factored into this calculus

should be a consideration of whether the case will be tried by

judge or jury, whether the parties themselves or only counsel will

be involved in the discussion, and whether the parties have consented to the discussions or to a subsequent trial by the settlement judge. Judges must be mindful of the effect settlement discussions can have not only on their own objectivity and impartiality but also on the appearance of their objectivity and impartiality. Despite a judge’s best efforts there may be instances where

information obtained during settlement discussions could

influence a judge’s decision-making during trial. Parties who

have confronted deficiencies in their cases, or who have negotiated candidly as to the value of their claims, may question

whether the judge can set aside this knowledge in a case tried to

the judge, whereas in a case tried to a jury, there may be less

reason to question the judge’s impartiality. . . . In the end, a

judge’s recusal decision following involvement in settlement discussions will be fact specific . . . .201

 

200. 2 Guide to Judiciary Policies and Procedures, at IV-229 (Administrative

Office of the U.S. Courts 1999) (Advisory Opinion No. 95).

201. Id.
Guide to Judicial Management of Cases in ADR

80

The concerns discussed in Advisory Opinion No. 95 are at least as great

in the ADR context as they are in the settlement conference context.202

These issues can be avoided if the case is referred to another judge

who will serve as the ADR neutral or to a nonjudicial ADR neutral. There

may be situations, however, when it appears to be advantageous for a

judge to act in the role of an ADR neutral in one of his or her own

cases—for example, in the interests of economy given the judge’s familiarity with the facts or issues in a complex case. If that judge proceeds and

serves as an ADR neutral and the ADR process does not result in full settlement, he or she should consider whether the case should then be tried

by a judge unfamiliar with the settlement discussions.

Some local rules restrict or prohibit judges who participate in settlement discussions from handling a subsequent trial of the case.203 See supra section VI.E.2 for a discussion of having magistrate judges handle

settlement and other pretrial matters in a case. Keep in mind, too, that

the ADR Act requires each district court to adopt local rules on disqualification of neutrals.204 See infra section VI.G. It is not clear whether

this will be interpreted to prohibit the trial judge from serving as an ADR

neutral in his or her own case.

Should a judge decide that he or she or another judge can appropriately serve as an ADR neutral in his or her own case, the judge should

keep in mind that the ADR Act requires that any ADR neutral must be

trained in the ADR procedures to which the case is referred.205

G. When should the neutral be disqualified for conflicts of interest or bias?

The ADR Act requires that each district court adopt local rules “relating

to the disqualification of neutrals,” including, where appropriate, disqualification on the same grounds as those for a judicial officer under 28

 

202. See generally James J. Alfini, Risk of Coercion Too Great: Judges Should

Not Mediate Cases Assigned to Them for Trial, Disp. Resol. Mag., Fall 1999, at 11,

13; Sander, supra note 191, at 24.

203. See S.D. Cal. Civ. R. 16.3(c) (requiring the parties to consent to trial by

the settlement judge). At least one local rule prohibits the assigned judge from

discussing settlement figures in nonjury cases, unless requested to do so by all

concerned parties. See N.D. Tex. Civ. R. 16.3(b).

204. 28 U.S.C. § 653(b) (Supp. 1998).

205. Id.
VI. Selecting the Neutral

81

U.S.C. § 455 and disqualification under “other applicable law, and professional responsibility standards.”206 The ADR Act specifically requires

that arbitrators must be subject to the disqualification rules of 28 U.S.C. §

455 and must take the oath or make the affirmation described in 28

U.S.C. § 453.207

All the effort in appointing the neutral can be undermined if there is

a likelihood that the neutral has a conflict of interest or bias. Since there

are currently no national professional responsibility standards for neutrals serving in federal court ADR programs, it is up to each court and the

ADR participants to ensure that any potential conflict of interest is

avoided. Local rules may provide a procedure for determining whether

conflicts of interest exist.

As a threshold issue, the court should decide which standards of

professional responsibility govern the neutral. Rules of professional responsibility for the governing bar may offer some guidance. On the other

hand, some argue that special rules of ethics are needed to govern this

complex area, where attorneys in particular are called on to balance professional practice and the role of ADR neutral.208 There are several

“model” ADR standards that might provide some guidance.209

Conflicts of interest between the neutral and one or more of the parties can arise due to significant current or past personal or professional

relationships with any party or attorney involved in the process. The po-

 

206. Id.

207. Id. § 655(b)(1)–(2).

208. See Carrie Menkel-Meadow, Ethics in Alternative Dispute Resolution:

New Issues, No Answers from the Adversary Conception of Lawyers’ Responsibilities, 38 S. Tex. L. Rev. 407, 453–54 (1997) (suggesting that special ethics rules for

ADR are needed).

209. See Model Standards for Mediators, supra note 180, Rule III; National

Mediation Standards, supra note 56, § 8.1(b). See generally Draft ABA Rules, supra note 180 (proposing revisions to ABA Model Rules of Professional Conduct

that would govern the conduct of attorneys who act as ADR neutrals or who represent parties in ADR proceedings); CPR-Georgetown Comm’n Proposed Model

Rule, supra note 180 (proposing rule for adoption into the ABA Model Rules of

Professional Conduct). See also infra notes 302–04 and accompanying text; ADR

Task Force of the Court Admin. & Case Management Comm., Guidelines for Ensuring Fair and Effective Court-Annexed ADR: Attributes of a Well-Functioning

ADR Program and Ethical Principles for ADR Neutrals (1997), reproduced infra

Appendix D, pt. III.2-4 (providing three guidelines for avoiding conflicts of interest).
Guide to Judicial Management of Cases in ADR

82

tential for conflicts may arise, for example, in the following situations:

where the neutral has previously arbitrated or mediated any matter in

which one of the present parties was a party; where the neutral previously represented a party in the same or a substantially related matter; or

where the neutral’s law firm has represented or currently represents a

party.210

Information gathered during the search for a neutral can help eliminate from consideration any persons who are susceptible to a conflict of

interest with one of the parties. Because most conflicts of interest are not

readily discoverable at the pre-appointment stage, however, the parties

and the neutral must do their own search for potential conflicts. The

neutral should disclose, preferably in writing, any circumstances that

may create or give the appearance of a conflict of interest,211 including

any prior relationship that the neutral or the neutral’s firm may have had

with any party. Additionally, each party should disclose any prior relationships with the neutral. If such disclosures reveal conflicts of interest,

the parties may still retain the neutral if they both agree that the neutral’s

independence and impartiality are not compromised. 

Consider whether any waiver of conflicts of interest should be subject

to court approval. If the judge thinks the ADR process might be negatively affected if the neutral remains, the judge should deny the appointment. Furthermore, the court should make it clear that it is the duty of a

neutral to continue to disclose conflicts throughout the ADR process.212

The safest approach is to disqualify the neutral promptly if any party

raises any objection. Courts may have some reluctance to do this if considerable time has already been invested in selecting a neutral, but forcing a neutral on a party can only create problems.

H. Will a nonjudicial neutral have immunity?

The ADR Act provides that arbitrators serving under the statute are entitled to the immunities and protections that the law accords to persons

 

210. See generally Niemic, supra note 2, at 20–27 (reporting incidences of

conflicts of interest or bias as observed or perceived by counsel-respondents and

mediator-respondents in a survey of mediation in bankruptcy). See also infra note

252 for cases holding that an attorney who served as a mediator was disqualified

in subsequent litigation from representing one of the parties to the mediation.

211. See National Mediation Standards, supra note 56, § 8.1(b).

212. See id.
VI. Selecting the Neutral

83

performing quasi-judicial functions.213 The ADR Act has no immunity

provision for other neutrals, and there is no other statutory source of

immunity for federal court ADR neutrals. One federal court of appeals

has found that neutrals serving in an official capacity in a court-based

ENE program have absolute quasi-judicial immunity.214 Some district

courts have considered the immunity question in the context of implementing their ADR programs and treat their ADR neutrals as officers of

the court who are protected by judicial immunity.215 A few have incorporated this view into local rules.216

Some commentators have expressed concern about immunity for

ADR neutrals.217 Particularly with respect to those who are ordered to use

ADR, some have maintained that granting mediators immunity could

deny litigants the opportunity to file claims if harm is caused by a neutral’s negligent acts or omissions.218 Others believe that immunity should

not be recognized if the ADR neutral has a conflict of interest in the mat-

 

213. 28 U.S.C. § 655(c) (Supp. 1998).

214. Wagshal v. Foster, 28 F.3d 1249, 1252–54 (D.C. Cir. 1994) (holding that

absolute quasi-judicial immunity extends to a volunteer evaluator/mediator performing official duties in D.C. Superior Court ADR program).

215. Examples include the U.S. District Court for the Western District of

Michigan and the U.S. District Court for the District of Rhode Island. See Plapinger & Stienstra, supra note 1, at 165, 255.

216. See, e.g., D. Ore. Civ. R. 16.4(f) (“During their service, mediators act as

officers of the court and are clothed with judicial immunity.”); N.D. Cal. ADR R.

2-5(e) (“All persons serving as neutrals in any of the Court’s ADR programs are

performing quasi-judicial functions and are entitled to the immunities and protections that the law accords to persons serving in such capacity.”); E.D.N.C. R.

32.11 (“A mediator appointed by the Court pursuant to these rules shall have

judicial immunity in the same manner and to the same extent as a judge.”); see

also Amended General Order M-143 paras. 6.0, 10.3 (Bankr. S.D.N.Y. Oct. 20,

1999).

217. See generally Arthur A. Chaykin, The Liabilities and Immunities of Mediators: A Hostile Environment for Model Legislation, 2 Ohio St. J. on Disp. Resol.

47 (1986) (maintaining that mediators do not need protection from common law

liability).

218. See, e.g., National Mediation Standards, supra note 56, § 14.0 & commentary.
Guide to Judicial Management of Cases in ADR

84

ter referred to the neutral.219 A third issue is whether immunity should be

treated differently for compensated and noncompensated neutrals.220

 

219. See generally Amanda K. Esquibel, The Case of the Conflicted Mediator:

An Argument for Liability and Against Immunity, 31 Rutgers L.J. 131 (1999).

220. See, e.g., Cassondra E. Joseph, The Scope of Mediator Immunity: When

Mediators Can Invoke Absolute Immunity, 12 Ohio St. J. on Disp. Resol. 629,

662–64 (1997) (evaluating whether the Southern District of New York bankruptcy

court mediators should be granted quasi-judicial immunity).
85

VII. Compensating the Neutral

A. Determining the neutral's fee

1. Options in setting the fee for the neutral

a. A market-rate fee

b. A fee set by the court

c. Pro bono service

d. Pro bono/fee mix

2. Questions to consider in setting the fee

B. Dividing the fee among the parties

1. Letting the parties decide

2. Equal division among the parties or the sides

3. Unequal division among the parties

4. Payment from the bankruptcy estate in bankruptcy cases

C. Fee issues in voluntary vs. mandatory referrals

The ADR Act of 1998 leaves to the courts the decision whether ADR neutrals should serve pro bono or be compensated.221 If district courts choose

to compensate neutrals, they must establish the amount of compensation

that “each arbitrator or neutral shall receive for services rendered in each

case.”222 Courts must do this in conformity with Judicial Conference

regulations,223 which state as follows:

All district courts must establish a local rule or policy regarding

the compensation, if any, of neutrals under Chapter 44 of title 28,

United States Code, §§ 651–658. Discretion remains with the

court as to whether that rule or policy should provide that neutrals serve pro bono or for a fee. As long as funding is not provided pursuant to the Act, the Judicial Conference does not encourage courts to institute rules or policies providing for court

funded, non-staff alternative dispute resolution neutrals.224

The Guide to Judiciary Policies and Procedures also includes two principles approved by the Judicial Conference's Court Administration and

 

221. 28 U.S.C. § 658(a) (Supp. 1998).

222. Id.

223. See id.

224. 1 Guide to Judiciary Policies and Procedures, supra note 200, at III-41.
Guide to Judicial Management of Cases in ADR

86

Case Management Committee in its Guidelines for Ensuring Fair and Effective Court-Annexed ADR:

225

• Where an ADR program provides for the neutral to receive compensation for services, the court should make explicit the rate of

and limitations on compensation.

• Where an ADR program provides for neutrals to receive compensation, the court should require both the neutrals and the parties to

disclose all fee and expense requirements and limitations in the

ADR process. A participant who is unable to afford the cost of ADR

should be excused from paying.

For bankruptcy courts, the ADR Act provisions may not apply.226 The

preferred approach is for local bankruptcy rules to provide procedures for

determining the neutral’s fee. See infra section VII.B.4 for a discussion of

payment of the neutral’s fee from the bankruptcy estate in bankruptcy

cases.

Courts and judges also should consider whether it is appropriate to

require parties to pay the neutral’s fee when the court, rather than the

parties, makes the decision that ADR will be used. See the discussion of

this issue infra section VII.C.

A. Determining the neutral’s fee

If the court does not have specific procedures or fee schedules, the judge

will have to determine whether and how the neutral’s fee will be paid in

a given case. The order referring the case to ADR can describe the fee

approach. See infra section IX.E. Some approaches used in the courts are

listed below.227

 

225. Id.; see ADR Task Force of the Court Admin. & Case Management

Comm., Guidelines for Ensuring Fair and Effective Court-Annexed ADR: Attributes of a Well-Functioning ADR Program and Ethical Principles for ADR Neutrals

(1997), reproduced infra Appendix D, pts. II.5, III.8.

226. See supra note 17 and accompanying text.

227. See Plapinger & Stienstra, supra note 1, at 36–56 tbls.4–7, 71–308 (providing district-by-district descriptions).
VII. Compensating the Neutral

87

1. Options in setting the fee for the neutral

a. A market-rate fee

The most common approach used in federal courts that authorize fees is

to permit the neutral to charge his or her regular market rate, whether

that is a per hour or per session rate. A number of courts using this approach reserve the right to review the reasonableness of the fee.

b. A fee set by the court

Some courts specify the fee the neutral may charge, either an hourly rate

(for example, $150 per hour) or an amount per session (for example,

$250 per day). Some judges put a cap on total neutral fees.

c. Pro bono service

In some courts, neutrals generally serve pro bono. Some of these courts,

however, reimburse the neutrals for out-of-pocket expenses, such as

travel.

In courts where neutrals are generally paid for their services, local

rules contain special provisions regarding low-income or indigent parties,

waiving the fee altogether in certain cases. To provide for this, many

courts require those who are selected for the court’s panel of neutrals to

serve pro bono for a specified number of hours or cases per year.

Some maintain that the quality of the neutral, or at least the quality

of the neutral’s performance, is better if the neutral is paid. Experience in

some courts, however, demonstrates that superior neutrals can be found

who are willing to serve pro bono.228

d. Pro bono/fee mix

In some courts, neutrals serve pro bono in a case for a specified period of

time (e.g., four hours) after which the parties must pay either a court-set

or market-rate fee.

 

228. See, e.g., Genevra Kay Loveland, Two ADR Administrators Reflect on

Developing and Implementing Court-Annexed Programs, FJC Directions (Federal

Judicial Center, Washington, D.C.), no. 7, Dec. 1994, at 18, 21 (describing programs in the District for the District of Columbia and the Northern District of

California).
Guide to Judicial Management of Cases in ADR

88

2. Questions to consider in setting the fee

Below are some questions to consider if the local rules do not specify

which fee option to use.

• Are the parties likely to agree on the proper method and rate for

compensating the neutral? The court might first consider whether

the parties can determine the neutral’s fee. Leaving this early decision to the discretion of the parties may help them commit to the

ADR process and may set the stage for resolving the matter being

referred to ADR. Conversely, leaving the decision to the parties

may cause conflict and separate them further.

• Are there advantages to using a per session fee (e.g., payment by

the day or half-day) for a particular case? It might be appropriate,

particularly for simpler cases, to order or approve a set fee by the

day or half-day. An advantage of this method is that the parties

may feel less pressure to settle hurriedly. When they know their

costs are not going up as each hour passes, they may be more

willing to take the time to examine carefully the settlement options

before them. Furthermore, parties need not be concerned that the

neutral is prolonging the session just to run up the fee. On the

other hand, when neutrals are paid by the day or half-day, if the

ADR session turns out to be brief, parties may end up paying more

than they would if they were paying at an hourly rate. There is also

the risk that the neutral will rush the process because the fee will

be the same no matter how much time is spent on the process.

• Would payment by the hour be best for a particular case? In some

cases, the court or the parties might want a neutral who charges by

the hour. Although an hourly fee may place pressure on the participants to rush to settlement in order to save money, payment by

the hour may in some situations save parties money if they quickly

come to settlement. Also, when the neutral’s meter is running,

parties may place more value on the time they spend on settlement, trying to use that time as effectively as they can. This might

help parties put aside personal grudges or other obstacles in order

to reach a mutually beneficial settlement. However, some parties

who pay by the hour may be concerned that the neutral is prolonging the session to run up the fee.

• Does the type or size of the case matter? The court might want to

consider using different approaches for different types or sizes of
VII. Compensating the Neutral

89

cases. For example, payment by the hour may be an effective arrangement in complex or hard-to-settle cases. Also, in a large,

complex case, the judge might want to reserve the right to review

the neutral’s fee.

• What if the parties cannot afford a neutral? The court also will

want to consider the ability of each party to pay for ADR. If one or

both of the parties cannot afford to pay a neutral’s fee, the court

might consider appointing a pro bono neutral or one who is willing

to work for a reduced fee. See infra section VII.B.3 for a discussion

of unequal division of the fee between the parties.

B. Dividing the fee among the parties

Some ADR programs regulate the allocation of costs by splitting the neutral’s fee equally among the parties or the sides in a case. Other courts

allow parties to negotiate fee allocations among themselves before or

during the substantive ADR sessions. If the court’s local rules do not determine how to allocate the fee, consider the following:

1. Letting the parties decide

The court may first want to ask the parties if they can decide among

themselves how to allocate the fee. If it appears unlikely that the parties

will be able to agree, the court may want to ask them for suggestions and

ask each party why it prefers its approach. For special concerns regarding

fee allocation when one party is not able to pay, but the other is, see the

discussion infra section VII.B.3 on unequal division among the parties.

2. Equal division among the parties or the sides

If the parties do not decide how to allocate the fee, the most commonly

used method is to divide the neutral’s fee equally between the parties or

by side. Dividing costs equally is a reasonable choice when there are only

two parties and each can afford to pay its share. This method can become

more complicated in multiparty disputes. When a case has many plaintiffs or defendants, a decision must be made about whether to split the

fee equally between the plaintiffs as one group and the defendants as

another, or alternatively, to split the fee equally among all parties involved in the case. If the court decides to split the fee equally between
Guide to Judicial Management of Cases in ADR

90

the plaintiffs’ group and the defendants’ group, the court may want to let

each group decide how to allocate its portion of the fee within the group.

3. Unequal division among the parties

Sometimes one party is willing to pay all of the neutral’s fee. A party may

volunteer to assume the fee, for example, when the other party is not

able to pay or in order to encourage a private resolution. The court may

want to discourage one party from paying the full fee if each party is able

to pay its share. Some believe that parties generally have more commitment to ADR when they know they have to pay for it.229 When parties

bear fees unequally, one or more of the parties may feel that the neutral

will become biased in favor of the party paying the larger share. To help

ensure neutrality, some maintain that the neutral should not know which

party is paying more.

4. Payment from the bankruptcy estate in bankruptcy cases

In a bankruptcy matter, the order of referral to ADR usually approves any

payment of the neutral’s fee by the trustee or debtor-in-possession.230 If

the bankruptcy estate’s portion of the neutral’s fee is expected to be relatively small, some courts authorize the trustee’s payment of the fee up to

a specified cap.231 Notice and other issues relating to the employment and

compensation of professional persons in the bankruptcy context are beyond the scope of this guide.232

 

229. See Erika S. Fine, Special Masters and Court-Appointed Experts: A Dialogue, in ADR and the Courts, supra note 36, at 209, 214.

230. See generally Nancy F. Atlas, Mediation in Bankruptcy Cases (pt. 1),

Prac. Law., Sept. 1995, at 39, 53. See also Second Amended General Order No. 95-

01 para. 8.2.b (Bankr. C.D. Cal. Aug. 24, 1999) (“the Mediator’s compensation

shall be . . . subject to the prior approval of the Judge if the estate is to be

charged with such expense”); Niemic, supra note 2, at 31–32 (reporting that in

bankruptcy mediation 20% of mediator-respondents indicated that the bankruptcy estate paid a portion of their fee).

231. See Atlas, supra note 230, at 55.

232. Cf. Chapter 11 Theory and Practice, supra note 88, § 36.20 (stating that

“one should obtain court approval of the retention of the mediator under 11

U.S.C. § 327 . . . , at least when the estate is to be charged”), with Norton, supra

note 75, § 146:6 (stating that “[t]he mediator is not a professional in the sense

provided for under Code § 327”).
VII. Compensating the Neutral

91

C. Fee issues in voluntary vs. mandatory referrals

An important consideration in deciding the neutral’s fee is whether the

ADR referral is voluntary or mandatory. See supra section I.D for a discussion of the distinction between voluntary and mandatory ADR. On the

issue of fees, some authorities make a sharp distinction between mandatory and voluntary ADR. They argue that, although it is appropriate to

require a fee when parties can choose to participate in ADR, it is unacceptable to force the parties to use ADR and then force them to pay for it

as well.233

Requiring parties to pay for mandatory ADR raises several issues,

including:234

• A party with very limited resources might be unable to afford the

costs of both the ADR sessions and taking the case to trial. Requiring such a party to pay for mandatory ADR might coerce the party

into settling235 and could impair or effectively deny the right to a

jury trial.236

• The judicial system may be perceived as unfair if it imposes significant fees for mandatory ADR services while court adjudication

fees remain modest.237 If litigants are forced into ADR, the fees they

pay to neutrals may appear to be costs for access to the public justice system.

• The fairness of a court’s procedures may be called into question

when it provides profitable work to private individuals.238

Although the ADR Act does not explicitly authorize courts to require

parties to pay for court-mandated ADR, it also does not bar compensation

 

233. See John P. McCrory, Mandated Mediation of Civil Cases in State Courts:

A Litigant’s Perspective on Program Model Choices, 14 Ohio St. J. on Disp. Resol.

813, 826–27 (1999); National Mediation Standards, supra note 56, §§ 5.1, 13.1 &

commentary.

234. See Elements of Program Design, supra note 94, at 57–58.

235. See Law & Pub. Policy Comm., Society of Prof'ls in Dispute Resolution,

Mandated Participation and Settlement Coercion: Dispute Resolution as It Relates

to the Courts 16 (1991); see also Eisele, supra note 15, at 1970, 1976–79.

236. See Wayne D. Brazil, Institutionalizing ADR Programs in Courts, in

Emerging ADR Issues in State and Federal Courts 52, 86 (Section of Litigation,

American Bar Association 1991); supra notes 15–16 and accompanying text.

237. See Frank E.A. Sander, Paying for ADR: To Make It Work, We Have to

Provide Funds for It, A.B.A. J., Feb. 1992, at 105.

238. Brazil, supra note 236, at 81–89.
Guide to Judicial Management of Cases in ADR

92

of neutrals in such cases. The ADR Act authorizes courts to require parties to use certain types of ADR,239 and it also states that courts shall establish the amount of compensation, if any, for neutrals.240

In practice, some federal courts do require parties to pay neutrals’

fees in court-mandated ADR. If the judge decides to order parties to use

ADR and require the litigants to pay the neutral’s fee, it is especially important that the court pay attention to the quality of the neutral to help

ensure that the parties, who have no choice about using ADR, receive

effective ADR services. See supra section VI.A, VI.D.

 

239. 28 U.S.C. § 652(a) (Supp. 1998).

240. Id. § 658(a).
93

VIII. Confidentiality of ADR

 Communications

A. What does confidentiality mean?

B. What are some approaches to help safeguard ADR communications?

1. What might the judge do at the time a case is referred to ADR?

a. Referral orders

b. Confidentiality agreements

2. What might the judge do when disclosure issues arise after ADR

communications have been made?

C. What exceptions to confidentiality protection might be recognized?

D. What statutes and rules govern whether ADR communications should be

protected from disclosure?

1. Statutes

2. Federal Rules of Evidence

a. Rule 403

b. Rule 408

c. Rule 501

3. Federal Rules of Civil Procedure

a. Rule 26(c)

b. Rule 45

c. Rule 68

4. Local rules on ADR

E. Are sanctions appropriate for breaches of confidentiality?

District courts have an obligation under the ADR Act of 1998 to provide

for the confidentiality of ADR processes.241 Given that this is an unsettled

area of the law, there are many factors to consider in referring cases to

ADR or in deciding issues concerning the confidentiality of ADR communications.

Confidentiality is generally considered a bedrock principle for most

ADR procedures.242 Thus, participants in court-based ADR are usually

 

241. Id. § 652(d). See infra text accompanying note 261.

242. See Bernard v. Galen Group, Inc., 901 F. Supp. 778, 784 (S.D.N.Y. 1995)

(stating that the considerations associated with settlement conferences apply with

equal force to district court mediation program, citing Lake Utopia Paper Ltd. v.

Connelly Containers, Inc., 608 F.2d 928, 930 (2d Cir. 1979) (stating that

confidentiality is “essential to the proper functioning” of court-based appellate

mediation program)); cf. Clark v. Stapleton Corp., 957 F.2d 745, 746 (10th Cir.

1992) (stating that “guarantee of confidentiality is essential to the proper functioning of an appellate [mediation] program”).
Guide to Judicial Management of Cases in ADR

94

assured at the outset of the process that their communications will be

kept confidential. Some local rules go so far as to say that ADR communications will be treated as privileged.

Assurances of confidentiality are not, however, absolute guarantees.

In some recent cases, courts have had to decide whether, and to what

extent, other parties in subsequent cases can gain access to ADR communications through discovery. Other courts have considered whether, and

to what extent, ADR communications are admissible as evidence at trial.

And some courts have had to decide whether to enforce a settlement

purportedly reached during ADR. In a number of cases, as discussed infra

Appendix E, courts have decided that ADR communications could not

remain confidential.

A. What does confidentiality mean?

In the court context, there is a lack of clarity about what confidentiality

means. The federal rules of practice and procedure do not provide direct

guidance regarding the admissibility or discoverability of ADR communications, and case law is inconsistent. Analysis of the extent of protection

is further complicated by the fact that the ADR Act of 1998, while requiring district courts to adopt local rules on ADR confidentiality,243 does

not define confidentiality nor state the scope of protection that Congress

intended. The Act does not state whether its confidentiality provision is

intended to protect ADR communications from disclosure in court—that

is, in the context of discovery and trial—or whether the protection is intended only with respect to disclosure in extrajudicial settings.244 Many

local ADR rules also do not make this distinction.

Does confidentiality mean that information exchanged during ADR

sessions is generally not discoverable, that is, unless discoverable independent of the ADR proceedings? Or does it mean that ADR communications are generally inadmissible, unless otherwise discoverable and admissible? If the evidence is inadmissible, is it inadmissible in any legal

proceeding or only in the trial of the case in which the ADR session was

 

243. 28 U.S.C. § 652(d) (Supp. 1998).

244. See Charles Alan Wright & Kenneth W. Graham, Jr., Federal Practice

and Procedure: Evidence § 5437 n.15 (“Confidentiality is concerned with extrajudicial disclosures; privilege is concerned with disclosure in court.”); infra note

367 and accompanying text.
VIII. Confidentiality of ADR Communications

95

held? In what circumstances should there be exceptions to the protection

of confidentiality—for example, should communications involving threats

to inflict bodily harm be protected? Should ADR communications be considered privileged and, if privileged, should the privilege be qualified or

absolute and should there be exceptions to the privilege? If there is such

a privilege, is it held only by the litigants who participated in ADR or by

the neutral as well? Under what circumstances can such a privilege be

waived?

In the next section we discuss some approaches the judge might consider to help ensure the confidentiality of ADR communications if local

rules, the federal rules, or case law do not provide sufficient protection.

In the following section we identify exceptions to confidentiality protection that have been recognized or suggested in order to help balance the

public interest in protecting the confidentiality of settlement processes

and countervailing interests such as the “right to every person’s evidence.” We then identify the sources of authority that courts have used

to determine whether ADR communications should be protected from

disclosure. For those who wish to pursue further the scope and limitations of those sources, we provide a discussion of case law applying the

statutes and rules that govern confidentiality infra Appendix E. Finally, in

the last part of this section, we discuss whether sanctions might be appropriate for breaches of confidentiality.

For a discussion of public access to ADR sessions and outcomes, see

infra section X.F. For a discussion on restrictions on communications

between the judge and the neutral, see infra section X.A.

There are special considerations in bankruptcy matters because of

certain rights of parties in interest who were not the parties referred to

the ADR process.245 For example, ADR settlements reached in bankruptcy

matters involving the trustee or bankruptcy estate are subject to the notice and hearing requirements under Rule of Bankruptcy Procedure 9019,

which governs the bankruptcy court’s approval of a settlement.246

 

245. See generally Norton, supra note 75, § 146:4 (describing ways to protect

ADR confidentiality in bankruptcy matters and exceptions to that protection).

246. See Niemic, supra note 2, at 17–19 (reporting that fewer than 5% of

survey respondents indicated that mediation confidentiality prevented the bankruptcy judge from learning facts or issues that the judge would have needed to

know in deciding whether to approve settlement).
Guide to Judicial Management of Cases in ADR

96

B. What are some approaches to help safeguard ADR communications?

1. What might the judge do at the time a case is referred to ADR?

If the court or the parties in a particular case are concerned about

whether local rules or procedures provide sufficient protection for the

confidentiality of ADR communications, the judge may want to consider

including specific provisions on confidentiality in the referral order and

asking the parties to clarify their understandings on this subject in a

confidentiality agreement.247

a. Referral orders

In the ADR referral order, the judge may want to specify, to the extent

permissible under Rule 83(b), the extent to which information exchanged

in the ADR process will be considered confidential.248 The referral order

could clarify, for example, what confidential means with respect to the

parties in the case, the ADR neutral who conducts the ADR process, and

persons who do not participate in the ADR process. However, as noted in

the discussion in this section and infra Appendix E, this is a complicated

issue. More specifically, the referral order could state whether testimony

concerning the ADR sessions may be taken from the ADR participants, by

 

247. See 2 Edward A. Dauer, Manual of Dispute Resolution: ADR Law and

Practice § 22.06 (1994); Brazil, supra note 189, at 307; Nancy F. Atlas, Mediation

in Bankruptcy Cases (pt. 2), Prac. Law., Oct. 1995, at 63, 66; see also Smith v.

Smith, 154 F.R.D. 661, 668–75 (N.D. Tex. 1994) (affirming magistrate judge’s

decision to quash subpoena served on state court-appointed mediator, where

referral order provided that the parties would be bound by the mediation

confidentiality rules printed on the order). The incidence of known breaches of

confidentiality appears to be infrequent, at least in the bankruptcy context. See

Niemic, supra note 2, at 15–17 (reporting that counsel-respondents indicated that

a party disclosed confidential ADR communications in 2.4% or less of the matters

referred to bankruptcy mediation and that a mediator disclosed ADR communications in 1.8% or less of the matters referred to bankruptcy mediation).

248. See ADR Task Force of the Court Admin. & Case Management Comm.,

Guidelines for Ensuring Fair and Effective Court-Annexed ADR: Attributes of a

Well-Functioning ADR Program and Ethical Principles for ADR Neutrals (1997),

reproduced infra Appendix D, pt. II.7 (stating that courts “should carefully define

the scope of confidentiality intended for information exchanged in its ADR program, striking a balance between absolute protection of ADR process information

and the need to avoid shielding misconduct”).
VIII. Confidentiality of ADR Communications

97

whom, and in what circumstances. The referral order also could define

what constitutes ADR communications.

The referral order also might tell the parties how to proceed if they

believe confidentiality has been or should be breached. Because the judge

or the parties may be concerned about whether knowledge of ADR communications might taint the judge’s impartiality, consider naming the

ADR compliance judge (if the court has one), the ADR administrator (if

such duties have been assigned to the administrator), or a judicial colleague to handle questions about the scope of confidentiality.249 See the

discussion on referral orders infra section IX.K and on sanctions infra

section IX.O.

The court needs to be careful not to promise parties more confidentiality than the court has the authority to provide. A referral order stating

that ADR communications are to be confidential or privileged may, in

reality, simply be a prophylactic to prevent disclosure outside and after

the ADR sessions. As discussed infra Appendix E.2, there may be circumstances—for example, in different litigation—where a third party, or even

one of the participants in ADR, would be allowed to gain access to those

communications in discovery or to use them at trial.

b. Confidentiality agreements

The court also might consider requiring the parties and the ADR neutral

to enter into a confidentiality/nondisclosure agreement before ADR begins. Some local rules provide a form for such confidentiality agreements.250 Incorporating a confidentiality agreement into a court order

 

249. See ADR Task Force of the Court Admin. & Case Management Comm.,

Guidelines for Ensuring Fair and Effective Court-Annexed ADR: Attributes of a

Well-Functioning ADR Program and Ethical Principles for ADR Neutrals (1997),

reproduced infra Appendix D, pt. II.6 (stating that courts “should adopt a mechanism for receiving any complaints regarding its ADR process and for interpreting

and enforcing its local rules for ADR, including the ethical principles it adopts”).

250. See, e.g., N.D. Cal. ADR R. 6-11(c) (allowing mediator to ask all parties

to sign confidentiality agreement on court form); Second Amended General Order

No. 95-01 para. 6.3 (Bankr. C.D. Cal. Aug. 24, 1999) (providing that parties and

mediator shall enter into written confidentiality agreement on designated form);

Bankr. C.D. Cal. Official Form 708 (1999) (Initial Mediation Confidentiality

Agreement stating that, other than signed agreement, written or oral communications will not be admissible or disclosed to anyone outside the Mediation Pro-
Guide to Judicial Management of Cases in ADR

98

might increase the agreement’s application with respect to nonparties to

the agreement.251

2. What might the judge do when disclosure issues arise after ADR

communications have been made?

The judge may be asked to resolve confidentiality issues after ADR communications have been made. This may happen in a case the judge has

referred to ADR or a case that is different from the one in which the ADR

communications were made.

For example, the judge may have to decide whether to admit as evidence documents or statements that were presented in ADR sessions,

whether to allow disclosure of such information in discovery, or whether

to permit the testimony of a neutral. See infra Appendix E. The plaintiff

in the instant case may, for example, want copies of the parties’ mediation statements prepared for another case in which the instant defendant

participated in the mediation. Or the discovery request might be made in

a case that involves completely different litigants from those who participated in the mediation. To protect the confidentiality of the ADR communications, the judge could consider using authority under Federal Rule

of Civil Procedure 26(c) or 45(c). Some judges, however, have found the

benefits of such an action to be outweighed by the importance of bringing all relevant evidence to light. See infra section VIII.C.

Confidentiality issues also may arise when deciding motions to disqualify counsel. For example, defendant XYZ Corporation may move to

disqualify plaintiff’s counsel on the ground that she had access to confi-

 

gram, and mediator will not be called to testify or provide materials from the mediation in any proceeding).

251. See Rogers & McEwen, supra note 116, § 9:23–:24; see also Grumman

Aerospace Corp. v. Titanium Metals Corp. of Am., 91 F.R.D. 84, 87–88 (E.D.N.Y.

1981) (holding that parties should not be permitted to “contract privately for the

confidentiality of documents, and foreclose [third parties] from obtaining, in the

course of litigation, materials that are relevant to their efforts to vindicate a legal

position”). See generally Federal Deposit Ins. Corp. v. Ernst & Ernst, 677 F.2d 230,

232 (2d Cir. 1982) (holding that a confidentiality order can be modified only “if

an ‘extraordinary circumstance’ or ‘compelling need’ warrants the requested

modification”).
VIII. Confidentiality of ADR Communications

99

dential information pertaining to XYZ Corporation when she served as a

mediator in an earlier case where XYZ Corporation was a party. 252

C. What exceptions to confidentiality protection

might be recognized?

The issue of confidentiality involves a balancing between the public interest in protecting the confidentiality of settlement processes and countervailing interests such as the “right to every person’s evidence.” In deciding issues on ADR confidentiality, the court might want to consider

whether to permit any exceptions. Some local ADR rules provide for limited exceptions to confidentiality—for example, disclosures as may be

stipulated by the parties or by the parties and the neutral,253 as necessary

to report violations of the ADR rule to the ADR compliance judge or ADR

administrator,254 or as are otherwise required by law.255 State mediation

privilege statutes, which are discussed infra Appendix E.3.d, often provide exceptions for certain defined circumstances.

 

252. See, e.g., In re County of Los Angeles, 223 F.3d 990, 997 (9th Cir. 2000)

(finding that the law firm’s ethical wall for this case was “timely and effective”

and holding “that the vicarious disqualification of a firm does not automatically

follow the personal disqualification of a former settlement judge, where the settlement negotiations are substantially related (but not identical) to the current

representation”). See also Fields-D’Arpino v. Restaurant Assocs., Inc., 39 F. Supp.

2d 412, 417–18 (S.D.N.Y. 1999) (disqualifying lawyer’s law firm from representing defendant-employer in lawsuit where lawyer served previously as mediator

between plaintiff-employee and defendant-employer); McKenzie Constr. v. St.

Croix Storage Corp., 961 F. Supp. 857, 861–62 (D.V.I. 1997) (holding that attorney, who served as mediator in unsuccessful mediation before joining a law firm

that represents a party in the same case, is disqualified from representing that

party, as is that attorney’s firm); Poly Software Int’l, Inc. v. Yu Su, 880 F. Supp.

1487, 1494–95 (D. Utah 1995) (holding that attorney and attorney’s firm were

disqualified from representing plaintiff in dispute with defendant, where attorney

had previously mediated dispute involving plaintiff and defendant acting jointly).

253. See, e.g., N.D. Cal. ADR R. 5-12(b) (ENE); N.D. Cal. ADR R. 6-11(b)

(mediation); D. Vt. Civ. R. 16.3(k)(2) (ENE).

254. See, e.g., D.N.J. Civ. R. 301.1(b), (f), app. Q.II.B (mediation).

255. See, e.g., N.D. Cal. ADR R. 5-12(b) (ENE); N.D. Cal. ADR R. 6-11(b)

(mediation).
Guide to Judicial Management of Cases in ADR

100

Some general subject matter categories that have been discussed as

possible exceptions to a blanket confidentiality protection include those

listed below:256

• significant threats made by a participant to inflict bodily injury;

• significant threats to public health or safety;

• use of, or attempts to use, the ADR process to plan or commit a

crime;

• admissions of abuse or neglect, such as spousal abuse or child neglect;

• evidence of professional misconduct or malpractice on the part of

an ADR neutral, a disputant, or a representative of a disputant; and

• evidence of fraud, duress, or incapacity regarding the validity or

enforceability of a recorded agreement that was reached by the

disputants as the result of ADR.

Of course, if evidence is otherwise discoverable, the presentation of

that evidence in the course of ADR proceedings does not make that evidence inadmissible or not discoverable.

The Administrative Dispute Resolution Act of 1996, which governs

ADR use in federal administrative proceedings, has been referred to in

analyzing the extent of ADR confidentiality protection in the federal court

context.257 The statute identifies exceptions to its confidentiality protections. The neutral and parties are prohibited from disclosing dispute

resolution communications unless:

• the communication has already been made public; or

 

256. Cf. December 2000 Draft of the Uniform Mediation Act, § 8 (visited Dec.

26, 2000) <http://www.pon.harvard.edu/guests/uma> [hereinafter Draft Uniform Mediation Act] (Drafting Committees on Uniform Mediation Act of National

Conference of Commissioners on Uniform State Laws & American Bar Association). The drafting committees intend to submit their draft of a uniform mediation

act to the National Conference of Commissioners on Uniform State Laws in 2001.

See CPR-Georgetown Comm’n Proposed Model Rule, supra note 180, Rule 4.5.2 &

comment (proposing rule on confidentiality for adoption into the ABA Model

Rules of Professional Conduct). See also infra text accompanying notes 302, 304.

257. See In re Grand Jury Subpoena Dated Dec. 17, 1996, 148 F.3d 487,

492–93 (5th Cir. 1998) (comparing the confidentiality protections of the 1996 Act

with other statutory protection for mediation communications as the court balanced “any interest the [participants] have in the confidentiality of their mediation sessions” with “the public interest in the administration of criminal justice”).
VIII. Confidentiality of ADR Communications

101

• a court determines that such testimony or disclosure is necessary to

prevent a manifest injustice, help establish a violation of law, or

prevent harm to the public health or safety of sufficient magnitude

in the particular case to outweigh the integrity of dispute resolution

proceedings in general by reducing the confidence of parties in future cases that their communications will remain confidential.258

In addition, under the statute, the neutral is prohibited from disclosing any dispute resolution communication or any communication provided in confidence to the neutral unless:

• all parties to the dispute resolution proceeding and the neutral consent in writing, and, if the dispute resolution communication was

provided by a nonparty participant, that participant also consents

in writing; or

• the dispute resolution communication is required by statute to be

made public (but a neutral should make such communication public only if no other person is reasonably available to disclose the

communication).259

Under the statute, a party to the ADR proceeding is also prohibited

from disclosing any dispute resolution communication unless:

• the communication was prepared by the party seeking disclosure;

• all parties to the dispute resolution proceeding consent in writing;

• the dispute resolution communication is required by statute to be

made public;

• the dispute resolution communication is relevant to determining

the existence or meaning of an agreement or award that resulted

from the dispute resolution proceeding or to the enforcement of

such an agreement or award; or

• the dispute resolution communication was made by one of the

parties (not the neutral) and was provided to, or was available to,

all parties to the dispute resolution proceeding.260

 

258 5 U.S.C. § 574(a)–(b) (Supp. 1998).

259 Id. § 574(a).

260 Id. § 574(b).
Guide to Judicial Management of Cases in ADR

102

D. What statutes and rules govern whether ADR communications should be protected from

disclosure?

Courts have looked to the authorities listed below when deciding issues

concerning the confidentiality of ADR communications.

1. Statutes

The ADR Act of 1998 requires that, until such time as a national rule is

adopted under the Rules Enabling Act, each district court “shall, by local

rule . . . , provide for the confidentiality of the alternative dispute resolution processes and . . . prohibit disclosure of confidential dispute resolution communications.”261 See infra Appendix E.3.b. Also, by statute, certain evidence concerning court-based arbitration is inadmissible in the

trial de novo unless the evidence would otherwise be admissible in the

court under the Federal Rules of Evidence.262 See infra Appendix E.1.a.

Many state statutes have provisions that govern the confidentiality of

ADR communications. See infra Appendix E.3.d(2) and E.5.

2. Federal Rules of Evidence

a. Rule 403

Rule 403 provides authority for balancing probative value with a number

of countervailing factors when deciding whether to admit evidence. See

infra Appendix E.1.b.

b. Rule 408

Rule 408 restricts the admissibility of certain communications, such as

offers to settle or acceptance of such offers made in compromise negotiations. This rule, which is cited in many district court local ADR rules, has

several limitations. See infra Appendix E.1.b, E.2.

 

261. 28 U.S.C. § 652(d) (Supp. 1998).

262. Id. § 657(c)(3); Judicial Improvements and Access to Justice Act, Pub.

L. No. 100-702, § 901(a), 102 Stat. 4642, 4661 (1988) (amended 1993, 1994, 1997)

(previously codified at 28 U.S.C. § 655(c) (1994)).
VIII. Confidentiality of ADR Communications

103

c. Rule 501

Rule 501 states the standards for recognizing and applying privileges in

federal court. Generally, under Rule 501, in federal question cases the

issue is whether federal common law recognizes an ADR privilege.

Where matters turn only on substantive questions of state law, state

common law or statutory rules of privilege apply. See infra Appendix

E.3.d.

3. Federal Rules of Civil Procedure

a. Rule 26 (c)

Rule 26(c)’s grant of authority to issue protective orders has been used to

limit discovery of ADR communications. See supra section VIII.B.2.

b. Rule 45

Rule 45’s grant of authority for courts to regulate the issuance of subpoenas and to protect respondents has been used to limit discovery of ADR

communications. See supra section VIII.B.2.

c. Rule 68

Under certain circumstances a court might use the language of Rule 68,

relating to the inadmissibility of unaccepted offers of judgment, to limit

the admissibility of ADR communications. See infra Appendix E.1.b.

4. Local Rules on ADR

Many local rules provide that ADR communications should be treated as

confidential or privileged to some extent. See infra Appendix E.1.b, E.2,

E.3.c, E.4.

As described infra Appendix E, courts have applied these sources of

authority in various ways in the ADR context.

E. Are sanctions appropriate for breaches of confidentiality?

Courts have sanctioned or admonished counsel for willfully disclosing to

the court statements made by a neutral or settlement offers made by a
Guide to Judicial Management of Cases in ADR

104

party in a session conducted under a court-based ADR program.263 Some

courts have local rules providing for the imposition of sanctions for violation of the court’s ADR rules.264

Whether sanctions should be imposed and the severity of any sanctions would depend on a number of factors, including whether the mediator explained the extent of the confidentiality rules; whether the mediator asked the parties to sign a confidentiality agreement and whether

such an agreement is required by local rule; the extent of willfulness or

bad faith involved; and the severity of the impact that the disclosure had

on the case. If sanctions are warranted, they might include oral admonition, written reprimand, the assessment of attorneys’ fees, the assessment

of costs of the mediation process, or mandatory training in mediation

techniques and ethics.

The complexity of the issues discussed in this section and infra Appendix E suggest that for some time to come judges will be trying to find

the appropriate balance between the competing concerns of protecting

ADR communications and bringing relevant evidence to light.

 

263. See Lake Utopia Paper Ltd. v. Connelly Containers, Inc., 608 F.2d 928,

930 (2d Cir. 1979) (denying motion for costs of appeal where movant’s brief

quoted statements made by court-employed evaluative mediator in violation of

court rules on confidentiality); Clark v. Stapleton Corp., 957 F.2d 745, 746 (10th

Cir. 1992) (admonishing counsel for recounting, in papers filed with the court,

statements made by court-employed mediator at a settlement conference in violation of court’s confidentiality rule); Bernard v. Galen Group, Inc., 901 F. Supp.

778, 782–84 (S.D.N.Y. 1995) (sanctioning attorney $2,500 for willfully disclosing

to the court settlement offers made in court-based mediation proceeding, where

referral order and mediation program rules described the confidentiality of the

process); see also Paranzino v. Barnett Bank, N.A., 690 So. 2d 725 (Fla. Dist. Ct.

App. 1997) (affirming sanction of trial court that dismissed plaintiff’s case with

prejudice, after plaintiff disclosed to newspaper the settlement offer made by defendant during court-ordered mediation in violation of agreement, state confidentiality statute, and confidentiality rule), dismissed by 695 So. 2d 700 (Fla. 1997)

(table).

264. See, e.g., Second Amended General Order No. 95-01 para. 7.10 (Bankr.

C.D. Cal. Aug. 24, 1999) (for willful failure to attend mediation or other violations

of the mediation program); E.D. Mo. Civ. R. 16-6.05(A) (for failure to attend,

comply with the referral order, or otherwise cooperate in the ADR process); N.D.

Okla. Civ. R. 16.3.J (for failure to comply with the settlement conference order or

to participate in good faith in ADR proceedings); S.D. Tex. Civ. R. 20.L (for

violations of the ADR rule).
105

IX. Elements of the Referral Order

A. Authorization for referral

B. Identification of the type of ADR to be used

C. Identification of the neutral or description of the neutral selection process

D. The neutral's responsibilities

E. Compensation of the neutral

F. Submission of materials

G. Attendance and settlement authority

H. Good faith participation

I. Deadlines

J. Interaction with trial processes

K. Confidentiality

L. Communication between the neutral and the judge

M. Ex parte communications between the neutral and the parties

N. Reporting of problems or ethical issues

O. Sanctions

P. Conclusion of the ADR session

After the court and the parties have made the decisions discussed in the

preceding sections, the court will want to record them, and perhaps give

further direction, in a referral order. The referral order is an important

document that sets the ground rules for the ADR process, gives that process structure, and helps prevent problems that might occur without one.

A good referral order can also fill in the blanks left by the absence of local rules on topics relevant to the referral, supplement relevant local

rules, or simply reinforce the provisions of a local rule.

A good referral order should include sufficient detail about how the

process will proceed to ensure that parties have clarity on fundamentals,

such as confidentiality and compensation of the neutral. The degree of

detail in the referral order can vary depending on the extent to which

local rules address various issues and the circumstances of the case. A

more detailed order may be appropriate, for example, if the court requires

use of ADR in a case or if the parties are having trouble cooperating with

each other and need an order setting basic ground rules, such as where

ADR sessions will take place. The judge might want to leave the neutral

some degree of flexibility, however, to adapt the ADR process to the

changing needs of the parties and the dispute, particularly in an ADR

process like mediation or early neutral evaluation.
Guide to Judicial Management of Cases in ADR

106

Including more detail in the order may help avoid subsequent challenges to the ADR process, such as disputes over fees. On the other hand,

for particularly contentious parties, a detailed order may ultimately provide them additional grounds for disputes. Generally, however, the best

protection for the parties and the court is to make sure the items discussed below are covered, if not in local rules, then in the referral order

in the individual case.

A. Authorization for referral

Referral orders generally cite the statute or rule that authorizes the court

to refer parties to ADR. This is particularly important if the court is requiring the parties to use an ADR process without the consent of all parties. See supra sections I.A, V.A.2, and V.B.4, respectively, for discussions of authority to refer cases to ADR, authority to make a mandatory

referral to ADR, and authority to compel client attendance.

B. Identification of the type of ADR to be used

Referral orders should identify what type of ADR process will be used.

Some referral orders describe the ADR process in great detail, explaining

to litigants the goals and methods of ADR.265 Other orders identify only

which ADR process will be used. Most mediation orders do not specify

whether the process will be facilitative or evaluative, leaving this issue

open for the mediator to work out with the parties. For a process like

mediation, the court might want to suggest that the neutral talk with the

parties before the ADR session about what they want from the process

and how they want it to proceed.

C. Identification of the neutral or description of

the neutral selection process

If the neutral has been selected, the neutral’s name should be stated in

the order. If the neutral has not been selected, the referral order should

say how the neutral will be selected. See supra section VI.B–C.

 

265. See, for example, ADR referral orders for the U.S. district courts for the

Western District of Missouri and the Western District of Michigan.
IX. Elements of the Referral Order

107

D. The neutral’s responsibilities

The referral order might address the scope of the neutral’s responsibilities, such as whether the neutral has authority to require clients, as well

as attorneys, to be present at the ADR sessions or to determine whether

additional time should be allocated to the ADR process. The referral order

might also state or refer to the standards of conduct the neutral is expected to meet. See supra section VI.A.

E. Compensation of the neutral

If the parties are to pay the neutral, the referral order can state the rate of

compensation and the method for allocation of the neutral’s fee between

the parties. Under the ADR Act of 1998, district courts that choose to

compensate neutrals must establish the amount of compensation that

“each neutral shall receive for services rendered in each case.”266 Some

referral orders state that parties may reallocate the neutral’s fee between

themselves as part of their negotiated settlement. See supra section VII.B.

F. Submission of materials

Some ADR programs require parties to file briefs or papers with the neutral prior to the ADR session. Some local rules specify what should be

contained in these statements and how long they may be.267 The referral

order can mention how and when parties should file their submissions

and whether the parties should exchange those submissions with each

other or provide them ex parte to the neutral. See supra section V.D.

 

266. 28 U.S.C. § 658(a) (Supp. 1998).

267. See, e.g., N.D. Cal. ADR R. 6-7(c) (instructing attorneys to: list persons

with decision-making authority who will attend the mediation session; describe

the substance of the suit; summarize the party’s views of key liability issues and

damages; discuss the key evidence in the case; and identify discovery and motions that promise to contribute most to meaningful settlement negotiations);

W.D. Mich. Civ. R. 16.3(e)(iii) (limiting each submission to no more than ten

double-spaced pages in length); see also D. Ariz. Civ. R. 2.11(h)(2) (instructing

parties in arbitration to identify issues to be determined, witnesses to be called,

and exhibits to be presented); N.D. Ala. ADR Plan para. IV.B.6 (instructing parties to submit to mediator relevant pleadings and motions, a short memorandum

stating legal and factual positions, and any other beneficial materials).
Guide to Judicial Management of Cases in ADR

108

G. Attendance and settlement authority

The referral order should state whether the parties themselves or someone else with settlement authority must be present at the ADR sessions.

Some courts allow a representative without full settlement authority to

attend the ADR sessions as long as someone with full authority is available by telephone. If local rules do not state whether the neutral can order or waive attendance of the parties themselves (i.e., the clients as well

as the attorneys), the judge may wish to clarify this issue, too, in the referral order. See supra section V.B.

H. Good faith participation

If the judge in the court’s ADR program requires good faith or meaningful

participation in the ADR process, the judge may wish to note this requirement in the referral order. See supra section V.C.

I. Deadlines

To keep a case on schedule, the court should give the parties a time

frame for the ADR process. Some referral orders set dates for commencement and deadlines for completion of the ADR process. Others

specify a number of weeks or months, to begin on appointment of the

neutral or some other initial step. If deadlines are set, the court may want

to be flexible in the event the parties are genuinely close to settlement

and request an extension. See supra section II.C.

J. Interaction with trial processes

If the case is not going to follow the judge’s regular case management

schedule during the ADR process, the parties need to know what and

how the pretrial process will change. Will the discovery period be tolled

during the ADR process? Will scheduled hearings still go forward? Will

the trial date be set back? The objective is to make the referral in such a

way that, if ADR is unsuccessful, the parties can proceed with the litigation schedule without undue cost or delay. See supra section II.C, infra

section X.E.
IX. Elements of the Referral Order

109

K. Confidentiality

The referral order can be used to let the parties know whether ADR

communications will be considered confidential. The extent to which

communications in ADR proceedings are protected from subsequent disclosure or admissibility is often left unclear by local ADR rules. Federal

Rule of Evidence 408, which is referred to in many local rules, offers only

limited protection. The judge may want to extend confidentiality beyond

the narrow scope of Rule 408 by including in the referral order a recommendation or requirement that the parties and the neutral enter into a

written confidentiality agreement prior to the first ADR session. See supra

section VIII.B.1.

L. Communications between the neutral and the

judge

The judge may want to clarify under what restricted circumstances a

neutral may communicate with the judge either during or after the ADR

process. As a general rule, the neutral should not communicate with the

judge. See infra section X.A.

M. Ex parte communications between the neutral and the parties

The referral order might make clear the rules that govern communications between the neutral and the parties. If a neutral is a fact finder or

decision maker, as in arbitration, ex parte communications are generally

as inappropriate as they are between parties and the judge in litigation. In

mediation or mediation-like processes, the general rule is that the neutral

should not hold private conversations or caucuses with a party except as

previously discussed with all ADR parties prior to undertaking such conversations or as provided in the court’s referral order. There is, of course,

a general exception for communication that concerns scheduling, preADR submissions, or purely administrative matters.268 See supra section

VI.E.3 for a discussion on appointing a special master for settlement purposes.

 

268. See Model Standards for Mediators, supra note 180, Rules V, VI & cmt.
Guide to Judicial Management of Cases in ADR

110

N. Reporting of problems or ethical issues

During the ADR process, the neutral or the parties might need to speak to

someone in the court regarding problems or ethical issues relating to the

ADR process. Communication with the assigned judge is risky in these

situations because of the possibility that the judge will learn facts about

the case or the parties that could undermine impartiality. If the court has

an ADR compliance judge, the referral order could require the neutral

and the parties to refer such matters to him or her. Or these matters

might be handled by the ADR administrator if such responsibilities have

been assigned to that person. Absent a compliance judge or qualified

ADR administrator, a judge may want to exchange this responsibility

with another judge for cases they each refer to ADR. See infra section

X.H for a discussion of the ethical issues that might arise for neutrals and

parties.

O. Sanctions

If sanctions might be imposed (e.g., for lack of good faith participation or

for noncompliance with any aspect of the ADR referral order or local

ADR rules), the judge may want to let the parties know of that possibility

in advance through the referral order. See infra section X.C.

P. Conclusion of the ADR process

The referral order could describe the procedure to be followed when concluding the ADR process, especially if local rules are silent on the subject.

The parties can be encouraged, for example, to enter into an executed

settlement agreement as soon as settlement is reached. If local rules do

not tell parties how to inform the court that the ADR process is complete

and whether or not settlement has been reached, the judge may want to

cover these matters in the referral order. See infra section X.I.
111

X. Managing Cases in the ADR

Process

A. Are communications between the judge and the neutral appropriate?

1. Restrictions on communications

2. Suggested safeguards for necessary communications

B. How can the court keep the ADR process on track?

C. Might the court impose sanctions for nonattendance, attendance without

settlement authority, or absence of good faith participation?

D. How might the judge respond if the parties ask for a decision on an

unresolved issue that is impeding settlement?

E. How might the judge handle a dispositive motion that is filed while ADR is

under way?

F. How might the court respond to requests for public access to ADR sessions

and outcomes?

G. When might the court withdraw a case from ADR?

1. Reasons for withdrawing a case from ADR

2. Procedures for withdrawing a case

3. Alternatives to withdrawing a case

H. What ethical issues may arise for the neutral or parties, and how might the

court respond?

I. How should the ADR process be concluded?

1. Conclusion of ADR when settlement has been reached

2. Conclusion of ADR when there is no settlement

3. Conclusion of ADR when a decision is rendered by the neutral

In referring a case to ADR, judges do not, of course, transfer control of

the case to the parties or the ADR neutral. Responsibility for case management remains with the judge. Managing a case in ADR is in part a

question of keeping the case on schedule while permitting the ADR process to unfold. It is also a question of preventing problems during the ADR

process and being prepared to handle any that might arise.

A. Are communications between the judge and the neutral appropriate?

In handling any matters that may arise in cases already in the ADR process, the judge must keep in mind the extent to which it is appropriate to

communicate with the neutral and the parties about the ADR process.

Unless authorized by law, as in a request for injunctive relief, judges

generally do not “initiate nor consider ex parte communications on the
Guide to Judicial Management of Cases in ADR

112

merits, or procedures affecting the merits, of a pending . . . proceeding.”269 The nature and confidentiality of ADR processes require that

court communication with ADR neutrals be strictly limited. The ADR Act

of 1998 requires each district court, by local rule, to “provide for the

confidentiality of [ADR] processes and to prohibit disclosure of confidential dispute resolution communications.”270

1. Restrictions on communications

Generally, after a case has been referred to ADR, the judge should be informed of only the information listed below:

• The neutral’s opinion, without elaboration, that the case is inappropriate for ADR;271

• The failure of a party to comply with the order to attend ADR;272

• Whether or not the case has settled, without elaboration, at the

conclusion of the ADR process.273 See infra section X.I for a discussion on concluding the ADR process.

Many local rules prohibit the neutral from providing the judge with

any details of the substance of the ADR sessions unless all parties to the

ADR process and the neutral stipulate otherwise.274 The judge can help

 

269. Code of Conduct, supra note 198, Canon 3A(4).

270. 28 U.S.C. § 652(d) (Supp. 1998). See also ADR Task Force of the Court

Admin. & Case Management Comm., Guidelines for Ensuring Fair and Effective

Court-Annexed ADR: Attributes of a Well-Functioning ADR Program and Ethical

Principles for ADR Neutrals (1997), reproduced infra Appendix D, pt. III.7 (stating

that neutrals should “protect the integrity” of the ADR process by “refraining

from communicating with the assigned trial judge concerning the substance of

negotiations or any other confidential information learned or obtained by virtue

of the ADR process”).

271. See generally National Mediation Standards, supra note 56, § 12.1.

272. Id.

273. Cf. id. § 12.2.

274. See, e.g., N.D. Cal. ADR R. 5-12 (providing that early neutral evaluators

may not disclose any ENE communications to the assigned judge, except under

limited, specified conditions, including stipulation by the parties); E.D.N.Y. Civ.

R. 83.11(d)(3) (providing that information about what transpired in the mediation

session generally will not be made known to the court, but it may be disclosed by

agreement of all parties and, if appropriate as determined by the mediator, the

mediator); E.D. Tenn. Civ. R. 16.4(h) (providing that, except as otherwise required by law, mediators may not divulge, to the assigned judge or others, information given to them in confidence without consent of the parties).
X. Managing Cases in the ADR Process

113

the neutral and the parties preserve the confidentiality and integrity of

the ADR process by not seeking information or intervening in the ADR

process unless approached by the parties themselves through a formal

procedure such as a motion. If the neutral has freedom to discuss the

inner workings of the ADR process with the judge, litigants may soon

conclude that they should not speak freely in the ADR sessions, and both

the usefulness of ADR and the credibility of the process could be undermined. Such communications could also risk compromising the neutral’s

impartiality, as well as the judge’s.

2. Suggested safeguards for necessary communications

If communication is necessary between the neutral and the court, generally it is best done in one of the ways listed below.

• In writing, approved in advance by all parties.

• On the record, with notice or a summary of the communication

given to all parties.

• By taking the matter to another judge, an ADR coordinator, or another court staff member who is specifically designated to handle

ADR matters of this type.275

In courts that have given their ADR administrators such responsibility, all communications from the neutral concerning ADR can be directed

to the administrator. The best practice is to have the neutral report violations of the court’s orders concerning ADR to a judge other than the assigned judge, such as an ADR compliance judge, or to a court official,

such as the ADR administrator. Requests for additional time for ADR and

other requests to the assigned judge, such as those involving discovery

disputes or the status of a ruling on a pending motion, are best made by

the parties themselves rather than by the neutral. See supra section VIII.B

for a further discussion of safeguarding the confidentiality of the ADR

process.

One way to assist the court’s neutrals in handling the kinds of issues

that may arise in ADR is to provide them with a forum for discussion of

 

275. See National Mediation Standards, supra note 56, § 12.3; see also N.D.

Cal. ADR R. 2-2 (stating that ADR magistrate judge shall hear and determine all

complaints alleging violations of the ADR rules); E.D. Tenn. Civ. R. 16.4(p)

(stating that ADR administrator is responsible for communications between mediators and the court).
Guide to Judicial Management of Cases in ADR

114

typical and unusual problems. Some courts, for example, organize periodic brown-bag lunches for nonjudicial neutrals, where they can get the

advice of other nonjudicial neutrals who may have encountered the same

problems. See infra section X.H.

B. How can the court keep the ADR process on track?

The court may have to play a continuing role after the ADR referral to

ensure that use of ADR does not interfere with the regular litigation

schedule. Although the court will not be involved in the substance of the

ADR process, the appropriate extent of involvement in other aspects of a

case in ADR will vary depending on the circumstances of the case. In

some cases, for example, the court may find it useful or necessary to resolve discovery disputes that might impede progress toward settlement.

In some cases, for instance, the court might ask the parties for periodic,

nonsubstantive reports on whether the parties should continue in ADR,

whereas in other cases the court might simply set a deadline and let the

parties proceed.

Some local rules establish time periods within which the ADR process must begin and end and permit the judge to extend the period upon

motion of a party.276 If there is no local rule, the extent to which boundaries are set on the time spent in ADR will depend on the judge. The judge

can rely on other deadlines in the case to keep the case on track, but the

ADR process usually requires its own discipline. A deadline for completion of the process can, for example, encourage serious negotiations and

focus attention on settlement. Deadlines also may be more fair to the

neutral by circumscribing his or her time commitment, especially if the

neutral is serving pro bono. Deadlines should be flexible enough, however, to allow for extensions if the parties are making progress toward

settlement.

It is important, however, that deadlines are not structured in such a

way that ADR sessions become simply pro forma steps in the litigation

process. This would be especially problematic if ADR referrals are mandatory. Pro forma, ineffective ADR processes are a waste of litigant’s time

and are damaging to the court’s reputation.

 

276. See, e.g., local rules cited supra notes 38, 42.
X. Managing Cases in the ADR Process

115

C. Might the court impose sanctions for nonattendance, attendance without settlement

authority, or absence of good faith

participation?

The ADR Act of 1998 does not say whether sanctions should ever be used

in the context of ADR. A number of courts provide for sanctions through

their local ADR rules.277 One source of authority for such provisions

might be inherent judicial authority. See supra sections I.A, V.B.4. By

analogy, another source of authority might be Federal Rule of Civil Procedure 16(f), which authorizes the judge to impose sanctions if, for example, no appearance is made on behalf of a party at a pretrial conference, if a party or party’s attorney fails to participate in a pretrial conference in good faith, or if a party fails to obey a pretrial order.278 In the

context of pretrial conferences as well as ADR processes, sanctions have

been imposed for failure to appear and for lack of preparation.279 Sanctions might include imposition of costs, award of attorneys’ fees, exclusion of evidence, denial of a trial de novo, or, under egregious circumstances, dismissal of the case.280 Sanctions for contempt are normally re-

 

277. See, e.g., S.D. Fla. Civ. R. 16.2(E); S.D. Tex. Civ. R. 20(F), (L); W.D.

Tex. Civ. R. CV-88 (c), (j). See also Fed. R. Civ. P. 83(b).

278. Fed. R. Civ. P. 16(f). But see Newton v. A.C. & S., Inc., 918 F.2d 1121,

1126–28 (3d Cir. 1990) (concluding that “Rule 16 authorizes courts to require

parties to attend conferences for the purpose of discussing settlement and impose

sanctions if they fail to participate in good faith” and that fines imposed violated

the public policy that the “‘court should never work to coerce or compel a litigant

to make a settlement,’” quoting Del Rio v. Northern Blower Co., 574 F.2d 23, 26

(1st Cir. 1978)).

279. See, e.g., G. Heileman Brewing Co. v. Joseph Oat Corp., 871 F.2d 648,

655 (7th Cir. 1989) (en banc) (upholding sanctions against corporation for failure

to comply with court order to have “corporate representative” attend pretrial settlement conference, even though attorney was authorized to speak on behalf of

principals); Nick v. Morgan’s Foods, Inc., 99 F. Supp. 2d 1056, 1064 (E.D. Mo.

2000) (imposing more than $5,000 in sanctions for calculated refusal to prepare

mediation memorandum and failing to send to mediation a corporate representative with authority to settle the case); Raad v. Wal-Mart Stores, Inc., No. 97-3015,

1998 WL 272879, at *1, *2 (D. Neb. May 6, 1998) (imposing sanctions against

defendant for failure to send corporate representative to mediation); Myers v.

Wiederhol, 185 F.R.D. 149, 152 (E.D.N.Y. 1999) (imposing sanctions after plaintiffs failed to appear at mandatory arbitration).

280. See Abney v. Patten, 696 F. Supp. 570, 573, 576 (W.D. Okla. 1987) (barring defendant Federal Deposit Insurance Corporation (FDIC) from defending
Guide to Judicial Management of Cases in ADR

116

served for willful violations of court rules or orders.281 See supra sections

I.A and V.A.2 for a discussion of authority to compel use of ADR and supra section V.C for a discussion of what degree of participation to require.

Some believe that compelling attendance by someone with settlement

authority, demanding good faith participation, and sanctioning noncompliance would probably do little to improve the prospects of settlement.282

Indeed, some suggest that sanctions would result in judicial inefficiency,

as valuable court time would be consumed litigating the sanctions issues.283

If a party or neutral in ADR is having trouble getting a party to participate, resolution is probably best sought within the ADR session itself,

without the judge’s involvement. If that fails and if the court’s local procedures provide, a party could file a notice or motion of nonparticipation,

preferably not with the assigned judge, but with another judge,284 an ADR

administrator, or a specially trained law clerk. To preserve the confidentiality of the ADR process and protect the assigned judge’s impartiality, it

 

claims against it at trial, and imposing Rule 11 sanctions, because FDIC in violation of court order refused to designate a representative with settlement authority). But cf. Robinson v. ABB Combustion Eng’g Servs., Inc., No. 93-3626, 1994

WL 404557, at *1–*2 (6th Cir. Aug. 2, 1994) (finding an abuse of discretion because the district court dismissed the case without a specific finding that plaintiff’s failure to attend mediation, where plaintiff’s counsel did attend, was willful

and without considering less drastic sanctions).

281. See, e.g., In re Novak, 932 F.2d 1397, 1408–09 (11th Cir. 1991) (upholding criminal contempt sanction for failure to comply with court-ordered attendance at settlement conference); Hess v. New Jersey Transit Rail Operations,

Inc., 846 F.2d 114, 116 (2d Cir. 1988) (holding that party could not be held in

criminal contempt for failing to comply with court order that it make “bonafide

offer of settlement,” and holding that order requiring good faith offer was too

vague); In re La Marre, 494 F.2d 753, 756 (6th Cir. 1974) (concluding that court

had inherent power to order insurance company representative to attend a pretrial session and, on refusal, to enforce the order by contempt proceedings).

282. See, e.g., Sherman, supra note 118, at 2094.

283. See, e.g., id.

284. See, e.g., D.N.J. Civ. R. 301.1(b) (designating a compliance judge to

“entertain any procedural or substantive issues arising out of mediation”); N.D.

Cal. ADR R. 2-2 (designating a magistrate judge to “hear and determine all complaints alleging violations of these ADR local rules”).
X. Managing Cases in the ADR Process

117

is best that he or she stay out of such disputes until other paths toward

resolution have been attempted.285

D. How might the judge respond if the parties ask for a decision on an unresolved issue that is

impeding settlement?

Sometimes the parties in a case referred to ADR may find that they have

settled most issues in the case but that one or two issues remain unresolved and are thus impeding settlement. To protect the confidentiality

and impartiality of the ADR process, the judge should not engage in ex

parte discussions with any of the participants in the ADR process. The

better approach is to have the parties file and brief a motion on the unresolved issues. To aid their settlement discussions, the judge might want

to rule on that motion promptly. See infra section X.E.

In the non-ADR context, as a means to expedite the motion calendar,

some judges issue tentative rulings in the form of a proposed or draft order before a scheduled hearing on a motion.286 Consider whether this approach is appropriate in the ADR context as well.

If the unresolved issue is a discovery dispute between the parties and

this dispute is impeding settlement discussions, the judge might consider

issuing an order that would limit discovery during ADR to what the parties need for meaningful participation in the ADR process. Alternatively,

the court might ask the parties to try to resolve the discovery dispute as

part of the ADR process. See supra section II.D.

E. How might the judge handle a dispositive motion that is filed while ADR is under way?

While the ADR procedure is under way, one or more of the parties may

file a dispositive motion. If considerable progress toward settlement has

been made, the judge may want to avoid disrupting that progress with a

ruling. This approach also might conserve the judge’s time. There is also

 

285. See Doe v. Nebraska, 971 F. Supp. 1305, 1307–08 (D. Neb. 1997) (deciding that materials related to the motion for sanctions (for not having authorized representatives appear at court-ordered mediation session) will be kept under seal and will not be made available to the assigned trial judge).

286. See Manual for Litigation Management and Cost and Delay Reduction

26–27 (Federal Judicial Center 1992).
Guide to Judicial Management of Cases in ADR

118

the possibility, however, that ruling on the motion will hasten settlement

negotiations or even terminate the case. Before ruling on the motion, the

court could try to determine whether settlement is likely; to avoid any

pressure on or risk of improper communications with the neutral, the

court should address this question to the parties (e.g., through a telephone status conference). If the judge has already decided the motion, he

or she might notify the parties that he or she is prepared to issue the decision and ask whether they want the decision held or issued. If the judge

does not communicate his or her intention to rule on the motion, there

may be some risk that the ruling and settlement will occur simultaneously, with potential for confusion about which one is the actual outcome.287 Regardless of the approach taken, however, the judge should

avoid ex parte communications so as not to risk breaching the confidentiality of the ADR process. See supra section X.A.

A problem also may arise for the neutral when a dispositive motion

has been filed. The parties may, for example, call the neutral or arrive at

the ADR session and inform the neutral that the session is unnecessary

because a dispositive motion has been filed. A party may take this position in order to stymie the ADR process. A skilled ADR neutral can be

effective despite this circumstance and in most situations should nonetheless proceed with the ADR session.

For a discussion of dispositive motions pending at the time of referral

to ADR, see supra section II.F.

F. How might the court respond to requests for public access to ADR sessions and outcomes?

Court-based ADR sessions typically are not open to the general public.288

ADR confidentiality policies sometimes conflict with policies concerning

 

287. See Sheng v. Starkey Labs., Inc., 117 F.3d 1081, 1084 (8th Cir. 1997

(remanding case to federal district court for entry of judgment dismissing the action based on mediated settlement agreement and not based on summary judgment ruling that occurred nearly simultaneously with the settlement).

288. But see Judith Resnik, Whose Judgment? Vacating Judgments, Preferences for Settlement, and the Role of Adjudication at the Close of the Twentieth

Century, 41 UCLA L. Rev. 1471, 1494 & n.87 (1994). In 1994, Professor Resnik

conducted a survey of the nine federal district courts with voluntary court-based

arbitration programs. Of the eight courts that responded, seven had held courtbased arbitrations. “[T]wo districts reported that anyone could attend [arbitra-
X. Managing Cases in the ADR Process

119

public access to information generated by use of the public justice system.289 However, courts have denied public access to judicial settlement

conferences.290 Courts also have held that settlement devices like summary jury trials are not subject to open court sessions or press access.291

One commentator has noted that if as formal an ADR proceeding as a

summary jury trial does not have to be open to the public, then less

structured processes like court-based mediation and nonbinding arbitration do not have to be open to the public.292 Nonetheless, the constitutionality of denying public access to federal court-based ADR proceedings, other than summary jury trial, has not yet been decided by a federal

court.

A public agency that participates in ADR may be required to release

certain information or open the ADR sessions to the public under, for

example, the federal Freedom of Information Act (FOIA).293 In the context

of a settlement process that did not involve ADR, communications between a federal government agency and another party in furtherance of a

 

tions],” three stated that it was up to the parties or arbitrator, and two had no

information available on public access. Id.

289. See generally Elements of Program Design, supra note 94, at 98–100.

290. See United States v. Town of Moreau, 979 F. Supp. 129, 136 (N.D.N.Y.

1997) (denying a motion by intervenor newspaper to open settlement conferences

to the public, because to do so “would delay if not all together prevent a negotiated settlement”), aff’d, United States v. Glen Falls Newspapers, Inc., 160 F.3d

853 (2d Cir. 1998); City of Hartford v. Chase, 942 F.2d 130, 135 (2d Cir. 1991)

(noting that “past cases make clear that a federal judge has the power to prevent

access to settlement negotiations when necessary to encourage the amicable

resolution of disputes”); B.H. v. McDonald, 49 F.3d 294, 303 (7th Cir. 1995)

(noting that settlement negotiations often take place in private with the help of a

mediator and that when a judge plays the role of the mediator the “principle is no

different”).

291. See, e.g., In re Cincinnati Enquirer, 94 F.3d 198, 199 (6th Cir. 1996)

(holding that “the first amendment right of access does not attach to a summary

jury trial”); see also Cincinnati Gas & Elec. Co. v. General Elec. Co., 854 F.2d 900,

903–04 (6th Cir. 1988) (stating that the First Amendment does not mandate access to the summary jury trial, because the process is more akin to a settlement

conference than to a trial, and because access would probably hamper the summary jury trial’s goal of promoting settlements).

292. See Edward F. Sherman, Confidentiality in ADR Proceedings: Policy Issues Arising from the Texas Experience, 38 S. Tex. L. Rev. 541, 560 (1997).

293. 5 U.S.C. § 552 (1994). See generally Rogers & McEwen, supra note 116,

§ 9:29.
Guide to Judicial Management of Cases in ADR

120

proposed settlement were held to be not exempt from disclosure under

FOIA.294 Some states have passed “access to settlement” or “open meetings” statutes that prohibit secrecy in cases involving public hazards,

safety, health, and, in some jurisdictions, public officials.295

With respect to public access to agreements that result from mediation, courts appear to follow the doctrine that has developed for settlement agreements.296 For court-based arbitration, unless a party demands

a trial de novo, an arbitration award becomes the judgment of the court,

but the award may not be made known to the judge assigned to the ac-

 

294. See County of Madison v. United States Dept. of Justice, 641 F.2d 1036,

1042 (1st Cir. 1981) (rejecting argument to create a FOIA “settlement exemption”

that would be based on equitable grounds of public policy). But see Federal Deposit Ins. Corp. v. Ernst & Ernst, 677 F.2d 230, 232 (2d Cir. 1982) (holding that

“the FOIA does not apply to a court’s order directing an agency not to reveal the

terms of an agreement crucial to the settlement of an action”).

295. See Carrie Menkel-Meadow, Public Access to Private Settlements:

Conflicting Legal Policies, 11 Alternatives to High Costs Litig. 85, 86 (1993). Compare Will Pryor & Robert M. O’Boyle, Public Policy ADR: Confidentiality in

Conflict?, 46 SMU L. Rev. 2207 (1993) (contending that nonbinding, public policy

mediation should be confidential), with Thomas S. Leatherbury & Mark A. Cover,

Keeping Public Mediation Public: Exploring the Conflict Between Confidential Mediation and Open Government, 46 SMU L. Rev. 2221 (1993) (stating that public

policy mediation should not be confidential).

296. See Rogers & McEwen, supra note 116, § 9:29. For examples of the doctrines that have evolved regarding settlement agreements, see Pansy v. Borough

of Stroudsburg, 23 F.3d 772, 782 (3d Cir. 1994) (holding that a settlement agreement never filed with or enforced in the district court is not a “judicial record”

accessible under the right of access doctrine); Bank of Am. Nat'l Trust & Sav.

Ass'n v. Hotel Rittenhouse Assocs., 800 F.2d 339, 345 (3d Cir. 1986) (holding that

“[o]nce a settlement is filed in the district court, it becomes a judicial record, and

subject to the access accorded such records”). But see United States v. Amodeo,

44 F.3d 141, 145 (2d Cir. 1995) (stating that “the mere filing of a paper or document with the court is insufficient to render that paper a judicial document subject to the right of public access . . . [and] that the item filed must be relevant to

the performance of the judicial function and useful in the judicial process in order

for it to be designated a judicial document”); Federal Deposit Ins. Corp., 677 F.2d

at 232 (holding that a confidentiality order can be modified only “if an ‘extraordinary circumstance’ or ‘compelling need’ warrants the requested modification,”

citing Martindell v. International Tel. & Tel. Corp., 594 F.2d 291, 296 (2d Cir.

1979)).
X. Managing Cases in the ADR Process

121

tion until the court has entered final judgment or the action has otherwise terminated.297

Settlements reached in bankruptcy matters involving the trustee or

bankruptcy estate might receive public scrutiny in the course of any notice and hearing process required by Federal Rule of Bankruptcy Procedure 9019, which governs the bankruptcy court’s approval of a compromise or settlement.298

G. When might the court withdraw a case from

ADR?

In rare instances, the court may need to withdraw a case from ADR either

right after the referral or at some point after the ADR process has begun.

Many ADR programs provide for a case to be withdrawn from ADR at the

discretion of the court.299

1. Reasons for withdrawing a case

There are several reasons the court might want to withdraw a case from

an ADR process. A case may simply be unsuitable for ADR, which may

not be discovered until after the case has been referred. For example, in

court programs that automatically refer cases to ADR, such as the mandatory arbitration programs, local rules generally provide for parties to

opt out of the process. Even if the court does not have such a program,

the court may receive opt-out requests from parties for a variety of

justifiable reasons.

The court also may find it necessary to withdraw a case from ADR

because of the behavior of the parties. A party may not be participating

 

297. See 28 U.S.C. § 657 (a)–(b) (Supp. 1998); Judicial Improvements and

Access to Justice Act, Pub. L. No. 100-702, § 901(a), 102 Stat. 4642, 4660–61

(1988) (amended 1993, 1994, 1997) (previously codified at 28 U.S.C. § 654

(1994)); see infra note 315.

298. See generally Norton, supra note 75, § 146:4 (describing public access to

settlement agreements in bankruptcy matters and exceptions to public access).

299. See, e.g., M.D. Fla. Civ. R. 9.03(c) (mediation); S.D. Fla. Civ. R. 16.2.D.4

(mediation); W.D. Pa. Civ. R. 16.2.4.C (arbitration); see also Form of General

Order, supra note 113, § 12.0.
Guide to Judicial Management of Cases in ADR

122

in good faith,300 may become abusive or threatening in the ADR session,

or may attempt to drag out the ADR process through noncooperation.

Mediator misconduct also may present a situation where withdrawal

of the case from ADR seems the best option. In such instances, however,

the court may want to explore with the parties whether they would

benefit from appointment of another mediator.

2. Procedures for withdrawing a case

It will most likely be the neutral or the parties themselves who recognize

the need to withdraw a case from ADR. Under many court ADR procedures, the neutral has the authority to terminate the ADR process for reasons that include lack of settlement or a determination that ADR is inappropriate in the given situation.301 If the district has an ADR compliance

judge or has assigned such duties to the ADR administrator, the neutral

or the parties could go to this person to request or discuss withdrawal. If

the district does not have a compliance judge or has not given the ADR

administrator such responsibilities, the neutral or the parties might find

an appropriate way to communicate to the judge the need to withdraw

the case without compromising the confidentiality or ex parte rules of the

ADR process. A simple notice to the judge by the neutral that the ADR

process has been completed without settlement, without any mention of

why the process is being terminated, may be the appropriate action. See

supra section X.A.

3. Alternatives to withdrawing a case

Withdrawing a case from ADR may not be the only recourse. Other options depend on the circumstances of a given case and may include the

following:

• Appoint a different neutral;

• Switch to a different ADR method;

• Hold a conference with the parties to evaluate the potential benefits

of further ADR;

 

300. For further discussion of what form of participation might be required of

the parties, see supra section V.C.

301. See, e.g., D. Mass. Expense and Delay Reduction Plan R. 4.03(d)(4)

(mediation); E.D. Pa. Civ. R. 53.2.1.5(f) (mediation).
X. Managing Cases in the ADR Process

123

• Issue an order resolving discovery problems or other matters that

may be hindering the ADR process; or

• Set a firm date for trial, but allow the ADR process to continue.

H. What ethical issues may arise for the neutral or parties, and how might the court respond?

Neutrals and parties in cases referred to ADR may, from time to time,

encounter situations that fall into a category of problems generally referred to as “ethical issues.” Among the kinds of issues that may arise for

neutrals or parties—and which, fortunately, arise infrequently—are those

described below.

• The neutral becomes aware during a private caucus that a party

intends physical violence against the opposing party. To warn the

opponent or to notify the appropriate authorities may violate the

rules of confidentiality, but a failure to do so may put the person in

grave danger.

• A party to a mediation has been ordered by the mediator to produce certain documents for the next mediation session. In the

party’s view, the documents are irrelevant. Given that this is the

third time the mediator has issued such an order, the party suspects the mediator is trying to increase the number of hours spent

in mediation and thus the mediator’s fee.

• A defendant has made an offer to the plaintiff. In private caucuses,

the mediator repeatedly tells the plaintiff to accept the offer because it is higher than could be expected following a trial. The

plaintiff feels undue pressure to accept the offer and believes that

refusal would put him or her at a disadvantage in further negotiations conducted by this mediator.

• The mediator knows that a recent decision controls the legal question in a case. The attorney whose client would benefit from the

decision seems unaware of it and is about to agree to a settlement

that is substantially lower than might be expected given the recent

decision. Alerting the attorney may risk the mediator’s neutrality or

the appearance of neutrality, but failing to alert the attorney may

result in a miscarriage of justice and a violation of an important

mediation principle—informed consent.
Guide to Judicial Management of Cases in ADR

124

• The mediator learns during a private caucus that, prior to the mediation, an attorney had not communicated to his or her client a

settlement offer made by the opposing party. As an attorney, the

mediator has an obligation under the Rules of Professional Conduct

to report this apparent ethical violation, but to do so would violate

the ADR program’s confidentiality rules.

Neutrals or parties in such situations may want advice on how to

handle the problem, and they may want to talk about it with the judge

assigned to the case. The assigned judge should decline to discuss such

matters with the neutrals or the parties. The risk is too great that he or

she will learn information about the case and the parties that should not

be known by the assigned judge and that could undermine his or her impartiality. See supra section X.A for a discussion of restrictions on communications between the assigned judge and the neutral.

There are other ways to give neutrals the assistance they need when

faced with an ethical dilemma. The court’s confidentiality rule, for example, might include exceptions for threats of violence, attorney misconduct, or evidence of fraud. See supra section VIII.C. The court could appoint an ADR compliance judge to counsel ADR neutrals who face ethical

dilemmas, or this responsibility could be given to the ADR administrator

if that person has the requisite skills and experience. Some courts have

organized regular brown-bag lunches where nonjudicial neutrals can discuss, in non-case-specific terms, the problems they have encountered and

how they handled them. Problems such as these also should be discussed

in the training the court provides for its neutrals.

To some extent, courts and their ADR neutrals are facing quandaries

such as those identified here because the various statutes and rules of

conduct have not caught up with the rapid expansion in use of ADR. As

of this writing, there are three projects under way to develop model

codes or rules that will govern neutrals generally, attorneys when they

are acting as neutrals, and the overall ADR process. The National Conference of Commissioners on Uniform State Laws (NCCUSL) and the American Bar Association Section of Dispute Resolution are in the process of

drafting a Uniform Mediation Act to address concerns about widely

varying and frequently conflicting statutory provisions that govern mediation across the fifty states.302 The American Bar Association’s Commis-

 

302. See supra note 256.
X. Managing Cases in the ADR Process

125

sion on the Evaluation of the Rules of Professional Conduct, known as

“Ethics 2000,” is considering new rules that would govern the conduct of

attorneys who act as ADR neutrals or who represent parties in ADR proceedings.303 The CPR-Georgetown Commission on Ethics and Standards in

ADR, a joint project of the CPR Institute for Dispute Resolution and

Georgetown University Law Center, has proposed revisions to the ABA

Model Rules of Professional Conduct to regulate the conduct of attorneys

who act as ADR neutrals.304

These efforts are not specifically aimed at court-based ADR, but the

general provisions regarding conduct of neutrals and the specific provisions regarding the conduct of attorneys who act as neutrals may, if

adopted, provide helpful guidance to neutrals who serve on federal court

panels, as well as to judges and ADR administrators who may be approached by neutrals or parties seeking advice.

I. How should the ADR process be concluded?

Regardless of the outcome of ADR, the judge should be informed of the

outcome as soon as possible after the conclusion of ADR so that the next

step in resolving the case can be taken. Local rules often provide the

steps to be taken. For example, the neutral or the parties might be asked

to inform the court of the following at the conclusion of the ADR process:305

• if agreement is reached, report its terms only to the extent needed

to be consistent with the court’s policies governing settlements in

general;

• if the parties do not reach agreement on any matter, report the lack

of an agreement without comment or recommendation; and

• if the parties do not reach agreement, identify any pending motions

or outstanding legal issues, discovery process, or other action by

any party which, if resolved or completed, would facilitate the possibility of a settlement.

Generally, reports submitted by the neutral should be submitted only

with consent of the parties.

 

303. See Draft ABA Rules, supra note 180.

304. See CPR-Georgetown Comm’n Proposed Model Rule, supra note 180.

305. Cf. National Mediation Standards, supra note 56, § 12.2.
Guide to Judicial Management of Cases in ADR

126

For court-based arbitration, an arbitration award becomes the judgment of the court unless a party requests a trial de novo. The judge is not

allowed to know the award until final judgment has been entered or the

action has otherwise terminated.306

1. Conclusion of ADR when settlement has been reached

Local rules may spell out how the parties are to proceed if they reach

settlement. If the local rules do not do so, or the judge has particular

preferences about procedures involving settlement, he or she may want

to include them in the referral order. See supra section IX.P. When the

parties reach settlement, they should get the settlement agreement in

writing and on the record as quickly as possible.307

The judge should decide the circumstances under which he or she

will review a settlement. Some settlements will always require the judge’s

review and approval, such as settlements in class actions and in certain

bankruptcy matters.308 Beyond that, some commentators maintain that it

is not the role of the court to evaluate parties’ ADR settlements, which

are by definition voluntary, just as most settlements in traditional litigation are not subject to judicial review. Others argue that judicial review is

appropriate in some circumstances to help ensure that the settlement will

endure.

 

306. See 28 U.S.C. § 657(b) (Supp. 1998); Judicial Improvements and Access

to Justice Act, Pub. L. No. 100-702, § 901(a), 102 Stat. 4642, 4660–61 (1988)

(amended 1993, 1994, 1997) (previously codified at 28 U.S.C. § 654 (1994)).

307. See, e.g., E.D.N.C. R. 32.07(g) (parties in a mediation should write down

and sign the essential terms and conditions of the settlement before departing the

conference); S.D. Fla. Civ. R. 16.2(F)(2) (counsel shall promptly notify the court

of settlement by filing a notice of settlement, signed by counsel, within ten days

of the mediation conference). A local rule or the referral order might require that

a pre-designated party submit a fully executed stipulation and proposed order to

the court within, say, twenty calendar days after the end of mediation. See, e.g.,

Form of General Order, supra note 113, § 11.1.

308. Settlements reached in some bankruptcy matters are subject to the notice and hearing process required by Federal Rule of Bankruptcy Procedure 9019,

which governs the court’s approval of a compromise or settlement. Fed. R. Bankr.

P. 9019.
X. Managing Cases in the ADR Process

127

2. Conclusion of ADR when there is no settlement

Under many local rules, if the neutral determines that it would not be

worthwhile to continue the ADR process, the neutral is to notify the court

in writing that the parties have not settled the case and that the ADR

process is finished.309 Many local rules specify the limited amount of information that may be communicated to the judge or court in the notice.310 After receiving such notice, the court could schedule a status conference and ask the parties to submit a statement about what needs to be

done next in the case. The court might ask the parties, for example,

whether issues can be narrowed or whether the case can be otherwise

streamlined because of progress made during the ADR sessions. The

court might discuss with the parties how best to take advantage of their

investment in the ADR process. A stipulation on any resolved issues may

be appropriate. Further steps toward settlement can be suggested, discussed, and potentially decided.

3. Conclusion of ADR when a decision is rendered by the neutral

In ADR processes where the neutral performs an adjudicative role, such

as court-based arbitration, the ADR process is concluded when the neutral makes his or her decision and the decision is filed with the clerk of

the court. Any party may request a trial de novo within thirty days after

the filing of an arbitration award.311 Alternatively, the parties may accept

the arbitration award, which then becomes the binding judgment of the

court.312

 

309. See, e.g., E.D.N.C. R. 32.09(e), (f) (mediation); D.S.C. Civ. R. 16.09(G),

(H) (mediation); E.D. Tenn. Civ. R. 16.4(m) (mediation).

310. See, e.g., D.S.C. Civ. R. 16.09(H) (mediator to report in writing whether

agreement was reached without disclosing “substance, tenor or other confidential

matter”); N.D. Cal. ADR R. 6-13 (mediator to report to ADR Unit the date session

was held, whether case settled in whole or in part, whether followup is scheduled, and any stipulations parties have agreed to disclose).

311. See 28 U.S.C. § 657(c)(1) (Supp. 1998); § 901(a), 102 Stat. at 4661 (previously codified at 28 U.S.C. § 655 (1994)).

312. See 28 U.S.C. § 657(a) (Supp. 1998); § 901(a), 102 Stat. at 4660 (previously codified at 28 U.S.C. § 654(a) (1994)).
128

Appendix A: Descriptions of the

Principal Court-Based ADR Processes

1. Mediation

2. Arbitration

3. Early neutral evaluation

4. Summary jury trial

5. Minitrial

6. Settlement week

7. Case evaluation (“Michigan mediation”)

8. Med-Arb

For those who may be less familiar with ADR, we offer definitions of the

basic types of ADR processes, recognizing that local variations may alter

the picture from court to court.313 Some ADR procedures are more suitable for some types of cases than others. In section III, supra, we discuss

case and party characteristics to consider in deciding whether a case is

appropriate for ADR, and in section IV, supra, we discuss criteria for selecting an ADR process for the case. See supra section I.B for a discussion

of judicial settlement conferences and ADR. See supra section I.D for a

discussion of the distinctions between voluntary and mandatory ADR and

between binding and nonbinding ADR.

1. Mediation

Mediation is a flexible, nonbinding dispute resolution process in which a

third-party neutral, the mediator, facilitates negotiations among the parties to help them resolve the dispute. In mediation, the parties are the

decision makers. Mediation is also generally referred to as an interestbased process—in contrast to a rights-based process—because it is designed to help the parties clarify any underlying motivations or interests.

The mediator also may help the parties probe the strengths and weaknesses of their legal positions, enhance communications, explore the con-

 

313. See Plapinger & Stienstra, supra note 1, at 71–308 (providing court-bycourt description of federal district court ADR programs, including, for example,

what kind of ADR procedures are offered by each court, whether referral is mandatory or voluntary, whether parties must pay a fee to the neutral, and whether

the court has adopted a confidentiality rule).
Appendix A

129

sequences of not settling, and generate settlement options. Mediation sessions sometimes result in inventive solutions, including those where both

sides can profit from the settlement terms. Mediation sessions also are

generally confidential, to encourage the parties to discuss any issue that

might help resolve the dispute.

Most kinds of civil cases are considered appropriate for mediation,

and most federal courts define case eligibility broadly, excepting for example only cases involving a pro se party and cases generally decided on

the briefs, such as Social Security appeals and prisoner civil rights cases.

Referral to mediation can occur at any stage in the litigation.

The mediator, who may meet jointly or separately with the parties,

serves as a facilitator and does not issue a decision or make findings of

fact. In the federal district courts, the mediator is usually an attorney approved by the court. In some districts, however, magistrate judges, and

occasionally district or bankruptcy judges, who have been trained in mediation techniques, mediate cases. Several district courts also include

nonlawyer professionals, such as engineers, on their rosters of courtapproved mediators. Similarly, some bankruptcy courts use nonlawyer

professionals, such as accountants and appraisers, as court-appointed

mediators.

After judicial settlement conferences, mediation is the next most

common form of ADR in the federal district, bankruptcy, and appellate

courts.

As mediation has developed, distinct mediation strategies or styles

have emerged. In classic mediation, the mediator’s mission is purely facilitative. The mediator does not give an opinion on the likely outcome at

trial, for example, but seeks only to help the parties find solutions to the

underlying interests or problems giving rise to the litigation. Generally, in

this kind of mediation, mediator expertise in the process of mediation,

rather than in the subject matter of the litigation, is viewed as paramount. Some mediation professionals view facilitative mediation as the

preferred approach because the mediator preserves the principle of complete impartiality by not giving an assessment or prediction of the outcome of the case at trial.

In the evaluative approach, the mediator is more likely to give a view

of the case. The mediator’s view of the case—including, for example, an

assessment of potential legal outcomes—is used as a settlement tool. This

approach generally requires mediators who are experts in the subject
Guide to Judicial Management of Cases in ADR

130

matter of the case. Most evaluative mediators also consider the interests

of the parties in attempting to facilitate a settlement.

Many mediators blend facilitation and evaluation, applying each approach in varying degrees at different times during the mediation process,

depending on the needs of a given case.314

In some federal courts, the referral of certain case types to mediation

may be made automatically at a specified stage in the litigation; these

mediation programs may be referred to as mandatory programs because

of the presumption that these cases will use mediation. Such programs

generally provide a method for seeking exemption from mediation. In

other courts, the use of mediation may be completely at the discretion of

the parties (voluntary mediation) or may be ordered by the judge after

discussion with the parties.

2. Arbitration

Unlike mediation, arbitration is an adjudicatory, rights-based process. In

federal court-based arbitration, one or three arbitrators hear adversarial

presentations, usually in summary form, by each side to the litigation and

then issue a nonbinding “award,” or decision, on the merits. Witnesses

may or may not be called, but exhibits are often submitted to the arbitrators. At a party’s request and cost, the hearing may be held on the record. Either party may reject the arbitration award and request a trial de

novo in the district court. Arbitration is a fairly formal process, in many

ways resembling an expedited court trial.

Mandatory arbitration under the 1988 Act. Most of the federal court

arbitration programs were established under a 1988 federal statute (1988

Act), which authorized ten district courts to implement arbitration programs where litigant participation is presumptively mandatory. Eligible

cases, which are defined by specific objective case characteristics such as

nature of suit, are generally automatically referred to arbitration by court

order once the case is filed. Certain types of cases are excluded from

mandatory arbitration, such as cases involving violations of constitutional

rights or damage claims in excess of a specified dollar amount. In all

 

314. See generally Leonard L. Riskin, Understanding Mediators' Orientations,

Strategies, and Techniques: A Grid for the Perplexed, 1 Harv. Negot. L. Rev. 7

(1996).
Appendix A

131

mandatory arbitration programs, the parties are provided an avenue for

seeking exemption from the referral to arbitration.

The ten courts authorized to implement mandatory arbitration programs were the following: Northern District of California, Middle District

of Florida, Western District of Michigan, Western District of Missouri,

District of New Jersey, Eastern District of New York, Middle District of

North Carolina, Western District of Oklahoma, Eastern District of Pennsylvania, and Western District of Texas.315 Several of these ten courts

have amended their processes to make them voluntary; one has dropped

the program altogether.

Voluntary arbitration under the 1988 Act. The 1988 Act also authorized the Judicial Conference of the United States to designate an additional ten courts to establish arbitration programs in which parties participate voluntarily.316 Of the courts that have created voluntary arbitration programs under the 1988 Act, some authorize participation in arbitration only if the parties voluntarily come forward, and others automatically refer certain case types to the program but permit parties to opt out

with no questions asked.317 The Judicial Conference approved a list of ten

courts in 1990 and delegated authority to the predecessor of its Committee on Court Administration and Case Management to make changes to

the list.318

Arbitration under the ADR Act of 1998. The ADR Act authorizes voluntary arbitration for all district courts.319 Among other provisions, referral to arbitration requires party consent, the action may not be based on

alleged violations of constitutional rights, jurisdiction may not be based

on an alleged deprivation of civil or elective franchise rights, and the re-

 

315. Judicial Improvements and Access to Justice Act, Pub. L. No. 100-702, §

901(a), 102 Stat. 4642, 4659–63 (1988) (amended 1993, 1994, 1997) (previously

codified at 28 U.S.C. §§ 651–658 (1994)). See generally Meierhoefer, supra note 49

(evaluting the mandatory arbitration programs in existence in the late 1980s).

316. § 901(a), 102 Stat. at 4662.

317. See generally David Rauma & Carol Krafka, Voluntary Arbitration in

Eight Federal District Courts: An Evaluation (Federal Judicial Center 1994).

318. See Reports of the Proceedings of the Judicial Conference of the United

States 22 (1990). The list has changed over the years. See generally Rauma &

Krafka, supra note 317, at 8 (identifying the districts with voluntary arbitration

programs as of 1994, and evaluating those programs).

319. 28 U.S.C. §§ 651(b), 654(a) (Supp. 1998).
Guide to Judicial Management of Cases in ADR

132

lief sought must consist of money damages not in excess of $150,000.320

The ADR Act does not alter any arbitration program established under

the 1988 Act.321

3. Early neutral evaluation

Early neutral evaluation (ENE) is a nonbinding process designed to improve case planning and settlement prospects by giving litigants an early

advisory evaluation of the case. Like mediation, ENE is thought to be

widely applicable to many types of civil cases, including complex disputes.

In ENE, a neutral evaluator, usually a private attorney with expertise

in the subject matter of the dispute,322 holds a confidential session with

the parties and counsel early in the litigation—generally before much discovery has taken place—to hear both sides of the case. The evaluator

then helps the parties clarify issues and evidence, identifies strengths and

weaknesses of the parties’ positions, and gives the parties a nonbinding

assessment of the value or merits of the case. Depending on the goals of

the program, the evaluator also may mediate settlement discussions or

offer case management assistance, such as developing a discovery plan.

The process was originally designed to improve attorneys’ pretrial

practices and knowledge of their cases by forcing them and their clients

to conduct core investigative and analytical work early, to communicate

directly across party lines, to expose each side to the other’s case, and to

consider the wisdom of early settlement.

In some district courts with ENE programs, the ENE sessions occur

later, rather than earlier, in the case. Although the term “early neutral

evaluation” is less apt in such circumstances, the key feature of the process—evaluation of the case by a neutral—remains the same.

 

320. See id. § 654(a).

321. Id. § 654(d).

322. Compare N.D. Cal. ADR R. 5-3(a) (requiring subject matter expertise for

ENE neutrals), and W.D. Okla. Civ. R. 4.1 (stating that ENE neutrals have subject

matter expertise), with W.D. Mich. Civ. R. 16.4(b)(i) (requiring, for ENE neutrals,

at least five years law practice and “general peer recognition for his or her expertise”).
Appendix A

133

4. Summary jury trial

The summary jury trial is a nonbinding ADR process designed to promote

settlement in trial-ready cases.323 A judge presides over the trial, where

attorneys for each party present the case to a jury, generally without

calling witnesses but relying instead on submission of exhibits. After this

abbreviated trial, the jury deliberates and then delivers an advisory verdict. After receiving the jury’s advisory verdict, the parties may use it as a

basis for subsequent settlement negotiations or proceed to trial.

A summary jury trial is typically used after discovery is complete.

Depending on the structure of the process, it can involve both facilitated

negotiations, which can occur throughout the planning, hearing, deliberation, and post-verdict phases, and outcome prediction, that is, an advisory verdict. Part or all of the case may be submitted to the jury. The

jurors are chosen from the court’s regular venire; some judges tell the

jurors at the outset that their role is advisory, but others wait until a verdict has been given.

Some judges use this process only for protracted cases where the

predicted length of a full trial justifies the substantial resources required

by a summary jury trial. Other judges use it for routine civil litigation

where litigants differ significantly about the likely jury outcome. The

format of this ADR process is determined by the individual judge more

than in most ADR procedures. A variant of the summary jury trial is the

summary bench trial, where a judge, rather than a jury, issues the advisory opinion.

 

323. See M.-Daniel Jacoubovitch & Carl M. Moore, Summary Jury Trials in

the Northern District of Ohio (Federal Judicial Center 1982) (describing and analyzing summary jury trial methods); see also Thomas D. Lambros, The Summary

Jury Trial—Ending the Guessing Game: An Objective Means of Case Evaluation: A

Comment on Professor Woodley's Proposal, 12 Ohio St. J. on Disp. Resol. 621

(1997); Richard A. Posner, The Summary Jury Trial and Other Methods of Alternative Dispute Resolution: Some Cautionary Observations, 53 U. Chi. L. Rev. 366

(1986); Thomas D. Lambros, The Summary Jury Trial and Other Alternative

Methods of Dispute Resolution: A Report to the Judicial Conference of the United

States Committee on the Operation of the Jury System, 103 F.R.D. 461 (1984).
Guide to Judicial Management of Cases in ADR

134

5. Minitrial

The minitrial is a flexible, nonbinding ADR process used primarily out of

court. A few federal judges have developed their own versions of the

minitrial, which is generally reserved for large cases.

In a typical court-based minitrial, each side presents a shortened version of its case to party representatives who have settlement authority—for example, the senior executives of corporate parties. The hearing

is informal, with no witnesses and with relaxed rules of evidence and

procedure. A judge or nonjudicial neutral may preside over the one-day

or two-day hearing. Following the hearing, the client representatives

meet, with or without the neutral presider, to negotiate a settlement.

6. Settlement week

In a typical settlement week, a court suspends normal trial activity and,

aided by volunteer mediators, sends numerous trial-ready cases to mediation sessions held at the courthouse. The mediation sessions may last

several hours, with additional sessions held as needed. Cases unresolved

during settlement week return to the court’s regular docket for further

pretrial or trial proceedings as needed. If settlement weeks are held infrequently and are a court’s only form of ADR, parties who want to use ADR

may have to look outside the court or may incur additional litigation expenses while cases await referral to settlement week. This can be overcome by regularly offering at least one other form of ADR.

7. Case evaluation (“Michigan mediation”)

Case evaluation provides litigants in trial-ready cases with a written,

nonbinding assessment of the case’s value. The assessment is made by a

panel of three attorneys after a short hearing. If the panel’s assessment is

accepted by all parties, the case is settled for that amount. If any party

rejects the panel’s assessment, the case proceeds to trial. This arbitrationlike process has been referred to as “Michigan mediation” because it was

created by the Michigan state courts and subsequently used by the federal district courts in Michigan as well.324

 

324. See, e.g., W.D. Mich. Civ. R. 16.5.
Appendix A

135

8. Med-Arb

As the name suggests, the med-arb procedure begins with mediation. If

the parties reach impasse or cannot resolve certain issues, they can, with

all parties’ full agreement, move into arbitration. The parties may, however, be unwilling to speak candidly during the mediation when they

know the neutral may ultimately become a decision maker. This can be

overcome if two different people serve as mediator and arbitrator. The

med-arb process is used more in the private sector than in the court setting, although at least one federal district court authorizes use of medarb.325

 

325. See N.D. Ala. ADR Plan sec. IV.C (The district’s ADR Plan appears as

Appendix C of the district’s Civil Justice Expense and Delay Reduction Plan,

which is Appendix I of the district’s local rules).
136

Appendix B: Alternative Dispute

Resolution Act of 1998 (as codified)

United States Code

Title 28. Judiciary And Judicial Procedure

Part III—Court Officers And Employees

Chapter 44—Alternative Dispute Resolution

§ 651. Authorization of alternative dispute resolution

(a) Definition.—For purposes of this chapter, an alternative dispute

resolution process includes any process or procedure, other than an adjudication by a presiding judge, in which a neutral third party participates

to assist in the resolution of issues in controversy, through processes

such as early neutral evaluation, mediation, minitrial, and arbitration as

provided in sections 654 through 658.

(b) Authority.—Each United States district court shall authorize, by

local rule adopted under section 2071(a), the use of alternative dispute

resolution processes in all civil actions, including adversary proceedings

in bankruptcy, in accordance with this chapter, except that the use of

arbitration may be authorized only as provided in section 654. Each

United States district court shall devise and implement its own alternative

dispute resolution program, by local rule adopted under section 2071(a),

to encourage and promote the use of alternative dispute resolution in its

district.

(c) Existing alternative dispute resolution programs.—In those

courts where an alternative dispute resolution program is in place on the

date of the enactment of the Alternative Dispute Resolution Act of 1998,

the court shall examine the effectiveness of that program and adopt such

improvements to the program as are consistent with the provisions and

purposes of this chapter [28 U.S.C.A. § 651 et seq.].

(d) Administration of alternative dispute resolution programs.—Each United States district court shall designate an employee, or

a judicial officer, who is knowledgeable in alternative dispute resolution

practices and processes to implement, administer, oversee, and evaluate

the court's alternative dispute resolution program. Such person may also

be responsible for recruiting, screening, and training attorneys to serve as
Appendix B

137

neutrals and arbitrators in the court's alternative dispute resolution program.

(e) Title 9 not affected.—This chapter [28 U.S.C.A. § 651 et seq.]

shall not affect title 9, United States Code.326

(f) Program support.—The Federal Judicial Center and the Administrative Office of the United States Courts are authorized to assist the district courts in the establishment and improvement of alternative dispute

resolution programs by identifying particular practices employed in successful programs and providing additional assistance as needed and appropriate.

§ 652. Jurisdiction

(a) Consideration of alternative dispute resolution in appropriate

cases.—Notwithstanding any provision of law to the contrary and except

as provided in subsections (b) and (c), each district court shall, by local

rule adopted under section 2071(a), require that litigants in all civil cases

consider the use of an alternative dispute resolution process at an appropriate stage in the litigation. Each district court shall provide litigants in

all civil cases with at least one alternative dispute resolution process, including, but not limited to, mediation, early neutral evaluation, minitrial,

and arbitration as authorized in sections 654 through 658. Any district

court that elects to require the use of alternative dispute resolution in

certain cases may do so only with respect to mediation, early neutral

evaluation, and, if the parties consent, arbitration.

(b) Actions exempted from consideration of alternative dispute

resolution.—Each district court may exempt from the requirements of

this section specific cases or categories of cases in which use of alternative dispute resolution would not be appropriate. In defining these exemptions, each district court shall consult with members of the bar, including the United States Attorney for that district.

(c) Authority of the Attorney General.—Nothing in this section

shall alter or conflict with the authority of the Attorney General to conduct litigation on behalf of the United States, with the authority of any

Federal agency authorized to conduct litigation in the United States

 

326. [Editor’s note: 9 U.S.C. §§ 1–307 (1994) (federal arbitration statute that

provides inter alia for the enforcement of arbitration agreements made in certain

kinds of transactions).]
Guide to Judicial Management of Cases in ADR

138

courts, or with any delegation of litigation authority by the Attorney General.

(d) Confidentiality provisions.—Until such time as rules are adopted

under chapter 131 of this title [28 U.S.C.A. § 2071 et seq.] providing for

the confidentiality of alternative dispute resolution processes under this

chapter [28 U.S.C.A. § 651 et seq.], each district court shall, by local rule

adopted under section 2071(a), provide for the confidentiality of the alternative dispute resolution processes and to prohibit disclosure of

confidential dispute resolution communications.

§ 653. Neutrals

(a) Panel of neutrals.—Each district court that authorizes the use of

alternative dispute resolution processes shall adopt appropriate processes

for making neutrals available for use by the parties for each category of

process offered. Each district court shall promulgate its own procedures

and criteria for the selection of neutrals on its panels.

(b) Qualifications and training.—Each person serving as a neutral

in an alternative dispute resolution process should be qualified and

trained to serve as a neutral in the appropriate alternative dispute resolution process. For this purpose, the district court may use, among others,

magistrate judges who have been trained to serve as neutrals in alternative dispute resolution processes, professional neutrals from the private

sector, and persons who have been trained to serve as neutrals in alternative dispute resolution processes. Until such time as rules are adopted

under chapter 131 of this title [28 U.S.C.A. § 2071 et seq.] relating to the

disqualification of neutrals, each district court shall issue rules under

section 2071(a) relating to the disqualification of neutrals (including,

where appropriate, disqualification under section 455 of this title, other

applicable law, and professional responsibility standards).

§ 654. Arbitration

(a) Referral of actions to arbitration.—Notwithstanding any provision of law to the contrary and except as provided in subsections (a), (b),

and (c) of section 652 and subsection (d) of this section, a district court

may allow the referral to arbitration of any civil action (including any

adversary proceeding in bankruptcy) pending before it when the parties

consent, except that referral to arbitration may not be made where—
Appendix B

139

(1) the action is based on an alleged violation of a right secured

by the Constitution of the United States;

(2) jurisdiction is based in whole or in part on section 1343 of

this title; or

(3) the relief sought consists of money damages in an amount

greater than $150,000.

(b) Safeguards in consent cases.—Until such time as rules are

adopted under chapter 131 of this title relating to procedures described in

this subsection, the district court shall, by local rule adopted under section 2071(a), establish procedures to ensure that any civil action in which

arbitration by consent is allowed under subsection (a)—

(1) consent to arbitration is freely and knowingly obtained; and

(2) no party or attorney is prejudiced for refusing to participate

in arbitration.

(c) Presumptions.—For purposes of subsection (a)(3), a district

court may presume damages are not in excess of $150,000 unless counsel

certifies that damages exceed such amount.

(d) Existing programs.—Nothing in this chapter is deemed to affect

any program in which arbitration is conducted pursuant to section [sic]327

title IX of the Judicial Improvements and Access to Justice Act (Public

Law 100-702), as amended by section 1 of Public Law 105-53.

§ 655. Arbitrators

(a) Powers of arbitrators.—An arbitrator to whom an action is referred under section 654 shall have the power, within the judicial district

of the district court which referred the action to arbitration—

(1) to conduct arbitration hearings;

(2) to administer oaths and affirmations; and

(3) to make awards.

(b) Standards for certification.—Each district court that authorizes

arbitration shall establish standards for the certification of arbitrators and

shall certify arbitrators to perform services in accordance with such stan-

 

327. [Editor’s note: The word “section” probably should not appear or the

intent was to refer to a section of Title IX of the Judicial Improvements and Access to Justice Act, which authorized mandatory arbitration programs for ten district courts and voluntary arbitration programs for another ten district courts. See

supra Appendix A.2.]
Guide to Judicial Management of Cases in ADR

140

dards and this chapter. The standards shall include provisions requiring

that any arbitrator—

(1) shall take the oath or affirmation described in section 453;

and

(2) shall be subject to the disqualification rules under section

455.

(c) Immunity.—All individuals serving as arbitrators in an alternative dispute resolution program under this chapter are performing quasijudicial functions and are entitled to the immunities and protections that

the law accords to persons serving in such capacity.

§ 656. Subpoenas

Rule 45 of the Federal Rules of Civil Procedure (relating to subpoenas) applies to subpoenas for the attendance of witnesses and the production of documentary evidence at an arbitration hearing under this

chapter.

§ 657. Arbitration award and judgment

(a) Filing and effect of arbitration award.—An arbitration award

made by an arbitrator under this chapter, along with proof of service of

such award on the other party by the prevailing party or by the plaintiff,

shall be filed promptly after the arbitration hearing is concluded with the

clerk of the district court that referred the case to arbitration. Such award

shall be entered as the judgment of the court after the time has expired

for requesting a trial de novo. The judgment so entered shall be subject

to the same provisions of law and shall have the same force and effect as

a judgment of the court in a civil action, except that the judgment shall

not be subject to review in any other court by appeal or otherwise.

(b) Sealing of arbitration award.—The district court shall provide,

by local rule adopted under section 2071(a), that the contents of any arbitration award made under this chapter shall not be made known to any

judge who might be assigned to the case until the district court has entered final judgment in the action or the action has otherwise terminated.

(c) Trial de novo of arbitration awards.—

(1) Time for filing demand.—Within 30 days after the filing of

an arbitration award with a district court under subsection

(a), any party may file a written demand for a trial de novo

in the district court.
Appendix B

141

(2) Action restored to court docket.—Upon a demand for a

trial de novo, the action shall be restored to the docket of

the court and treated for all purposes as if it had not been

referred to arbitration.

(3) Exclusion of evidence of arbitration.—The court shall not

admit at the trial de novo any evidence that there has been

an arbitration proceeding, the nature or amount of any

award, or any other matter concerning the conduct of the

arbitration proceeding, unless—

(A) the evidence would otherwise be admissible in the

court under the Federal Rules of Evidence; or

(B) the parties have otherwise stipulated.

§ 658. Compensation of arbitrators and neutrals

(a) Compensation.—The district court shall, subject to regulations

approved by the Judicial Conference of the United States, establish the

amount of compensation, if any, that each arbitrator or neutral shall receive for services rendered in each case under this chapter.

(b) Transportation allowances.—Under regulations prescribed by

the Director of the Administrative Office of the United States Courts, a

district court may reimburse arbitrators and other neutrals for actual

transportation expenses necessarily incurred in the performance of duties

under this chapter.
142

Appendix C: Summary of the

Alternative Dispute Resolution Act of

1998

Public Law 105-315

Signed October 30, 1998

Codified at 28 U.S.C. §§ 651–658

1. Section-by-section summary

2. Summary by type of duty required of the courts

a. Requirements to be incorporated into local rules

b. Other provisions, requirements, and prohibitions

(1) Definitions, general authorization, program administration

(2) ADR neutrals

(3) Arbitration

c. Other

The requirements, provisions, and prohibitions of the Alternative Dispute

Resolution Act of 1998328 can be summarized in a number of different

ways. Two types of summaries are provided here. The items listed under

each are essentially the same but are arranged differently.

The first summary sets out the ADR Act’s principal provisions, following the order in which they appear in the Act. The second groups the

ADR Act’s requirements by the level of duty required of the courts, in

part to highlight matters the courts must address in local rules.

The ADR Act of 1998 is codified at 28 U.S.C. §§ 651–658 (Supp.

1998). Before passage of the ADR Act, these U.S. Code provisions were

more limited in scope, authorizing mandatory arbitration in ten districts

and voluntary arbitration in another ten districts and setting out provisions for implementing those arbitration programs under the provisions

of the Judicial Improvements and Access to Justice Act of 1988.329 The

ADR Act of 1998 does not affect any program in which arbitration is conducted under the 1988 Act (see 28 U.S.C. § 654(d) (1998)), authorizes

 

328. Alternative Dispute Resolution Act of 1998, Pub. L. No. 105-315, 112

Stat. 2993 (codified at 28 U.S.C. §§ 651–658 (Supp. 1998)).

329. Judicial Improvements and Access to Justice Act, Pub. L. No. 100-702, §

901(a), 102 Stat. 4642, 4659–62 (1988) (amended 1993, 1994, 1997) (previously

codified at 28 U.S.C. §§ 651–658 (1994)).
Appendix C

143

ADR more generally for the district courts, and provides requirements for

the referral of cases to arbitration other than under the 1988 Act.

1. Section-by-section summary

Section 651: Authorization of Alternative Dispute Resolution

• Definition of ADR. Alternative dispute resolution (ADR) includes any

process or procedure, other than an adjudication by a presiding judge, in

which a neutral third party assists in resolving the dispute, through processes such as early neutral evaluation, mediation, minitrial, and arbitration (28 U.S. C. § 651(a) (1998)).

• Requirement to Authorize Use of ADR. Each district court shall by

local rule authorize use of ADR in all civil actions, including adversary

proceedings in bankruptcy (§ 651(b)).

• Requirement to Implement an ADR Program. Each district court

shall by local rule devise and implement its own ADR program to encourage and promote use of ADR (§ 651(b)).

• Existing ADR Programs. Courts with existing ADR programs shall

examine their effectiveness and adopt such improvements as are consistent with the Act (§ 651(c)).

• Program Administration. Each district court shall designate an employee or judicial officer who is knowledgeable in ADR practices and

processes to implement, administer, oversee, and evaluate the ADR program. This person may also be responsible for recruiting, screening, and

training attorneys to serve as neutrals and arbitrators (§ 651(d)).

• Title 9. The ADR Act of 1998 shall not affect the federal arbitration

statute that is codified at Title 9 of the United States Code.

• Federal Judicial Center and Administrative Office Support. The

Federal Judicial Center and the Administrative Office of the U.S. Courts

are authorized to assist the district courts in the establishment and improvement of ADR programs by identifying particular practices used in

successful programs and providing additional assistance as needed and

appropriate (§ 651(f)).
Guide to Judicial Management of Cases in ADR

144

Section 652: Jurisdiction

• Requirement That Litigants Consider ADR. Each district court shall

by local rule require litigants in all civil cases to consider using ADR at an

appropriate stage in the litigation (§ 652(a)).

• Requirement to Provide at Least One ADR Process. Each district

court shall provide litigants in all civil cases at least one ADR process,

including but not limited to mediation, early neutral evaluation, minitrial,

and arbitration (§ 652(a)).

• Compelled Use of ADR. Any district court that elects to require use

of ADR in certain cases may do so only with respect to mediation, early

neutral evaluation, and, with party consent, arbitration (§ 652(a)). The

ADR Act does not, however, affect any program in which arbitration is

conducted under the 1988 Act (§ 654(d)).

• Cases Exempt From ADR. Each district court may exempt specific

cases or categories of cases from ADR, but shall consult with the bar,

including the U.S. Attorney, in defining these exemptions (§ 652(b)).

• Authority of the Attorney General. Nothing in section 652 of the

ADR Act (as codified) shall alter or conflict with the authority of the Attorney General or any federal agency to conduct litigation (§ 652(c)).

• Confidentiality. Until such time as rules are adopted under the Rules

Enabling Act, codified at chapter 131 of Title 28, each district court shall

by local rule provide for the confidentiality of the ADR processes and

prohibit disclosure of confidential ADR communications (§ 652(d)).

Section 653: Neutrals

• Panel of Neutrals. Each district court shall adopt appropriate processes for making neutrals available for use by the parties for each category of ADR process offered and must promulgate its own procedures

and criteria for the selection of neutrals on its panels (§ 653(a)).

• Qualifications of Neutrals. Each neutral should be qualified and

trained in the appropriate ADR process. The district court may use,

among others, magistrate judges who have been trained in ADR processes, professional neutrals from the private sector, and persons trained

to serve as ADR neutrals (§ 653(b)).

• Disqualification of Neutrals. Until such time as rules are adopted

under the Rules Enabling Act, codified at chapter 131 of Title 28, each

district court shall issue rules on disqualification of neutrals, including
Appendix C

145

where appropriate disqualification under 28 U.S.C. § 455, other applicable law, and professional responsibility standards (§ 653(b)).

Section 654: Arbitration

• Referral to Arbitration. A district court may allow referral to arbitration of any civil action, including any adversary proceeding in bankruptcy, when the parties consent, except: in cases alleging violation of a

Constitutional right; when jurisdiction is based in whole or part on 28

U.S.C. § 1343; or when the relief sought consists of money damages

greater than $150,000 (§ 654(a)).

• Safeguards in Consent Cases. Until such time as national rules are

adopted under the Rules Enabling Act, codified at chapter 131 of Title 28,

the district court shall by local rule establish procedures to ensure that, in

any civil action in which arbitration by consent is allowed, consent is

freely and knowingly obtained, and no party or attorney is prejudiced for

refusing to participate in arbitration (§ 654(b)).

• Presumption Regarding Monetary Damages. A district court may

presume damages are not in excess of $150,000 unless counsel certifies

otherwise.

• The 1988 Act’s Authorization for Twenty Arbitration Programs.

Nothing in the ADR Act of 1998 is deemed to affect any arbitration program conducted under the 1988 Act.330 (§ 654(d)).

Section 655: Arbitrators

• Powers of Arbitrators. An arbitrator shall have the power to conduct

arbitration hearings, administer oaths and affirmations, and make awards

(§ 655(a)).

• Certification of Arbitrators. Each district court that authorizes arbitration shall establish standards for certification of arbitrators and shall

certify arbitrators to perform services in accord with those standards. The

standards shall include provisions requiring arbitrators to take an oath

and to be subject to the disqualification rules of 28 U.S.C. § 455 (§

655(b)).

 

330. Id.
Guide to Judicial Management of Cases in ADR

146

• Immunity for Arbitrators. Arbitrators are performing quasi-judicial

functions and are entitled to the immunities and protections afforded to

persons serving in such a capacity (§ 655(c)).

Section 656: Subpoenas

• Subpoenas. Federal Rule of Civil Procedure 45 applies to subpoenas

for attendance of witnesses and production of documentary evidence at

an arbitration hearing (§ 656).

Section 657: Arbitration Award and Judgment

• Filing and Effect of Arbitration Awards. An arbitration award shall

be filed promptly with the clerk of the district court and shall be entered

as the judgment of the court after the time for requesting a trial de novo

has expired. The judgment shall have the same force and effect as a

judgment in a civil action, except it shall not be subject to review in any

other court by appeal or otherwise (§ 657(a)).

• Sealing of the Arbitration Award. The district court shall by local

rule provide that the contents of any arbitration award shall not be made

known to any judge who might be assigned to the case until the court

has entered final judgment or the action has otherwise terminated (§

657(b)).

• Trial De Novo. Any party may file a written demand for a trial de

novo within thirty days after the filing of the arbitration award. The action shall be restored to the docket and treated as if it had not been referred to arbitration. The court shall not admit at the trial de novo any

evidence that there has been an arbitration proceeding, the nature or

amount of any arbitration award, or any matter concerning the conduct

of the arbitration proceeding unless it would be admissible under the

Federal Rules of Evidence or the parties otherwise stipulate (§ 657(c)).

Section 658: Compensation of Arbitrators and Neutrals

• Compensation of Neutrals. Subject to regulations approved by the

Judicial Conference, the district court shall establish the amount of compensation, if any, that each arbitrator or neutral shall receive (§ 658(a)).

• Transportation Allowances. Under regulations prescribed by the

Administrative Office of the U.S. Courts, a district court may reimburse
Appendix C

147

arbitrators and other neutrals for actual transportation expenses incurred

in performing their duties (§ 658(b)).

Authorization of Appropriations

• Appropriations. The ADR Act authorizes such appropriations for

each fiscal year as may be necessary to carry out the Act.331

2. Summary by type of duty required of the courts

a. Requirements to be incorporated into local rules

• Requirement to Authorize Use of ADR. Each district court shall by

local rule authorize use of ADR in all civil actions, including adversary

proceedings in bankruptcy (28 U.S.C. § 651(b) (1998)).

• Requirement to Implement an ADR Program. Each district court

shall by local rule devise and implement its own ADR program to encourage and promote use of ADR (§ 651(b)).

• Requirement That Litigants Consider ADR. Each district court shall

by local rule require litigants in all civil cases to consider using ADR at an

appropriate stage in the litigation (§ 652(a)).

• Confidentiality. Until such time as rules are adopted under the Rules

Enabling Act, codified at chapter 131 of Title 28, each district court shall

by local rule provide for the confidentiality of the ADR processes and

prohibit disclosure of confidential ADR communications (§ 652(d)).

• Safeguards in Consent Cases. Until such time as national rules are

adopted under the Rules Enabling Act, codified at chapter 131 of Title 28,

the district court shall by local rule establish procedures to ensure that, in

any civil action in which arbitration by consent is allowed, consent is

freely and knowingly obtained, and no party or attorney is prejudiced for

refusing to participate in arbitration (§ 654(b)).

• Sealing of the Arbitration Award. The district court shall by local

rule provide that the contents of any arbitration award shall not be made

known to any judge who might be assigned to the case until the court

has entered final judgment or the action has otherwise terminated (§

657(b)).

 

331. § 11, 112 Stat. at 2998.
Guide to Judicial Management of Cases in ADR

148

• Disqualification of Neutrals. Until such time as rules are adopted

under the Rules Enabling Act, codified at chapter 131 of Title 28, each

district court shall issue rules on disqualification of neutrals, including

where appropriate disqualification under 28 U.S.C. § 455, other applicable law, and professional responsibility standards (§ 653(b)).

b. Other provisions, requirements, and prohibitions

(1) Definitions, general authorization, program administration

• Definition of ADR. Alternative dispute resolution (ADR) includes any

process or procedure, other than an adjudication by a presiding judge, in

which a neutral third party assists in resolving the dispute, through processes such as early neutral evaluation, mediation, minitrial, and arbitration (§ 651(a)).

• Existing ADR Programs. Courts with existing ADR programs shall

examine their effectiveness and adopt such improvements as are consistent with the Act (§ 651(c)).

• Program Administration. Each district court shall designate an employee or judicial officer who is knowledgeable in ADR practices and

processes to implement, administer, oversee, and evaluate the ADR program. This person may also be responsible for recruiting, screening, and

training attorneys to serve as neutrals and arbitrators (§ 651(d)).

• Requirement to Provide at Least One ADR Process. Each district

court shall provide litigants in all civil cases at least one ADR process,

including but not limited to mediation, early neutral evaluation, minitrial,

and arbitration (§ 652(a)).

• Compelled Use of ADR. Any district court that elects to require use

of ADR in certain cases may do so only with respect to mediation, early

neutral evaluation, and, with party consent, arbitration (§ 652(a)). The

ADR Act does not, however, affect any program in which arbitration is

conducted pursuant to the 1988 Act (§ 654(d)).

• Cases Exempt From ADR. Each district court may exempt specific

cases or categories of cases from ADR, but shall consult with the bar,

including the U.S. Attorney, in defining these exemptions (§ 652(b)).
Appendix C

149

(2) ADR neutrals

• Panel of Neutrals. Each district court shall adopt appropriate processes for making neutrals available for use by the parties for each category of ADR process offered and must promulgate its own procedures

and criteria for the selection of neutrals on its panels (§ 653(a)).

• Qualifications of Neutrals. Each neutral should be qualified and

trained in the appropriate ADR process. The district court may use,

among others, magistrate judges who have been trained in ADR processes, professional neutrals from the private sector, and persons trained

to serve as ADR neutrals (§ 653(b)).

• Disqualification of Neutrals. Until such time as rules are adopted

under the Rules Enabling Act codified at chapter 131 of Title 28, each

district court shall issue rules on disqualification of neutrals, including

where appropriate disqualification under 28 U.S.C. § 455, other applicable law, and professional responsibility standards (§ 653(b)).

• Compensation of Neutrals. Subject to regulations approved by the

Judicial Conference, the district court shall establish the amount of compensation, if any, that each arbitrator or neutral shall receive (§ 658(a)).

• Transportation Allowances. Under regulations prescribed by the

Administrative Office of the U.S. Courts, a district court may reimburse

arbitrators and other neutrals for actual transportation expenses incurred

in performing their duties (§ 658(b)).

(3) Arbitration

• Referral to Arbitration. A district court may allow referral to arbitration of any civil action, including any adversary proceeding in bankruptcy, when the parties consent, except: in cases alleging violation of a

Constitutional right; when jurisdiction is based in whole or part on 28

U.S.C. § 1343; or when the relief sought consists of money damages

greater than $150,000 (§ 654(a)).

• Presumption Regarding Monetary Damages. A district court may

presume damages are not in excess of $150,000 unless counsel certifies

otherwise.

• The 1988 Act’s Authorization for Twenty Arbitration Programs.

Nothing in the ADR Act of 1998 is deemed to affect any arbitration program conducted under the 1988 Act.332 (§ 654(d)).

 

332. § 901(a), 102 Stat. at 4659–63.
Guide to Judicial Management of Cases in ADR

150

• Powers of Arbitrators. An arbitrator shall have the power to conduct

arbitration hearings, administer oaths and affirmations, and make awards

(§ 655(a)).

• Certification of Arbitrators. Each district court that authorizes arbitration shall establish standards for certification of arbitrators and shall

certify arbitrators to perform services in accord with those standards. The

standards shall include provisions requiring arbitrators to take an oath

and to be subject to the disqualification rules of 28 U.S.C. § 455 (§

655(b)).

• Immunity for Arbitrators. Arbitrators are performing quasi-judicial

functions and are entitled to the immunities and protections afforded to

persons serving in such a capacity (§ 655(c)).

• Subpoenas. Federal Rule of Civil Procedure 45 applies to subpoenas

for attendance of witnesses and production of documentary evidence at

an arbitration hearing (§ 656).

• Filing and Effect of Arbitration Awards. An arbitration award shall

be filed promptly with the clerk of the district court and shall be entered

as the judgment of the court after the time for requesting a trial de novo

has expired. The judgment shall have the same force and effect as a

judgment in a civil action, except it shall not be subject to review in any

other court by appeal or otherwise (§ 657(a)).

• Trial De Novo. Any party may file a written demand for a trial de

novo within thirty days after the filing of the arbitration award. The action shall be restored to the docket and treated as if it had not been referred to arbitration. The court shall not admit at the trial de novo any

evidence that there has been an arbitration proceeding, the nature or

amount of any arbitration award, or any matter concerning the conduct

of the arbitration proceeding unless it would be admissible under the

Federal Rules of Evidence or the parties otherwise stipulate (§ 657(c)).

c. Other

• Title 9. The ADR Act of 1998 shall not affect the federal arbitration

statute that is codified at Title 9 of the United States Code.

• Federal Judicial Center and Administrative Office Support. The

Federal Judicial Center and Administrative Office of the U.S. Courts are

authorized to assist the district courts in the establishment and improvement of ADR programs by identifying particular practices used in suc-
Appendix C

151

cessful programs and providing additional assistance as needed and appropriate (§ 651(f)).

• Authority of the Attorney General. Nothing in section 652 of the

ADR Act (as codified) shall alter or conflict with the authority of the Attorney General or any federal agency to conduct litigation (§ 652(c)).

• Appropriations. The ADR Act authorizes such appropriations for

each fiscal year as may be necessary to carry out the Act.
152

Appendix D: Guidelines for Ensuring

Fair and Effective Court-Annexed

ADR: Attributes of a WellFunctioning ADR Program and

Ethical Principles for ADR Neutrals

Report of the ADR Task Force of the

Court Administration and Case Management Committee

December 1997

I. Background

II. The Attributes of a Well-Functioning Court-Annexed ADR Program

III. The Ethical Principles for ADR Neutrals in Court-Annexed ADR Programs

[Editor’s note: The report set out in this Appendix D is a reproduction.

This report predated passage of the Alternative Dispute Resolution Act of

1998.]

I. Background

In June 1995, the Court Administration and Case Management Committee established an ADR Task Force, composed of Magistrate Judge

John Wagner (OK-N), Bankruptcy Judge Barry Russell (CA-C), and District Judge Jerome Simandle (NJ), who served as chair. The purpose of

the Task Force was to consider the issue of ethical guidelines for private

sector attorneys who serve as neutrals in court-annexed ADR programs.

This step was prompted by the substantial growth of such programs

during the 1990s, programs which at this time are governed only by local

rules. The Task Force's concerns were driven largely by rapid change in

the district courts, but it recognized that ADR has grown apace in the

appellate and bankruptcy courts as well.

To determine the incidence and nature of ethical problems in district

court ADR proceedings, the Task Force held a series of meetings with

those involved in court-annexed programs, including judges, court ADR

staff, attorneys who serve as neutrals, and academics. There was general

agreement that the incidence of ethical problems is low but that the combination of rapidly growing programs, sometimes inadequate training of
Appendix D

153

ADR neutrals, and judges who are unfamiliar with ADR creates a potential for serious ethical breaches.

Through its meetings with the various ADR experts, the Task Force

identified four areas where problems are likely to arise when courts use

private sector attorneys as ADR neutrals: past, present, and future

conflicts of interest; confidentiality of materials and information disclosed

during ADR; exposure of the neutral to subpoena to testify in subsequent

litigation; and protection of ADR neutrals from civil liability through immunity.

For a number of reasons, the Task Force determined that national

ADR ethics rules would be premature at this time. Not only did the ADR

experts advise against them, but the Task Force believes there is considerable value in encouraging further experimentation at the local level

before national rules, if any, are drafted. Furthermore, some issues, such

as immunity and conflicts of interest, are either very complicated, are

currently the subject of in-depth study by other organizations, or would

require statutory authorization, which the Task Force is not prepared to

recommend.

Nonetheless, the Task Force did conclude that it would be useful for

the Committee to issue a general statement encouraging courts to give

careful consideration to several specific ethical issues and advising the

courts on the attributes of a well-functioning court-annexed ADR program. A recommendation to this effect was made and accepted at the

June 1996 Committee meeting. The Task Force has subsequently identified the attributes of a well-functioning court-annexed ADR program

and has developed a set of ethical principles for ADR neutrals. These are

presented below.

II. The Attributes of a Well-Functioning Court-Annexed ADR

Program

Our Task Force agrees with the consensus view that a federal court

must make a conscious effort to determine whether some type of ADR is

an appropriate response to local dockets, customs, practices, and demands for ADR services. We also believe that, for ADR to be most responsive to local conditions, it should be implemented at the local court

level (district, appellate, or bankruptcy). There is sufficient breadth in the

Federal Rules of Civil Procedure and other legislation, as the Judicial
Guide to Judicial Management of Cases in ADR

154

Conference has found, to foster and support implementation of varying

ADR programs in the local courts.

Although we have witnessed the gradual development of a preference

for mediation, we have not seen the emergence of a single type of ADR

that should serve as a paradigm for all courts and we recommend none

here. Nevertheless, the Task Force believes there are common attributes

of well-functioning ADR programs that all courts should strive to incorporate into their ADR programs and that should be enunciated through local

rules.

At the same time, we recognize the need for flexibility in providing a

means for dispute resolution that is informal, inexpensive, and adaptable.

ADR is often valued, in fact, as an alternative to rule-bound and costly

procedures like motion practice and trial. One cannot lose sight of the

fact, however, that federal cases referred to ADR can be factually or legally complicated and can have high stakes. In such an environment, the

basic ingredients of a fair and effective court-annexed ADR program

should include at least minimal rules with respect to the expectations

placed upon the court staff and judicial officers, the appointed neutrals,

and the participants (attorneys and litigants).

Both research and anecdote suggest that, to date, litigants in federal

court ADR programs have had positive experiences.333 Our goal is to ensure that this remains true in the future. As use of ADR and understanding of its characteristics continue to grow, we feel that some guidance is

both warranted and now possible. Thus, we offer the following eight attributes of a well-functioning court-annexed ADR program, drawn from

our discussions with ADR experts, our own experiences, and other

sources.334 Given the critical role played by ADR neutrals, on whom the

 

333. [1] [Editor’s note: The footnotes in Appendix D are numbered consecutively to be in conformity with the rest of the guide; original footnote numbers

from the December 1997 report are in brackets.] Research has consistently shown

high attorney and litigant satisfaction with ADR procedures, including the fairness

of these procedures. For the most recent research in federal courts, see Evaluation

of Mediation and Early Neutral Evaluation Under the Civil Justice Reform Act

(RAND 1997) and Report to the Judicial Conference Committee on Court Administration and Case Management: A Study of the Five Demonstration Programs Established Under the Civil Justice Reform Act of 1990 (Federal Judicial Center

1997).

334. [2] Other sources include two symposia offered by the Federal Judicial

Center for representatives from district and bankruptcy courts with new or estab-
Appendix D

155

effectiveness, integrity, and reputation of court ADR rests, we address

this attribute of court programs separately in Section III.

1. The local court should, after consultation among bench, bar and

participants, define the goals and characteristics of the local ADR program and approve it by promulgating appropriate written local rules.

Comment: The program's structure follows the identification of its goals.

The court should identify its needs after consultation with all constituencies, especially the advisory group set up under the CJRA if it is still in

operation. The necessity for written guidance is self-evident, and the local

rules process provides the surest means of careful promulgation. These

rules should contain provisions to address each of the attributes discussed here, with special attention to ethical guidelines for ADR neutrals.335

2. The court should provide administration of the ADR program

through a judicial officer or administrator who is trained to perform

these duties.

Comment: An ADR program does not run itself and cannot succeed without leadership. The selection of cases, administration of the panel of

neutrals, matters concerning compensation of neutrals, and ethical problems will need to be addressed from time to time by a person with

authority to speak for the court. During the past five years, a number of

courts have appointed full-time, professional ADR staff, to whom they

have assigned many core ADR functions, such as recruitment and training of neutrals, assignment of cases to neutrals, and evaluation of program effectiveness. Professional ADR staff can be particularly helpful in

handling problems that arise in ADR, providing a buffer between the

parties, neutral, and assigned judge. Although courts can retain these

staff through the use of local funds, additional funding will depend on

actions taken by the Judicial Resources Committee and the Judicial Conference of the United States. Where such staff are not available, their im-

 

lished ADR programs, as well as the National ADR Institute for Federal Judges,

co-sponsored by the Federal Judicial Center, the Center for Public Resources, and

the ABA's Litigation Section. A handbook prepared for the Institute, Judges's

Deskbook on Court ADR (Center for Public Resources 1993), has served as a useful guide for courts interested in ensuring the quality of their ADR efforts.

335. [3] For guidance in designing an ADR program and determining what

topics should be covered by local rules, courts are strongly encouraged to consult

the Judge's Deskbook on Court ADR, supra note [2] (available from the Federal

Judicial Center).
Guide to Judicial Management of Cases in ADR

156

portant functions can be and often ably have been performed by an ADR

liaison judge. The important point is to have someone who is responsible

for the program.

3. When establishing a roster of neutrals for cases referred to ADR,

the court should define and require specific levels of training and experience for its ADR neutrals, and appropriate training should be provided through the court or an outside organization. Training should

include techniques relevant to the neutral’s functions in the program,

as well as instruction in ethical duties.

Comment: Court-appointed ADR neutrals are typically experienced attorneys from the local bar or, less frequently, attorneys specializing in an

ADR practice. We have found, however, great variability in the training

of these appointed neutrals. Some courts require no training, some provide training by judicial officers, and some provide training by expert

consultants. No funding for training of attorney-neutrals has been available from central budget sources, so courts have sometimes funded

training from local sources, such as bar associations or attorney admission funds, or have required the trainees to bear the cost. The training of

a court’s ADR neutrals, tailored to the goals and structure of the local

program, is an essential ingredient of a well-functioning court-annexed

ADR program. ADR neutrals cannot be expected to perform the sensitive

functions of their role unless they have the necessary skills. Mediation

and other techniques require special insights into the process that may be

unavailable to ordinary litigators, no matter how experienced. Training

should include instruction on ethics, to increase the sensitivity of the

court-appointed neutral to the ethical demands of these duties.

4. The court should adopt written ethical principles to cover the

conduct of ADR neutrals.

Comment: Well-defined ethical principles are part and parcel of a wellfunctioning ADR program and are discussed in greater detail in Section

III. Principles addressing past, present, and future conflicts, impartiality,

protection of confidentiality, and protection of the trial process all should

be included in a court’s ADR rules. No national model for such ethical

rules has yet emerged. It should be apparent that the American Bar Association’s (ABA) Model Rules of Professional Conduct (RPC) (which derive

from an adversarial conception of an attorney-client relationship that is

not pertinent to an attorney-neutral) and the Code of Conduct for United

States Judges (which addresses the ethics of judges who adjudicate cases
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157

by exercise of judicial power) do not precisely fit the roles and functions

of the appointed ADR neutral in most court programs. Similarly, the

Model Standards of Conduct for Mediators, promulgated in 1995 by the

American Arbitration Association (AAA), ABA, and Society for Professionals in Dispute Resolution (SPIDR), provide a helpful and thoughtful

guide for mediators generally but not necessarily for mediators in courtannexed programs. Therefore, until national federal rules or guidelines, if

any, are promulgated, courts should make certain their local rules spell

out the duties of and constraints upon ADR neutrals.

5. Where an ADR program provides for the attorney-neutral to receive compensation for services, the court should make the method

and limitations upon compensation explicit. A litigant who is unable

to afford the cost of ADR should be excused from any fees.

Comment: Methods of compensation for ADR neutrals vary widely from

court to court.336 Some courts use a panel of neutrals who serve completely pro bono. Other courts use a modified program, where a certain

number of hours are rendered free of charge, with a fixed hourly rate

thereafter, while still others have a fixed per-case payment schedule

(such as in the statutory arbitration courts under 28 U.S.C. § 651, et

seq.). [Editor’s note: Judicial Improvements and Access to Justice Act,

Pub. L. No. 100-702, § 901, 102 Stat. 4642, 4659-63 (1988) (amended

1993, 1994, 1997) (previously codified at 28 U.S.C. §§ 651–658 (1994)).

After preparation of these Guidelines in December 1997, the ADR Act of

1998 was codified at 28 U.S.C. §§ 651–658 (Supp. 1998). Before passage

of the ADR Act in October 1998, these U.S. Code provisions were more

limited in scope, authorizing mandatory arbitration in ten districts and

voluntary arbitration in another ten districts and setting out provisions

for implementing the arbitration programs. The ADR Act of 1998 retains

the authority of the twenty districts to refer cases to arbitration (see 28

U.S.C. § 654(d) (Supp. 1998)) but it also authorizes ADR more generally

for the district courts.] Other programs have left the matter of compensation to the participants themselves, for negotiation with the neutral.

Whatever funding mechanism is decided upon, the court’s rule should

minimize undue burden and expense for ADR, yet not impose on the

ADR neutrals to render sophisticated or prolonged services on a pro bono

 

336. [4] For the range of fee arrangements used in the district courts, see

ADR and Settlement in the Federal District Courts: A Sourcebook for Judges and

Lawyers 29–56 (Federal Judicial Center 1996).
Guide to Judicial Management of Cases in ADR

158

basis as a matter of course. Where the court draws upon a panel of federal litigators to render service as ADR neutrals, the court must avoid the

appearance of an attorney earning a benefit in litigation as a result of

service to the court as an ADR neutral.

6. The local court should adopt a mechanism for receiving any complaints regarding its ADR process and for interpreting and enforcing

the local rules for ADR, including the ethical principles it adopts.

Comment: Courts have adopted a variety of mechanisms for handling

problems in ADR, ranging from the appointment of a compliance judge

(or ADR liaison judge) with general supervisory authority to the appointment of an ADR administrator who receives such complaints or

other feedback and channels them appropriately to the court. It is important, whatever mechanism is decided upon, that the parties be aware

of its availability and that it be relatively speedy and simple. Among the

problems such a mechanism can address are failures of a party to attend

the ADR session, scheduling difficulties, ineffectiveness of the ADR neutral and ethical problems.

7. The court should carefully define the scope of confidentiality intended for information exchanged in its ADR program, striking a balance between absolute protection of ADR process information and the

need to avoid shielding misconduct by participants or neutrals.

Comment: The candor of adversaries in a negotiation process can often

depend on the confidentiality of negotiations, although this concern may

be lessened in an evaluative or arbitral settlement process involving little

or no confidential exchange. The rules of confidentiality and disclosure

for attorney-client information under RPC 1.6 [Editor’s note: RPC refers to

the American Bar Association’s Model Rules of Professional Conduct] will

generally not apply to negotiations between adverse parties or discussions with an ADR neutral, and likewise Fed. R. Evid. 408 will not render

confidential, but merely inadmissible for most purposes, evidence of conduct or statements made in compromise negotiations. In addition, most

states have not adopted a statutory ADR privilege and therefore the degree of protection given by a local confidentiality rule will vary.

A blanket rule deeming the entire ADR process confidential has appeal, to protect the need of participants to share settlement facts with

each other and with the attorney-neutral without fear that such information will be used against them in another forum. If the ADR process permits ex parte communications with the neutral, the participants should be
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assured that information imparted in confidence will not be shared unless

authorized. A rule of complete confidentiality may be overbroad, however, and therefore costly if, for example, a participant has abused the

process or revealed a fraud or crime. As in Rule 408, evidence does not

become confidential merely because it was presented to the ADR neutral

if it was otherwise discoverable by an adverse party independently of the

ADR proceeding.

To avoid the problems of an overbroad rule, the confidentiality rule

could provide that (a) all information presented to the ADR neutral is

deemed confidential unless disclosure is jointly agreed to by the parties

and (b) shall not be disclosed by anyone without consent, except (i) as

required to be disclosed by operation of law, or (ii) as related to an ongoing or intended crime or fraud, or (iii) as tending to prove the existence

or terms of a settlement, or (iv) as proving an abuse of the process by a

participant or an attorney-neutral.

Whatever rule of confidentiality a court chooses, it will be informing

the expectations of the ADR participants. The parties’ expectations at the

outset are material and will shape the ADR neutral’s duties of confidentiality, as reflected in suggested Principle 6 below. The AAA/ABA/SPIDR

standards, supra, thus state as to confidentiality: “A mediator shall

maintain the reasonable expectations of the parties with regard to

confidentiality.” It is best practice to assure that the participants understand the contours of the confidentiality requirements and protections at

the outset by having the ADR neutral review the court’s rule with them.

8. The court should evaluate and measure the success of its ADR

program, perhaps in conjunction with its advisory group.

Comment: In many districts with successful ADR programs, the advisory

groups established by the CJRA have had important roles in designing,

implementing, and evaluating the court’s ADR processes. Whether an

advisory group is used or not, however, it remains the responsibility of

the local court to ensure that its program provides the quality and integrity of service that is commensurate with the court’s aspirations and the

parties’ expectations. Unless such evaluation and measurement are included, the court may remain unaware of areas in need of improvement.

*****

These attributes of healthy and responsive ADR programs are not

meant to provide an exclusive list. Courts may have needs and goals that

go beyond these principles. The Task Force recommends the considera-
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160

tion of these principles as constituting a benchmark for a court-annexed

ADR program.

III. Ethical Principles for ADR Neutrals in Court-Annexed ADR Programs

If courts continue to use practicing attorneys as neutrals in courtannexed ADR programs, they must make sure their local rules satisfactorily address the role of the attorney-neutral. Particularly important are

rules regarding ethical issues, such as maintaining confidentiality and

revealing conflicts of interest. When adopting such rules, courts should

make sure the rules are consistent with the type of ADR program established. For example, while existing rules for judges and lawyers operating

in advocacy roles may translate to some extent to adjudicative ADR processes such as arbitration, they cannot properly be applied to nonadjudicative ADR processes such as mediation, where the attorneyneutral acts neither as judge nor advocate but rather as a neutral facilitator in a non-binding process. In designing ethical guidelines appropriate

to the type of ADR program adopted, courts should be encouraged to

consider each of the following principles.

1. An attorney-neutral appointed or selected by the court should act

fairly, honestly, competently, and impartially.

Comment: This is an objective, not subjective, standard. Should the integrity or competency of an attorney-neutral be questioned, the inquiry

should be whether an attorney-neutral has acted fairly, honestly, competently, and impartially. Whether this standard has been met should be

measured from the point of view of a disinterested, objective observer

(such as the judge who administers the ADR program), rather than from

the point of view of any particular party.

The imposition of a subjective appearance standard would unfairly

require the neutral to withstand the subjective scrutiny of the interested

parties, who, for example, might seek to attack the neutral’s impartiality

if disappointed by the settlement. As this would undermine the important

public interest in achieving binding settlements, there is no intention to

impose such a subjective standard under this principle.

2. An attorney-neutral should disqualify himself or herself if there is

a conflict of interest arising from a past or current relationship with a

party to the ADR process.
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161

Comment: Ordinarily, an attorney-neutral cannot perform effectively as a

neutral if there is a past or present representational or other business relationship with one of the parties to the dispute, even if that relationship

existed only in connection with entirely unrelated matters. However,

such conflicts of interest may be waived by the parties, so long as the

particulars of the representational or other business relationship are first

fully disclosed on a timely basis. Family relationships, and relationships

that give rise to an attorney-neutral’s having a financial interest in one of

the parties or in the outcome of the dispute, or prior representation with

regard to the particular dispute to be addressed in the ADR process, cannot be waived.

The Code of Conduct for United States Judges, which incorporates 28

U.S.C. § 455, provides guidance as to the grounds for disqualification of

judges. Although the Code of Judicial Conduct is not directly applicable

to the attorney-neutral context, it does set out some guiding principles

that can be applied if modified to accommodate the different orientation

of an attorney-neutral operating in an ADR, as opposed to a public adjudication, context. Keep in mind, however, that § 455 is expressly required

as the appropriate standard when evaluating the actions of arbitrators (28

U.S.C. § 656(a)(2)). [Editor’s note: See Judicial Improvements and Access

to Justice Act, Pub. L. No. 100-702, § 901(a), 102 Stat. 4642, 4662 (1988)

(amended 1993, 1994, 1997) (previously codified at 28 U.S.C. § 656(a)(2)

(1994)). See also 28 U.S.C. § 655(b)(2) (Supp. 1998)].

3. An attorney-neutral should avoid future conflicts that may arise

after the ADR proceeding is complete. Thus, an attorney-neutral

should be barred from representing a party to the ADR proceeding

with regard to the same or substantially related matters, as should his

or her law firm, except that no future conflict with regard to substantially related matters will be imputed to his or her law firm after the

expiration of one year from completion of the ADR process, provided

that the law firm shields the ADR neutral from participating in the

substantially related matter in any way.

Comment: Parties to an ADR proceeding have a reasonable expectation

that they will not be harmed in the future from an ADR neutral’s knowledge about them, especially confidential information gained during the

ADR process. Thus, this principle would preclude the ADR neutral from

representing any other ADR party in the same or substantially related

matters, recognizing the sensitive nature of information, opinions, and
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162

strategies learned by the ADR neutral. The same impairment would be

imputed to the neutral’s law firm in the same case, but it would dissipate

with the passage of time, our recommendation being one year, in any

substantially related matter. This safe harbor recognizes that it would be

far too draconian to automatically preclude the law firm’s representation

of a prospective client for all time merely because an attorney-neutral in

that firm conducted ADR proceedings involving that party in the past,

even in a substantially related matter. This provision assumes that the

attorney-neutral has observed the duty of confidentiality and that he or

she can be screened from any future related matter undertaken by the

firm.

A conflict rule that generally disqualifies an entire law firm from representing any party that participates in an ADR proceeding conducted by

an attorney in the firm will have severe and adverse effects on courtannexed ADR programs that use active lawyers as neutrals. Finally, because an attorney who serves as a court-appointed ADR neutral does not

thereby undertake the representation of the participants as clients in the

practice of law, ethical rules governing future conflicts of interest arising

from past representation, such as the ABA Model Rules of Professional

Conduct 1.9 and 1.10, do not appear to apply.

4. Before accepting an ADR assignment, an attorney-neutral should

disclose any facts or circumstances that may give rise to an appearance of bias.

Comment: Once such disclosure is made, the attorney-neutral may proceed with the ADR process if the party or parties against whom the apparent bias would operate waive the potential conflict. The best practice

is for the attorney-neutral to disclose the potential conflict in writing and

to obtain written waivers from each party before proceeding.

5. While presiding over an ADR process, an attorney-neutral should

refrain from soliciting legal business from, or developing an attorneyclient relationship with, a participant in that ongoing ADR process.

Comment: This provision prohibits the development of a representational

attorney- client relationship, or the solicitation of one, during the course

of an ADR process. It is not intended to preclude consideration of enlarging an ADR process to include related matters, nor is it intended to

prevent the ADR neutral from accepting other ADR assignments involving

a participant in an ongoing ADR matter, provided the attorney-neutral
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163

discloses such arrangements to all the other participants in the ongoing

ADR matter.

6. An attorney-neutral should protect confidential information obtained by virtue of the ADR process and should not disclose such information to other attorneys within his or her law firm or use such

information to the advantage of the law firm’s clients or to the disadvantage of those providing such information. However, notwithstanding the foregoing, an attorney-neutral may disclose information (a)

that is required to be disclosed by operation of law, including the

court’s local rules on ADR; (b) that he or she is permitted by the parties to disclose; (c) that is related to an ongoing or intended crime or

fraud; or (d) that would prove an abuse of the process by a participant

or an attorney-neutral.

Comment: This provision requires protection of confidential information

learned during ADR processes. For this purpose, information is confidential if it was imparted to the ADR neutral with the expectation that it

would not be used outside the ADR process; information otherwise discoverable in the litigation does not become confidential merely because it

has been exchanged in the ADR process. This principle also permits disclosure of information that is required to be disclosed by operation of

law. This provision accommodates laws such as those requiring the reporting of domestic violence and child abuse.

7. An attorney-neutral should protect the integrity of both the trial

and ADR processes by refraining from communicating with the assigned trial judge concerning the substance of negotiations or any

other confidential information learned or obtained by virtue of the

ADR process, unless all of the participants agree and jointly ask the

attorney-neutral to communicate in a specified way with the assigned

trial judge.

Comment: Courts implementing ADR programs should specifically adopt

a written policy forbidding attorney-neutrals from speaking with the assigned trial judge about the substance of confidential negotiations and

also prohibiting the assigned trial judge from seeking such information

from an attorney-neutral. Docket control should be facilitated by means

of the attorney-neutral’s report of whether the case settled or not or

through other periodic reporting that does not discuss parties’ positions

or the merits of the case. Such reports should be submitted to the ADR
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164

administrator, judicial ADR liaison, or the court clerk or his or her designee.

Public confidence in both the trial and settlement processes can be

undermined if direct communication is permitted between the attorneyneutral and the assigned trial judge regarding the merits of the case or the

parties’ confidential settlement positions. However, it does no harm to

communicate with the trial judge at the joint request of the parties, such

as requests for continuances, discovery accommodations, more time to

pursue the effort, or administrative closure of the case pending implementation of a settlement agreement.

8. An attorney-neutral should fully and timely disclose all fee and

expense requirements to the prospective participants in the settlement

process in accordance with the rules of the program. When an ADR

program provides for the attorney-neutral to receive a defined level of

compensation for services rendered, the court should require the parties to make explicit the method of compensation and any limits upon

compensation. A participant who is unable to afford the cost of ADR

should be excused from paying.

Comment: If the court intends to require a certain level of pro bono service in order to participate as an attorney-neutral in a court-annexed ADR

program, the level of the pro bono commitment should be explicitly

defined. Where courts permit neutrals to charge a fee to ADR participants, disputes about ADR fees, though rare, can be prevented through

disclosure at the outset of the fee arrangements.
165

Appendix E: Discussion of Case Law

on the Confidentiality of ADR

Communications

1. To what extent have courts found ADR communications inadmissible?

a. Arbitration

b. Other ADR processes

2. To what extent have courts found ADR communications not discoverable?

3. To what extent have courts found ADR communications privileged?

a. The debate about the merits of an ADR privilege

b. Federal statutes

c. Local rules

d. The law of privilege in the context of ADR communications

(1). Rule 501 and federal common law

(2). Rule 501 and state law

4. To what extent can local rules protect confidentiality in ADR proceedings?

5. Should the neutral be allowed to testify about ADR sessions?

The complexity of the issues discussed in section VIII of this guide indicates that for some time to come judges will be trying to find the appropriate balance between the competing concerns of protecting ADR communications and bringing relevant evidence to light. Section VIII.D of the

guide sets out the statutes and rules that courts have looked to when deciding issues concerning the confidentiality of ADR communications.

Courts have applied these sources of authority in various ways in the

ADR context.

In this appendix we will discuss case law that points to the scope and

limitations of those sources. We will explore issues that lie behind any

steps a court and parties may take to protect confidentiality of ADR

communications either before or after the ADR process—for example,

when deciding how much confidentiality protection to provide in the referral order or when deciding whether or when any ADR communications

are discoverable or admissible.

Debate continues as to whether information presented during ADR

should be protected from disclosure outside the ADR session. In particular, the questions discussed in this Appendix are whether ADR communications should be viewed as:
Guide to Judicial Management of Cases in ADR

166

• admissible in judicial proceedings;337

• generally inadmissible, but discoverable, in judicial proceedings;

• generally not discoverable and not admissible in judicial proceedings; or

• privileged, with certain exceptions to the privilege.

1. To what extent have courts found ADR communications

inadmissible?

Below we describe when ADR communications might be inadmissible

and the steps some have taken to help protect the confidentiality of those

communications.

a. Arbitration

The federal statutes authorizing court-based arbitration bar the admission at the trial de novo of:

• any evidence that there has been an arbitration proceeding,

• the nature or amount of any arbitration award, or

• any other matter concerning the conduct of the arbitration proceeding,

unless the evidence would otherwise—that is, independently—be admissible in court under the Federal Rules of Evidence or the parties have

otherwise stipulated.338 See infra Appendix A.2 for a description of the

statutory provisions authorizing referral to arbitration. The arbitration

award is not made known to the judge assigned to the case until the

court has entered the arbitration award as the final judgment or the action has otherwise terminated.339 Local rules may require that the clerk

promptly seal any arbitration award.340

 

337. See supra note 244 and accompanying text.

338. See 28 U.S.C. § 657(c)(3) (Supp. 1998); Judicial Improvements and Access to Justice Act, Pub. L. No. 100-702, § 901(a), 102 Stat. 4642, 4661 (1988)

(amended 1993, 1994, 1997) (previously codified at 28 U.S.C. § 655(c) (1994));

see supra note 315. Cf. D. Ariz. Civ. R. 2.11(i)(8) (“In the absence of agreement of

the parties and except as related to impeachment of a witness, no transcript of the

[arbitration] proceedings shall be admissible in evidence at any subsequent trial

de novo of the action.”).

339. See 28 U.S.C. § 657(b) (Supp. 1998); § 901(a), 102 Stat. at 4661 (previously codified at 28 U.S.C. § 654(b) (1994)).

340. See, e.g., N.D. Cal. ADR R. 4-11(c); D. Ariz. Civ. R. 2.11(j)(1).
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167

In some federal courts with arbitration programs, a party to an arbitration hearing may, at its discretion and expense, have a private court

reporter record the hearing.341 This raises the possibility that, at a subsequent trial other than the trial de novo, a court might admit transcribed

arbitration hearing testimony into evidence for impeachment or other

purposes.342

b. Other ADR processes

Federal Rule of Evidence 408 has been read to bar admissibility, but not

discoverability, of certain conduct or statements made in “compromise

negotiations.” Some local rules on ADR incorporate Rule 408 by reference,343 while others expand the protections of Rule 408.344 Other local

rules, rather than referring to Rule 408, set out confidentiality provisions

independent of Rule 408.345 Some local ADR rules provide that informa-

 

341. See, e.g., D. Ariz. Civ. R. 2.11(i)(8) (arbitration); N.D. Cal. ADR R. 4-

10(f) (arbitration); E.D. Pa. Civ. R. 53.2(5)(F) (arbitration).

342. Cf. AT&T Corp. v. Public Serv. Enters. of Pa., Inc., No. Civ. A. 99-4975,

2000 WL 218347, at *2 (E.D. Pa. Feb. 16, 2000) (denying motion to strike postarbitration complaint by rejecting defendants’ contention that evidence of defendants’ conduct “learned” about during arbitration is barred by Fed. R. Evid. 408);

AT&T Corp. v. Public Serv. Enters. of Pa., Inc., Nos. Civ. A. 99-4975, Civ. A. 99-

6099, 2000 WL 387738, at *2 (E.D. Pa. Apr. 12, 2000) (rejecting defendants’ argument that the arbitration transcript was confidential and refusing to enjoin

post-arbitration complaint to enforce judgment).

343. See, e.g., D. Vt. Civ. R. 16.3(k) (“The ENE process is treated as a settlement negotiation under Fed. R. Evid. 408.”); Bankr. D. Or. Civ. R. 9019-2.E.2

(“Rule 408 of the Federal Rules of Evidence (FRE) shall apply to mediation proceedings.”).

344. See, e.g., W.D. Mich. Civ. R. 16.2(e) (various types of ADR); N.D. Cal.

ADR R. 6-11 (mediation); General Order No. 97-4 para. 9.1 (Bankr. W.D. Pa. Aug.

13, 1997) (mediation); W.D. Mo. Civ. R. app. para. V (early assessment program); N.D. Cal. ADR R. 5-12 (early neutral evaluation); E.D. Cal. Civ. R. 16-

271(g) (early neutral evaluation); D. Vt. Civ. R. 16.3(k) (early neutral evaluation).

See also orders referring cases to ADR in the U.S. District Court for the District of

Rhode Island.

345. See, e.g., D.N.J. Civ. R. 301.1(e)(4) (“All information presented to the

mediator shall be deemed confidential . . . . No statements made or documents

prepared for mediation shall be disclosed in any subsequent proceeding or construed as an admission.”); S.D. Fla. Civ. R. 16.2.G(2) (making mediation proceedings, including statements made therein, privileged); Second Amended General Order No. 95-01 paras. 6.1 to 6.7 (Bankr. C.D. Cal. Aug. 24, 1999) (providing
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168

tion presented in the course of ADR processes like mediation is generally

inadmissible, unless such statements or information would be discoverable independent of the ADR proceedings. See infra Appendix E.4 for a

discussion of the application of local ADR rules concerning confidentiality.

Although some court decisions have found that Rule 408 governs

evidence from different types of settlement processes, including summary

jury trials,346 Rule 408 by itself can be read to provide only limited protection against the admissibility of information presented during an ADR

session. Generally, under Rule 408, offers to compromise a disputed

claim, responses to those offers, and evidence of conduct or statements

made in “compromise negotiations” on a claim are inadmissible to prove

the validity or amount of that claim.347 That language by itself can be

read to offer no protection when evidence from an ADR proceeding is

presented to prove or disprove anything other than liability or the validity

of the claim or its amount.348 In addition, courts have interpreted Rule

408’s term “compromise negotiations” in different ways. Some cases suggest that a discussion occurring during a settlement meeting is not necessarily a compromise negotiation under Rule 408.349

 

that communications not otherwise discoverable may not be disclosed or introduced in any court proceeding, unless all participants agree in writing or the

communication to be disclosed is a settlement agreement that has been recorded,

reduced to writing, and signed or that provides for its own disclosure or enforceability).

346. See Russell v. PPG Indus., Inc., 953 F.2d 326, 334 (7th Cir. 1991)

(finding inappropriate a party’s disclosure to court of appeals of information that

was intended to remain within the confines of summary jury trial); see also

United States v. Contra Costa County Water Dist., 678 F.2d 90, 92 (9th Cir. 1982)

(holding that evidence of negotiated amount in prior litigation settlement between

instant plaintiff and third party was inadmissible under Rule 408).

347. Fed. R. Evid. 408. See generally Fed. R. Evid. 408 advisory committee’s

note (1972 Proposed Rules) (noting the “expansion of the rule herewith to include evidence of conduct or statements made in compromise negotiations, as

well as the offer or completed compromise itself”).

348. See Rogers & McEwen, supra note 116, § 9:04.

349. See, e.g., Thomas v. Resort Health Related Facility, 539 F. Supp. 630,

637–38 (E.D.N.Y. 1982) (stating, in context of partial summary judgment motion

on back pay damages period, that evidence of employer’s unconditional offer to

reinstate and employee’s rejection during prior settlement meeting is admissible

because the offer was not made to compromise the back pay claim); see also

Rogers & McEwen, supra note 116, § 9:05.
Appendix E

169

Rule 408’s “for another purpose” language also can limit the rule’s

usefulness as a shield against the admissibility of ADR communications.

Rule 408 allows the admission of evidence when it is “offered for another

purpose, such as proving bias or prejudice of a witness, negativing a

contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution.”350 This language provides an incentive for

parties to recharacterize compromise evidence to fit these exceptions. The

language might be used by litigants who were not parties to the ADR

proceedings, or even by those who were, to get ADR communications

admitted, even though the ADR participants expected, when making the

communications, that they would remain confidential. See infra Appendix

E.3, E.4.

To establish ADR confidentiality protections more specific than Rule

408, consider using one or more of the methods discussed supra section

VIII.B.1. See also infra Appendix E.5 for a discussion on allowing the

neutral to testify.

If evidence is not inadmissible under Rule 408, it may still be found

inadmissible under Federal Rule of Evidence 403351 or Federal Rule of

Civil Procedure 68.352 Some appellate courts have called for a Rule 403

balancing analysis when deciding whether to admit evidence from settlement that is not clearly barred by Rule 408.353

 

350. Fed. R. Evid. 408. But see Equal Employment Opportunity Comm’n v.

Gear Petroleum, Inc., 948 F.2d 1542, 1545–46 (10th Cir. 1991) (deciding that exclusion of evidence offered for impeachment was not an abuse of discretion when

the proffer of evidence “was but a thinly veiled attempt to get the ‘smoking gun’

letters before the jury”).

351. See Wayne D. Brazil, Protecting the Confidentiality of Settlement Negotiations, 39 Hastings L.J. 955, 982–87 (1988).

352. See id. at 1022–23. Federal Rule of Civil Procedure 68 states that evidence of an unaccepted offer that was made under Rule 68 is “not admissible

except in a proceeding to determine costs.” Fed. R. Civ. P. 68.

353. See, e.g., Weir v. Federal Ins. Co., 811 F.2d 1387, 1395–96 (10th Cir.

1987) (instructing the district judge to balance under Rule 403 the relevance of

evidence of the circumstances surrounding a settlement payment with the prejudicial effect of such evidence); John McShain, Inc. v. Cessna Aircraft Co., 563

F.2d 632, 635 (3d Cir. 1977) (finding that district judge did not commit reversible

error in admitting a settlement agreement, because the judge was in a position to

gauge the relative importance of potential prejudice and probative value of the

evidence).
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170

2. To what extent have courts found ADR communications not

discoverable?

Some local rules on ADR seem to limit confidentiality protections to prohibiting admissibility of ADR communications, arguably allowing for their

production in discovery. Other local rules have established ADR

confidentiality protections broader than any provided by Rule 408 and

attempt to prevent discovery of ADR communications.354 However, case

law is still developing on how much protection local rules on confidentiality provide. See infra Appendix E.4.

Federal Rule of Evidence 408 has been read to bar admissibility, but

not discoverability, of certain conduct or statements made in “compromise negotiations.”355 Thus, where confidentiality is protected only by

Rule 408, ADR participants are not necessarily insulated from third party

discovery of information presented in the course of ADR proceedings.356

The third party seeking discovery may be a party to the same litigation

who did not participate in the ADR process, such as an intervenor or

third-party defendant. Or the third party may be one who is not involved

in the litigation in question, such as a party in another lawsuit.

Some courts have ruled that ADR communications can be protected

from discovery requests, given the public policy interest in protecting

confidential communications in court-ordered ADR.357 There are opposing

 

354. See supra notes 344–45; infra note 370.

355. See, e.g., Alcan Int'l Ltd. v. S.A. Day Mfg. Co., 179 F.R.D. 403, 404

(W.D.N.Y. 1998) (noting that Rule 408 does not limit the discovery of evidence);

Computer Assocs. Int'l, Inc. v. American Fundware, Inc., 831 F. Supp. 1516, 1531

(D. Colo. 1993) (recognizing that offers of compromise which are inadmissible at

trial under Rule 408 are still discoverable if they might lead to other admissible

evidence).

356. Federal Rule of Civil Procedure 26 provides that “[t]he information

sought need not be admissible at the trial if the information sought appears reasonably calculated to lead to the discovery of admissible evidence.” Fed. R. Civ.

P. 26(b)(1).

357. See Folb v. Motion Picture Indus. Pension & Health Plans, 16 F. Supp.

2d 1164, 1170–80 (C.D. Cal. 1998) (balancing needs of confidentiality in mediation against common law presumption of availability of evidence, and adopting a

federal mediation privilege under Fed. R. Evid. 501 applicable to all communications made in conjunction with a formal mediation); see also Haworth, Inc. v.

Steelcase, Inc., 12 F.3d 1090, 1095–96 (Fed. Cir. 1993) (stating that “judicial

economy is best served by promoting ADR” and prohibiting a third party from

intervening in an ongoing court ADR proceeding to gain access to documents).
Appendix E

171

views.358 However, even in the context of settlement negotiations other

than ADR, some federal district courts have expanded the protections of

Rule 408 by requiring a “particularized showing” before allowing discovery of materials from the negotiations.359 They found this heightened

standard justified by the public policy favoring settlement of disputes

which underlies Rule 408.360 Other district courts, however, have rejected

this approach.361

 

358. See Datapoint Corp. v. PictureTel Corp., No. 93-2381D, 1998 WL 25536,

at *2 (N.D. Tex. Jan. 14, 1998) (compelling production of mediated settlement

agreement from another case despite local rule providing for confidentiality of

ADR proceedings, where settlement agreement provided for its confidentiality

“unless ordered by the court”); cf. Carman v. McDonnell Douglas Corp., 114 F.3d

790, 795 (8th Cir. 1997) (declining to recognize evidentiary privilege for corporate

ombudsman, reasoning that benefits of privilege do not outweigh need for obtaining information in litigation); In re Grand Jury Subpoena Dated Dec. 17, 1996,

148 F.3d 487, 493 (5th Cir. 1998) (allowing grand jury subpoena of information

related to mediation session, stating that “any interest the [participants] have in

the confidentiality of their mediation sessions will have to give way to the public

interest in the administration of criminal justice”); Ford Motor Credit v. Shockley,

Reid & Tyson, No. 93-1037-CV-W-6, 1996 WL 9689, at *1, 1*–*2 (W.D. Mo. Jan.

4, 1996) (commenting on potential disclosure to state bar disciplinary proceedings

of information received at a mediation in the court’s Early Assessment Program).

359. Lesal Interiors, Inc. v. Resolution Trust Corp., 153 F.R.D. 552, 562

(D.N.J. 1994) (applying the heightened standard and refusing disclosure, after

balancing concerns underlying Fed. R. Evid. 408 with those of Fed. R. Civ. P. 26);

Fidelity Fed. Sav. & Loan Ass’n v. Felicetti, 148 F.R.D. 532, 534 (E.D. Pa. 1993)

(characterizing the heightened standard as “switch[ing] the burden of proof from

the party in opposition to the discovery to the party seeking the information”);

Morse/Diesel, Inc. v. Fidelity & Deposit Co., 122 F.R.D. 447, 450–51 (S.D.N.Y.

1988) (using the heightened standard analysis, finding that the required “particularized showing” had been made, and ordering disclosure of the settlement

materials); Bottaro v. Hatton Assocs., 96 F.R.D. 158, 160 (E.D.N.Y. 1982) (refusing disclosure after requiring “some particularized showing of a likelihood that

admissible evidence will be generated by the dissemination of the terms of a settlement agreement”).

360. Fed. R. Evid. 408 advisory committee’s note (1972 Proposed Rules)

(stating that one ground for Rule 408 is “promotion of the public policy favoring

the compromise and settlement of disputes”).

361. See, e.g., City of Wichita v. Aero Holdings, Inc., 192 F.R.D. 300, 302 n.1

(D. Kan. 2000) (rejecting propositon that a higher burden is placed on a party

seeking to discover evidence related to settlement negotiations); Vardon Golf Co.

v. BBMG Golf Ltd., 156 F.R.D. 641, 650–51 (N.D. Ill. 1994) (concluding that the

Bottaro standard overstated the nature of the proponent's burden, and noting the
Guide to Judicial Management of Cases in ADR

172

3. To what extent have courts found ADR communications privileged?

a. The debate about the merits of an ADR privilege

A substantial part of the recent debate over admissibility and discoverability has been about whether ADR communications should be treated

as privileged.362 Few argue for a blanket privilege for ADR communications. Even those who argue that preserving the integrity of settlement

processes is a sufficient public policy interest to justify an absolute ADR

privilege acknowledge that there may be specific situations in which

some other public policy outweighs the general need for the privilege.363

See supra section VIII.C for a discussion of exceptions to confidentiality

protections.

Some have called for establishing an ADR privilege to be held by the

parties participating in ADR and by the neutral.364 Others find sufficient

protections for ADR communications that fall short of privilege, such as

protection against admissibility similar to, or expanded from, that given

under Federal Rule of Evidence 408.365

 

Rule 26(b)(1) “reasonably calculated” standard embodied in the Fed. R. Civ. P.

rather than requiring a “particularized showing”).

362. See generally Eric D. Green, A Heretical View of the Mediation Privilege,

2 Ohio St. J. on Disp. Resol. 1 (1986); Scott H. Hughes, A Closer Look: The Case

for a Mediation Confidentiality Privilege Still Has Not Been Made, Disp. Resol.

Mag., Winter 1998, at 14; Alan Kirtley, Best of Both Worlds:Uniform Mediation

Privilege Should Draw from Both Absolute and Qualified Approaches, Disp. Resol.

Mag., Winter 1998, at 5; Draft Uniform Mediation Act, supra note 256, § 6; Atlas,

supra note 247, at 74 (identifying several “questionable” exceptions that courts

may decide to recognize in establishing a mediation privilege). See also CPRGeorgetown Comm’n Proposed Model Rule, supra note 180, Rule 4.5.2 & comment

(proposing rule on confidentiality for adoption into the ABA Model Rules of Professional Conduct).

363. See generally Charles W. Ehrhardt, Confidentiality, Privilege and Rule

408: The Protection of Mediation Proceedings in Federal Court, 60 La. L. Rev. 91,

121–24 (1999); Kirtley, supra note 362; Draft Uniform Mediation Act, supra note

256, § 8.

364. See generally Alan Kirtley, The Mediation Privilege’s Transition from

Theory to Implementation: Designing a Mediation Privilege Standard to Protect

Mediation Participants, the Process, and the Public Interest, 1995 J. Disp. Resol. 1;

Draft Uniform Mediation Act, supra note 256, § 5.

365. See generally Stephen A. Hochman, The Uniform Mediation Act–A Radical Approach to Confidentiality, Conflict Mgmt., Winter 1999, at 3; Green, supra

note 362; Hughes, supra note 362.
Appendix E

173

b. Federal statutes

Although the ADR Act of 1998 requires that district courts adopt local

rules providing for the confidentiality of ADR processes and prohibiting

disclosure of confidential ADR communications,366 the statute does not

explicitly establish an ADR privilege. Court decisions have stated that

none was intended.367 Other recent federal statutes more specifically provide for the inadmissibility and non-discoverability of ADR communications. The Individuals with Disabilities Education Act, for example, has a

confidentiality provision that provides not only that “[d]iscussions that

occur during the mediation process shall be confidential,” but also that

they “may not be used as evidence in any subsequent due process hearings or civil proceedings.”368 The Administrative Dispute Resolution Act

of 1996, which governs ADR used for federal administrative proceedings,

protects ADR communications from “discovery or compulsory process.”369 See supra section VIII.C for a discussion on this 1996 statute.

c. Local rules

Some district court local rules refer to the privileged nature of ADR communications.370 Although not necessarily viewing it as “privilege,” a dis-

 

366. 28 U.S.C. § 652(d) (Supp. 1998).

367. See Federal Deposit Ins. Corp. v. White, 76 F. Supp. 2d 736, 738 (N.D.

Tex. 1999) (stating that the ADR Act does not create an evidentiary privilege that

would preclude a litigant from challenging the validity of a settlement agreement

based on events that transpired in the mediation); Olam v. Congress Mortgage

Co., 68 F. Supp. 2d 1110, 1123 (N.D. Cal. 1999) (stating that it is not likely that

Congress intended to create a mediation privilege by the confidentiality provisions in the ADR Act, given Congress’s prior role in determining the language of

Fed. R. Evid. 501); Fields-D’Arpino v. Restaurant Assocs., Inc., 39 F. Supp. 2d

412, 418 (S.D.N.Y. 1999) (stating that the ADR Act does not make mediation

communications privileged). See generally St. Regis Paper Co. v. United States,

368 U.S. 208, 218 (1961) (applying general statutory construction disfavoring a

finding of privilege unless specifically stated in the language of the statute).

368. 20 U.S.C. § 1415(e)(2)(g) (Supp. 1998).

369. 5 U.S.C. § 574(a)–(b) (Supp. 1998).

370. See, e.g., S.D. Fla. Civ. R. 16.2.G.2 (“All proceedings of the mediation

conference . . . are privileged in all respects.”); S.D. W. Va. Civ. R. 5.01(f) (“All

proceedings of the mediation conference . . . shall be privileged and not reported,

recorded, placed in evidence, made known to the assigned judicial officer or jury,

or construed for any purpose as an admission against interest.”). See also Chief
Guide to Judicial Management of Cases in ADR

174

trict court applied such a rule and found evidence from a mediation inadmissible.371 This has not, however, been widely tested.

d. The law of privilege in the context of ADR communications

Federal Rule of Evidence 501 governs privileges in federal courts. Under

Rule 501, determining whether ADR communications are privileged depends on whose law applies: federal common law or state law. Although

there is no widely accepted ADR privilege under federal common law,

many state statutes recognize an ADR privilege to one extent or another

as discussed below. See infra Appendix E.3.d(2).

(1). Rule 501 and federal common law

As a general rule, testimonial privileges are disfavored and may be

justified only by a “‘public good transcending the normally predominant

principle of utilizing all rational means for ascertaining the truth.’”372 The

standard for privileges is governed by “the principles of the common law

as interpreted by the courts of the United States in the light of reason and

experience.”373 Generally, in federal question cases, the issue is whether

an ADR privilege is recognized as federal common law under Rule 501,

even if the ADR sessions occur in a federal court that sits in a state that

has a statute that provides that ADR communications are privileged. In

cases where federal law governs, federal courts can consider state law

privileges under the doctrine of comity and might recognize state privileges where this can be accomplished at no substantial cost to federal

substantive and procedural policy.374

 

Judge’s Form Order of Referral to Mediation para. (8) (N.D. Fla. Apr. 12, 2000)

(“All discussions, representations, and statements made at the mediation conference shall be off the record and privileged as settlement negotiations.”).

371. Barnett v. Sea Land Serv., Inc., 875 F.2d 741, 743–44 (9th Cir. 1989)

(interpreting the Western District of Washington’s local rule that states that

communications in that court’s mediation program are privileged).

372. Jaffee v. Redmond, 518 U.S. 1, 9 (1996) (quoting Trammel v. United

States, 445 U.S. 40, 50 (1980)).

373. Fed. R. Evid. 501.

374. See Memorial Hosp. v. Shadur, 664 F.2d 1058, 1061 (7th Cir. 1981)

(stating that the requirement of Fed. R. Evid. 501 in federal question cases “does

not mean . . . that federal courts should not consider the law of the state in which

the case arises in determining whether a privilege should be recognized as a
Appendix E

175

The language of Rule 501 arguably leaves open the question of which

law applies when evidence is relevant to both a federal law claim and an

element of a claim or defense controlled by state law.375 Several federal

courts of appeals addressing this issue have held that the federal law of

privilege governs claims of privilege raised in federal question cases with

pendent state law claims.376

The federal courts that have protected mediation communications

from disclosure in subsequent litigation have, for the most part, done so

without finding the need to establish a federal common law privilege.

Until the district court holding in Folb v. Motion Picture Industry Pension

& Health Plans in 1998, no federal court had definitively adopted a mediation privilege as federal common law under Federal Rule of Evidence

501.377 The Folb court balanced the needs for confidentiality in mediation

 

matter of federal law”); In re International Horizons, Inc., 689 F.2d 996, 1005

(11th Cir. 1982) (stating that considerations of comity did not require that state

accountant-client privilege be adopted in federal bankruptcy proceedings); United

States v. Gullo, 672 F. Supp. 99, 104, 107 (W.D.N.Y. 1987) (suppressing at a

criminal trial all communications made during a community dispute resolution

process that operated under a New York state statute).

375. See Jaffee, 518 U.S. at 16 n.15 (“[T]here is disagreement concerning the

proper rule in cases such as this in which both federal and state claims are asserted in federal court and relevant evidence would be privileged under state law

but not under federal law.”). See generally Fed. R. Evid. 501 advisory committee’s

note.

376. See Pearson v. Miller, 211 F.3d 57, 66 (3d Cir. 2000) (holding that federal privilege law applies for resolution of discovery dispute which concerns material relevant to both federal and state claims); Hancock v. Dodson, 958 F.2d

1367, 1373 (6th Cir. 1992) (holding that “the existence of pendent state law

claims does not relieve us of our obligation to apply the federal law of privilege”);

Hancock v. Hobbs, 967 F.2d 462, 467 (11th Cir. 1992) (per curiam); von Bulow ex

rel. Auersperg v. von Bulow, 811 F.2d 136, 141 (2d Cir. 1987); Memorial Hosp.,

664 F.2d at 1061 n.3. Cf. Motley v. Marathon Oil Co., 71 F.3d 1547, 1551 (10th

Cir. 1995) (looking to state law in deciding privilege questions as to state causes

of action where plaintiff asserted both federal and state race discrimination

claims); Wm. T. Thompson Co. v. General Nutrition Corp., 671 F.2d 100, 104 (3d

Cir. 1982) (applying federal rule favoring admissibility to federal and state law

claims, and stating that that “holding does not, of course, preclude resort to state

law analogies for the development of a federal common law of privileges in instances where the federal rule is unsettled”).

377. 16 F. Supp. 2d 1164, 1171 (C.D. Cal. 1998); see also Gullo, 672 F. Supp.

at 104, 107 (suppressing at a criminal trial all communications made during a

community dispute resolution process that operated under a New York state stat-
Guide to Judicial Management of Cases in ADR

176

against the common law presumption of availability of evidence and

adopted “a federal mediation privilege applicable to all communications

made in conjunction with a formal mediation.”378 The case involved a

federal question with pendent state claims.

In another case, however, the U.S. Court of Appeals for the Fifth Circuit found there to be no evidentiary privilege to prevent disclosure to a

grand jury of documents relating to mediation sessions conducted pursuant to the confidential mediation provision of the federal Agricultural

Credit Act.379 Because of that decision, proposals have been made to

amend the statute to expand the protection of the act’s confidentiality

provisions.

In the labor mediation/conciliation context, in cases where the federal neutral was subpoenaed to testify, some courts have concluded that

complete exclusion of the neutral’s testimony was necessary to the preservation of an effective system of labor mediation. Courts balanced the

public interest in maintaining the impartiality and effectiveness of the

federal mediation/conciliation process with the benefits to be derived

from the neutral’s testimony.380 See infra Appendix E.5 for a discussion

on allowing the neutral to testify.

Future cases likely will test whether there is a need for a federal ADR

privilege and whether that need outweighs the common law presumption

of availability of evidence.381

 

ute; and finding that grand jury indictment, based in part on those statements,

should not be dismissed).

378., 16 F. Supp. 2d at 1170–80.

379. In re Grand Jury Subpoena Dated Dec. 17, 1996, 148 F.3d 487, 492 (5th

Cir. 1998) (stating that federal Agricultural Credit Act requirement that mediation

sessions remain “‘confidential’ does not necessarily mean ‘privileged’”).

380. See, e.g., NLRB v. Joseph Macaluso, Inc., 618 F.2d 51, 55 (9th Cir. 1980)

(finding that “[a]ny activity that would significantly decrease the effectiveness of

[the Federal Mediation and Conciliation Service] could threaten the industrial

stability of the nation”); Maine Cent. R.R. v. Brotherhood of Maintenance of Way

Employes, 117 F.R.D. 485, 486–87 (D. Me. 1987) (following principles of Joseph

Macaluso). But see Drukker Communications, Inc. v. NLRB, 700 F.2d 727, 731–34

(D.C. Cir. 1983) (concluding that National Labor Relations Board (NLRB) should

have issued the requested subpoena of an NLRB agent, and reasoning that the

parties’ need for the testimony outweighed any potential harm to the future effectiveness of NLRB agents). See generally Kirtley, supra note 362.

381. For discussion of this balancing, see Joseph Macaluso, 618 F.2d at

54–56; Folb, 16 F. Supp. 2d at 1170–80; Smith v. Smith, 154 F.R.D. 661, 670–75
Appendix E

177

(2). Rule 501 and state law

Rule 501 provides that where claims and defenses turn only on substantive questions of state law, state law on privilege applies.382 Nearly all, if

not all, states and the District of Columbia have adopted statutory provisions providing for a mediation privilege for at least certain kinds of disputes. Only about half of the states, however, have enacted confidentiality protections for mediation that are of general application.383 Moreover,

the nature of the statutory privileges varies significantly from state to

state. Many state statutes not only block the admissibility of ADR communications at trial but also protect against compelled disclosure in discovery and other proceedings.384 Some statutes explicitly provide that the

privilege cannot be waived unless all parties to the ADR proceeding and

the neutral consent in writing.385 Some state statutes provide for an ADR

privilege to be held by the parties participating in ADR and by the neutral.

As of this writing, the National Conference of Commissioners on

Uniform State Laws and the American Bar Association’s Section of Dispute Resolution are in the process of drafting a model uniform mediation

act to address concerns about widely varying and conflicting mediation

statutes across the fifty states. The December 2000 draft of the uniform

act included a mediation privilege to be held by the mediator and by each

of the parties to the mediation. The draft specifically excluded from protection certain disclosures, such as threats to commit violent acts, that

the drafters deemed to be in the interest of justice.386 See supra section

VIII.C for a discussion of exceptions from confidentiality protections.

 

(N.D. Tex. 1994) (neither adopting nor rejecting a federal common law mediator

privilege).

382. Fed. R. Evid. 501 & advisory committee’s note.

383. See November 2000 Draft of the Uniform Mediation Act § 2 reporter’s

working notes (visited Dec. 26, 2000) <http://www.pon.harvard.edu/guests/

uma/press.htm>.

384. See Rogers & McEwen, supra note 116, § 9:10, app. A (containing a

comprehensive listing of state statutes).

385. See, e.g., Colo. Rev. Stat. Ann. § 13-22-307(2)(a) (WESTLAW through

1st Reg. Sess. 1999). See generally Rogers & McEwen, supra note 116, app. A.

386. Draft Uniform Mediation Act, supra note 256, § 8.
Guide to Judicial Management of Cases in ADR

178

Some lawyers oppose a statutory ADR privilege that would go far beyond

the protections provided in Federal Rule of Evidence 408.387

4. To what extent can local rules protect confidentiality in ADR

proceedings?

District court local rules provide for the confidentiality of ADR communications in a variety of ways.388 As of this writing, we have yet to see the

full impact of the ADR Act of 1998389 on local rulemaking in federal district courts. It is not clear how far courts will go, under the authority of

Federal Rule of Civil Procedure 83, in using local rules to establish protections for confidentiality or how court decisions will interpret those local rules.

Nor has it been well established to what extent a federal court’s local

ADR rule’s confidentiality provisions will protect the confidentiality of

ADR communications that occur under that court’s ADR program.390

Some recent district court opinions suggest that, under certain circumstances, local rule provisions may not fully protect ADR communications

from disclosure. In a 1999 case, where state law was applied in deciding

the admissibility of ADR communications, the opinion described the effect that Federal Rule of Evidence 501 could have on a federal district

court’s attempts to safeguard the confidentiality of ADR communications

in a case the court had referred to its mediation program. The court noted

that, when state substantive law applies, the federal court must apply

state privilege law—even if that means that the mediation communica-

 

387. See generally Green, supra note 362, at 36; Hughes, supra note 362, at

16; Hochman, supra note 365, at 3.

388. See supra notes 343–45 and accompanying text.

389. 28 U.S.C. § 652(d) (Supp. 1998).

390. See Olam v. Congress Mortgage Co., 68 F. Supp. 2d 1110, 1124–25 (N.D.

Cal. 1999) (stating that “even when a local rule adopted by a federal district court

. . . offers more protection to mediation communications than would be offered

by the law of the state where the district court sits, the federal court must apply

state privilege law when state substantive law is the source of the rule of decision

on the claim to which the proffered evidence from the mediation is relevant”);

Barnett v. Sea Land Serv., Inc., 875 F.2d 741, 744 (9th Cir. 1989) (finding evidence of settlement inadmissible under local ADR rule, and stating that “ruling is

reached only under the language of Western District of Washington Local Rule

39.1 and is not meant to be a general pronouncement on when binding settlements are reached in other cases, disputes and forums”).
Appendix E

179

tions will not receive as much protection as they would have received by

applying the federal court’s local rule.391

And in a 1998 case, where the federal common law of privileges governed, the issue was whether pre-litigation mediation communications

were discoverable. The district court decided to recognize a mediation

privilege as federal common law. In so doing, the court stated that without such a privilege the district court’s local ADR rule did not prevent

communications made in mediation proceedings from being discovered

by a third party in subsequent litigation.392

In a 1996 unreported decision, a district court noted that it will not be

presumed that that court’s local rule on ADR confidentiality intended to

frustrate subpoenas issued by other courts or governmental bodies.393 The

court, however, stated that state courts and administrative agencies owe

some degree of comity to rules and orders of the federal district court.394

5. Should the neutral be allowed to testify about ADR sessions?

Some decisions have protected mediators from being compelled to testify

about ADR sessions, applying for example Federal Rule of Evidence 501

or 601.395 Others have not.396 Decisions have noted the importance of

 

391. See Olam, 68 F. Supp. 2d at 1124–25 (stating that “[p]arties to a mediation sponsored by a federal court located in a state that had rejected the notion

that mediation communications should be protected could not feel confident . . .

that what they said during the mediation would not be disclosed in subsequent

proceedings to enforce purported settlement contracts, even if the district court’s

local rule purported to promise absolute confidentiality”); cf. Willis v. McGraw,

177 F.R.D. 632, 633 (S.D. W. Va. 1998) (establishing “bright-line rule” that “the

Court will not involve itself under any circumstances in sorting out disagreements

amongst the parties emanating from the mediation process”).

392. See Folb v. Motion Picture Indus. Pension & Health Plans, 16 F. Supp.

2d 1164, 1175 (C.D. Cal. 1998) (stating that “[i]n the absence of a federal mediation privilege, that assurance of confidentiality [in C.D. Cal. local rule on the

confidentiality of nonjudicial dispute resolution proceedings] does little, in the

face of third-party discovery, to protect those parties choosing mediation”).

393. Ford Motor Credit v. Shockley, Reid & Tyson, No. 93-1037-CV-W-6,

1996 WL 9689, at *1, *1 (W.D. Mo. Jan. 4, 1996) (commenting on requested disclosure to state bar disciplinary proceedings of information received at a mediation in the court’s Early Assessment Program).

394. Id.

395. See Haghighi v. Russian-Am. Broad. Co., 945 F. Supp. 1233, 1235 (D.

Minn. 1996) (applying Minnesota privilege statute and Fed. R. Evid. 501 and 601
Guide to Judicial Management of Cases in ADR

180

avoiding compelled testimony by the mediator. One recent decision further stated that the mediator, in addition to the parties, held a privilege

against compelled testimony under state statute. The court nonetheless

allowed the mediator’s testimony.397

Prior to these cases, federal court decisions that have precluded neutrals from testifying have done so principally in the context of labor mediation, relying, for example, on National Labor Relations Board regulations prohibiting mediators from testifying about bargaining sessions they

attend.398

Some state statutes have privilege or testimonial incapacity provisions that explicitly insulate mediators from compelled testimony that

would require disclosure of communications made during the mediation

process.399 See supra Appendix E.3.d(2) for a discussion of state mediation privilege statutes.

 

in refusing to permit mediator to testify at evidentiary hearing on motion to enforce settlement agreement), rev'd on other grounds, 173 F.3d 1086 (8th Cir.

1999); Smith v. Smith, 154 F.R.D. 661, 670–75 (N.D. Tex. 1994) (neither adopting

nor rejecting a federal common law mediator privilege, yet affirming magistrate

judge’s decision quashing subpoena served on state court-appointed mediator);

Wilson v. Attaway, 757 F.2d 1227, 1245 (11th Cir. 1985) (upholding trial court’s

refusal to permit mediator for federal Community Relations Service to be required

to testify, because authorizing statute provides for confidentiality).

396. See, e.g., In re March, 1994–Special Grand Jury, 897 F. Supp. 1170, 1173

(S.D. Ind. 1995) (ordering mediator to respond to the grand jury subpoena and to

testify, finding that strong interest in fact finding in criminal trial outweighs any

benefits of recognizing the state mediation privilege).

397. See Olam, 68 F. Supp. 2d at 1137–39 (unsealing court-employed mediator’s testimony, because it “was essential to doing justice” and to preserving the

integrity of the mediation process, where plaintiff in protracted litigation had

claimed she was under undue pressure during mediation); cf. Willis, 177 F.R.D.

at 633 (establishing “bright-line rule” that “the Court will not involve itself under

any circumstances in sorting out disagreements amongst the parties emanating

from the mediation process”).

398. See, e.g., NLRB v. Joseph Macaluso Inc., 618 F.2d 51, 55–56 (9th Cir.

1980) (approving revocation of a subpoena that would have required a Federal

Mediation and Conciliation Service mediator to testify in an NLRB enforcement

proceeding). See supra note 380 and accompanying text.

399. See Rogers & McEwen, supra note 116, § 9:13, :33, app. A.
Table of Cases

181

Table of Cases

A

Abney v. Patten, 696 F. Supp. 570 (W.D. Okla. 1987) ............................115

Alcan Int'l Ltd. v. S.A. Day Mfg. Co., 179 F.R.D. 403 (W.D.N.Y. 1998) 170

Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997) .................33, 35, 36

Arabian Am. Oil Co. v. Scarfone, 119 F.R.D. 448 (M.D. Fla. 1988) ..........54

AT&T Corp. v. Public Serv. Enters. of Pa., Inc., No. Civ. A. 99-4975, 2000

WL 218347 (E.D. Pa. Feb. 16, 2000) .....................................................167

AT&T Corp. v. Public Serv. Enters. of Pa., Inc., Nos. Civ. A. 99-4975, Civ.

A. 99-6099, 2000 WL 387738 (E.D. Pa. Apr. 12, 2000) ........................167

B

B.H. v. McDonald, 49 F.3d 294 (7th Cir. 1995) ........................................119

Bank of Am. Nat'l Trust & Sav. Ass'n v. Hotel Rittenhouse Assocs., 800

F.2d 339 (3d Cir. 1986) ..........................................................................120

Barnett v. Sea Land Serv., Inc., 875 F.2d 741 (9th Cir. 1989) .........174, 178

Bernard v. Galen Group, Inc., 901 F. Supp. 778 (S.D.N.Y. 1995) .....93, 104

Bottaro v. Hatton Assocs., 96 F.R.D. 158 (E.D.N.Y. 1982) ......................171

Bouchard Transp. Co. v. Florida Dep’t of Envtl. Protection, 91 F.3d 1445

(11th Cir. 1996) ...........................................................................................3

Bowling v. Pfizer, Inc., 143 F.R.D. 141 (S.D. Ohio 1992) ..........................36

C

Carman v. McDonnell Douglas Corp., 114 F.3d 790 (8th Cir. 1997) ......171

Chambers v. NASCO, Inc., 501 U.S. 32 (1991) ............................................3

Cincinnati Gas & Elec. Co. v. General Elec. Co., 854 F.2d 900 (6th Cir.

1988) ........................................................................................................119

City of Hartford v. Chase, 942 F.2d 130 (2d Cir. 1991) ...........................119

City of Wichita v. Aero Holdings, Inc., 192 F.R.D. 300 (D. Kan. 2000) .171

Clark v. Stapleton Corp., 957 F.2d 745 (10th Cir. 1992) ....................93, 104

Computer Assocs. Int'l, Inc. v. American Fundware, Inc., 831 F. Supp.

1516 (D. Colo. 1993) ..............................................................................170

County of Madison v. United States Dept. of Justice, 641 F.2d 1036 (1st

Cir. 1981) .................................................................................................120
Guide to Judicial Management of Cases in ADR

182

D

Datapoint Corp. v. PictureTel Corp., No. 93-2381D, 1998 WL 25536 (N.D.

Tex. Jan. 14, 1998) ..................................................................................171

Dawson v. United States, 68 F.3d 886 (5th Cir. 1995) ...............................50

Del Rio v. Northern Blower Co., 574 F.2d 23 (1st Cir. 1978)) ................115

Doe v. Nebraska, 971 F. Supp. 1305 (D. Neb. 1997) ...............................117

Dore & Assocs. Contracting, Inc. v. American Druggists’ Ins. Co. ( In re

Dore & Assocs. Contracting, Inc.), 43 B.R. 717 (Bankr. E.D. Mich.

1984) ..........................................................................................................49

Drukker Communications, Inc. v. NLRB, 700 F.2d 727 (D.C. Cir. 1983) 176

E

Equal Employment Opportunity Comm’n v. Gear Petroleum, Inc., 948

F.2d 1542 (10th Cir. 1991) .....................................................................169

F

Federal Deposit Ins. Corp. v. Ernst & Ernst, 677 F.2d 230 (2d Cir. 1982) 98,

120

Federal Deposit Ins. Corp. v. White, 76 F. Supp. 2d 736 (N.D. Tex. 1999) 173

Federal Reserve Bank v. Carey-Can., Inc., 123 F.R.D. 603 (D. Minn. 1988) 54

Fidelity Fed. Sav. & Loan Ass’n v. Felicetti, 148 F.R.D. 532 (E.D. Pa.

1993) ........................................................................................................171

Fields-D’Arpino v. Restaurant Assocs., Inc., 39 F. Supp. 2d 412 (S.D.N.Y.

1999) ..................................................................................................99, 173

Folb v. Motion Picture Indus. Pension & Health Plans, 16 F. Supp. 2d

1164 (C.D. Cal. 1998) .................................................... 170, 175, 176, 179

Ford Motor Credit v. Shockley, Reid & Tyson, No. 93-1037-CV-W-6, 1996

WL 9689 (W.D. Mo. Jan. 4, 1996) .................................................171, 179

G

G. Heileman Brewing Co. v. Joseph Oat Corp ., 871 F.2d 648 (7th Cir.

1989) (en banc) ...........................................................................57, 62, 115

Gilling v. Eastern Airlines, Inc., 680 F. Supp. 169 (D.N.J. 1988) ..............64

Greyhound Lines, Inc. v. Rogers ( In re Eagle Bus Mfg., Inc.), 62 F.3d 730

(5th Cir. 1995) .....................................................................................37, 49

Grumman Aerospace Corp. v. Titanium Metals Corp. of Am., 91 F.R.D.

84 (E.D.N.Y. 1981) ....................................................................................98
Table of Cases

183

H

Haghighi v. Russian-Am. Broad. Co., 945 F. Supp. 1233 (D. Minn. 1996)

rev'd on other grounds , 173 F.3d 1086 (8th Cir. 1999) .........................179

Hancock v. Dodson, 958 F.2d 1367 (6th Cir. 1992) .................................175

Hancock v. Hobbs, 967 F.2d 462 (11th Cir. 1992) ...................................175

Haworth, Inc. v. Steelcase, Inc., 12 F.3d 1090 (Fed. Cir. 1993) ..............170

Hess v. New Jersey Transit Rail Operations, Inc., 846 F.2d 114 (2d Cir.

1988) ..................................................................................................64, 116

I

In re A.H. Robins Co., 88 B.R. 742 (E.D. Va. 1988), aff’d, 880 F.2d 694

(4th Cir. 1989) ...........................................................................................29

In re Cincinnati Enquirer, 94 F.3d 198 (6th Cir. 1996) ............................119

In re County of Los Angeles, 223 F.3d 990 (9th Cir. 2000) .......................99

In re Diet Drugs Prods. Liab. Litig., MDL No. 1203, Civ. No. 99-20593,

2000 WL 1222042 (E.D. Pa. Aug. 28, 2000) ...........................................36

In re Filex, Inc., 116 B.R. 37 (Bankr. S.D.N.Y. 1990) .................................49

In re Grand Jury Subpoena Dated Dec. 17, 1996, 148 F.3d 487 (5th Cir.

1998) ........................................................................................100, 171, 176

In re International Horizons, Inc., 689 F.2d 996 (11th Cir. 1982) ...........175

In re La Marre, 494 F.2d 753 (6th Cir. 1974) ......................................58, 116

In re March, 1994–Special Grand Jury, 897 F. Supp. 1170 (S.D. Ind. 1995) 180

In re NLO, Inc., 5 F.3d 154 (6th Cir. 1993) .................................................54

In re Novak, 932 F.2d 1397 (11th Cir. 1991) ................................58, 62, 116

In re Rainbow Magazine, Inc., 77 F.3d 278 (9th Cir. 1996) .........................5

In re Sargeant Farms, Inc., 224 B.R. 842 (Bankr. M.D. Fla. 1998) ........5, 55

In re Southern Ohio Correctional Facility, 166 F.R.D. 391 (S.D. Ohio 1996) 54

In re Stone, 986 F.2d 898 (5th Cir. 1993) ..............................................60, 62

In re United States, 149 F.3d 332 (5th Cir. 1998) .......................................59

J

Jaffee v. Redmond, 518 U.S. 1 (1996) ...............................................174, 175

John McShain, Inc. v. Cessna Aircraft Co., 563 F.2d 632 (3d Cir. 1977) 169

Jones v. Bank of Santa Fe ( In re Courtesy Inns, Ltd.), 40 F.3d 1084 (10th

Cir. 1994) .....................................................................................................5

K

Kothe v. Smith, 771 F.2d 667 (2d Cir. 1985) ..............................................50
Guide to Judicial Management of Cases in ADR

184

Kubicik v. Apex Oil Co. ( In re Apex Oil Co.), 884 F.2d 343 (8th Cir. 1989) 37,

49

L

Lake Utopia Paper Ltd. v. Connelly Containers, Inc., 608 F.2d 928 (2d Cir.

1979) ..................................................................................................93, 104

Lesal Interiors, Inc. v. Resolution Trust Corp., 153 F.R.D. 552 (D.N.J.

1994) ........................................................................................................171

Link v. Wabash R.R., 370 U.S. 626 (1962) .................................................62

Local 715, United Rubber, Cork, Linoleum & Plastic Workers v. Michelin

Am. Small Tire, 840 F. Supp. 595 (N.D. Ind. 1993) ...............................61

M

Maine Cent. R.R. v. Brotherhood of Maintenance of Way Employes, 117

F.R.D. 485 (D. Me. 1987) .......................................................................176

Martindell v. International Tel. & Tel. Corp., 594 F.2d 291 (2d Cir. 1979)) 120

McKenzie Constr. v. St. Croix Storage Corp ., 961 F. Supp. 857 (D.V.I.

1997) ..........................................................................................................99

Memorial Hosp. v. Shadur, 664 F.2d 1058 (7th Cir. 1981) ......................174

Morse/Diesel, Inc. v. Fidelity & Deposit Co., 122 F.R.D. 447 (S.D.N.Y.

1988) ........................................................................................................171

Motley v. Marathon Oil Co., 71 F.3d 1547 (10th Cir. 1995) ....................175

Myers v. Wiederhol, 185 F.R.D. 149 (E.D.N.Y. 1999) .............................115

N

New Eng. Merchants Nat’l Bank v. Hughes, 556 F. Supp. 712 (E.D. Pa.

1983) ............................................................................................................4

Newton v. A.C. & S., Inc., 918 F.2d 1121 (3d Cir. 1990) .........................115

Nick v. Morgan’s Foods, Inc., 99 F. Supp. 2d 1056 (E.D. Mo. 2000) ......115

NLRB v. Joseph Macaluso, Inc., 618 F.2d 51 (9th Cir. 1980) ..........176, 180

O

Olam v. Congress Mortgage Co., 68 F. Supp. 2d 1110 (N.D. Cal. 1999) 173,

178, 179, 180

P

Pansy v. Borough of Stroudsburg, 23 F.3d 772 (3d Cir. 1994) ................120

Paranzino v. Barnett Bank, N.A., 690 So. 2d 725 (Fla. Dist. Ct. App.

1997) dismissed by 695 So. 2d 700 (Fla. 1997) (table).. ......................104
Table of Cases

185

Pearson v. Miller, 211 F.3d 57 (3d Cir. 2000) ...........................................175

Poly Software Int’l, Inc. v. Yu Su, 880 F. Supp. 1487 (D. Utah 1995) ......99

R

Raad v. Wal-Mart Stores, Inc., No. 97-3015, 1998 WL 272879 (D. Neb.

May 6, 1998) ...........................................................................................115

Rhea v. Massey-Ferguson, Inc., 767 F.2d 266 (6th Cir. 1985) ....................4

Robinson v. ABB Combustion Eng’g Servs., Inc., No. 93-3626, 1994 WL

404557 (6th Cir. Aug. 2, 1994) ........................................................63, 116

Russell v. PPG Indus., Inc., 953 F.2d 326 (7th Cir. 1991) .......................168

S

Schwartzman, Inc. v. ACF Indus., 167 F.R.D. 694 (D.N.M. 1996) ...........60

Sheng v. Starkey Labs., Inc., 117 F.3d 1081 (8th Cir. 1997) .............19, 118

Smith v. Smith, 154 F.R.D. 661 (N.D. Tex. 1994) ......................96, 176, 180

St. Regis Paper Co. v. United States, 368 U.S. 208 (1961) .......................173

Strandell v. Jackson County, 838 F.2d 884 (7th Cir. 1987) .......................54

T

Thomas v. Resort Health Related Facility, 539 F. Supp. 630 (E.D.N.Y.

1982) ........................................................................................................168

Tiedel v. Northwestern Mich. College, 865 F.2d 88 (6th Cir. 1988) ...........3

Trammel v. United States, 445 U.S. 40 (1980)) ........................................174

U

United States v. Amodeo, 44 F.3d 141 (2d Cir. 1995) ..............................120

United States v. City of Garland, No. Civ.A. 3:98-CV-0307, 2000 WL

1597901 (N.D. Tex. Oct. 25, 2000) ..........................................................60

United States v. Contra Costa County Water Dist., 678 F.2d 90 (9th Cir.

1982) ........................................................................................................168

United States v. Glen Falls Newspapers, Inc., 160 F.3d 853 (2d Cir. 1998) 119

United States v. Gullo, 672 F. Supp. 99 (W.D.N.Y. 1987) .......................175

United States v. Town of Moreau, 979 F. Supp. 129 (N.D.N.Y. 1997) ...119

V

Vardon Golf Co. v. BBMG Golf Ltd., 156 F.R.D. 641 (N.D. Ill. 1994) .....171

von Bulow ex rel. Auersperg v. von Bulow, 811 F.2d 136 (2d Cir. 1987) 175
Guide to Judicial Management of Cases in ADR

186

W

Wagshal v. Foster, 28 F.3d 1249 (D.C. Cir. 1994) ......................................83

Weir v. Federal Ins. Co., 811 F.2d 1387 (10th Cir. 1987) ........................169

Willis v. McGraw, 177 F.R.D. 632 (S.D. W. Va. 1998) ....................179, 180

Wilson v. Attaway, 757 F.2d 1227 (11th Cir. 1985) ................................180

Wm. T. Thompson Co. v. General Nutrition Corp., 671 F.2d 100 (3d Cir.

1982) ........................................................................................................175
187

Index

ADR administrator

contact person for problems, 110, 113

handling ethical issues, 110, 124

helping parties decide about ADR, 13

required by ADR Act, 11

selection of ADR neutrals, 70-72

selection of ADR process, 39

withdrawing case from ADR, 122

Alternative Dispute Resolution Act of 1998 (ADR Act)

as codified, 136-141

authorizing district court ADR, 2-4

relationship to bankruptcy courts, 4-5

summary of Act, 142-151

Appropriateness of ADR

bankruptcy matters, 36-37

by case type, 40-47

case characteristics, 26-30

complex cases, 30-36

party characteristics, 21-26

Arbitration

generally, 130-132

appropriateness by case type, 40-43

confidentiality, 166-167

defined, 8

discovery, 17-18

mandatory arbitration, 42-43, 130-131

requirements and restrictions under ADR Act, 41-42, 131-132,

145-147

time for referral to, 15, 17-18

voluntary arbitration, 41-42, 131-132

Authority to refer cases to ADR

generally, 2

ADR Act, 2-5

in bankruptcy court, 4-7, 49, 54-55

in district court, 2-4, 48-49, 53-54

inherent authority, 3, 5, 55, 62-63, 115

without party consent, 52-55

Authority to require client attendance, 61-63
Guide to Judicial Management of Cases in ADR

188

Bankruptcy courts

generally, 36-37

authority for referral to ADR in

generally, 4-7

without party consent, 49, 54-55

authority to require clients to attend ADR sessions in, 61-63

compensating the neutral in, 86, 90

see also Neutrals, compensation

confidentiality, special considerations in, 95

court approval of settlements in, 95, 121, 126

examiners as ADR neutrals, 77-78

Binding vs. nonbinding outcomes, 10

Case evaluation (“Michigan mediation”)

generally, 134

defined, 9

Case type, 39-47

Civil Justice Reform Act, 1, 3

Class actions, use of ADR in, 32-33

Complex cases, 30-36

see also Parties, Multiple

Concluding ADR process, 125-127

Confidentiality

generally, 93-104, 165-180

ADR Act requirements, 93-94, 102, 144, 147, 173, 178

admissibility of ADR communications, 166-169

and good-faith participation, 64

as reason for use of ADR, 26

confidentiality agreements, 97-98

communications between judge and neutral, 111-114

defined, 94-95

discoverability of ADR communications, 170-171

exceptions to, 99-101

in bankruptcy, 77-78, 95

neutral’s testimony, 64, 179-180

privilege, 172-178

public access, 118-121

safeguards for, 96-99, 113-114

sanctions, 103-104

special masters, 77

statutes and rules governing, 102-103, 178-179

Uniform Mediation Act, 100, 124, 177
Index

189

Conflicts of interest

ADR neutrals’, 71-72, 77-78, 80-82

judges’, 71-72, 78-80

Consent to ADR

generally, 48-56

informed consent, ensuring, 55-56

summary jury trial, 44-45

Court Administration and Case Management Committee Guidelines, 152-

164

Court-based ADR

attributes of a well-functioning court ADR program, 153-160

defined, 7

Definitions of principal types of ADR, 8-9

Department of Justice, 25, 59-61

Discovery before or during ADR

in early neutral evaluation, 17

in minitrial, 18

in summary jury trial, 18

how much is necessary in ADR, 17-18

relationship of ADR and discovery disputes, 117

Discovery after ADR, 98, 170-179

Dispositive motions as affecting ADR, 18-19, 117-118

Early neutral evaluation (ENE)

generally, 132

appropriateness by case type, 43

complex cases, use in, 31

defined, 8

discovery, 17

time for referral to, 15, 17

use of senior judges in, 75

Effect of ADR

generally, 50-52

on litigation cost, 22-23

on litigation delay, 22-23

on type of outcome, 21-22

Ethical issues

addressing in referral order, 110

judges as ADR neutrals, 75-76, 78-80

principles for ADR neutrals, 68-69, 77-78, 80-82, 160-164

types of, 123-125
Guide to Judicial Management of Cases in ADR

190

Ex parte communications

between judges and neutrals, 76, 111-114, 117-118

between neutrals and parties, 109

with special masters, 77

Fees, see Neutrals, compensation

Georgetown-CPR Commission on Ethics and Standards in ADR, 125

Good-faith participation, 63-64

Governmental entities

considerations in referral to ADR with, 25

requiring attendance at ADR sessions, 58-61

Immunity for neutrals, 82-84

Insurance companies, requiring attendance at ADR sessions, 58

Interest-based vs. rights-based processes, 10

Judicial Conference

judges in settlement vs. ADR vs. trial, 78-80

opposition to mandatory arbitration, 53

recommendations regarding ADR, 1-2

regulations regarding compensation of neutrals, 85-86

Judges as ADR neutrals, 75-76, 78-80

Jury trial, right to, 4, 8, 51, 91

Mandatory referrals

generally, 9, 44, 48-55

ADR Act provisions, 53-54, 144, 148

fee issues, 91-92

mandatory arbitration, 42-43, 130-131

Mass tort cases, use of ADR in, 33-36

Matching case to process, 39-47

Med-arb

generally, 135

defined, 9

Mediation

generally, 128-130

appropriateness by case type, 40

defined, 8

discovery, 17

eligibility for, 20-21

facilitative vs. evaluative, 35, 75-78, 106, 129-130

in bankruptcy court, 25, 36-37

time for referral to, 14-15, 17

“Michigan mediation,” see Case evaluation (“Michigan mediation”)
Index

191

Minitrial

generally, 134

appropriateness by case type, 45-47

defined, 9

discovery, 18

infrequency of use in federal courts, 45

time for referral to, 18

Neutrals

compensation, 85-92

disqualification for conflicts of interest, bias, 80-82

ethical principles for, 68-69, 80-82, 160-164

immunity, 82-84

judges as ADR neutrals, 75-76, 78-80

provisions of ADR Act, 68, 80-83, 85-86, 91-92, 150

qualifications of, 68-69, 72-74

mandatory referral, 51, 91-92

selection by judge or court staff, 70-72

selection by parties, 69-70

special masters or examiners as ADR neutrals, 77-78

standards of conduct for, 68-69

testimony of, 179-180

Parties

attendance required for clients, 56-63

consent to ADR, 48-56

good-faith participation, 63-64

government as party, 25, 58-61, 118-121

informed consent to ADR, 55-56

insurance company as party, 58

large corporation as party, 58-61

multiple, 28-29

neutral’s fee, 89-90

participation, 63-64, 115-117

pro se parties, 24-25, 40, 56

reluctance to use ADR, 12-13, 18, 50-52

required to consider ADR by ADR Act, 52, 144, 147

selection of ADR neutral, 69-70

selection of ADR process, 38-39

submissions by parties, 65-66

Pretrial conference (Rule 16 conference), 12-13, 54-55, 61-62

Pretrial schedule, ADR’s effect on, 16

Pro se parties, considerations in referral to ADR with, 24-25, 40, 56
Guide to Judicial Management of Cases in ADR

192

Public interest in cases referred to ADR

access to ADR sessions, outcomes, 118-121

referral of cases involving public policy, issues of public interest, 26-

27, 36

Referral to ADR

ADR Act provisions, 12, 53-54

authority, 2-7, 52-55

bankruptcy court, 36-37

see also Bankruptcy

case schedule, 16

discovery, 17-18

informed consent, 55-56

mandatory, see Mandatory referrals

on motion of a party, 48-50

raising ADR with parties, 12-13, 18, 50-52

referral orders

generally, 105-110

safeguarding ADR confidentiality in, 96-97

rulings on dispositive motions, 18-19

selection of appropriate cases, 20-37

selection of ADR process, 38-47

sua sponte, 48-50

timing of referral, 13-15

voluntary, see Voluntary referrals

Sanctions

breaches of confidentiality, 103-104

for non-attendance, bad faith, 115-117

in referral order, 110

Scheduling

effect of ADR on, 16, 114

keeping cases referred to ADR on track, 114

raising issue of ADR with parties, 12-15

setting schedule for ADR process, 108

Selecting cases

ADR Act provisions, 12, 21, 53, 144-145

automatic referral based on objective criteria, 21

bankruptcy matters, 36-37

case characteristics, 26-37

complex cases, 30-36

party characteristics, 20-26

Settlement conferences, 7, 78-80

Settlement week

generally, 134

defined, 9
Index

193

Special masters, use as ADR neutrals, 77

Submissions by parties, 65-66

Summary bench trial, 8

see also Summary jury trial

Summary jury trial

generally, 133

appropriateness by case type, 44-45

defined, 8-9

discovery, 18

judges’ authority to order cases to, 53-54

public access to, 119

relationship of discovery to, 18

time for referral to, 15

Timing of ADR sessions

stage in the litigation, 11-19

setting deadlines for, 108, 114

Types of ADR, 8-9, 38-47, 128-135

Uniform Mediation Act, 124, 177

Voluntary referrals

generally, 9, 44, 48-52, 55-56

fee issues, 91-92

ADR Act provisions, 53-54, 144-145, 147-149

voluntary arbitration, 41-42, 131-132

Withdrawing a case from ADR, 121-123