This is a non-exhaustive note on some aspects of ADR rules applicable in some business courts.
OVERVIEW
After identifying some literature on ADR in business courts, I have included two general groupings to begin this post. These focus on (1) courts with mandatory ADR and (2) courts addressing ADR as part of case management.
I then give a bit deeper analysis from a few individual states that are particularly detailed in their business court’s rules concerning ADR, including a very new business court (Wyoming, 2021, mandatory ADR) and one of the original business courts (North Carolina, 1995-1996, mandatory ADR). I finally include more detailed descriptions of business courts that have interesting innovations such as in Delaware, and in some courts allowing business court judges to mediate each other’s cases.
ADR AND BUSINESS COURTS LITERATURE
There is some literature on ADR in business courts. Getting to Yes in Business Courts: The Unique Role of ADR in Business Court Cases (2011), by Judge Ben F. Tennille, Professor Anne Tucker, and me, includes a discussion about the history and nature of business courts, the use of court annexed ADR, and comparisons with independent arbitration. See also these articles in the Cardozo Journal of Conflict Resolution: Ari Davis, Moving From Mandatory: Making ADR Voluntary in New York Commercial Cases, 8 Cardozo J. Conflict Resol. 283 (2006) and Christopher R. Drahozal, Business Courts and the Future of Arbitration, 10 Cardozo J. of Conflict Resol. 491 (2009). There is also a discussion of ADR and business courts in the Eighth edition of the ABA’s The Improvement of the Administration of Justice, in Chapter 37, Business Courts in the United States: 20 Years of Innovation, by me and Mitchell L. Bach, one of the leading attorneys involved in developing business courts over the last 25 years. This is not an exhaustive list of where one might find discussions of ADR and business courts.
Although not specific to business courts, it was my experience in commercial dispute mediation that led me to write Solomon and the Baby: Lessons in Mediation, in connection with a court-annexed mediator/settlement master training program in Philadelphia’s Commerce Court. This article was derived from the earlier article, Lee Applebaum, Evaluating Gut Instincts Wisely, The Legal Intelligencer (Feb. 8, 2001).
MICHIGAN LITERATURE ON ADR AND BUSINESS COURTS
Michigan has produced considerable literature on ADR in connection with business courts, including: the 2015 work by Hurford and Allen, A Taxonomy of ADR, a 2015 article from Michigan by business court judge John C. Foster, Richard L. Hurford & Douglas L. Toering; Business Courts, Arbitration, and Pre-Suit Mediation: A Modest Proposal for the Strategic Resolution of Business Disputes, another 2015 article by Judge Foster and Richard Hurford; ADR within ADR – Business Courts as Laboratories for Litigation Process Improvement; Doug Van Epps, Business Courts and ADR: SCAO Research Supports Early ADR Interventions; and Mark Cooper and Hal Caroll, Business Courts, Insurance Coverage and Indemnity Disputes, and Early Expert Evaluation.
SPECIFIC ADR RULES IN BUSINESS COURTS
- COURTS WITH POWERS TO ORDER MANDATORY ADR
Circuit Court of Cook County (Chicago) Commercial Calendar Court-Annexed Mediation
Local Circuit Court Rule 20.02(A)
allows the Presiding Judge of the Law Division, individual calendar judges and motion judges to order a case to mediation or the parties may agree to mediate any issue between them at any time during the litigation. An Order of Referral to Civil Mediation is entered by the court upon motion of the parties or on the judge’s order. [Emphasis added]
Cook County’s detailed court-annexed mediation rules can be found here.
Cuyahoga County (Cleveland) Court of Common Pleas Commercial Docket Business Mediation Rules
Cuyahoga County Court of Common Pleas Local Rule 21.1 governs mediation, and section II thereof specifically governs business mediation. As to all mediations, these can be ordered solely by a judge or sought by motion of one party, or by joint request of all parties. The body of this lengthy and detailed rule can be found here.
Florida’s Ninth Judicial Circuit (Orlando and Osceola) Business Court
Section 8 of the Ninth Judicial Circuit’s Business Court Rules addresses a wide range of ADR matters. First and foremost, ADR is mandatory.
8.1 – Alternative Dispute Resolution Mandatory in All Cases. Alternative Dispute Resolution (“ADR”) is a valued tool in the resolution of litigated matters. An appropriate mechanism for ADR shall be discussed by the court and counsel at the Case Management Conference. The Case Management Order shall order the parties to a specific ADR process, to be conducted either by a court–assigned or an agreed–upon facilitator and shall establish a deadline for its completion.
The parties, in consultation with the court, can choose the form of ADR best suited to the case, whether non-binding arbitration, mediation, or presumably a process of neutral valuation.
Rule 8.2 specifically addresses non-binding arbitration and Rule 8.3 addresses mediation.
8.2 – Non–Binding Arbitration. The parties may agree to submit to non–binding arbitration or it may be ordered upon motion of any party. The rules governing arbitration shall be selected by the parties or failing agreement, the court will order use of all or a part of the arbitration rules common to the Ninth Judicial Circuit of Florida, the American Arbitration Association or other available rules.
Rule 8.3 gives a specific and detailed set of rules on how mediation will be conducted in Business Court cases.
Florida’s Thirteenth Judicial Circuit (Tampa) Business Court,
Under Local Rule 3.13(f), “At the case management conference, the court will address, “(f) The timing of Alternative Dispute Resolution, including the selection of a mediator or arbitrator(s)….”
Local Rule 3.20, addressing mediation, states: “The parties in all cases assigned to Business Court shall be ordered to attend mediation to be conducted by a mediator who the parties agree upon or who the Court assigns.”
Local Rule 3.21, provides: “Non-Binding and Voluntary Binding Arbitration. Non-binding and voluntary binding arbitration are governed by Florida Statutes, Florida Rules of Civil Procedure, and the Thirteenth Judicial Circuit Court Non-Binding Arbitration Administrative Order, as amended from time to time.”
Maine’s Business and Consumer Docket (BCD)
Maine’s general rules governing ADR in the Superior Court should apply to BCD cases. Thus, absent certifying they have already been through a neutral ADR process, per Rule of Civil Procedure 16B(d)(1):
Promptly after the filing of an answer in the Superior Court or removal from the District Court, the parties shall confer and select an alternate dispute resolution process (that is, mediation, early neutral evaluation, or nonbinding arbitration) and a neutral third party to conduct the process. If the parties cannot agree on the ADR process, they shall proceed to mediation. If the parties cannot agree on the selection of a neutral, they shall notify the court, which shall designate a neutral third party, with experience appropriate to the nature of the case, from the appropriate roster of court neutrals ….
Per Rule 132(b), governing BCD case management conferences, the BCD judge issues a scheduling order that sets deadlines for participation in ADR, which order should also address any opportunity for a Judicially Assisted Settlement Conference.
Maryland,Business and Technology Case Management Program
Under Maryland Rule 16-308(b)(4), governing the general operation of Maryland’s statewide Business and Technology Case Management Program (BTCMP):
(b) Program Established. Subject to the availability of fiscal and human resources, a program approved by the Chief Judge of the Court of Appeals shall be established to enable each circuit court to handle business and technology matters in a coordinated, efficient, and responsive manner and to afford convenient access to attorneys and litigants in business and technology matters. The program shall include: ….
(4) ADR proceedings conducted by individuals qualified under Title 17 of these Rules and specially trained in business and technology.
Persons wanting to serve as court-designated mediators in BTCMP cases, per Maryland ADR Rule 17-207(b), must meet specific criteria to serve as BTCMP case mediators. See this link.
The parties are expected to discuss ADR as part of the initial case planning conference, under Maryland Rule of Civil Procedure in the Circuit Courts 2-504.1.
Maryland has 23 counties, along with Baltimore City, grouped into 8 Circuits. There are BTCMP judges assigned in each Circuit (though not in each County). Montgomery County’s Circuit Court, in the Sixth Circuit, is one of the more prolific BTCMP programs. There appear to be no detailed statewide rules of procedure governing each BTCMP court common to every circuit, so I have looked at the former Montgomery County guidelines on its BTCMP program, which can be found here.
Under these guidelines, there is a mandatory settlement conference as part of the pre-trial conference, requiring the presence of parties and persons with settlement authority to appear in person.
New Jersey Complex Business Litigation Program
Under Administrative Office of the Courts Directive # 01-19 , concerning the Complex Business Litigation Program (CBLP), linked here, the CBLP’s enabling order provides, at page 5:
Settlement and CDR [Complementary Dispute Resolution]
Any settlement conferences will be held at the CBLP judge’s discretion. The CBLP judge will also advise whether a settlement conference memorandum is necessary as well as any content and formatting requirements.
CBLP cases are not part of the court’s mandatory civil mediation and arbitration programs. However, the CBLP judge in each vicinage, as part of case management, should encourage the parties to engage in mediation or some type of dispute resolution to facilitate settlement.
New York Commercial Division
As with a number of other business courts, New York’s Commercial Division has both mandatory and voluntary ADR components.
Commercial Division Rule 30 addresses settlement conferences, including mandatory settlement conferences.
(a) Settlement Conference. At the time of certification of the matter as ready for trial or at any time after the discovery cut-off date, the court may schedule a settlement conference which shall be attended by counsel and the parties, who are expected to be fully prepared to discuss the settlement of the matter.
(b) Mandatory Settlement Conference. Unless exempted as set forth herein, the parties in every case pending in the Commercial Division must participate in a court-ordered mandatory settlement conference (MSC) following the filing of a Note of Issue.
Rule 30(b) lays out considerable detail for the MSC process.
Commercial Division Rule 3 more generally addresses ADR and settlement conferences before a judged other than the judge assigned to the case.
(a) At any stage of the matter, the court may direct or counsel may seek the appointment of an uncompensated mediator or neutral evaluator for the purpose of helping to achieve a resolution of all or some of the issues presented in the litigation. Counsel are encouraged to work together to select a mediator or neutral evaluator that is mutually acceptable and may wish to consult any list of approved neutrals in the county where the case is pending. Additionally, counsel for all parties may stipulate to having the case determined by a summary jury trial pursuant to any applicable local rules or, in the absence of a controlling local rule, with permission of the court.
Rule 3(b), on using judges as mediators, is discussed at the end of this post.
Philadelphia Court of Common Pleas Commerce Case Management Program
Under Administrative Docket No. 01 of 2016 In re: Commerce Case Management Program, section 7, there are provisions for both mandatory ADR and voluntary ADR: “A settlement conference with a Commerce Program JPT [Judge Pro Tempore] will be scheduled after pre-trial motions are decided. A settlement conference may be scheduled earlier in any case in which counsel agree that such a conference may be productive. Such a request shall be made in writing by letter to the assigned Commerce Program Judge.”
In addition, “Commerce Program Judges may assist the parties in reaching a fair and reasonable settlement or other resolution of the matter. To that end, the assigned Commerce Program Judge, in his or her discretion, may schedule one or more formal settlement conferences. The Commerce Program Judge may also encourage the parties to engage in settlement discussions and in any form of Alternative Dispute Resolution (ADR), including the assistance of a Commerce Program JPT, that may result in settlement, avoidance of trial or expeditious resolution of the dispute. Except upon order of the Court, the pendency of any form of ADR shall not alter the date for commencement of trial.”
Rhode Island Superior Court Business Calendar
Section V. of Superior Court Administrative Order No. 2011-10 provides:
It is the intent of the Superior Court to process matters on the Business Calendar in as expeditious a manner as possible. To that end, the Justice(s) assigned to the Calendar are vested with the power to require mandatory submission of the dispute to non-binding mediation. Failure to comply with an Order to that affect may be sanctionable.
- COURTS REQUIRING THE PARTIES TO ADDRESS ADR AT INITIAL CASE MANAGEMENT CONFERENCES, AND WHICH APPEAR NOT TO HAVE MANDATORY ADR
Georgia Statewide Business Court Case Management Meeting
Georgia’s Statewide Business Court Rules 5.1(e)(1) and (9) provide:
Topics. Unless the Court orders otherwise, the Case Management Meeting shall, at minimum, cover the following topics:
(1) The nature and basis of each party’s claims and defenses and the possibilities of settling the case, including by early mediation (see subsection (9) of this section) …. (9) Each party’s view on the timing of mediation, including any plans for early mediation, a mediation deadline, and each agreed-upon mediator.
Georgia, Metro Atlanta Business Case Division
Per section 13 of Atlanta Judicial Circuit Rule 1004 Metro Atlanta Business Case Division:
The Division Judges, in consultation with all parties, shall have the ability to order nonbinding mediation, nonbinding arbitration, or other means of alternative dispute resolution as dictated by the needs of a particular Business Case. The Division Judges themselves, with the consent of all parties, may conduct such nonbinding mediation, nonbinding arbitration, or other means of alternative dispute resolution.
Florida’s Eleventh Judicial Circuit (Miami) Complex Business Litigation Rules
The Complex Business Litigation (CBL) Rules expressly state that the CBL judge will follow Florida Rule of Civil Procedure 1.201 governing complex litigation, including case management conferences.
Under Rule 1.201(b)(1)(K), the parties are to outline a plan with “suggestions on the advisability and timing of referring matters to a magistrate, master, other neutral, or mediation.”
Under CBL Rule 5.1.2.h. governing the scheduling case management conferences, the parties are to discuss, “The possibility of settlement and the timing of Alternative Dispute Resolution, including the selection of a mediator or arbitrator(s)….”
Indiana Commercial Courts
Indiana’s Commercial Courts Handbook includes considerable discussion on all forms of ADR, and the inclusion of ADR discussions and orders in the early case management process. The Handbook can be found here.
Kentucky Business Court
Kentucky Business Court Rule 4.2.k, requires the parties are to address: “Mediation or Alternative Dispute Resolution, including timing, deadlines, possibility of early resolution efforts, and possible mediator(s).”
Under BCR 4.3.e., the parties are to submit a joint case management report, including:
The report must explain whether the parties agree to early mediation and any agreements to facilitate an early mediation. Counsel for the parties are encouraged to discuss with their client(s) the cost of litigation and the potential cost savings that may be realized by an early mediation. Additionally, the report must include a deadline for mediation (or competing
proposals) and the name of any agreed-upon mediator.
Massachusetts, Superior Court Business Litigation Session
As reflected in this 2022 Business Litigation Session practice guide, found here, while there appear to be no specific rules on ADR or mandatory ADR requirements, the judges are highly involved interacting with the parties and determining when and how ADR may assist the parties in resolving the matter.
Michigan Business Court, Kent County
Section V of the local business court’s administrative order provides that “Each Kent County SBD judge shall conduct an initial case conference in each case assigned to the SBD, and each … judge shall encourage the use of early facilitative mediation in all cases where resolution through mediation may be accomplished.
Michigan Business Court, Macomb County
Local Administrative Order, section 5.a.ii., provides that at the initial pre-trial conference, the parties are to address “Whether ADR is suitable, and if so, when and what type(s) should be employed.”
Section 7 of the same Order provides:
The parties are encouraged to explore any and all ADR options that will assist in the early resolution of the dispute. The parties are also encouraged to mutually agree on the ADR neutral(s). To assist the parties in mutually selecting appropriate neutral(s), the ADR clerk will make available a roster of ADR neutrals. … The parties are free to select mutually agreed upon neutral(s) who many not be listed in this roster. If the parties are unable to mutually agree on an ADR neutral, mediator, and the Business Court orders mediation, the neutral will be selected form the roster ….
New Hampshire Business and Commercial Docket
Under Standing Order 2, Initial Status Conference, the parties are to discuss, “6. ADR: the timing of ADR and whether there are motions that, once ruled upon, would facilitate ADR.”
Tennessee Business Court
Under section 4.4(k) of Tennessee’s “Guide to the Business Court Docket – Phase 2” (rev. 2022), the business court judge may notify counsel before the first case management meeting that the court expects to address “the possibility of settlement and the timing of Alternative Dispute Resolution….”
- WYOMING COURT OF CHANCERY’S ADR RULES
As one of the newest business court’s, I’m putting up Wyoming’s Chancy Court Rules of Civil Procedure addressing ADR, separately, and at more length.
Under Rule 40(b)(1), “Limited Assignment for Alternative Dispute Resolution,” the Chancery Court seems to have a wide range of powers to assign cases to nonbinding ADR. In its own discretion it “may” assign cases, but it “shall” assign cases on the request of any party (i.e. full consent is not required for the case to go to ADR). The neutrals/mediators include certain categories of judges or other qualified persons.
Under Rule 40(b)(2), the parties can seek ADR by agreement. If they want ADR, but cannot agree on the neutral/mediator, they can give the court a list of their recommendations and “the chancery court shall then appoint a person to conduct the settlement conference or to serve as the mediator.”
Under Rule 40(b)(2), “A settlement conference or mediation may be conducted in accordance with procedures prescribed by the person conducting the settlement conference or mediation.” The Rule then goes on, however, to describe in specific details all aspects of the mediation process.
ADR is not limited to mediation, and can include arbitration, at a minimum. Rule 40(b)(2)(E) provides: “Other forms of Alternative Dispute Resolution. Nothing in this rule is intended to preclude the parties from agreeing to submit their dispute to other forms of alternative dispute resolution, including arbitration.”
Rule 40(b)(2)(F) provides: “Retained Jurisdiction. Assignment of a case to alternative dispute resolution shall not suspend any deadlines or cancel any hearings or trial. The chancery court retains jurisdiction for any and all purposes while the case is assigned to any alternative dispute resolution.
- NORTH CAROLINA BUSINESS COURT MANDATORY MEDIATION RULE
As one of the oldest business court’s (created in 1995 and operational in 1996), and as a court staking out ground for mandatory mediation as part of the business court program, North Carolina’s Rules are also being separately set out here.
Rule 11. Mediation
11.1. Mandatory mediation. All mandatory complex business cases and cases assigned to a Business Court judge pursuant to Rule 2.1 of the General Rules of Practice are subject to the Rules for Mediated Settlement Conferences and Other Settlement Procedures in Superior Court Civil Actions. Although these statewide mediation rules require participation in a mediation utilizing a certified mediator unless the Court orders otherwise on a showing of good cause, the parties may engage in multiple mediated settlement conferences before the same or different mediators.
11.2. Selection and appointment of mediator. The parties should attempt to select a mediator by agreement. The Case Management Report should contain either the parties’ agreement or, in the absence of an agreement, each party’s nominee of a certified mediator for appointment by the Court. If all parties cannot agree on a mediator, then the Court will appoint a mediator from the list of certified mediators maintained by the North Carolina Dispute Resolution
Commission.
11.3. Report of mediator. Within ten days of the conclusion of the mediation, the mediator must mail or e-mail a copy of his or her report to the Court, in addition to filing the report with the Clerk of Superior Court in the county of venue.
11.4. Notification of settlement. The parties are encouraged to keep the Court apprised of the status of settlement negotiations and should notify the Court promptly when the parties have reached a settlement.
- DELAWARE’S RAPID ARBITRATION ACT
This is a statutory format for an expedited arbitration process that runs through the Chancery Court. The Chancellor and Vice-Chancellors do not arbitrate the cases, but are involved in some level of oversight and review. Delaware’s Rapid Arbitration Act is found at 10 Del. C. §§ 5801-5812. Pursuant to powers authorized in the Act, Delaware Rules of Chancery Court 96 and 97 have been adopted to enable Chancery”s role in this process.
Delaware’s effort at establishing a private arbitration forum, where the Chancellor or Vice Chancellors serve as the arbitrator, 10 Del. C. § 349, was declared unconstitutional in the U.S. Court of Appeals for the Third Circuit. Delaware Coalition for Open Government, Inc. v. Strine, 733 F.3d 510 (3d Cir. 2013) (cert. denied).
- MEDIATION IN DELAWARE’S CHANCERY COURT
There are two approaches to mediation in the Chancery Court.
Under 10 Del. C. § 347, the Chancery Court has jurisdiction to mediate certain delineated commercial and technology disputes, when the litigation is not otherwise before the Chancery Court. These have become known as “mediation only” disputes, and this jurisdictional innovation was originally promoted by then Vice-Chancellor Leo Strine in a well-known article, ”Mediation-Only” Filings in the Delaware Court of Chancery: Can New Value Be Added by One of America’s Business Courts?, 53 Duke L. J. 585 (2003). These mediations are governed by Delaware Rules of Chancery Court 93-95.
Delaware Rule of Chancery Court 174 addresses voluntary mediations of case pending in the Chancery Court. (There are some categories of non-business cases in Chancery’s jurisdiction that could be sent to mandatory mediation.)
- USING JUDGES ON THE SAME COURT AS NEUTRALS/MEDIATORS
West Virginia Trial Court Rules Governing Business Court Division
Per Rule 29.04(e), a “Resolution Judge” is defined as:
A member of the Division assigned by order of the Division Chair, with the advice and consent of the Division, to mediate, arbitrate, or provide any other form of dispute resolution agreed to by the parties. To protect confidentiality of the mediation process, communication between the presiding and resolution judge regarding the mediation during or after the process shall be limited to procedural status or other matters agreed to by all parties. The presiding judge will retain control and jurisdiction over the case.
Rule 29.08(h) provides:
The Resolution Judge is authorized to schedule and conduct mediation of the case or any Alternative Dispute Resolution as agreed to by the parties and the Resolution Judge in an attempt to resolve the case in an expedient and efficient manner.
New York Commercial Division
Commercial Division Rule 3 addresses ADR and settlement conferences before a judged other than the judge assigned to the case. Rule 3(b) provides:
(b) Should counsel wish to proceed with a settlement conference before a justice other than the justice assigned to the case, counsel may jointly request that the assigned justice grant such a separate settlement conference. This request may be made at any time in the litigation. Such request will be granted in the discretion of the justice assigned to the case upon finding that such a separate settlement conference would be beneficial to the parties and the court and would further the interests of justice. If the request is granted, the assigned justice shall make appropriate arrangements for the designation of a “settlement judge.”
Delaware Court of Chancery
Under Delaware Court of Chancery Rule 174(b), addressing voluntary mediations:
(b) Voluntary mediation. In any type of matter, with the consent of the parties, the Court may enter an order referring the matter or any issue for mediation before a judicial mediator or a non–judicial mediator. A member of the Court of Chancery or a Master sitting permanently in Chancery who has had no prior involvement in the case may serve as a judicial mediator. Any impartial individual may serve as a non–judicial mediator. A non–judicial mediator need not be an attorney.
Massachusetts, Superior Court Business Litigation Session
As reflected in this 2022 Business Litigation Session practice guide, found here, there is at least one judge that will serve as a mediator where that judge is not presiding over the case.
Posted by Lee Applebaum
