ABA SECTION OF DISPUTE RESOLUTION

Transcription

1 ABA SECTION OF DISPUTE RESOLUTION Course Materials for Dispositive Motions in Arbitration: When to File Them and When to Hear Them A Continuing Legal Education Webinar June 27, :00 to 1:15 pm EST Moderator: Dana Welch Panelists: Gary Benton and Edward Lozowicki Table of Contents Page Title Author(s) 2 Presenter Biographies 4 PowerPoint Presentation Dana Welch, Gary Benton, and Edward Lozowicki Nothing in these course materials is to be considered as the rendering of legal advice for specific cases, and readers are responsible for obtaining such advice from their own legal counsel. These course materials are intended for educational and informational purposes only.

2 PRESENTER BIOGRAPHIES Moderator: Dana Welch Dana Welch, an arbitrator based in the San Francisco Bay Area, is on AAA s large and complex commercial case and employment panels. She currently is the Co-chair of the Arbitration Committee of the ABA s DR section and the past chair of the State Bar of California s Standing Committee on ADR. She is a Fellow of the College of Commercial Arbitrators as well as of the Chartered Institute of Arbitrators. Previously, she was General Counsel of an investment bank and a partner in a San Francisco law firm. She obtained her JD from Boalt Hall School of Law, University of California, Berkeley. Panelists: Gary L. Benton Gary L. Benton is an internationally recognized arbitration and mediation expert. He is the founder and Chairman of the Silicon Valley Arbitration & Mediation Center in Palo Alto, California. He was previously a partner with the international law firms Pillsbury Winthrop Shaw Pittman LLP and Coudert Brothers LLP. Gary focuses on disputes involving private investment and technology companies, including corporate/securities, venture capital financing, technology development, licensing, intellectual property and international commercial matters. Gary is a US lawyer and English solicitor. He is a Fellow of the College of Commercial Arbitrators (CCA) and the Chartered Institute of Arbitrators (CIArb). He serves on the AAA Panel, the ICDR Panel, the CPR Panel of Distinguished Neutrals, on ICC and other international panels and in ad hoc proceedings. Among other honors, he was named a NLJ 2016 ADR Champion.

3 Edward Lozowicki Edward Lozowicki is a full-time Arbitrator & Mediator and serves on the panels of the American Arbitration Association (Construction, Commercial and Large Complex Cases), CPR, FINRA and the California Office of Administrative Hearings. Previously he was a business trial partner at three international law firms and has over 35 years' experience as a trial lawyer and arbitrator of construction, energy, real estate, commercial, employment and international cases. Recently he has taught Alternative Dispute Resolution as Adjunct Professor at the Law School of Santa Clara University. Ed has published many articles and lectured on arbitration law for the American Arbitration Association, the ABA Dispute Resolution Section and trade associations. Further information on his neutral practice appears at:

4 ABA DISPUTE RESOLUTION SECTION WEBINAR -- JUNE 27, 2017 Dispositive Motions In Arbitration Presented By: Gary Benton Edward Lozowicki Dana Welch

5 Gary Benton U.S., U.K., and international arbitrator Member of ICDR, CPR, AAA, WIPO Panels Expertise in international business, private investment, technology, emerging growth matters Founder and Chairman of the Silicon Valley Arbitration and Mediation Center Fellow, College of Commercial Arbitrators and Chartered Institute of Arbitrators Previously, General Counsel of an internet cloud security company and a partner in San Francisco law firm and Palo Alto law firms 2

6 Ed Lozowicki Full-time arbitrator and mediator On AAA s construction, commercial, energy and large and complex commercial case panels; CPR, FINRA and the California Office of Administrative panels Previously, business trial partner at three international law firms; over 35 years experience Has taught ADR as Adjunct Professor at the Law School of Santa Clara University Lecturer on arbitration law for the AAA and the ABA Dispute Resolution Section as well as trade associations 3

7 Dana Welch Full-time arbitrator and mediator On AAA s large and complex commercial and employment as well as CPR panels Co-chair of the Arbitration Committee of ABA s DR section; past chair of State Bar of California s Standing Committee on ADR Fellow, College of Commercial Arbitrators and Chartered Institute of Arbitrators Previously, General Counsel of an investment bank and a partner in a San Francisco law firm JD, Order of the Coif, Boalt Hall School of Law, University of California, Berkeley 4

8 QUESTION 1 ARBITRATION IS NOT A COURT PROCEEDING: ARE MOTIONS EVER APPROPRIATE IN ARBITRATION? 5

9 Survey Answers Question 1 A. No, we don t apply court procedures in arbitration so motions should not be allowed. B. Yes, but motions are solely at the Arbitrator s option. C. Yes, but only where it will eliminate the need for a hearing and end the case. D. Yes, where a motion is likely to succeed and will dispose of claims or narrow the issues. E. Yes, in all cases where a party requests it, otherwise it is an abuse of discretion. 6

10 What Is a Dispositive Motion? Motion which disposes of or narrows the issues (AAA Commercial Rule No. R-33) Motion which disposes of all or part of a claim or narrows the issues (AAA Construction Rule No. R-34; JAMS Comprehensive Arbitration Rule No. 18) e.g., Motion to Dismiss (FINRA Code of Procedures for Customer Disputes & 12504) 7

11 Examples of Dispositive Motions Motions for early disposition of issues: e.g., jurisdiction and standing, certain claims and defenses that can be accepted or rejected as a matter of law, and certain issues relating to damages (CPR Guidelines on Early Disposition of Issues in Arbitration, 2.3; see also CPR Administered Rule 9.3(b) and its commentary) Motion for summary judgment/adjudication Motion to strike claim/defense? 8

12 Appropriate for Dispositive Motions? Running of Statute of Limitations or Repose? (See, e.g., FINRA Code of Arbitration Proc (b) Exclusion of certain types of damages per contract? Limitations on scope of indemnity obligation in contract? Enforcement of a written release or settlement? (See, e.g., FINRA Code of Arbitration Proc (a) Bar of claims based on res judicata? 9

13 What is not a Dispositive Motion? Consolidation motion Joinder motion Preliminary / Injunctive relief motion Is a motion challenging arbitrability a dispositive motion? Is a motion to expunge Lis Pendens a dispositive motion? 10

14 Issues Not Appropriate For Dispositive Motions Proposed motion raises genuine issue of material fact Proposed motion seeks to invade privileged matters Are dispositive motions in limine appropriate? Are motions to exclude evidence on the eve of hearings appropriate? 11

15 QUESTION 2 A RESPONDENT PLEADS THE STATUTE OF LIMITATIONS AND FILES A MOTION TO DISMISS A CLAIM ON THAT DEFENSE. IS THIS A PROPER PRE-HEARING DISPOSITIVE MOTION? 12

16 Survey Answers Question 2 A. Yes, it is a dispositive motion and must be heard prior to the hearing. B. Yes, it is dispositive as to a claim but need only be considered in advance at the arbitrator s discretion. C. Yes, it is dispositive but not significant enough to be heard in advance of the hearing. D. No, this is not a dispositive motion because it will not dispose of the case. E. No, because I don t want to consider any motions that may eliminate or shorten the hearing. 13

17 Authority for Arbitrator s Power to Award on Dispositive Motion RUAA Sec. 15(b) authorizes arbitrators to decide a request for summary disposition of a claim or particular issue. But the FAA is silent. If the arbitrator bases an award on a motion for summary judgment, will it survive a motion to vacate? New York, California, and federal courts will not vacate awards solely because they emanate from summary process. Arbitrators have discretion to determine which evidence to consider and to tailor the process. 14

18 Authority for Arbitrator s Power to Award on Dispositive Motion Sherrock Brothers, Inc. v. Daimler-Chrysler Motors Co. LLC, 260 Fed. Appx. 497 (3rd Cir. 2008) (Under FAA and AAA Rules, arbitrator did not deny party a fair hearing by basing Award on summary judgment motion) TIG Ins. Co. v. Global Int l Reinsurance Co., 640 F.Supp.2d 519, 523 (1999) ( [A]rbitrators have great latitude to determine the procedures and to restrict or control evidentiary proceedings, and may proceed with only a summary hearing and with restricted inquiry into factual issues. ) 15

19 Authority For Arbitrator s Power To Award On Dispositive Motion Brooks v. BDO Seidman, LLP, No , 2011 N.Y. Misc. LEXIS 834 (N.Y.Sup.Ct. Feb. 22, 2011) (Confirming arbitration award that rendered summary judgment; rejecting argument that this constituted arbitrator misconduct). Schlessinger v. Rosenfeld, 40 Cal.App.4th 1096 (1995) (Under State Act and AAA Rules, arbitrator has implicit authority to award based on motion for summary adjudication). Max Marx Color & Chem. Co. Employees Profit Sharing Plan v. Barnes, 37 F.Supp.2d 248, 252 n.23 (1999) ( The law only requires that the parties be given an opportunity to present their evidence, not that they be given every opportunity. ) 16

20 QUESTION 3 WHAT PRELIMINARY SHOWING IS REQUIRED BEFORE ALLOWING A DISPOSITIVE MOTION? 17

21 Survey Answers Question 3 A. The motion is likely to succeed. B. The motion is likely to dispose or narrow the issues in the case. C. The motion will cost less than the cost of a hearing and resolve the case in less time. D. The parties will not be denied an opportunity to examine witnesses. E. The Arbitrator will not receive a lower fee if the motion is granted. 18

22 Preliminary Showing: Likely Success Of Dispositive Motion The arbitrator may allow the filing of and make rulings upon a dispositive motion only if the arbitrator determines that the moving party has shown that the motion is likely to succeed and dispose of or narrow the issues in the case. (AAA Commercial Rule R-33) Upon prior written application, the arbitrator may permit motions that dispose of all or part of a claim, or narrow the issues in a case. (AAA Construction Rule R- 34) At the pre-hearing conference, the desirability of the Tribunal s ruling [by motion for partial summary judgment] before the hearings commence can be considered. (CPR Commentary, Administered Rule 9) 19

23 20 Preliminary Showing: Likely Success Of Dispositive Motion The Arbitrator may permit any party to file a Motion for Summary Disposition of a particular claim or issue at the request of one party (JAMS Comprehensive Rule 18) Does the arbitrator have the same discretion under each Rule? How to determine if the motion is likely to succeed? How to determine if the motion will dispose of or narrow an issue or claim? How is cost/time efficiency factored in?

24 QUESTION 4 HOW SHOULD AN ARBITRATOR SCREEN A DISPOSITIVE MOTION? 21

25 Survey Answers Question 4 A. Leave to submit a dispositive motion may be requested orally and should always be allowed to ensure a fair hearing. B. Reject all requests for motions that were not raised at the Preliminary Hearing. C. Have the parties brief the merits and efficiency of the motion. D. Require the moving party to submit the motion and all supporting evidence in order to decide whether the motion should be allowed. E. Require the parties to fully brief the motion and hold a hearing to decide whether the motion should be allowed. 22

26 Screening for Dispositive Motions Discuss potential motions with parties at first preliminary hearing (See e.g. AAA Commercial Rules P.2(2)(vi)) Identify key issues as soon as possible Disallow reflexive motions. What if the moving party did not raise motion practice at the preliminary hearing? Should arbitrator require a written submittal demonstrating likelihood of success? (See, e.g., AAA Commercial Rule R-33). Or should the preliminary showing be made orally at a preliminary hearing? 23

27 24 Screening for Dispositive Motions Should the arbitrator give the non-moving party an opportunity to oppose the preliminary showing? Should the arbitrator require a showing that the motion be efficient and cost effective? (See, e.g., AAA Commercial Rule L-3(a)). Assume a demand asserts alternative causes of action based on the same operative facts. Would a motion to dismiss one of the alternative causes of action, if granted, make the arbitration more efficient and cost effective? Should a different standard apply for pro se parties?

28 Hearing Dispositive Motions Should the arbitrator have the motion submitted on the papers only or also allow oral argument? Should the arbitrator impose page limits on briefs, declarations and exhibits? Should the arbitrator schedule an evidentiary hearing if requested by the non-moving party? And if the arbitrator does so, should the arbitration be bifurcated? 25

29 QUESTION 5 THE NON-MOVING PARTY ARGUES THE MOTION IS UNFAIR WITHOUT FIRST HAVING EXTENSIVE DISCOVERY. WHAT DO YOU DO? 26

30 Survey Answers Question 5 A. Deny the motion because there is risk any award will be vacated if a party needs discovery. B. Proceed with the motion because discovery is at the option of the arbitrator. C. Allow the non-moving party all the discovery requested to limit the risk of having the award vacated. D. Consider delaying the motion to provide the nonmoving party a reasonable opportunity to gather evidence. E. Proceed with the motion but allow for reconsideration if new evidence comes up. 27

31 Ruling on Dispositive Motions Guidance provided from Guide to Best Practices in Commercial Arbitration, 3d Edition, The College of Commercial Arbitrators (2014): To avoid the risk of having an award vacated for refusing to hear evidence, arbitrators should grant dispositive motions only when a party opposing the motion has had a reasonable opportunity to gather and present evidence on the pertinent issues and the arbitrators are confident that on the undisputed facts, the movant is clearly entitled to an award in its favor. 28

32 Ruling on Dispositive Motions The fear that an award might be vacated on the grounds that the arbitrator failed to consider material evidence must be balanced with the goals of efficient and cost-effective arbitrations. If the motion is granted but does not resolve the entire case, should the arbitrator issue an interim award? If so, what form of award should be issued? If so, how should issues such as interest and attorneys fees be handled? 29

33 QUESTION 6 SHOULD DIFFERENT STANDARDS FOR DISPOSITIVE MOTIONS BE APPLIED IN INTERNATIONAL ARBITRATION CASES? 30

34 Survey Answers Question 6 A. No, this is our country and they should follow our rules. B. No, just because a foreign party is involved they shouldn t get any special treatment. C. Yes, motions should not be allowed in international arbitration cases because foreign parties don t know what they are. D. Yes, because there is limited, if any, discovery in international arbitration. E. Yes, in addition to efficiency concerns, consideration should be given to whether the parties reasonably anticipated having motion practice. 31

35 Dispositive Motions in International Arbitration The traditional expectation in international arbitration is that a claim will go through a full hearing process before being resolved on the merits. The more modern view is reflected in the IBA Rules on the Taking of Evidence in International Arbitration: The Arbitral Tribunal is encouraged to identify to the Parties, as soon as it considers it to be appropriate, any issues for which a preliminary determination may be appropriate. IBA Rules, Article 2.3. Most Institutional rules do not provide specific guidance: ICSID: Objection to and preliminary review of claims that are manifestly without legal merit. (ICSID Additional Facility Rules, Article 41 (5)) 32

36 Dispositive Motions in International Arbitration Enforceability dispositive motion practice raises enforceability concerns under the NY Convention. See Art. V (1)(b) (procedural unfairness); Art. VI (1)(d) (procedure not in accordance with parties agreement or Art. V (2)(b) (contrary to public policy). However, there do not appear to be any reported NY Convention cases rejecting dispositive motion practice. 33

37 Dispositive Motions in International Arbitration Is dispositive motion practice appropriate in an international arbitration with non-us parties? Is dispositive motion practice appropriate in an international arbitration where there is limited disclosure/discovery and direct testimony is presented by written statements? Is there a risk to basing an award on a dispositive motion if the award will be enforced outside the US? 34

38 QUESTIONS? 35