California Courts Begin New Dispute Resolution Programs

The Los Angeles Daily Journal, 12/27/2002

by Lawrence C. Waddington

Responding to the increased judicial emphasis on alternatives to litigation, California state and federal courts will introduce programs effective Jan. 1, 2003.

U.S. District Court for the Central District of California. The Central District has expanded its current attorney settlement office program (General Order 01-04) by adopting the alternative dispute resolution pilot program (ADR Pilot Program; General Order 02-07)

The court rules governing this new program allow mandatory and elective referral of specified civil actions to a settlement conference conducted by a neutral member of the court-appointed attorney settlement officer program.

Cases subject to mandatory referral include contract, personal injury and employment litigation, or a complaint seeking damages of $250,000 or less. The trial judge, in the exercise of discretion, also may refer litigation of the panel in cases lacking these criteria if parties may benefit from participation in the ADR pilot program.

Whether referral is mandatory or discretionary, the general order provides notice to counsel that the assigned judge participation in the program requires completion of a questionnaire signed and filed by all parties. In that document, counsel must identify categories of damage claimed and any outstanding discovery issues necessary for preparation in a settlement conference or mediation.

The parties may stipulate to a panelist, or the court will assign a settlement officer in the absence of agreement. Subject to court permission, the officer. Under either option, the settlement office must determine and disclose any conflict of interest in accordance with the California Rules of Professional Conduct.

The existing attorney settlement officer program (General Order 01-04) in the Central District currently offers four optional settlement procedures and outlines a more structured approach. The program rules require a statement of the case, a personal appearance at the hearing by counsel assigned to try the case and a party or representative with settlement authority. Parties must discuss all factors relevant to settlement. The settlement. The settlement officer may require an opening statement, presentation of testimony by expert witnesses and closing argument (i.e., a minitrial). Members of the Attorney Settlement Officer Panel will continue to serve the Central District in this program.

The ADR pilot program, in contrast, is more informal in an attempt to achieve early settlement. Although settlement panelists are required to divulge information pertaining to potential conflicts of interest, none of the burdensome requirements of the new California court rules on mediation (see below) apply. Rules of professional responsibility, not ethical guidelines, govern disclosure.

The new ADR pilot program, essentially an “early mediation” program implemented under the aegis of 28 U.S.C. Section 651 et seq., authorizes district courts to offer the use of ADR processes. Although the new program does not assure confidentiality of the proceedings explicitly, Local Rule 23.9, Rule 16-14.8 and 28 U.S.C. Section 652(d) apply to prevent disclosure of any information divulged during settlement or mediation; and, inferentially, the court retains the right to exclude evidence in a subsequent trial.

U.S. District Court for the Northern District of California. The Northern District will continue to utilize its Local Rules for Alternative Dispute Resolution (Local Rule 1-1 et seq.), initially developed as a pilot program and subsequently adopted in 2000. Under its multioption program, the Northern District offers nonbonding arbitration, early neutral evaluation and mediation.

The Court automatically may refer cases to ADR within financial limits, and certain categories are expected from referral. No new amendments or revisions to the Northern District Civil Rules are in force on Jan. 1, 2003.

California state court. California has adopted a variety of dispute resolution alternatives, but a new set of California Rules of Court will supplement the existing Civil Action Mediation Program Rules (rule of Court 1630 et seq.) and Mediation Pilot Program Rules (Rule of Court 1640 et seq.).

Effective Jan.1, 2003 any mediation conducted under these two programs is now subject to “Rules of Conduct for Mediators in Court Connected Mediation in Court Connected Mediation Programs for Civil Cases.” Rule of Court 1620 et seq.

The Judicial Council, presumable concerned that the court-annexed statutory civil action mediation (Code of Civil Procedure Section 1775) and the mediation pilot program (Code of Civil Procedure Section 1730) are coercive, has directed mediators to “conduct mediation in a manner that supports the principles of voluntary participation and self-determination by the parties.” Rule of Court 1620.3.

Mediators are under a continuing obligation to “make reasonable efforts to keep [themselves] informed” – and to disclose – matters “reasonable” questioning their ability to conduct proceedings impartially. Rule of Court 1620.5 (b)(1).

To implement that goal, the new rules require the mediator to disclose “[p]ast, present, and currently expected interests, relationships and affiliations of a personal, professional or financial nature.” Rule of Court 1620.5 (b)(1)(A).

In addition, the mediator must disclose the existence of any grounds applicable to the disqualification of a judge under Code of Civil Procedure Section 170.1 Rule of Court 1620.5(b)(1)(B).

Disclosure is required “when an attorney in their firm is serving or has served as a lawyer for any of the parties in the mediation.” Rule of Court 1620.5; Advisory Committee Comment to Rule 1620.5.

Mediators must possess “competence” sufficient to conduct mediation effectively, although the rules dispense with requiring any “particular advanced academic degree or technical or professional experience.” Rule of Court 1620.6(d). The rules admonish mediators to engage in “procedural fairness” despite the absence of litigation experience or familiarity with civil procedure. Rule of Court 1620.7(b).

Lawyers engaged in mediating litigated cases are likely to reject mediators who lack knowledge of substantive and procedural California law, the Evidence Code, motion practice, discovery, damages and legal strategy.

The Rules of Conduct for Mediators borrow heavily from existing rules (Rule of Court 1600 et seq.) applicable to arbitrators participating in court-annexed judicial arbitration. Code of Civil Procedure Section 1141.10; Rule of Court Appendix, Division VI: Ethics Standards for Neutral Arbitrators in Contractual Arbitration; Code of Civil Procedure Section 1281.9.

The rules indicate concern whether a mediator’s assessment of prospective litigation during mediation constitutes legal advice or practicing lay without a license. Rule of Court 1620.7. For good reason. Is the nonlawyer competent to answer questions about the consequences of settlement, good faith motions, indemnity agreements or verdict set-offs?

Unlike judicial arbitration, the new rules in judicially annexed mediation do not specifically authorize a penalty for non-compliance with mandated disclosure. C.f. Rule of Court 1606. Can a dissatisfied party nevertheless challenge a settlement on grounds that the mediator failed to disclose “matters affecting impartiality” or was incompetent? The new rules applicable in court-annexed mediation are likely to result in more litigation, but the more difficult question is whether lawyers will accept disclosure requirements.

The tenor of the new rules suggests an increasing judicial commitment to involve parties in an informed selection of mediators and to actively engage participants in the ADR process. The rulemaking authority of the judiciary is an appropriate vehicle for this policy choice in court-annexed ADR, but a related disclosure issue is likely to surface in the recent California State Bar’s activation of the Commission on the Revision of the Rules of Professional Conduct.

Current Rules of Professional Conduct do not explicitly require counsel to disclose availability of ADR to their clients. Critics have argued that failure to advise clients of ADR options violates the duty of a lawyer to act “competently” or constitutes failure to “communicate” with a client. Rule of Professional Conduct 3/110A, B. Although a tenuous interpretation of the language, the bar commission may confront a difficult ethical dilemma in determining whether to adopt any propose amendment or revision of the rules mandating disclosure of ADR to clients.

The Central District, Northern District and California Superior Courts have all adopted and encouraged the use of ADR in optional or mandatory formats. The persuasive use of ADR suggests that counsel should mirror the court rules and initially advise clients of the advantages and disadvantages of ADR. But once litigation commences, the courts unquestionable will provide the relevant information describing ADR alternatives.

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