Creative Settlement

Here is a most creative mediated settlement reported by one of our subscribers (name withheld to protect the innocent). In a $100,000 business dispute the parties agreed that the defendant would pay $60,000 to charity -- $30,000 to a charity of the plaintiff's choosing and $30,000 to a charity of the defendant's choosing.They also discussed the tax deduction and the plaintiff agreed the defendant could take the entire deduction. The mediator humbly stated "I can't claim any credit. It was the defendant's idea and his attorney tells me he has settled a number of disputes this way recently."

We'd love to hear of other creative settlements you've negotiated, mediated, or simply know of. Read more!

A few comments on 2007 legislation in Georgia

Perhaps the General Assembly has lost its collective head, something long ago suspected. Anyway, its collective heart is in the right place as evidenced by its increased interest in incorporating ADR into legislative proposals, but it should consult some experts when it attempts to create new forms and applications of ADR.

In 2007, several bills made it to the governor's desk (and beyond) with the most screwed up notions of arbitration. The most notable has to be S.B.19, codified as OCGA 32-6-171(2)(c, d, & e). This is a procedure to resolve disputes over claims by the Department of Transportation that utility companies have caused damages or delay costs in the removal or relocation of utilities in the path of a project. It is called a "mediation," but it is clearly an adjudicative process by a "mediation board" that makes a final decision by majority on issues submitted. The Fulton County Superior Court gets to perform de novo reviews if a party seeks it within 30 days of being served the "final decision."

My favorite is H.B. 2, codified as OCGA 36-36-114 through 119. This is a procedure for the arbitration of annexation disputes between counties and municipal corporations. This is an entirely new arbitration scheme completely independent from the Georgia Arbitration Code. Putting aside some of the weak procedural elements for now, the weakest part of the scheme is the creation of the pool of arbitrators for the five-member (yes, five) arbitral panels. Actually, there are to be three pools, one of elected municipal officials, one of elected county officials, and one of "persons with masters degrees or higher in public administration or planning and who are currently employed by an institution of higher education in this state." As it turns out, a literal reading of the requirements for the last pool excludes most law faculty members in the state, many of which are otherwise experts in annexation, zoning, and county and municipal law problems. Seems a small thing, but the Department of Community Affairs, charged with administrating the scheme, and the Vinson Institute, charged with training the pools, had a really hard time putting this together. Rumor has it that at the initial training, the attorneys for the county and municipal associations couldn't agree on the meaning and application of the new law. Read more!

The strange case of arbitrating divorce disputes

The arbitration of issues arising in a divorce is a legally complex, if not confused, matter. New legislation in 2007 complicated the matter...

The arbitration of issues arising in a divorce is a legally complex, if not confused, matter. Divorces must be granted by the state, and the Superior Courts have exclusive jurisdiction, but parties are free to submit their divorce-related disputes to arbitration. The few recent cases of this type have involved the division of marital property, and presumably such arbitrations are governed by the Georgia Arbitration Code. See Ciraldo v. Ciraldo, 280 Ga. 602(1), 631 S.E.2d 640 (2006) (assuming without deciding that the GAC is applicable). However, to be an effective part of the final divorce decree, does a party merely have to confirm the award, or must the award be adopted by the court and incorporated into the decree? It would appear that courts must exercise their oversight powers to insure fairness in the final settlement. In Page v. Page, 281 Ga. 155, 635 S.E.2d 762 (2006), the Court held that a settlement agreement reached prior to arbitration and incorporated into the arbitrator’s award must be reviewed by court before being incorporated into final decree. Thus, the standards for modifying or vacating an award in such cases are going to diverge from those under the GAC. Completely ignoring the standards for judicial review in modifying or vacating an award, the Court in Barton v. Barton, 281 Ga. 565, 639 S.E.2d 481 (2007), examined whether or not the arbitrator had applied the prevailing rule for the valuation of stock options.
In Page v. Page, the Court narrowly avoided the question as to whether matters of child support and custody were, as a matter of public policy, capable of being a subject of arbitration. 281 Ga. 155, at 156 n. 3. Subsequent legislation in 2007 expressly permitted the use of binding arbitration on issues of child custody, visitation, parenting time, and parenting plans. O.C.G.A. § 19-9-1.1. The relationship of this code section to the provisions of the GAC are unclear; however, this section specifically provides: “The arbiter's decisions will be incorporated into a final decree awarding child custody unless the judge makes specific written factual findings that under the circumstances of the parents and the child, the arbiter's award would not be in the best interests of the child. In its judgment, the judge may supplement the arbiter's decision on issues not covered by the binding arbitration.”
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New Year Blog about Last Year's Cases

We’ve been working on the 2008 pocket part for the treatise, and several cases struck us as interesting. First, has to be Wilson v. Wilson, --Ga.--, --- S.E.2d ----, 2007 WL 4124349 (Ga.), in which the Georgia Supreme Court bent the confidentiality provisions of its own ADR Rules; second, is a couple of opinions from Georgia’s federal courts illustrating how labor arbitration and commercial arbitration standards can be mixed; and, third, is an oddity from our Court of Appeals in which court-connected non-binding arbitration is once again merged somehow with private commercial arbitration.

When private mediations are really court-connected and a new exception to confidentiality --
For mediators and perhaps for ADR practitioners generally, Wilson v. Wilson, --Ga.--, --- S.E.2d ----, 2007 WL 4124349 (Ga.) is easily the most interesting case of this year. Mr. Wilson challenged the lower court’s enforcement of a mediated divorce agreement. The first issue was whether the mediation was court-connected, and therefore governed by the court’s ADR rules, or not. The divorce was filed in the Coweta Judicial Circuit, which had adopted a standing order requiring all contested divorce cases to participate in mediation. Mr. Wilson's attorney filled out a form to initiate mediation with the Coweta ADR Program, but due to a request by the attorneys not to schedule the case for mediation “pending further discovery,” the Program Director placed the case on inactive status until hearing back from the attorneys. A couple of months later and without informing the circuit’s mediation center, the parties privately chose a mediator (registered with ODR but not on the center’s list) and reached the mediated agreement without their attorneys present. The Coweta court said it was a private mediation conducted outside of its rules, but the Georgia Supreme Court determined otherwise reasoning that the mediation was initiated by the standing order, the local rules allowed parties to pick ODR-registered mediators not on the court’s list, and the parties did not avail themselves of the procedure to opt-out of the court-connected mediation. The moral of this story is that mediators may think they are handling a private mediation, but if the dispute is in court, that mediation may be “court-connected,” and the mediator should be sensitive to the prevailing rules governing the process.

The sexy issue in Wilson, however, involves confidentiality. During the lower court hearing, Mr. Wilson testified that he wasn’t sufficiently competent to enter into the agreement; however, the mediator was also called to the stand and testified about his general impression that both of the parties had the mental capacity to engage in the mediation and settlement. On appeal, Mr. Wilson argued that calling the mediator to the stand violated the confidentiality portion of the agreement to mediate, which provided, “all written and oral communications, negotiations and statements made in the course of mediation will be treated as privileged ... and are absolutely confidential.” Presumably, this also violated the confidentiality provisions of part VII. A. of the Georgia Alternative Dispute Resolution Rules, which provide that mediators cannot “be subpoenaed or otherwise required to testify concerning a mediation,” and is completely contrary to the spirit of Advisory Opinion 6 of the Commission’s Ethics Committee. Relying on an exception to confidentiality in the Uniform Mediation Act (which is not the law in Georgia), the Court rejected Mr. Wilson’s argument and concluded “that fairness to the opposing party and the integrity of mediation process dictate that we create such an exception when a party contends in court that he or she was not competent to enter a signed settlement agreement that resulted from the mediation.” This decision is similar to that made by the court in Olam v. Congress Mortg. Co., 68 FSupp2d 1110, 1137 (N.D.Cal.1999). There are many interesting questions about Wilson, not the least of which is the expertise of mediators to testify as to mental competence, but here’s the one we should be thinking about: When a mediator comes to the “confidentiality” information in the introductory statement, should he or she detail this new exception? It appears so.

Is this labor arbitration?
If you get a chance, read the following cases:
Aldred v. Avis Rent-A-Car, Slip Copy, 2007 WL 2110720 (C.A.11 (Fla.) (2007), in which the court used both FAA and labor arbitration standards in reviewing an award under a collective bargaining agreement, and Bryant Motors, Inc. v. Blue Bird Body Co., Slip Copy, 2007 WL 1832016, , M.D.Ga., June 25, 2007), modified by Bryant Motors, Inc. v. Blue Bird Body Co., Slip Copy, 2007 WL 2422133, (M.D.Ga. 2007), in which the court mixes standards and cases from labor arbitration with the FAA in its analysis on a motion to vacate a commercial arbitration award. Note that the US Supreme Court has yet to address the applicability of the FAA to arbitration clauses in collective bargaining agreements. John Allgood makes some informative comments in this regard (see his comments to this post).

Obong Redux
Who can forget that madcap case, Obong v. Ekereke, 216 Ga. App. 59 (1994), in which it was unclear whether the parties had participated in a voluntary binding arbitration or a court-connected mandatory non-binding arbitration? Needless to say, but I’ll say it - the difference is important. The Court of Appeals concluded it was the latter, and the Supreme Court concluded it was the former. Ekereke v. Obong, 265 Ga. 728 (1995). Of course, those were the formative days of Georgia ADR. Now, we have Lowe v. Center Neurology Associates, P.C., --- Ga. App. ---, --- S.E.2d ----, 2007 WL 2822420, in which the court uses the Georgia Arbitration Code for authority in a case that appears to have been referred by the lower court to court-connected mandatory non-binding arbitration, to which the Georgia Arbitration Code would not be applicable. Oops…
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