FINRA announced today the formation of a new Arbitration Task Force “to consider possible enhancements to its arbitration forum to improve the transparency, impartiality and efficiency of FINRA’s securities arbitration forum for all participants.” The 13-member Task Force will be Chaired by Professor Barbara Black, my former colleague and frequent co-author, and will include forum arbitrators, representatives from the securities industry, investor advocates and attorneys, industry attorneys and a regulator.
Because virtually all broker-dealers require their customers to arbitrate their disputes, FINRA’s arbitration program, which administers virtually all of these disputes, continues to be criticized as some investors perceive the process is unfair. FINRA last appointed a task force to conduct a wholesale examination of its arbitration forum in the mid 1990′s, when David S. Ruder (Professor of Law Emeritus, Northwestern) chaired the Arbitration Policy Task Force that issued a January 1996 report to the Board of Governors of NASD (FINRA’s predecessor). The “Ruder Report,” as it is known, led to many important reforms of the process.
Given my respect for Professor Black, I have no doubt that the “Black Report” will contain similarly significant recommendations to increase the fairness for all disputants.
Remember when we used to lament the fact that there were no mediation tv shows? Well we had Fairly Legal which was farcically formulaic and often a bit silly. Now we have Untying the Knot, a new reality series on the Bravo network. The show follows New Jersey divorce attorney-mediator Vikki Ziegler as she “mediates” property division issues for divorcing couples. The reason for the quotes? Here’s why – from the show’s website summarizing the series:
When couples go from “I do” to “I don’t,” Vikki Ziegler is who they call to mediate, advise and divide their assets out of court. Each 30-minute episode features a different divorcing couple struggling to divvy up their belongings that range from dazzling diamonds to the family pets. Expert appraisers Michael and Mark Millea evaluate the items in question and help Vikki determine a fair division of assets. Why let a judge decide your fate when this “Divorce Diva” can cut through all the drama to determine who will get what?
Obviously having the mediator “determine a fair division of assets” doesn’t sound like mediation; Ms. Ziegler is engaging in early neutral evaluation (ENE). But ENE has gone the way of Betamax and is so confused with mediation that it’s not worth the time to fight it. In fact, I’ve seen and heard of many well respected mediators engage in such behavior. So, let’s hope that this practice does not become what the public expects from divorce mediation, as this clearly limits the good that mediation can do in divorce. Nevertheless, clips of the show are going to be great for class this fall when we discuss facilitative and evaluative mediation styles.
I’ve watched all of the episodes that have aired to date (thank you DVR), and the show’s formula is simple – meet the divorcing couple and the property in dispute, the appraisers give their valuations of the items to Ms. Ziegler, and then Ms. Ziegler meets with the disputants and awards (yes, that’s the term she uses) the property and any corresponding financial offsets to the disputants. I find the show to be interesting mostly because the emotion of divorce is on display – you can really feel for some of the couples. Other interesting aspects include when Ms. Ziegler pushes a disputant and when disputants negotiate off of her evaluation. I could do without some of the witty-made-for-tv banter about the parties and/or their possessions from Ms. Ziegler and the appraisers, but I’m sure the producers love that kind of snarkiness.
Enjoy or cringe watching the show, but do use it in class – it’s going to be a great teaching tool.
The Federal Circuit recently handed down its decision in the CEATS v. Continental case. If I were teaching Mediation this year, I’d spend some real time on it.
Quick summary (oversimplifying for purposes of clarity here): Mediator appointed to patent case. Case didn’t wind up settling, and it proceeded to trial. After jury verdict, losing party discovered that the mediator had a prior relationship with the prevailing party. Losing party seeks FRCP 60(b) relief. Court says, “Yes, mediator should have disclosed the relationship, but no, relief from judgment is not available.”
Lots in there worthy of time and consideration. How did the court come to cite and apply things like the Model Standards of Conduct to this mediator? What, if any, consequences could there be for failure to disclose? (Private liability, as I’ve written previously, here, unlikely to be successful.) If the presence of a subsequent jury trial stands as evidence of a cure of any alleged prior mediator misconduct, what incentives does that create within mediation? Does the conflict rule applied to judges and arbitrators make sense for mediators? Etc.
For those interested in the field of securities dispute resolution, check out this new blog, just launched by Securities Arbitration Commentator (http://www.sacarbitration.com/blog/). Here is its opening announcement:
The Securities Arbitration Commentator (“SAC”) is just delighted to welcome you to our new blog, through which we will keep followers informed of key developments in the securities dispute resolution field. Typical blog posts will cover state and federal court cases of importance to our followers, regulatory and rulemaking updates, and the latest news from the securities and alternative dispute resolution worlds. This week, we lead with an analysis of an important United States Supreme Court ruling impacting the financial industry.