The Supreme Court of the United States, in 14 Penn Plaza LLC v. Pyett, 129 S. Ct. 1456 (2009), recently held that a provision in a collective bargaining agreement that clearly requires employees to submit their Age Discrimination in Employment Act of 1967 (“ADEA”) claims to arbitration is enforceable. Thus, workers who traditionally have had the right to have age discrimination claims heard by a jury in federal court, may lose that right depending on the content of their collective bargaining agreement.
With so much litigation over whether arbitration agreements are enforceable, it is important to understand what arbitration is. While frequently confused as synonyms, arbitration and mediation are two distinct, different forms of alternative dispute resolution (“ADR”). In arbitration, the parties present their case to an arbitrator who renders a decision which is usually binding (if the parties agreed beforehand that the decision would be binding on them). The arbitrator acts as something of a private judge with the authority to handle preliminary matters, resolve discovery disputes, rule on the admissibility of evidence and make an award. Courts routinely uphold arbitration clauses in contracts and will not disturb the judgment of an arbitrator except in extraordinary circumstances. The benefits to the parties of submitting their claim to an arbitrator include savings of time and money (since an arbitration can usually take place significantly sooner than a court case which is litigated), privacy (an arbitration is not open to the public as a court case is) and is more user-friendly than litigation, since the rules of arbitration allow for a more relaxed approach and the arbitration hearing is typically in a conference room.
Mandatory arbitration clauses are frequently included in employment contracts, construction contracts, and in nearly all securities trading agreements.
In a mediation, a trained third-party neutral, the mediator, will assist the parties in attempting to negotiate a settlement of their dispute. Through a series of group meetings and individual caucuses (in which the mediator meets with just one side at a time to obtain confidential information meant to assist the mediator), the mediator gathers information and guides the parties towards settlement. The mediator will not render any decision. The parties will either agree to a settlement or not. A mediation shares many of the same benefits of an arbitration and also allows for the possibility of the parties preserving their relationship after the resolution of their dispute. Thus, if a dispute arises between two neighbors, or a vendor and his client or two parents, for example, trying mediation is an innovative way to resolve a dispute while continuing an important relationship thereafter.
The lawyers at Lars Liebeler LLC have decades of experience in assisting our clients through the processes of arbitration and mediation.
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GEORGE S. PATTON