Dispute Resolution News
Official Publication of the Atlanta Bar Association Dispute Resolution Section
In This Issue
Upcoming Events
Arbitrator's Interpretation that Arbitration Agreement Permitted Class Actions under the FAA is Upheld
Cornell Study Updates Corporate Views on ADR Usage
Breach of Mediation Confidentiality Leads to Dismissal of Lawsuit
FINRA Sanctions Merrill Lynch for Failure to Arbitrate Employee Disputes
The Dispute Resolution News is Looking for Articles of Interest
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April 2012
Newsletter Editor: 
John F. Allgood
Dispute Resolution Section Board of Directors
Chair: Robert N. Dokson
Vice Chair/Chair-Elect: Emory Speer Mabry III
Secretary/Treasurer: Herbert H. (Hal) Gray III
Immediate Past Chair: Robert B. Wedge

John F. Allgood
William Beringer
Cicely Breckenridge
Hala Carey
Terrence L. Croft
William S. Goodman
Daniel E. Gulden
Rex D. Smith 
Upcoming Events
Mark your calendars for
this upcoming Section Meeting 


Section Spring Social
Tuesday, May 1, 2012 - 5:30 pm
Come network with other Section members at
STRIP in Atlantic Station.  Spouses and Significant Others Welcome!

Please register online or return the registration form


Arbitrator's Interpretation that Arbitration Agreement Permitted Class Actions under the FAA is Upheld In Motion to Vacate

In response to a motion to vacate the award, the Third Circuit has upheld the interpretation of an arbitrator that the parties to a Primary Care Physician's Agreement agreed to a broad arbitration provision that included the possibility of class action arbitration.  While the arbitration provision did not expressly reference class action arbitration one way or the other, the Court found the arbitrator's interpretation of the provision was to be upheld and did not a violate recent Supreme Court decisions.  Sutter v. Oxford Health Plans LLC, ____ F.3rd ______, 2012 WL 1088887 (C.A.3 (N.J.))


Sutter had agreed to provide services through Oxford's managed care network in exchange for reimbursement for services based on established rates.  Disputes arising under the agreement were to be resolved through binding arbitration in a provision of the contract which stated:

Cornell Study Updates Corporate Views on ADR Usage: Mediation Continues to be Popular, Arbitration Is Less So
In a study co-sponsored by Pepperdine's Straus Institute for Dispute Resolution, Cornell University and the International Institute for Conflict Prevention and Resolution [CPR] and surveying in-house counsel for the Fortune 1000 has shown that mediation continues to be a favored form of dispute resolution but that arbitration may be
                                  declining in its appeal.
The study is an update of a 1997 survey conducted with approximately the same mix of in house users.  In the 1997 survey 78% of the companies indicated that used mediation to resolve commercial disputes and in 2011, the number of users was about the same at 80%.  On the other hand, in 1197 85% of the survey participants indicated the use of arbitration in commercial disputes which by 2011 had declined to 60% of those reporting.
One of the authors of the study, Tom Stipanowich, suggests that the change may be due less to the capabilities of arbitration as a backstop to mediation than to the perspective and predilections of the attorneys determining the process to be used.  Other reasons cited are the difficulty of an appeal, the perception that arbitrators tend to compromise or that they may not follow the law.
Stipanowich concludes that the business lawyers seem concerned of not having enough control of the arbitration process despite criticisms of litigation as inadequate "one size fits all" in its approach and less flexible that a choice based process.
Breach of Mediation Confidentiality Leads to Dismissal of Lawsuit
 A Tenth Circuit decision sustaining the dismissal with prejudice of a lawsuit because of the plaintiff's disregard for mediation confidentiality requirements illustrates a sanction that courts may consider when parties fail to abide by mediation standards.  In a decision issued on April 4, 2012, the Court noted the plaintiff had brought a lawsuit against a sailing club for failure to comply with the Americans with Disabilities Act. Hand v. Walnut Valley Sailing Club, No. 11-3228 (10th Cir. 2012).  The court ordered the parties to participate in mediation.  The mediation failed to produce a settlement and the plaintiff thereafter sent e-mails to club members and others complaining about the positions in the mediation, providing details of discussions and the amount of the defendant's settlement offer.  These expressions were in violation of the district court rule requiring the parties to keep all information confidential.

FINRA Sanctions Merrill Lynch for Failure to Arbitrate Employee Disputes
Merrill Lynch, Pierce, Fenner & Smith [ML] merged with Bank of America in 2009.  A bonus program was put in place for high-producing representatives. Part of the bonus was structured to avoid the requirements of the Financial Industry Regulatory Authority [FINRA] to arbitrate disputes with employees.  Part of the bonus stipulations required employees to sign promissory notes that prevented arbitration disagreements and forcing the resolution of any related disputes to be brought in New York State courts.
The New York courts greatly limit the opportunity to file counter claims on promissory notes.  When a number of their employees left Merrill Lynch then filed over 90 actions in New York state courts to collect amounts under the promissory notes.  These requirements violate FINRA rules that require arbitration of disputes been employees and FINRA members.
When FINRA learned of the filing of the expedited suits to collect, an investigation was conducted and a fine of $1,000,000 was levied against Merrill Lynch in order to settle the matter.
The Dispute Resolution News is Looking for Articles of Interest
typewriter newsThe Dispute Resolution News is looking for articles of interest to the Section. 

If you would like to submit an article for publication, please email newsletter editor, John Allgood.