The National Hockey League Negotiations: Will Mediation Make a Difference?

As the NHL lockout reaches its 10^th week, it is hard from the outside to see any progress. Both the All-Star game and the Winter Classic have been cancelled and the two sides seem just as far apart as they were three months ago.

But one recent development which should delight hockey fans and ADR professionals alike is that the owners and players have finally agreed to mediation. Both sides have agreed that ongoing negotiations will be conducted under the auspices of mediators from the Federal Mediation and Conciliation Service. 

Although this may not seem like a huge development it is a step in the right direction. The owners and players union have been negotiating for months to no avail. There is hope that with the assistance of the mediator they may begin to make some progress.

Some collective bargaining disputes are very contentious; both parties play “hardball” to get the best deal for their side. They often, as here, resort to lockouts or strikes. Both tactics are designed to put economic pressure on the other party. The problem is that such tactics force the parties into ‘win-lose’ scenarios in part because the high cost of applying economic pressure compels parties to justify the costs of the pressure to their own stakeholders by ‘winning.’

This results in both sides finding it difficult to properly assess the short- and longer-term costs associated with their hardball tactics. To justify the costs and defend their actions to their own stakeholders, the owners and players engage in positional bargaining rather than thinking creatively and seeking solutions. This may be one explanation of why mediation has a lower success rate in collective bargaining disputes than in other arenas; the recent NBA and NFL lockouts are prime examples.

But even if mediation is not successful in the NHL dispute, agreeing to mediation shows that both sides are interested in being seen by their stakeholders and the public as reasonable and willing to negotiate. It shows that the parties are aware of the costs and risks of alienating their own stakeholders. The desire to be seen as reasonable may allow space for the parties, with the assistance of a skilled mediator, to engage in a serious conversation about the issues separating them.

Both sides would be wise to keep the costs of a failure to achieve a settlement in the forefront as they enter into mediation. As the mediators most assuredly will point out many times and in different ways, the costs of not settling will be high, probably higher than the costs of a settlement and will unquestionably end in a “lose-lose” situation. 

Absent settlement, the consequences are likely to be union decertification; litigation; the loss of yet another hockey season; disaffected arena owners and local businesses, subjection to the mercy of judges and, possibly, the permanent loss of hockey’s fan base, without whom, there is no sport.

This is a situation we’ll be following closely. Hopefully both sides will see the merit of mediation and can follow the precedents set by baseball  and other collective bargaining negotiations that have benefited from mediation.

Prepared with Assistance from Michael Ciccarone

Maryland Mediation Confidentiality Act: Invoking the Magic Words

The Maryland legislature recently passed the Maryland Mediation Confidentiality Act  that took effect on October 1, 2012. It created a new subtitle 18 of Article 3, Courts and Judicial Proceedings of the Annotated Code of Maryland. 

The Act requires mediators to certify, in writing, “that the mediator has read and, consistent with state law, will abide by the Maryland Standard of Conduct for mediators…” for the confidentiality protections to apply (See Article 3-1802 (A) (2))

The provision in the Act requiring mediators to certify adherence to ethical standards means that the statutory confidentiality protections can be lost if the mediator fails to so certify, in writing.  In essence the parties, not the mediator, are punished by a mediator’s failure to invoke the magic words. They can lose the confidentially protection in the Act, often the sine qua non of mediation.

Mediators in Maryland must be aware of with this statute because it affects our practice; failure to follow the Act could result in parties losing the confidentiality provisions of the statute and expose the mediator to liability.

It is not hard to imagine that a party, having lost the confidentiality protection because of the mediator, could be pretty unhappy.  Enough to sue the mediator.

Here is a brief summary of some other important provisions of the statute.

With certain exceptions, the Act applies to cases in which the parties have agreed in writing that the Act applies or when they are required to mediate by law, except in court-referred cases under Title 17 of the Maryland Rules of Procedure.

However, the Maryland act does not apply to:

·        Maryland Court-annexed mediation conducted under Title 17 of the Maryland Rules;
·        Collective bargaining disputes;
·        Actions to enforce agreements to arbitrate under common law and the various Arbitration Acts;
·        Lien foreclosure mediation under Maryland Rule 14-209.1;
·        Certain parental matters under Maryland Rules 2-541; 2-542, 2-543, or 9-205.2;  
·        Mediation cases conducted by a judge who might rule based on the dispute; and 

·        Cases in which the parties and the mediator agree in advance in writing to exclude all or parts of mediation communication from the application of the statute.       

  

The Act also provides that signed agreements between the parties are not confidential unless the parties agree otherwise in writing. 

Section 3-1804 (B) of the Act sets our specific exceptions to the confidentiality standard. Those are:

·        A reasonable belief that the disclosure is necessary to prevent serious bodily harm or death;
·        To assert or defend against allegations of mediator misconduct or negligence or attorney professional misconduct or malpractice; or
·        To deal with allegations that, because of fraud, duress, or misrepresentation (emphasis added), a contract arising out of a mediation should be rescinded or damages should be awarded.

Finally, Section 3-1804 (C) has a general exception to the confidentiality provisions in the Act that allows a court to order mediation communications disclosed:

“…only to the extent that the court determines that the disclosure is necessary to prevent an injustice or harm to the public interest that is of sufficient magnitude in the particular case to outweigh the integrity of mediation.”

This, ‘prevent an injustice’ provision to allows the courts to act, when necessary, to protect threats to the public health, to address rare cases of potential denial of civil due process and even to protect a criminal defendant's constitutional rights. Absent such a general exception, it is possible that the statute would allow an injustice in the name of protecting mediation confidentiality. For an example of how a statute written to absolutely prohibit disclosure can result in such injustices, see my blog posts here and here 

Mediators Now Targets of Internet Scams: A Cautionary Tale

The internet is a great tool for all legal professionals, including mediators. Between the information available online and the ease in sharing information, it is almost impossible to imagine a world without the internet.

The bad news, however, is that the internet also increases the ease with which internet scammers can communicate their malice.  We all have seen how common internet scams have become. Internet scams cost businesses a great deal of money and frustration; it is essential to know what to look for to avoid these traps.

Mediators are now well enough established in business to become targets of scams.

We recently learned of a scam going around, targeting mediators in particular.

Here is a cautionary tale. 

The scam involves two alleged companies (in this particular scam, Barr Holdings and Arrow Electronics) who are alleged to be involved in a commercial dispute and request the help of a mediator. If the mediator agrees to help, a mediation contract is sent to the mediator with the signature of both company presidents. Here are the initial email exchanges, copied verbatim:

How are you today? We would like to thank you for your response to our inquiry for legal services. On behalf of Barr Holdings Limited, we are one of the UK's leading design and construction companies, specializing in the design and construction of sports stadia and arenas as well as large scale leisure, commercial, and retail projects.

However, We wish to inform you that we would be needing your mediation help to assist us with a breach of contract matter and also retrieve funds owed to our company. We ordered goods from Arrow Electronics, Inc. and was asked to make a 50% down payment for goods to be delivered to us and that we did and up till date no goods were delivered. We asked for a refund and they made a part payment and after that no other payment was made. We seek your help to help us collect these funds owed to our company amicably as we do not wish to go any further with the said transaction. We have made several attempts in the past to collect these funds which all ended negatively. We are aware that a conflict search would need to be done.

Here is the name of our supplier for your conflict check of interest-

Arrow Electronics, Inc., 7067 Columbia Gateway Drive, Suite 170 Columbia, MD 21046

Attached to this email you will find attached copy of contract, email correspondence and proof of payment for your perusal. We are prepared to pay a reasonable retainer fee for this service as soon as our board gets to review the terms of your engagement. So please have that sent to my attention via email if this is a case you are willing to handle.

What we require from you is to mediate the dispute and collect the funds peacefully without litigation [emphasis added]. We look forward to your prompt response. We wanted to also inform you that the said funds owed to us has caused a great strain on our company's operational capital and we want this issue to be resolved quickly. We would like to know a few things about your firm and also how you intend to handle this dispute

Then the mediator is sent an email claiming that the two sides have come to an agreement and one party will send a cashier’s check to the mediator to deposit and hold in trust on behalf of the other party.

On behalf of Barr Holdings Limited we have decided to retain your services after our review of your terms and attached herewith is a copy of the signed agreement. Due to your establishment as our mediator in the United States we have been able to yield a positive result.

Furthermore, we had talks with our contact and brought the possibility of mediation to his notice as we informed him of our correspondence with your service. He informed us that some Payment will be effected on or before 8th November 2012.

This is a positive breakthrough for me as this development will eventually reduce time and cost for all parties involved. However I do not intend to introduce any legal pressure unless the deadline of 8th November 2012.

Contract is breached. I do hope you understand my position as i intend to introduce litigation as a last resort.

I instructed that further correspondence including payment be made via our mediator. Please confirm name and mailing address check payments is to be made out on so we can forward it to him at once. It is also my thinking that your engagement fee be deducted as soon as funds are received by you and the balance held in trust pending further instruction.

I await your urgent acknowledgment and requested details as time is of the essence thank you.”

After the mediator receives the check – supposedly to pay a portion of the money owed that was in dispute -- the party sending the check asks the mediator to wire a portion of the funds to a creditor of the party. A wire transfer cannot be undone. Once the money is sent, it is gone.

In the scam, of course, the cashier’s check is fraudulent, and the mediator is now responsible for the money sent to the creditor. Unlike wire transfers, counterfeit cashier checks are not good until the issuing bank actually pays. So a wire transfer irrevocably removes money from the account and the fraudulent cashier’s check is not finally payable – even if the money initially appears in an account -- until after it has cleared by the issuing bank, which can take days, often longer. Thus, in the scam, the mediator is exposed to losing all of the money sent via wire transfer.  Here is the email exchange from the scammer trying to close the deal.

 How are you doing today??

Please do proceed with the swift wire transfer to our creditors as instructed yesterday. Today is the last date giving to us by our creditor to remit payment to them as promised. I Hope you understand how important this transaction mean to us because we don't want our company to be sued. if they file a law suit against us it will bring a bad reputation to our company and we will also loose our business relationship with our creditor. Due to my daughter condition am leaving the offices to know how she doing so keep me updated once the transfer is made this morning your time. I strongly believe you can handle the transaction ASAP.

Await your acknowledgment of instructions and wire confirmation slip thank you.”

This is an all-too-common situation. Mediators and attorneys must be on the lookout for scams.  Fortunately in this case the mediator sensed there was something ‘fishy’ and did not bite.  

Be careful.

Here are some signs that you might be the target of a scam

• Does the email have poor grammar, spelling errors or strange vernacular in general? A large majority of scams come from outside the U.S. and generally do not write in English very well and often use translation websites. 

• Have you received emails or heard from both sides individually? Most scams are the work of one person who usually speaks for the other side. If you are only hearing from one party, there is a good chance it is part of a scam. 

• Has it developed quickly, or have the two sides come to an agreement without your help? This is usually part of scam. Whoever is part of the scam is trying to get the money from you without you even realizing what is happening.  

• Did you receive a call from a location that does not correspond with either party? The mediator and target of this scam was receiving calls from Naples, Florida, a home to neither of the parties involved. This should be another sign that something fishy is going on.

For more information on this particular scam and for more examples of how scammers contact you, go to LawPro's Avoid A Claim blog. You can also report if you have been the target of a suspected fraud and see tips on how to prevent fraud.

Assisted by Michael Ciccarone

Maryland Court of Appeals Adopts New Rules Changing Title 17 – Alternative Dispute Resolution

On Nov. 1, 2012 the Court of Appeals of Maryland adopted a rules order including changes to Title 17, governing the provision of Alternative Dispute Resolution (ADR) services in all court ordered cases in Maryland. 

In addition, the rules order changed Title 9  Family Law, including how ADR services are provided by the Maryland courts in family cases.

The rules will go into effect on January 1, 2013. The full text of a PDF file of the rules order is here. 

Title 17 begins on page 55 and Title 9 begins on page 44 of the document.  The ADR Section of the Maryland State Bar Association played a significant role in shaping much of Title 17. Anyone providing ADR services to the Circuit Courts of Maryland should be sure to review the new rule.   

Delaware Chancery Court Appeals Decision Striking Arbitration Program

I recently blogged about Delaware statute that allows Chancery Court judges to sit as private arbitrators having been found to be unconstitutional by U.S. District Court Judge Mary McLaughlin of the District of Delaware.

As the DealBook blog in the New York Times wrote, the statute was designed to “permit the Delaware Chancery Court to arbitrate private disputes confidentially without public access.” Which seems to me to be the problem with the program.

As expected, the case has been appealed to the 3^rd Circuit. The lack of transparency in this arbitration program is a significant obstacle for the appellant to overcome.  What do you think are the odds of the District Court’s decision being overturned?

To read an article that disagrees with the District Court decision and supports the private arbitration program, click here. 

Citizens United? Evaluating the 2012 Presidential Election in a "Super PAC" World

The 2012 presidential election has been the most expensive to date. The whopping $2 billion that has been spent by both campaigns can be partially attributed to the Citizens United v. the Federal Election Commission decision by the Supreme Court.

This decision, as many of you know, held that corporations and labor unions have a First Amendment right to make independent expenditures that advocate election or defeat of candidates in certain federal elections.

This has led to the creation of “Super-PACs” that can spend an unlimited about of money in federal elections. This has led to a very large increase in paid media advertising. Many believe our campaign finance system is broken.

The American Bar Association Section on Individual Rights and Responsibility is holding a panel discussion to consider the effects of Citizens United on the 2012 presidential election.  Free-speech proponents, proponents of campaign donation regulation and election law practitioners will meet to discuss the lessons learned from this election and how campaign finance has changed.  The legal ramifications of Citizens United, such as the potential effects of shareholder litigation challenging campaign expenditures, will also be discussed.

Campaign finance is a critical issue. This panel is a timely opportunity for those in the DC area to hear civil discourse about an interesting subject. It is free, unless you are requesting CLE credit, in which case it costs $25.

To register for CLE credit, email the Section at irr@americanbar.org.  For more information, contact Patrice Payne at (202) 662-1030.

Federal Agencies Directed to Use Conflict Resolution to Resolve Environmental Issues

Federal agencies have been directed yet again to use Alternative Dispute Resolution (ADR) techniques to resolve disputes.  This time the Acting Director of the Office of Management and Budget and the Chair of the Council on Environmental Quality have directed relevant departments and agencies to

“increase the appropriate and effective use of third-party assisted environmental collaboration as well as environmental conflict resolution to resolve problems and conflicts that arise in the context of environmental, public lands, or natural resources issues, including matters related to energy, transportation, and water and land management. See Memorandum on Environmental Conflict Resolution 

This is not the first time the White House has encouraged federal agencies to use ADR techniques. For example, in 1998 President Clinton ordered agencies and departments to take steps to promote greater use of ADR techniques to resolve disputes and to negotiate regulations. See Memorandum for Heads of Executive Departments and Agencies

The latest memorandum requires that agencies use ADR techniques when appropriate to develop regulations and policy, resolve land management disputes and resolve enforcement issues related to water and land management, energy and transportation issues.

The memo applies to the executive branch agencies’ enabling legislation, the National Environmental Policy Act (NEPA) and other laws aimed at managing and conserving the environment, natural resources and public lands.  The complete memo is here.

Information about some of the relevant federal environmental ADR resources can be found at the Department of Justice website the EPA Conflict Prevention and Resolution Center website and the Department of Interior Office of Collaborative Action and Dispute Resolution website.