Business Law: Ch. 5

Under section 10, subsection (b) of the Federal Arbitration Act, what does the use of "partial or corrupt" mean?

An arbitrator lacks the ability to objectively consider evidence and to reach a fair conclusion.

Arbitration has become increasingly common in recent decades, in part because

An increasing number of states have adopted statutes requiring mandatory arbitration for certain types of disputes.

Mediator

An individual who assists disputing parties in their efforts to resolve their differences. Mediators must rely on their persuasive abilities because they have no authority to settle the dispute.

Predispute arbitration clause

Applicable to ADR systems agreed to by contracting parties prior to a dispute arising; usually this clause is a part of the original contract between the parties. Commonly appear in business contracts.

What has been the most commonly used ADR system in business disputes?

Arbitration

____________ is the technique used in collective-bargaining contracts to settle grievances of employees against their employers.

Arbitration

Identify the most popular alternative dispute resolution (ADR) systems used by people and businesses attempting to resolve disputes.

Arbitration Mediation

Dispute

The circumstance when a party in conflict claims the right to do or have something and the other party denies, rejects, or ignores the claim. Conflict+Clain that is rejected=Dispute

Conflict

The common occurrence in life when two or more points of view exist.

Award

The decision announced by an arbitrator.

Arbitrator

The individual or panel members authorized by disputing parties to resolve a dispute through the arbitration process.

Caucus

The name used for a private meeting between a mediator and one of the parties involved in a mediation.

Negotiation

The process used to persuade or coerce someone to do or to stop doing something.

T/F The positional bargaining method of negotiation is the same as principled, interest-based negotiations.

FALSE

T/F State laws may prevent arbitration of disputes if the parties are engaged in or impact interstate commerce.

FALSE (cannot prevent)

T/F Conflicts between two parties with different points of view are generally negative and unproductive.

FALSE Conflict is ubiquitous and can be productive. Conflicts are not inherently negative.

T/F Unlike alternatives, legitimacy involves having the parties state unsupported propositions in a negotiation.

FALSE Legitimacy involves the application of accepted standards to the topic negotiated

Legitimacy

It involves the application of accepted standards to the topic negotiated.

Alternative

It is an outcome that is possible without the agreement of the other party in a negotiation.

One reason why businesses tend to settle disputes with customers out of court is that...

Juries frequently sympathize with individuals suing large corporations or other businesses covered by insurance.

Which of the following elements of principled interest-based negotiations suggests that disputing parties should apply accepted standards to the topic negotiated?

Legitimacy

Which of the following is in proper order from most expensive and time consuming to least expensive and time consuming?

Litigation arbitration mediation negotiated settlement

American Express Co. v Italian Colors Restaurant

Supreme Court held that contractual waiver of class arbitration is enforceable "ironclad" under the Federal Arbitration Act

T/F After a mandatory arbitration, a dissatisfied party may reject the arbitrator's award and see de novo judicial review.

TRUE

T/F Businesses settle many disputes even though they might possibly prevail in litigation.

TRUE

T/F Mediators use the principles of interest-based negotiations.

TRUE

T/F The conduct of a mediator is not typically subject to judicial review.

TRUE

Submission

The act or process of referring an issue to arbitration.

The Federal Arbitration Act provides that an arbitration award may be vacated or set aside on any of the following grounds except:

if a party didn't know that an arbitration agreement was an included contract clause.

Gateway issue

involve claims that the question in dispute is covered by an arbitration agreement

An agreement to submit an issue to arbitration is ___________.

irrevocable

Which of the following is not grounds for vacating or setting aside an arbitration award according to Section 10 of the Federal Arbitration Act?

The arbitration award was a result of voluntary arbitration, which was not mandated by legislation.

Which of the following is true of voluntary arbitration?

The award cannot be set aside on the grounds that the arbitrator reached erroneous findings of fact from the evidence.

The number of arbitrators is based on

the agreement of the parties

How are arbitrators paid?

per-diem fee (parties involved in the arbitration are responsible for paying these costs.)

Arbitration

submission of a dispute to an extrajudicial authority, impartial party, for decision.

The important role and positive perception of arbitration among businesses today would not exist without

the Federal Arbitration Act (FAA)

5 disadvantages of arbitration

1. Enforcing arbitration agreements may be costly 2. Limited discovery 3. Compromise verdict is common 4. Limited applicability of rules of evidence 5. Limited appeal rights

Mediation

An alternative to litigation whereby a third party attempts to assist the disputing parties in reaching a settlement. The third-party mediator lacks authority to impose on the parties a binding solution to the dispute.

Undue means (Section 10 Subsection (a) FAA)

" corruption" or "fraud" and requires some type of bad faith in the procurement of the award. goes beyond the merely inappropriate or inadequate nature of the evidence and refers to some aspect of the arbitrators decision or decision-making process that was unfair and beyond the normal process contemplated by the arbitration act

Alternative Dispute Resolution

(ADR )Any other formal or informal process used to settle disputes without resorting to a trial

Key Points of Penn Plaza LLC V. Pyett (supreme court)

* Members of the Service Workers International Union filed a lawsuit alleging age discrimination under the Age Discrimination in Employment Act of 1967 (ADEA) *The defendant, a member of the Realty Advisory Board on Labor Relations Inc. (RAB), asserted that the union members were required to arbitrate their claims pursuant to a collective bargaining agreement with RAB. *The Supreme Court held that the provision in the collective bargaining agreement that "clearly and unmistakably" required union members to arbitrate claims under the ADEA is enforceable.

3 reasons the number of mediations has increased

**1. disputing parties retain control over when to settle and when to continue disputing. 2. cost savings compared to litigation and arbitration 3. reduction of the legal system governing process

Identify the true statements about alternative dispute resolution (ADR) systems. (Check all that apply.) *The use of ADR techniques is usually precluded by litigation. *There is no requirement for disputing parties to begin a lawsuit to use any form of ADR. *Disputing parties that do not have an ADR system as part of their contractual relationship cannot use an ADR technique after a dispute arises. *The use of ADR systems considerably reduces the costs associated with litigation.

*There is no requirement for disputing parties to begin a lawsuit to use any form of ADR. *The use of ADR systems considerably reduces the costs associated with litigation.

2 of the most common ADR systems

1. Arbitration 2. Mediation

2 clauses used to set aside state laws that deny arbitration of certain disputes.

1. Commerce Clause 2. Supremacy Clause of the US Constitution.

5 benefits of arbitration

1. Costs 2. Swift resolution 3. Experienced decision makers 4. Flexibility 5. Privacy

Arbitrations that are void and go against public policy and are unconstitutional (3 requirements)

1. Deprive one of property and liberty of contract without due process of law. 2. violate the litigant's 7th Amendment right to a jury trial and/or the state's constitutional access to courts' provisions. 3. Result in the unconstitutional delegation of legislative or judicial power in violation of state constitutional separation-of-powers provisions.

6 steps in mediation process

1. Mediator's introduction and explanation of mediation (rules) 2. parties' opening "statements" 3. Parties' exchange (or dialogue or negotiation) 4. "Brainstorming" possible options (solutions) 5. The agreement (written and signed) 6. Private sessions or caucuses (These are optional at the mediator's discretion)

4 actions found to constitute misconduct and justify vacating an arbitration (Section 10 Subsection (c) FAA)

1. Participation in communications with a party or a witness without the knowledge or consent of the other party. 2. Receipt of evidence as to a material fact without notice to a party. Holding hearings or conducting deliberations in the absence of a member of an arbitration panel or rendering an award without consulting a panel member. 4. Undertaking an independent investigation into a material matter after the close of hearings and without notice to the parties.

Examples of contracts with arbitration clauses (8)

1. Stockholder and client 2. Brokerage firm and employee 3. Attorney and client 4. Union- management collective bargaining agreements 5. Owner- contractor and contractor- subcontractor 6. Insurance company and insured 7. Commodities broker and customer 8. Public carrier and shipper of goods.

Section 10 of the Federal Arbitration Act provides that an arbitration award may be vacated or set aside on any 1 of the 4 grounds..

1. Where the award was procured by corruption, fraud, or other undue means. 2. Where the arbitrators were obviously partial or corrupt. 3. Where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy or by engaging in any other misbehavior by which the rights of any party have been prejudiced. 4. Where the arbitrators exceeded their powers or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.

5 styles of negotiation

1. avoiding 2. accommodating 3. competing 4. compromising 5. collaborating

3 most common arbitration clauses

1. business-to-business contracts 2. employee contracts securities broker-investor contracts

7 elements of Interest-based negotiation

1. communication 2.relationship 3. interests 4. options 5.Legitimacy 6. Alternatives 7. Commitment

What is usually not used in an arbitration hearing?

1. discovery 2. rules of evidence

3 arbitration factors beyond legal criteria that bear on the proper resolution of a dispute in the workplace

1. impact of a particular result on productivity 2. consequences to morale 3. if tensions will be heightened or diminished

The award is valid under 2 conditions

1. it settles the entire controversy 2. states which party is to pay the other a sum of money

2 methods of negotiation

1. positional bargaining 2. principled (interest-based) bargaining

Most common number of arbitrators on a panel.

3

Lamps Plus, Inc. v. Varela

5-4 Decision, FAA requires courts to "enforce arbitration agreements according to their terms". An agreement thay is ambiguous does not provide the necessary contractual basis for compelling class arbitration.

Mandatory arbitration

A form of resolving a dispute, as an alternative to litigation, that is required by a statute.

Focus group

A group acting as a mock jury; attorneys present cases to such a group to get the members' feedback on the merits of the various arguments presented.

Positional bargaining

A method of negotiation that focuses on the parties exchanging offers, with concessions being made so that parties find a middle ground. The seller refers to the last offer made as its bottom line, and the buyer refers to the last offer made as its top dollar. -Most people instinctively use this negotiation method.

Principled, interest-based, negotiations

A method of negotiation that focuses on the parties' interests as opposed to positions. The language used to describe this bargaining includes options, alternatives, objective criteria, and relationships.

Voluntary arbitration

A method of resolving a dispute, as an alternative to litigation, that the parties agree to utilize. This agreement may be made before or after a dispute arises.

De novo judicial review

A proceeding wherein the judge or hearing officer hears the case as if it had not been heard before.

Effective use of _______ systems can save disputing parties many of the costs associated with litigation.

ADR

Epic Systems Corp v. Lewis

Addresses how the FAA interacts with the National Labor Relations Act (NLRA) Court held that the NLRA did not include the right for employees to bring collective or class litigation Judge objected that the court "subordinated employee-protective legislation to the FAA"

The things that can be done away from the bargaining table in interest based negotiation are known collectively as

Alternatives

Med-Arb

An abbreviation for an alternative dispute resolution system that involves parties going through mediation and agreeing to resolve as many issues as possible. These parties agree that any matters not resolved in the mediation process will then be arbitrated. "mediation-arbitration"

Postdispute arbitration agreement

Can be applicable to arbitration, mediation, or other methods of ADR; such a clause is signed by parties that are already in dispute.

_________ may be insignificant and easily avoided, or they may produce significant anxiety if ignored.

Conflicts

________ are everywhere. Each personal interaction can cause ________ or be impacted by them.

Conflicts, conflicts

Henry Schein, Inc. v. Archer & White Sales, Inc.

Unanimous court held that if the parties "clearly" and "unmistakably" delegated arbitrability of so-called "gateway issues to an arbitrator. This decision reinforces that the Court wants parties' arbitration agreements to be binding without judicial interference.

New Prime Inc. v. Oliveira

Unanimous opinion the Court held that courts should decide whether the FAA applies to a transaction and that "contracts of employment" include those for an independent-contractor relationship.

The US Supreme Court favors a

broad scope of the arbitrators' authority

The federal policy favoring arbitration frequently ___________with state law favoring litigation as a means to resolve a dispute

conflicts

A _________ arises from a conflict when one party makes a claim that another denies or refuses to honor.

dispute

Arbitrators are generally chosen by the __________ parties.

disputing

Advantage of mediation over litigation and arbitration

disputing parties retain full control over the resolution The disputing parties can decide the amount of time and effort that need to be put into the process.

Attorneys frequently use _________ ________ in significant cases.

focus groups

The arbitrator takes the place of the __________ & ________ in the litigation process

jury & judge

The use of experts in abritration is especially important in __________-________ relations.

labor-management

Prior to the enactment of the FAA, our common law system preferred ________ over arbitration as a means of resolving disputes.

litigation

Conflicts and disputes can be managed and perhaps resolved through _________.

negotiations

An award becomes final and enforceable when

no objections are filed within the statutory period.

submission by contract

occurs when the parties enter into an agreement to arbitrate an existing dispute the arbitration agreement is the submission in this case.

A negotiation method in which parties begin in a competitive style by stating their respective expectations is known as

positional bargaining

A party dissatisfied with an award has the right to

reject the award and to proceed to trial

After an award is made by the arbitrator, it is usually filed with

the clerk of an appropriate court.

Courts of review are sometimes called upon to set aside an award when

the decision is allegedly against public policy.

Primary reason for the use of arbitration is

the laudable goal of providing a relatively quick and inexpensive resolution of disputes.

An aspect of negotiation is that _____.

the parties are negotiating even as evidence of a conflict is exhibited

One reason arbitration is frequently preferable to litigation

the use of an expert to resolve a dispute

To avoid the various expenses of litigation, disputing parties sometimes agree to have a _______ _______ decide the merits of the dispute.

third party (Arbitration)

The FAA provides that arbitration agreements shall be

valid, irrevocable, and enforceable.

In most states, the arbitrator's award must be in ________.

writing

Most states require the voluntary arbitration agreement to be in ______ to be authorized.

writing