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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Non-Lawyer representation in arbitration?

Although the right to legal representation in arbitration is well-settled, the use of non-lawyers to represent disputants in the arbitral process is not.

In Florida, non-lawyers representing parties in securities arbitrations are deemed to be engaged in the unauthorized practice of law. See Florida Bar Advisory Opinion on Non-lawyer Representation in Securities Arbitration, 696 So.2d 1178, 22 Fla.L.Weekly S388 (date). Securities arbitration may present a special case. The Florida court specifically noting that the opinion did not address the “propriety of non-lawyer representation in any other form of arbitration.” Id. Apparently, the drafters of the revised Uniform Arbitration Act thought so also. The drafters considered adding “or any other person” after “attorney” in the section providing for representation in arbitration; however, they expressed particular concern over the possibility that “incompetent and unscrupulous individuals, especially in securities arbitration,” would hold themselves out in arbitration. ULA ARB §16, Comment 2 (2000) (emphasis added). Nevertheless, the drafters purposely avoided prohibiting non-lawyer representation by noting that §16 “is not intended to preclude, where authorized by law, representation in an arbitration proceeding by individuals who are not licensed to practice law.” Id.
State law governs the unauthorized practice of law. Because the “practice of law” is defined very broadly in Georgia, representation in arbitration could easily fall into the definition. See OCGA §15-19-50; see also discussion §15:6 infra. Nevertheless, neither federal nor state arbitration law empowers a court to intervene in an arbitration when a non-lawyer is representing a party, nor is non-lawyer representation is a ground to vacate an award. In addition, there is no authority to support discipline for lawyers serving as arbitrators or representatives of other parties in such arbitrations. Arguably, the “freedom to contract” rationale that underlies so much of the pro-arbitration trend in case law, particularly at the federal level, supports the parties’ choice of representation. After all, they need not select lawyers as arbitrators. In some instances, federal law may actually preempt state limitations on representation. See, e.g., 36 USCA §220529(b)(4) (allowing parties in certain sports arbitrations to be represented by an attorney “or by any other authorized representative”(emphasis added)).
Finally, judicial deference to arbitration custom would favor non-lawyer representation in many traditional arbitration settings in which legal issues are secondary, e.g., factual and technical disputes in construction or commodities association trading, or where arbitration is part of a religious or cultural identity, e.g., Bet Din arbitration in Jewish communities. EM/DY
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11th Cir. lacks jurisdiction to hear lower court's refusal to enjoin arbitration

In ConArt, Inc. v. Hellmuth, Slip Copy 2007 WL 2994001 (11th Cir. Oct. 16, 2007), the 11th Circuit found it was without jurisdiction to hear an appeal of an Alabama federal district court’s order refusing to enjoin arbitration. Under the FAA, an appeal may not be taken from an interlocutory order refusing to enjoin arbitration. 9 U.S.C. 16(b)(4). The Court rejected petitioner’s argument that 28 U.S.C. s 1292(a)(1), which authorizes interlocutory appeals generally of orders "refusing ... injunctions," trumps the FAA. Such an argument has “too much throw weight” according to the Court. Furthermore, the lower court had retained jurisdiction over the issues and, therefore, its order was not a final order subject to review. Pointing out that the order refusing to enjoin arbitration could be reviewed after final judgment on the award was entered following the conclusion of arbitration, the 11th Circuit accepted the possibility that the parties may have to adjudicate twice if the issues are subsequently found to be non-arbitrable. SH Read more!

Should Georgia Adopt the Uniform Mediation Act?

A recent decision from the New York appellate division in Hauzinger v. Hauzinger illustrates the complex issues and implications involved in the adoption or non-adoption of the Uniform Mediation Act (UMA). In Hauzinger, the appellate division refused to enforce a confidentiality agreement that the parties entered into as part of the mediation process. The court also refused to grant a motion, made by the mediator, to quash the subpoena which required the mediator to appear for a deposition and for his records in connection with the mediation. The court noted that the UMA had yet to be adopted by the New York legislature and declined to use the case before them as an opportunity to do so.
The confidentiality of mediation proceedings is considered important to attain the level of candor that some feel is essential for the efficacy of the process. Different ways to achieve protection include privilege, evidentiary exclusion rules, and non-disclosure agreements. The drafters of the UMA adopted a privilege approach to confidentiality that can be invoked to protect mediation communications. While there are some exceptions, supporters believe the UMA will foster more candor and respect for the mediation process. Critics, however, find the privilege approach lacking and believe a broader confidentiality provision should have been utilized. Also controversial is the use of ethical disclosure requirements similar to those involved in arbitration with loss of confidentiality as the penalty for violation.

Georgia has not passed the UMA. Instead, the confidentiality of court-connected mediation is governed by the Georgia Supreme Court Dispute Resolution Rules. Under the rules there is a broader confidentiality provision for court-connected mediation with a few exceptions in the case of threats or abuse. Were Georgia to consider supplementing current laws with the UMA it would be important to take stock of exactly what protections are currently afforded, locate the gaps, and use the UMA to create broader protection. One huge gap involves private mediations which are protected only by the evidentiary exclusion rules that protect the content of settlement discussions. Something to think about. SH
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Recent Ga. App. decision misses the mark

Consider this scenario, one party says there is an arbitration agreement, and the other party says there isn’t. Wouldn’t it be prudent to resolve this question of arbitrability before the time and expense of the arbitration? In hindsight, the parties in Panhandle Fire Protection v. Batson Cook Co., Slip Copy, 2007 WL 3203072 (Ga. App. Nov. 1, 2007), probably wish they had. This case raises several interesting questions.

Batson Cook (BCC), a corporation headquartered in Georgia, subcontracted a Florida company, Panhandle (PFP), to install sprinklers in an Alabama project. BCC believed the operative version of the subcontract was governed by Georgia law and contained an arbitration clause providing for arbitration under AAA rules in Georgia. In contrast, PFP believed that the operative version of the subcontract provided that all disputes be handled in a Florida court. After the relationship soured and BCC filed a demand for arbitration with the AAA, PFP notified BCC and the AAA that it wasn’t bound to arbitrate. It is important to note here that apparently BCC did not seek to compel arbitration nor did PFP file a petition in any court to stay the arbitration. The arbitrator was appointed and ruled PFP was bound to arbitrate in Georgia. The hearing was held and an award issued in favor of BCC. PFP did not participate in any way other than to give notice that it believed it wasn’t bound to arbitrate. The Troup County Superior Court confirmed the award and awarded attorneys’ fees under OCGA 9-15-14. The Georgia Court of Appeals vacated the trial court’s order and remanded with instructions for the lower court to determine whether or not there was an enforceable arbitration agreement before it could act on the confirmation of the award.

Whoa! Isn’t this a bit like trying to put the horse back in the barn, the cat back in the bag, etc. Shouldn’t it be incumbent on one of the parties to have tried to resolve the question of arbitrability before getting this far down the pipeline? On one hand, I’d argue that BCC satisfied any responsibility it had by obtaining an arbitral ruling that PFP was bound to arbitrate. After all, under BCC’s version of the situation, AAA Rules applied and R-7 empowers an arbitrator to “rule on his or her own jurisdiction including any objections with respect to the existence…of the arbitration agreement.” Although both federal and state arbitration law (the later of which the Court said would apply) allow a party to seek an order compelling arbitration, BCC should not be required to do so to have a valid arbitration. Nevertheless, on appeal, R-7 isn’t mentioned. Are we to assume that R-7 is always trumped by the “clear and unmistakable” standard of First Options? That is to say, if the parties contest whether or not they entered into an arbitration agreement, then is it impossible to have clear and unmistakable agreement to submit this particular gateway issue to the arbitrator?

On the other hand, I’d argue that PFP had a responsibility to seek an order to stay the arbitration, clearly available to it under OCGA § 9-9-6(b). Moreover, the GAC expressly provides that a party served with a demand cannot argue to vacate the award on the basis that there isn’t a valid arbitral agreement. OCGA § 9-9-13(c)(2). By not seeking a stay, PFP waived its right subsequently seek to vacate the award on the grounds that a valid arbitration agreement doesn’t exist. When we drafted the GAC, we created this bar to encourage early resolution of the gateway issue of arbitrability and to discourage challenges to arbitrability after one or both parties had incurred the costs of the process. Moreover, the law should insure that parties not have to adjudicate the same thing twice, once in the arbitral forum and again in the courts.

If after its independent examination, the Troup County court concludes that there isn’t a valid arbitration agreement, then BCC will have to retry the matter in a Florida court after having gone through the considerable expense of already adjudicating the matter and arguing the appeal and subsequent lower court hearing on remand. Ouch! If the Troup County court finds the arbitral agreement to be valid, it can simply confirm the award, in which case, the costs to BCC will be “only” the appellate proceedings and the lower court hearing, neither of which is insubstantial. If I were BCC, I’d seek attorneys’ fees again on the basis of PFP’s failure to seek a stay of arbitration. But that’s just my opinion.

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Reviving the blog and other news-- ODR gets temporary reprieve

I apologize for the paucity in posts since late Spring. It takes more discipline or change of habit than anticipated. Nevertheless, I'm trying to pick up the pace with the help of my student assistants, Elizabeth Marum and Shannon Hodder. Elizabeth is graduating in December, and Shannon will be taking over. I could also use help from the readers of this blog. If you have an issue, news, comment, etc. regarding ADR in Georgia, please sent it to me, and I'll post it.

Here's some big news: The Georgia Office of Dispute Resolution received a grant from the Georgia Legal Foundation to cover the current year's massive budget shortfall caused by some odd decision making in the General Assembly. GODR's Director, Shinji Morokuma, will have his work cut out for him during the next session to get ODR's budget reinstated. If you have friends in high places, please contact Shinji to coordinate efforts. Read more!

ADR Job available in Dekalb Co.

DEKALB COUNTY C0URTS ADR TRUST FUND

Dispute Resolution Center Director

Applications accepted: October 5-26, 2007

This is a merit exempt position funded by the ADR Trust Fund.

Under the general direction of the ADR Trust Fund Board , the Director will administer and manage all aspects of the DeKalb County Dispute Resolution program. The Director is expected to function under a high degree of accountability in ensuring the accuracy and follow through of the program requirements. Maintains overall responsibility for the program's administrative and operational functions, and program adherence to and compliance with established Federal, State and local standards and guidelines governing alternative dispute resolution. Manages assigned staff including establishing workloads, evaluating performance, resolving staff conflicts and administering employee discipline. Evaluates, recommends and implements policies and procedures for the operation of the dispute resolution center. Recruits, trains and coordinates a network of mediators, arbitrators and case evaluators to provide services. Develops forms, brochures and reports for the dissemination of ADR program information.

[The aforementioned duties are normal for this position. These are not to be construed as exclusive or all-inclusive. Other duties may be required and assigned.]

Minimum Requirements: Bachelor's degree in Public Administration, Criminal Justice, Social or Human Services, Court Management or a related field, five years of work experience in a court system or legal field, knowledge and experience with the Georgia state ADR rules and guidelines; three or more years of supervisory experience preferred. An equivalent combination of education and experience may be considered in determining eligibility for this position.

Work Schedule: Employee may be required to work regularly on various shifts as deemed necessary by the ADR Trust Fund Board.

Annual Salary Range: $55,000 - $75,000 (commensurate with education and experience)

Benefits: 10 paid holidays; 15 days vacation; 13 days sick leave; medical group insurance options; pension plan; deferred compensation plan.

Physical Ability: Successful completion of a job related physical examination by a County Examining Physician is required. DeKalb County does not discriminate on the basis of disability.

Submit application and resume detailing experience and skills related to this position to the Superior Court Administrator's Office, Room 405, DeKalb County Courthouse, Decatur, Georgia 30030, or to cwmccumb@co.dekalb.ga.us by close of business October 26, 2007. Applications are available online at http://www.co.dekalb.ga.us/ or at the DeKalb County Human Resources Department.

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