Seven Steps to Defend an Arbitration

7/29/2019 Seven Steps to Defend an Arbitration

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SEVEN STEPS TO DEFEND AN ARBITRATION

by J . S. Chris Christie, J r.

Your client, the defendant, had its motion to compel arbitration granted. Ratherthan going away, opposing counsel is pushing forward with arbitration. How is

defending an arbitration different from defending a case before a trial court? Forarbitration, a defense attorney should consider the following seven steps:

I. Identify the Applicable Rules FirstA defense attorney should identify the applicable rules first. Rather than familiar

federal or state rules of civil procedure, the possible versions or sets of arbitration rulesare numerous. Arbitration rules vary significantly on discovery and other issues.

The Federal Arbitration Act, 9 U.S.C. 1-16, the Uniform Arbitration Act(adopted by most states), and the Revised Uniform Arbitration Act do not provideprocedural rules for arbitration. The parties can agree pre-dispute or post-dispute toapplicable rules. Ideally, the applicable arbitration rules are identified in the arbitrationagreement. Failing agreement, a court can decide on the arbitrator and the rules or thearbitrator can decide on the rules.

Some sets of arbitration rules are specific to an area of law (e.g., employment,patent, international) and some to an industry (e.g., securities, real estate, employeebenefits). While the American Arbitration Association (AAA) is widely known, manyother organizations offer comprehensive rules (e.g., JAMS Comprehensive ArbitrationRules and Procedures, www.jams.adr.com).

II . Identify Witnesses and Evidence EarlyEarly, a defense attorney should investigate witnesses and other evidence. This

information is needed for arbitrator selection and for decisions as to how much discoverymight be negotiated.

Arbitrators are selected at the beginning of arbitral proceedings, rather than at theend, when a jury is selected. Before arbitrator selection, a defense attorney should knowwhat type of person the client would want to serve as both judge and jury deciding thedispute. Therefore, enough investigation is needed to know how the claims will probablybe defended so decisions can be made when selecting an arbitrator.

For defending a particular arbitration, almost no discovery might be best orextensive discovery might be best. Investigate early to have better information as to howmuch and what discovery may be needed. Before the arbitrator is appointed, a discoveryagreement might be negotiated. See AAA Comm. Arb. R-1 (The parties, by writtenagreement, may vary the procedures set forth in these rules. After appointment of thearbitrator, such modifications may be made only with the consent of the arbitrator.). Ifno party agreement is reached before the arbitrator is appointed, the amount of discoverycan be negotiated and presented to the arbitrator in a proposed draft of the arbitratorsfirst order, at times called a Scheduling and Procedures Order.


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III. Select the Right Arbitrator(s)Selecting an arbitrator can be more important than selecting a jury, because

arbitrators serve as judge and jury. AAA panel biographies are helpful, but moreinformation is better. Search the web, Westlaw and whatever other sources are available.If the size of the dispute warrants the expense, a defense attorney may want to hire a

private investigator to gather information.

AAA panels normally include a number of full-time neutrals. Some of theseindividuals are career arbitrators and mediators. Other lawyers who have had a candidateas an arbitrator can be a great source of information.

During an initial AAA administrative conference, the attorneys can tell the casemanager the type of person preferred: A lawyer? If not a lawyer, an accountant, anengineer or an industry expert? A retired judge? An experienced full-time arbitrator?An arbitrator with a flexible schedule? AAA case managers usually will attempt toinclude the types of persons requested on the list of potential arbitrators.

The most important characteristic of potential arbitrators may be psychological:Does the defendant want an arbitrator who is fair, open-mined and would do equity? Ordoes the defendant want an arbitrator who is strict, rule-oriented and would apply thelaw? Just as psychologists at times help select a jury, if the size of the dispute warrantsthe expense, a defense attorney might consider using a jury consultant during arbitratorselection.

Whether to have one arbitrator or a panel of three arbitrators may arise. Often,the arbitration agreement provides for the number of arbitrators. At times, the applicablerules do so. Usually, the parties can agree to a different number of arbitrators thanprovided in an arbitration agreement or in applicable rules. Having three arbitrators ismore expensive, but also might make the result expected more predictable. Because

arbitration awards usually cannot be appealed, having one arbitrator is a risk that adefense attorney might want to avoid.

IV. Plan Early for DiscoveryA defense attorney should plan early for discovery. Before an arbitrator is

appointed is the best time to negotiate discovery parameters. Before the preliminaryhearing is the next best time to negotiate discovery parameters. The defense attorneyshould assess the clients need for discovery and, if different from what is provided in theapplicable arbitration rules, either attempt to persuade the opposing party or, if the partiesdisagree, attempt to persuade the arbitrator to accept the discovery wanted by thedefendant.

The arbitrator (absent specific applicable rules to the contrary) has substantialdiscretion as to the scope of discovery, including deposition discovery. If depositiondiscovery is needed, a defense attorney at the first conference should be prepared toidentify prospective deponents by name or position and be prepared to explain how theirdeposition testimony will aid fair, efficient and economical resolution.


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V. Prepare for the Preliminary Hearing

A defense attorney in arbitration should prepare for the first and perhaps onlypreliminary hearing, which is often called a scheduling and procedures conference. TheAAA almost always conducts these conferences by telephone. Typical subject matterincludes the issues to be resolved, discovery and scheduling. An objective of this

preliminary hearing usually is to determine those issues that will, in fact, be arbitrated.Additionally, this preliminary hearing may be the defense attorneys only contact withthe arbitrator prior to the hearing. It is an opportunity to make a good first impression bydemonstrating familiarity with the facts and legal issues.

Before the preliminary hearing, a defense attorney should consider drafting aproposed Scheduling and Procedures Order, which at times might be called a CaseManagement Order or called Pre-arbitration and Arbitration Guidelines. Often, beforethe hearing, a defense attorney would want to send the proposed order to opposingcounsel and negotiate whatever provisions might be negotiated. If all issues are notagreed upon, the parties positions can be stated as to remaining issues. Even if noagreement is reached, providing arbitrators and opposing parties with a draft Schedulingand Procedures Order will likely make the issues the defendant wants addressed at thepreliminary hearing become part of the agenda for the preliminary hearing.

An advantage to an agreed Scheduling and Procedure Order is that the arbitratorsrole should be to implement whatever the parties agree upon, only ruling when there isnot agreement. SeeVolt Information Sciences, Inc. v. Board of Trustees, 489 U.S. 468,479 (1989) (Just as [the parties] may limit by contract the issues which they willarbitrate, so too may they specify by contract the rules under which that arbitration maybe conducted (citation omitted)).

VI . Draft the Right Scheduling and Procedures OrderA defense attorney usually should draft a proposed Scheduling and ProceduresOrder designed for that particular dispute. What should be in the Scheduling and

Procedures Order? The answer depends on what arbitration rules apply and ondefendants desire to avoid discovery, need for discovery, and other litigation strategy.Start knowing the default (usually what is in the applicable rules) and negotiateappropriate changes. Some suggested topics to consider are the following:

Pre-hearing Communications The Order might provide for how the parties are tocommunicate with each other and with the arbitrator for pre-hearing proceduressuch as scheduling, discovery disputes, and subpoenas. The AAA normallyexpects parties to communicate with the arbitrator through the AAA. The Ordermight provide for using direct email, with copies to the AAA, for such

communications.

Presiding Panel Member Decisions For arbitrations with a three arbitrator panel,the Order might provide that one of a panel of arbitrators can rule on preliminarymatters and can sign subpoenas. If the parties each chose one arbitrator and thosetwo chose the third arbitrator, the third arbitrator would seem to be the naturalchoice. The third arbitrator might have the discretion to involve all arbitrators.


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Affirmative Defenses and Amendments to Pleadings The Order might providedeadlines for amendments to pleadings. Whether and how affirmative defensesmight need to be pled might need to be clarified. Cf. AAA Comm. R-4(b) & (c)& R-6 (implying that affirmative defenses do not need to be pled).

The Arbitration Hearing Schedule The Order might provide when and where thearbitration hearing will be held and how long the arbitration hearing might take.

Witness and Exhibit Lists The Order might require pre-hearing witness lists andexchanges of documents. If there is to be discovery, the Order might requireinitial witness lists and exchanges of documents weeks after entry of the order andfinal witness and exhibit lists weeks before the hearing.

Pre-hearing Discovery The Order might provide for discovery. It might simplyprovide that the Federal Rules of Civil Procedure apply. Another option is toprovide that the parties may serve certain types and amounts of discovery,referencing the Federal Rules of Civil Procedure. Not referencing proceduralrules for discovery probably makes disputes about whether a party has complied

harder to resolve.

Expert Discovery The Order might provide for expert reports and, whenappropriate, expert discovery such as document requests and a deposition. Forsome disputes, adequate expert discovery can be essential.

Hearing Exhibits The Order might require a notebook of joint exhibits for ahearing with each partys having separate exhibits as appropriate. Deadlinesshould be included for providing the exhibits.

Reasoned Award The Order might call for a reasoned award or for an awardwith findings of fact and conclusions of law like a bench trial. Normally,

arbitration awards are simple like a jury verdict. Because a claimant must usuallyestablish numerous elements to prevail, a reasoned award would seem to favor adefendant.

Appeals The Order might provide for an agreed upon arbitral appeal.Generally, one cannot appeal an arbitration award to a court.

Court Reporter The Order might provide whether the hearing will be transcribedby a court reporter.

Pre-hearing and Post-hearing Briefs The Order might provide for the length andservice dates for pre-hearing and post-hearing briefs.

VII. Handle the Arbitration Hearing EffectivelyA defense attorney should adjust what he or she normally does to fit the forum

arbitration. Generally, effective advocacy in a courtroom is effective advocacy forarbitration. The following additional considerations apply to an arbitration hearing:

Do Not Rely on Summary Judgment In most arbitration, one should not movefor summary judgment, or otherwise move for judgment as a matter of law, absenta clear factual situation (e.g., a claim plainly barred by the applicable statute oflimitations). In large part due to the rare circumstances in which an arbitrators


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decision may be reviewed, arbitrators rarely summarily dismiss any claims orotherwise rule as a matter of law.

Do Not Call the Arbitrator Judge The arbitrator is not a judge and should notbe addressed as your honor or judge. Mr./Ms. Arbitrator is one appropriatesalutation. Arbitrator Smith is another. Mr./Ms. Smith might be best.

Organize Exhibits into Notebooks Arbitrators do not have courtroom staff.Ideally, provide pre-marked exhibits in notebooks, with a table listing the exhibitswith places to mark when an exhibit is introduced and is admitted.

Submit Affidavits or Deposition Excerpts Affidavits or deposition excerpts canbe used for evidentiary foundations or other secondary matters. Counselsreading portions of depositions at an arbitration hearing usually is not appropriate.

Prepare Witnesses Witnesses need to be prepared just as for a trial. The witnessshould talk to the arbitrator, who is the fact-finder. The witness should beprepared for the arbitrator to ask the witness questions directly.

Remember, Rules of Evidence Rarely Enforced An arbitrators commonevidentiary ruling is Ill let it in for what its worth. So, do not rely on the rulesof evidence as a means to keep out evidence.

Remember the Rules of Evidence The rules of evidence exclude evidence basedon its being unreliable. So, use evidentiary objections strategically to convincethe arbitrator that the opposing parties evidence deserves little weight. Inaddition, usually follow evidentiary rules when presenting evidence.

Argue Persuasively Make the arbitrator want to rule for your client. Emotionaljury speeches are likely to be counter-productive. On the other hand, arbitratorsare people, too, just like juries.

Submit an Effective Pre-hearing Brief Pre-hearing briefs are normally the firstchance to persuade an arbitrator to rule for your client. A pre-hearing brief shouldintroduce the arbitrator to the parties, the witnesses and the parties positions.While some law is likely to be appropriate, a pre-hearing brief probably shouldfocus on facts, tell a story, and establish your themes.

Prepare an Opening Argument Prepare a short, simple and convincing openingargument (five to twenty minutes, depending on the dispute and the arbitrator).Be prepared to give a one or two minute version and, if the arbitrator suggestswaiving opening, tell the arbitrator you have that ready.

Stop and Argue Do not overdo it, but stop for a mini-closing argument, in themiddle of the hearing. After a crucial factual development, turn to the arbitratorand explain why the evidence proves the point in question. Keep it short (lessthan one minute). The other side will probably object. The response is that thearbitrator may allow such argument, since the proceeding seeks to reveal the truth.

Prepare a Closing Argument Do not waive closing argument unless thearbitrator insists. Especially if post-hearing briefs are not expected, one shouldsummarize and synthesize the case in closing.


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Submit an Effective Post-Hearing Brief Post-hearing briefs are a last chance topersuade an arbitrator to rule for your client. The arbitrator probably does nothave a law clerk. Copies of the primary cases are useful. A brief on a disk withhyperlinks to the exhibits and cases on the same disk is better.

Do Not Waive Limitations on Arbitrators Authority The arbitration agreementor the applicable arbitration rules may limit the arbitrators authority. Failing tomake appropriate objections might waive these limitations.

Arrange for a Transcript A court reporters transcript is useful in drafting post-hearing briefs. In addition, a transcript should protect a party from overt bias byan arbitrator at the hearing. Having a court vacate an adverse arbitration award isdifficult in any circumstances. Without a transcript, it may be almost impossible.

Conclusion

A defense attorney can adjust his litigation skills for the arbitral forum byfollowing the above seven steps. Hopefully, opposing counsel will then regret havingpushed forward with arbitration.

Documents

Seven Steps to Defend an Arbitration