MANDATORY ARBITRATION VS. VOLUNTARY MEDIATION

I recently received a call from a friend who said she was being forced into arbitration and would rather mediate. She asked if there was anything she could do about that.

 First, I had to be sure she understood the processes. In arbitration, a neutral third party reviews evidence, hears arguments and renders a decision. The rules of evidence used in court are relaxed. The use of arbitration is frequently agreed to in advance when parties enter into a contractual relationship. In this usage there is very limited opportunity, if any, to appeal the decision. The advantages of this form of arbitration are speed, having an arbitrator with specific expertise in the area of the dispute, and cost.

In contrast to mediation, a third party neutrally facilitates communication between the parties and helps them work out a mutually agreed upon solution.

 In recent years, mandatory arbitration clauses have become common in contracts that now require the parties to arbitrate their disputes. These mandatory clauses have become common in employment, insurance, construction, car loans, leases, credit cards, retirement accounts, investments, nursing facilities, and more. Usually these clauses prevent claimants from participating in class action suits, impose a cap on damages and require confidentiality with a non-disclosure agreement.

 Unfortunately, my friend, like many others, didn’t read her contract and was not aware she was agreeing to a mandatory arbitration clause.

Such clauses have been challenged in legislatures and in the courts. Perhaps the most well-known challenge is Siperavage v. Uber Technologies. Edward Siperavage bought a $71,000 Chevrolet Tahoe in order to participate in the Uber Black SUV program. Uber later informed him his Tahoe would no longer qualify as an upscale vehicle. He sought to file a class action suit but a federal judge ruled that it must be handled through the mandatory arbitration clause. His attorney called the ruling another example of aggrieved individuals being forced into arbitration.

 Siperavage and others who signed mandatory agreements are taking their disputes to arbitration as required. But businesses who hoped to avoid large class actions cases now are dealing with thousands of arbitrations with nearly identical circumstances.

So, can my friend avoid mandatory arbitration and use mediation? I can’t provide a legal opinion, but my layperson’s view is both parties would have to agree and it’s unlikely the company will do so. Some state legislatures have acted to ban mandatory arbitration in sexual abuse cases and some are reviewing the uses of the clauses in employment contracts as well.

Peter Costanzo
WILL WE HAVE BASEBALL?

Major League Baseball had been working with a 2016 collective bargaining agreement between the league and the player’s union. Players’ demands in negotiation included expanded player control over the terms of their contract, particularly for the younger players who are under the control of the team that drafts them for the first six years of their career. Owner’s proposals included establishing narrower ranges for each team’s combined salary and an expanded postseason playoffs from 10 teams to 14 of the league’s 30.

Unable to resolve the issues last December during negotiations, Major League Baseball owners voted unanimously for a lockout, the first work stoppage since the 1994-95 strike. Early in February, the owners requested the help of a federal mediator. And this isn’t the first time owners and players done so. In 1981, a mediator worked with partiers to resolve a 50-day strike. In the 1994 strike that eliminated the World Series, highly respected mediator Bill Usery was called in, but the mediation was unsuccessful.

This year the Players Association did not support the request for mediation, but instead, preferred to return to negotiations. Negotiations continued, but on March 4 the league officially cancelled all spring training games through March 17.

Mediations record with professional sports is clearly mixed. Mediation was not successful with disputes related to the 2011 NFL lockout and with the NHL that same year. On the other hand, the 2013 NHL mediation was successful with both owners and players publicly praising the mediator and the process.

The current status raises at least two points: Mediation can only happen if both parties believe a third party can help them work together to resolve the issues. It’s possible, for example, the players saw the offer for mediation as a negotiation tactic and not as a call find common ground. It’s also possible that players believe a resolution is not only possible, but close, and starting the mediation process would only delay the season even more.

A second point is that labor negotiations and mediations exclude other interested parties. It’s reasonable to ask if the public has a legitimate interest in seeing the season be played.

Peter Costanzo