Friday, June 11, 2021

Mastering Rule 30(b)(6) and the New Confer-in-Good Faith Requirement for Construction Corporate Representative Depositions

The recent amendment, effective December 1, 2020, to Federal Rule of Civil Procedure 30(b)(6), provides:

Before or promptly after the notice or subpoena is served, the serving party and the organization must confer in good faith about the matters for examination. A subpoena must advise a non-party organization of its duty to confer with the serving party and to designate each person who will testify.

Practitioners knew some form of change would come due to the absurd amount of stonewalling and abuse to minimize the impact of a corporate representative deposition as well as the contentious gamesmanship to obtain impermissibly broad discovery from an opposing party. For many, 30(b)(6) was kicked to the side or treated as the “forgotten rule.” (Mark A. Cymrot, The Forgotten Rule, 18 Litig. 3 (1992) (discussing the failure of litigants to use Fed. R. Civ. P. 30(b)(6) for the 20 years after its promulgation).) In the context of construction litigation, which is usually highly contentious, complex and multi-faceted, the conferral requirement provides litigants another opportunity to streamline issues in order to focus on the heart of the matter. 

Litigants can either embrace the rule by maximizing the opportunities conferral brings or continue to deal with disputes and motion practice premised upon inadequately prepared witnesses and ambiguous topics incapable of putting any reasonable person on notice regarding the information sought. For many construction lawyers, the amendment is not a shocking change from best practices as construction law continues to be one of the more collaborative areas in litigation. But the amendment did send waves throughout the legal community since it has not had any significant modifications since its adoption in 1970. 

Plaintiff’s expressed concerns regarding their inability to prepare for corporate examinations hindering their success in utilizing 30(b)(6) and defense counsel expressed similar discontent regarding the overreaching of the rule, “gotcha” moves, the incredible expenses of preparing designees, and the similarly high expense of investigating which designee or designees should testify as to each topic noticed or provided. 30(b)(6) depositions are binding; therefore, preparation, understanding the topics and proper witness designation is key. 

The amended rule instructs parties to confer concerning the matters of examination, but it does not preclude further matters for conferral. Therefore, the sky is the limit. After six months in the wild, what we suspected to occur is true—the good, the bad and the ugly. Productive construction related 30(b)(6) conferences have enabled parties to identify issues and focus on what topics the deposing party intends to cover, why each side believes the matters of examination are meritorious or not, and alternatives to the deposing party’s specifications in pursuit of resolution of the dispute. Uncooperative parties have certified intentions and efforts to confer without success. 

The rule does not mandate specific designees be decided upon. In fact, it was considered and rejected in a proposed amendment. However, the topics and/or areas of inquiry continue to require painstaking specificity. Conferral topics may include date and time of the deposition, duration, method (in person, remote, video, etc.), topics and specification. 

Parties receiving a notice or subpoena should:
  1. Meet early and actually confer;
  2. Focus on specifying the noticed topics to eliminate confusion and ambiguity;
  3. Confirm that proper entity was selected; and
  4. Designate appropriate deponent(s).
Is this the only option to gather information about an organization? No; this is one tool in your toolbox. 30(b)(6) depositions do enable litigants to nail down the opposition’s position and to determine defenses and theories. However, this tool is not a case determinant. 

Furthermore, the amendment does not mandate that parties must reach an agreement—it requires good faith efforts to confer. Many proponents for additional rule components vehemently opposed the revisions arguing that although intentions are good, the amendment is not going to change much at all. However, the goal was to avoid disputes about “overlong or ambiguously worded lists of matters for examination and inadequately prepared witnesses.” 

The rule change is an attempt to reduce one aspect of discovery that can result in satellite litigation. Lawyers defending corporate deponents should use this new arrow in their quivers to shoot down overly broad topics. For those noticing corporate depositions, this rule change underlines what should have been the practice previously – sharper, narrower topics are better topics to get binding testimony for use at trial.

If you are interested in further discussion about this topic, please join the authors on June 16, 2021, for the Webinar CLE sponsored by the Forum called “Mastering Rule 30(b)(6) and the New Confer-in-Good-Faith Requirement.” Just click the link to sign up. 

Author Anthony D. Lehman is a partner with the Atlanta, GA office of Hudson Lambert Parrott Walker, LLC. He is licensed in Georgia, Florida, and Alabama and is Board Certified in Construction Law. He is a past chair of Division 1 and is a member of the ABA Forum on Construction Law’s Governing Committee.

Author C. Jade Davis is an associate attorney with the Sarasota, FL office of Shumaker, Loop & Kendrick, LLP. She is experienced in representing manufacturers of building products and engineers in all phases of construction litigation and trial.

Friday, June 4, 2021

What to become a AAA Arbitrator / Mediator? But don't know how? Join Us on June 30th at 3PM ET

Have you ever thought about what it would take to serve as a Construction Arbitrator or Mediator? Do you think you have to wait until the end of your career to pursue an ADR Practice? You don’t. Most arbitrators on the American Arbitration Association (AAA) Construction Panel still maintain a full-time practice. 

On June 30th, Division 1 (Litigation & Dispute Resolution) is teaming up with the AAA, Construction Litigation Committee of the ABA Section of Litigation, and the Forum's Diversity + Inclusion Committee for a virtual program on how you can design your career path to have a successful neutral practice.  Our panelists from the AAA, Forum/D1, and CLC will discuss what it takes to be an arbitrator or mediator with the AAA's Construction Panel, give tips for building the type of experience that the AAA looks for and offer insight and advice for building a successful ADR practice. Understanding that parties often seek diverse viewpoints in dispute resolution, the AAA has made a concerted effort to attract and mentor diverse arbitrators and mediators. During this session, the Panelists will discuss the training and continuing education offered by the AAA to its panelists, as well as its mentoring program.

It is never too early to start planning your career goals and aspirations.  We hope you join us for this discussion.  There will be time for questions at the conclusion of the program.  

REGISTER

Questions about this program or Division 1 in general, contact me, Tom Dunn, Division 1 Chair, at rtdunn@PierceAtwood.com.  

Wednesday, June 2, 2021

Return on Investment of Construction Claims: How to Best Advise Clients on Legal Strategy in Construction Claims

On March 31, 2021, Division 1 held a program with DPA on Construction Claims. The program focused on process from the start of the claim through dispute resolution.  If you missed the program, please watch the video here.  


 Thanks to Brenda, Marc, and Philip for putting together this program for us.



Tuesday, June 1, 2021

What's Up at Division 1 (No. 11)

Our May Toolbox Talk Series was great last month.  David Ponte and Joe Wallwork from Nautilus discussed discovery tips in Delay Claims.  They provided the attached listing of documents (shown below) and explained the most important documents to obtain to evaluate delays.  

In addition to the documents, they explained how experts can be very helpful in attending and preparing for other expert depositions.  Thanks David and Joe for leading that discussion.  

Our next TTS is scheduled at its regular time (4th Thursday at noon eastern -- June 24th).  Be on the lookout for the registration email on that program.  If you have a TTS topic or would like to contribute to the planning of these programs, please reach out.  

In addition to our TTS, Division 1 and the Forum has some great events coming up in June including:


Want to join the fun with Division 1 -- join us for our next D1 monthly call on Monday, June 14, 2021 at 3PM ET. 

https://americanbar.zoom.us/j/6691783882?pwd=NUh3SE42eWMrc0ZrdW5pdEgyMFo0Zz09

Meeting ID: 669 178 3882  |  Password: 826501 

I hope you all had a great Memorial Day Weekend!  In New England we had weather in the 40s, freezing rain, 50 MPH wind gusts, and very little sun.  But, we fought through the nasty conditions and made the best of it in our winter clothes (even fishing)!  Below is a photo of my kids fishing on Cape Cod (we caught a bunch of Sea Robins -- weird fish).  


As always, if you want to learn more about Division 1, please contact me.  

Division 1 Chair
rtdunn@PierceAtwood.com

Friday, May 7, 2021

Hear from the Pros: Using Zoom for Pre-Mediation Activities to Achieve Earlier Settlements

In the 2020 Winter issue of Under Construction, two of our D1 members, Paul M. Lurie and Robyn L. Miller, discussed Using Zoom for Pre-Mediation Activities to Achieve Earlier Settlements. As they mentioned in their article, most construction disputes settle and are therefore not adjudicated by courts or arbitrators. We decided to pick their brains a bit more on effective settlement strategies from the perspectives of an ADR neutral and attorney: 

Why are pre-mediation activities important for earlier settlement?

Paul:  Settlement impasse issues should be identified and dealt with long before the start of any settlement negotiation. Traditional mediation in commercial cases often does not identify impasse issues until the start (or middle) of the mediation session where settlement is also discussed. Guiding Mediators are trained to understand and overcome the wide variety of impasse issues. The mediator’s ability to diagnose causes of impasse is enhanced due to a mediator’s ability to leverage confidentiality. Impasse issues are always about more than money. They include anger, missing parties, fear of public knowledge of settlement, need for discovery, insurance, and expert opinion differences.  The pre-mediation session should not involve any negotiations. This creates a much more collaborative atmosphere for addressing impasse issues.

Robyn:  In addition, pre-mediation activities make the mediation itself more efficient.  In a traditional mediation, each party sits with their attorneys and, perhaps, experts in a room alone while the mediator goes room to room to gain introductions and understand the positions of the counsel and parties.  Pre-mediation activities avoid wasting one party’s time while the mediator is being introduced to other parties. Using Zoom or similar platforms is an especially good means of allowing the mediator to meet one-on-one with the parties and get a good understanding of the people and their positions prior to the start of mediation itself. 


Can you provide us with an example of diagnostic and remedial processes?

Paul:  I was hired as a mediator to resolve a dispute between a City and its contractor, who was responsible for replacing windows in a historic governmental building. The City was not happy with the contractor’s original installation and its inability to prevent water penetration. The contractor had a fix which the City rejected. The City wanted a much more expensive fix, so the City was also withholding the contract balance due to the contractor, which was causing financial problems to the contractor. In their assignment of the case, the AAA described the dispute only as being about the amount of money due to the contractor. After my confidential discussions, it was clear that the impasse was more based on a technical dispute between the City’s expert and the contractor concerning the design of a fix. 

In the spirit of the diagnostic and remedial process, I asked each party to nominate three contractors who could understand the problem. From the six names, I chose a president of a contractor who also had an architect’s license. That architect then presided over meetings between the parties until both a fix was agreed upon as well as a method to delivery the money to the contractor after such fix. While the architect had never mediated before, he became my “co-mediator” and the case settled.


How is the construction industry well-served by Pre-mediation?

Paul:  Pre-mediation is part of the design of a mediation process. It assumes that there are multiple phases to the mediation, one of which is preparation for overcoming impasse before the start of the settlement negotiations. Again, the Pre-mediation phase does not include any settlement demands or offers. Instead, Pre-mediation activity builds trust in the mediator and overcomes resistance to their early hire. When hired early, the mediator is best able to avoid expense and delay in settlement.  Pre-mediation also involves the parties’ collaborative efforts to provide the information parties need to evaluate whether settlement or litigation is in their best interest. This information significantly reduces the expense of using discovery to prepare for ultimate adjudication, if necessary.

Robyn: Pre-mediation helps the construction industry by increasing the likelihood of successful and efficient settlement. With more timely settlements, owners, contractors, and designers can minimize their “investment” in litigation or arbitration and focus their resources on new projects and opportunities.


Is there standard language to include in a contract related to Pre-Mediation?

Robyn:  Pre-mediation does not require any change of language in the standard form of construction or design contracts. The parties should only need to hire mediators who know when and how to the use the tools of Guiding Mediation, including the use of Pre-mediation.


What are examples of “nudges” from the mediator that may fulfill the needs of the parties before they are willing to consider change of settlement position?

Paul:  Here is an example: the mediator might suggest a meeting of experts, who are creating large disparities in the respective parties’ offers and demands, due to their disagreement over liability and/or damages. This discussion between the experts, sometimes referred to in adversarial proceedings as “hot boxing,” is considered confidential and, therefore, what is said is not admissible in litigation or arbitration.  As a result, the experts can adjust their positions without having to concede that they are wrong in an open session. The benefit to this “hot boxing” is that if they are able to reduce their dollar differences, it will make it easier for the parties to change their positions and make more agreeable offers and demands.


How effective is the use of virtual platforms, like Zoom, for Pre-mediation activities if the actual mediated settlement negotiations will occur in person?

Paul:  Virtual platforms are great for the kinds of Pre-mediation activities described above which are a necessary precursor to settlement negotiations.  Live settlement negotiations may involve direct personal confrontations creating emotions and fears which make it difficult to overcome impasse. Virtual discussions can avoid these situations. This can result in a more collaborative atmosphere that reduces the time and expense of activities, such as furnishing information needed by parties, 

Robyn:  Virtual meetings are much easier to arrange than in-person meetings because they avoid the time, expense, and coordination required to get lawyers, parties, and experts in the same physical location for the purpose of meeting to agree on the mediation process.  Pre-mediation also allows the mediator to spend the amount of time needed with each party to prepare for an effective in-person mediation session because the mediator will have had the time to meet the parties, their counsel, and experts in advance of the mediation. In addition, virtual Pre-mediation meetings provide an even greater opportunity to diagnose barriers to settlement which, inevitably, makes the in-person mediation be more successful.


What do you believe mediation will look like in the coming years?

Paul:  Most construction disputes settle before judgment or award because at some point parties agree that a settlement, rather than adjudication, is in their best interest. Most of the expense in dispute resolution is incurred when lawyers and experts prepare for litigations or arbitrations that will never occur. The expense and delay of such preparation can be reduced by using collaborative processes to determine what information – fact witnesses, discovery, or expert testimony – is needed to satisfy the parties so that they have the information needed to overcome impasse. Using virtual Pre-mediation conferences is the best way to agree on these collaborative processes. 

Robyn:  Given the inefficiency of traditional mediation, as well as the time and cost savings associated with Guiding Mediation, I anticipate that Guiding Mediation will eventually be the standard  – and I look forward to that day!


-----------------------------------------------------------------------------------------------------------------

Contact Paul M. Lurie: pmlurie@early-dispute-resolution.com.

Contact Robyn Miller: Robyn.Miller@crtkl.com.

Editor Lexie Pereira is a third year J.D./M.B.A. candidate at Boston College Law School and Carroll School of Management, studying to become a litigator with a specialty in construction law. This summer, she will be joining Pillsbury Winthrop Shaw's DC office as a Summer Associate. Contact Lexie: pereirle@bc.edu.

Friday, April 30, 2021

What's Up At Division 1 (No. 10)

Happy Law Day! Did you know that tomorrow, May 1st, is Law Day?  Do you know that Law Day was created by the American Bar Association? Well . . . it was.  Here is a brief history about Law Day:

In 1957, the ABA President envisioned a day to celebrate our legal system.  The next year, President Eisenhower established Law Day as a day of national dedication to the principles of government under law.  In 1961, Congress joined in the recognition of Law Day as May 1st.  The trend has spread throughout many countries since.  So, to my fellow D1 Friends, congratulations on being part of the legal system of the United States. I hope you find something rewarding and fun to do this weekend to celebrate!  

Speaking of fun, we had some fun in Division 1 in April 2021.  

Our toolbox talk series this month was led by Jen Millender and Bill Franczek.  They talked about virtual testimony particularly from the arbitrator's perspective.  Bill expressed that he finds virtual testimony to be productive.  He can see the facial expressions effectively -- sometimes better than if he were in a large conference rooms.  There was a discussion about using the record feature during virtual arbitrations and best practices to work with those and/or have them transcribed.  We discussed the AAA Rules as it relates to virtual testimony and inquired whether a task force about specific rules should be employed.  The 30-minute discussion (and, it was a true discussion amongst many attendees) flew by given our dynamic speakers and members.  Thanks Jen and Bill for putting together a great TTS.  

Earlier this year, in either late January or early February, I spoke with Nicky Steen about Division 1 and some ideas she had about programing.  We discussed a variety of programs, but she said she was particularly interested in doing a Privilege Walk program.  My first impression was that she wanted to do a survey of various evidentiary privileges, attorney-client, work product, common interest, etc., but then she clarified it wasn't that kind of privilege.  She expressed that a Privilege Walk is normally done in person whereby the attendees stand in a line at a common starting point.  Thereafter, the moderator reads a series of statements concerning "privileges" (racial, gender, socio-economic) and asks the attendees to take a step forward or a step backwards.  After the statements are read, the attendees can see where they are in reference to each other in terms of privilege.  Nicky did a virtual privilege walk for her firm earlier this year and suggested D1 would benefit from it.  It seemed like a perfect thing for us to do so we partnered up with the Forum's Diversity + Inclusion Committee, Division 13, and the National Association of Women in Construction (NAWIC) as co-sponsors to conduct the program on April 29th.  Nicky and I were blessed with a fabulous planning team consisting of Jessica Sabbath, Lexie Pereira, MJ Torres-Martin, and Peter Hahn.  Our awesome ABA team members put together an amazing flyer and promoted the event in the Forum's emails and social media accounts.  

Yesterday, we held the privilege walk event.  We had 57+ people attend (with a lot of NAWIC members!).  We went through just under 50 statements and took a poll of where we ended up.  We then engaged in a 25-30 minute breakout-room discussions led by a great team of Forum volunteers.  The event was a true eye-opener for many attendees.  I was moved the experience and, more importantly, the constructive discussion we had afterwards.  Huge thanks to Nicky and our D1 team for putting this together!  I look forward to continuing the discussion in Division 1 and hope to continue our partnership with NAWIC (their members were great!).  

This blog also published two excellent articles on arbitration in April.  One was about international arbitration and the other was about the new AAA guidelines regarding discovery in the arbitration.  If you haven't read them, check them out at http://abaconstructionforumdivision1.blogspot.com/.

Looking forward into May, please consider attending our monthly business meeting on May 10th and our Toolbox Talk Series on May 27th on discovery for delay claims.  If you want the login information for the monthly meeting, contact me or visit our ABA Connect page.  

REGISTER FOR MAY TTS


I hope to see you at one of those meetings.  If you want to learn more about D1 or get involved, contact me and we can schedule a call. 

Tom Dunn, Chair Division 1 (Litigation & Dispute Resolution), rtdunn@PierceAtwood.com

Thursday, April 29, 2021

AAA Releases Discovery Best Practices for Construction Arbitration

 The American Arbitration Association (“AAA”) recently released an important new document, “Discovery Best Practices for Construction Arbitration: Recommendations for AAA Construction Advocates and Arbitrators.” These best practices are intended to “educate advocates and arbitrators to better manage pre-hearing exchanges of information in construction disputes.” 

Generally, the seven-page document seeks to promote the speed and efficiency of resolving construction disputes through arbitration. While observing that construction disputes are often very document-intensive, the best practices note that the format of arbitration does not allow for unlimited discovery:

Therefore, arbitrators should, consistent with their authority, manage arbitration proceedings to achieve the goal of providing a simpler, less expensive and more expeditious process, and discovery decisions should be proportional to the size and complexity of the matter being heard. The arbitrator should stress how, due to the number of documents, discovery in a construction dispute is different than in a typical commercial dispute.

These best practices were developed in conjunction with the AAA’s National Construction Dispute Resolution Committee (“NCDRC”), advocates, arbitrators and construction industry professionals. The guidance and suggestions in the best practices are recommended for use in all construction cases administered by the AAA under the Construction Industry Arbitration Rules or Commercial Arbitration Rules. It is important to note that these best practices are in no way intended to replace the Rules.

Document Exchange

The best practices suggest filing a detailed statement of claims and defenses as early as possible. This can help narrow the focus of discovery, identify critical documents, and avoid disputes. Whenever possible, “the scope of documents should be narrowly tailored and proportionate to the disputes at hand.” Further, a scheduling order can be an effective tool to establish deadlines and avoid delays.

The best practices also address the growing importance of e-discovery. Today’s construction disputes commonly involve a high-volume of emails, drawings, submittals, and other electronically stored information (“ESI”). The new guidance suggests addressing e-discovery during the pre-hearing conference. The size and complexity of the dispute should be the driver of the ESI protocol. In situations where the cost to produce electronic documents appears excessive, arbitrators are encouraged to consider requiring the party demanding that production to pay for the costs.

Site Inspections

Site inspections can play an important role in resolving construction disputes. They can also be expensive and time-consuming. The best practices suggest arbitrators carefully weigh the benefits of agreeing to a site inspection and establish a protocol in advance. Likewise, arbitrators are encouraged to consult photographs of the site prior to a visit to help become familiar with the project. Any tour of the project site should be conducted without attorney commentary.

Disputes and Sanctions

Discovery disputes happen. Parties should make a good-faith effort to meet and confer to resolve these disagreements. If these consultations are unsuccessful, arbitrators are encouraged to schedule a telephonic conference. Hopefully many of these disputes can be precluded from arising in the first place through appropriate planning and communication.

It is important to remember that arbitrators have the authority to order sanctions. Courts may uphold these sanctions when sufficient cause exists. Arbitrators can choose to order sanctions either immediately at the time of the action, or they can choose to wait to do so in the final award. However, precluding proof should only be considered in the most extreme circumstances.

Other Considerations

The new AAA guidance suggest that depositions be used only when there are clear and compelling grounds to demonstrate they will contribute to the speed and efficiency of the arbitration process.

Third-party discovery can be a complicated and thorny issue in an AAA arbitration. Courts have reached different conclusions as to whether Article 7 of the Federal Arbitration Act allows for an arbitrator to subpoena a third-party to produce documents prior to a hearing. In any event, third-party discovery should be limited to the largest, most complex cases.

Conclusion

These best practices seek to balance the almost inherently complex nature of construction disputes with the efficiency offered by AAA arbitration. This new document is a valuable resource for arbitrators, attorneys, and construction professionals. The summary contained in this article discussed only a few of the highlights and is not meant as a comprehensive survey.

Parties interested in more information on AAA construction arbitration rules and procedures are encouraged to visit adr.org/construction.

Author Patrick McKnight is an associate in the Litigation Department at Klehr Harrison Harvey Branzburg LLP in Philadelphia, Pennsylvania. Patrick also serves on the Klehr Harrison Coronavirus Task Force. He can be reached at pmcknight@klehr.com.

Thursday, April 8, 2021

Next Toolbox Talk Series -- April 22nd at Noon -- Virtual Testimony: Lessons Learned from the Arbitrator's Perspective

 REGISTER


Now that we have been living with virtual testimony on a more regular basis for one year, there are truly well-developed lessons learned from all perspectives.  On April 22nd, we will hear what works and what doesn't work for virtual testimony from the arbitrator's perspective.  

We will be led by two fabulous discussion leaders.  Bill Franczek is a Forum leader, advocate, and active AAA arbitrator.  He previously served on Division 1's steering committee and was the first Chair of Division 13 (Government Construction).  

Hon. Gill Freeman (retired) is one of Division 1's newest team members.  She had the opportunity to handle complex commercial and construction cases while on the bench and is now doing the same with JAMS.  Welcome Judge Freeman to the Forum and D1!  We look forward to learning from you.  

If you have a good idea for an upcoming TTS or have other suggestions for Division 1, please reach out to me (Tom Dunn, D1 Chair, rtdunn@PierceAtwood.com).  

Monday, April 5, 2021

Privilege Walk -- April 29 at 3PM ET

Join us on April 29th for the Division 1 Privilege Walk.  We are partnering up on this program with Division 13, the Forum's Diversity + Inclusion Committee and the National Association of Women in Connection.  



 

Thursday, April 1, 2021

Servotronics, Inc. v. Rolls-Royce PLC: What the U.S. Supreme Court’s Upcoming Decision on 28 U.S.C § 1782 Means for International Construction Arbitration

On March 22, 2021, the U.S. Supreme Court announced that it would consider the hotly contested issue of whether 28 U.S.C. § 1782 (“Section 1782”) grants parties to international commercial arbitrations seated outside the United States the right to seek U.S.-style discovery from the federal courts. The Supreme Court’s decision in Servotronics, Inc. v. Rolls-Royce PLC will ostensibly put to rest a matter that has roiled the international arbitration community for the last several years and may have profound implications for modern international arbitration practice.

Given the role international arbitration serves in connection with international construction projects, construction practitioners and industry representatives should pay close attention to the Supreme Court’s upcoming decision. The following article seeks to introduce the current debate to construction practitioners and offer some insight into what the Supreme Court’s decision may mean for the field of international construction arbitration.

28 U.S.C. § 1782 and the “Foreign or International Tribunal”

Section 1782 is a procedural device that permits an applicant to petition the U.S. courts to order document disclosure or compel testimony “for use in a proceeding in a foreign or international tribunal.” As a result, Section 1782 is a potentially powerful tool to gather evidence in the United States for use in a proceeding located abroad. This is particularly true for international arbitration proceedings where document exchange practices are significantly more constrained than in U.S. discovery.

Importantly, Section 1782 does not define the phrase “foreign or international tribunal” and the question of whether the statute applies to international commercial arbitral tribunals seated in jurisdictions outside the United States has caused a circuit split.  Specifically, case law dating back to the late 1990s from the Second and Fifth Circuits answered this question in the negative and remained unchallenged for two decades.  However, in 2019 the Sixth Circuit reached the opposite conclusion in the case of Abdul Latif Jameel Transp. Co. v. FedEx Corp., 939 F.3d 710 (6th Cir. 2019) and held that the phrase “foreign or international tribunal” in Section 1782 encompassed private commercial arbitral tribunals seated abroad.

The latest iteration in this saga arrived in March 2020 and September 2020 when the Fourth and Seventh Circuits, respectively, reached opposite conclusions on precisely the same set of facts in the case of Servotronics. As explained below, the Fourth and Seventh Circuit’s inconsistent holdings only broadened the circuit split and almost necessarily required the Supreme Court to review the matter.

Servotronics, Inc. v. Rolls-Royce PLC

Servotronics arose from a fire that occurred during a ground engine test of a Boeing 787 in Charleston, South Carolina. (In re Servotronics, Inc., No. 18-CV-7187, 2019 WL 9698535, at *1 (N.D. Ill. Apr. 22, 2019), aff'd sub nom. Servotronics, Inc. v. Rolls-Royce PLC, 975 F.3d 689 (7th Cir. 2020), cert. granted, No. 20-794, 2021 WL 1072280 (U.S. Mar. 22, 2021).) Rolls-Royce, the engine manufacturer, settled with Boeing and then sought indemnity from Servotronics—the entity that manufactured an engine valve that Rolls-Royce alleges caused the fire. (Id.) Accordingly, pursuant to an arbitration agreement between Rolls-Royce and Servotronics, Rolls-Royce initiated arbitration in London under the arbitration rules of the Chartered Institute of Arbitrators (more commonly referred to a CIArb).
 
In connection with those proceedings, Servotronics filed an application under Section 1782 in the U.S. federal district court for the District of South Carolina seeking testimony from Boeing’s employees that resided in South Carolina. In addition, Servotronics also sought document discovery from Boeing pursuant to Section 1782 through a separate ex parte application in the U.S. federal district court for the Northern District of Illinois. (Id. at *2.)

The federal district court for District of South Carolina initially denied Servotronics’s application. (Servotronics, Inc. v. Boeing Co., 954 F.3d 209, 211 (4th Cir. 2020).) However, on March 30, 2020, the Fourth Circuit Court of Appeals reversed the lower court’s decision. After reviewing the language and legislative history of Section 1782, the Fourth Circuit concluded that Congress intended the phrase “foreign or international tribunal” to encompass private commercial arbitral tribunals seated abroad and applied the broader interpretation of Section 1782 espoused by the Sixth Circuit. (Id. at 216.)

In the Northern District of Illinois, the court initially granted Servotronics’ application, but later vacated its decision after Rolls-Royce and Boeing intervened in the case. (2019 WL 9698535 at *3.) The district court concluded it lacked the authority to grant Servotronics’ request because the London-based arbitration proceeding between Servotronics and Rolls-Royce was not a “proceeding in a foreign international tribunal” within the meaning of Section 1782. (Id.) Servotronics subsequently appealed the decision to the Seventh Circuit court of appeals.

On September 22, 2020, the Seventh Circuit affirmed the lower court’s decision.  In doing so, it rejected the conclusions the Fourth Circuit reached on the very same set of facts just sixth months prior.  The Seventh Circuit made two significant findings.

First, according to the Seventh Circuit, neither the plain language nor the statutory context underlying Section 1782 supported an interpretation that “foreign or international tribunals” included foreign commercial arbitral tribunals. Instead, according to the Seventh Circuit, Section 1782 the term “foreign or international tribunal” only encompassed foreign courts and quasi-judicial agencies. (Servotronics, Inc. v. Rolls-Royce PLC, 975 F.3d 689, 695 (7th Cir. 2020), cert. granted, No. 20-794, 2021 WL 1072280 (U.S. Mar. 22, 2021).)

Second, the Seventh Circuit raised concerns over a potential conflict with the Federal Arbitration Act. (Id. at 695–96 (7th Cir. 2020).) Specifically, the Federal Arbitration Act only permits arbitration panels—but not parties—to seek third-party discovery. By contrast, if Section 1782 were read to apply to foreign private arbitrations, litigants in a foreign arbitration proceeding as well as any other “interested persons” (as set forth in Section 1782) would have access to much more expansive discovery than would otherwise be the case in U.S. seated arbitrations governed by the FAA. (Id. at 695.)

Implications of a Supreme Court Decision

Given the circuit split, and with similar cases pending in the Third and Ninth Circuits, the Supreme Court’s decision to consider the issues presented in Servotronics is not surprising. However, depending on whether the Supreme Court sides with the Fourth and Sixth Circuits or Second, Fifth, and Seventh Circuits, the decision could broaden the otherwise narrow document exchange practices commonly used in international arbitration proceedings.

One of the defining features of international arbitration is its relatively narrow approach to document exchange and similarly limited access to third-party discovery. Should the Supreme Court follow the Fourth and Sixth Circuits, it seems likely that the U.S. courts will become ripe for Section 1782 discovery requests. Moreover, given that applications made under Section 1782 are governed by the discovery standards set out the Federal Rules of Civil Procedure, parties to international arbitration proceedings may very well may gain access to U.S. discovery practices that would not otherwise be available in international arbitration. As a result, construction practitioners may have to rapidly adjust how they procedurally and strategically approach international construction arbitrations going forward.
 
Ultimately, the future of Section 1782 practice is far from certain. Even if the current legal framework associated with Section 1782 shifts as the result of a Supreme Court decision, the U.S. courts and international arbitral tribunals will retain significant discretion over the breadth and viability of document requests under Section 1782. As a result, notwithstanding the current focus on the Supreme Court, much remains to be written about Section 1782 in practice. In the meantime, international construction arbitration practitioners should pay careful attention to the Supreme Court in Servotronics and consider what strategic implications the Court’s decision in that case may have on the current international arbitration practices.

Author Hailey Barnett is a senior associate in the Construction Practice Group at Troutman Pepper in Atlanta. She concentrates her practice in construction transactions and construction related disputes before U.S. courts and arbitral tribunals. She can be reached at Hailey.Barnett@troutman.com.

Author Zach Torres-Fowler is a senior associate in the Construction Practice Group at Troutman Pepper in Philadelphia and New York. He concentrates his practice in construction related disputes and specializes in complex international and domestic arbitration proceedings. He can be reached at Zach.Torres-Fowler@Troutman.com.

Wednesday, March 31, 2021

What's Up at Division 1 (No. 9)

It's Springtime and Division 1 is hard at work on a number of programs and ventures which I will highlight in this month's post.  

We had a great toolbox talk series program this month on opening statements in mediation.  The discussion was led by John Bulman and Patricia Thompson. Lexie Pereira did a great job moderating.  Takeaways included:
  • Do an opening statement.  It is your opportunity to speak with the adverse party.  You can demonstrate your knowledge and control of the facts/law of the case.  In other words, you can demonstrate you are trial ready.  
  • Keep it professional.  Opening statements should be concise, factual, and presented in a direct (non-confrontational) manner.  You do not want to shut down the decision-maker on the other side.  
  • Work with the Mediator in advance.  Pre-mediation conference calls with the client is essential.  Listen to the mediator regarding the topics to cover during the mediation open statement and joint session.  Customize your presentation using the expertise and perspective of your mediator.   
  • Sometimes it doesn't work.  For meditations post-trial, where there are personality conflicts that cannot be avoided, and/or where private, personal information is part of the dispute, a joint session opening statement may not be appropriate. 
I am excited to announce the topic of our April TTS.  It is 

Virtual Testimony from the Arbitrator’s Perspective
April 22, 2021 | 12-12:30PM ET

Our discussion leaders for the April TTS are Bill Franczek, Vandeventer Black, LLP and Gill Freeman, JAMS. I know many of you know Bill.  He was a former D1 steering committee member before he was asked to serve as D13's first Chair.  He served on the GC and as the Chair of the Forum's Division Chairs Committee.  Bill is a long time AAA arbitrator and active litigator/advocate.  Gill is a retired civil trial judge and the first judge of the complex commercial/construction litigation court in Miami.  He is a veteran JAMS arbitrator and newly minted D1 member! Be on the lookout for the registration flyer for this excellent program!

On March 24th, we also had our Napa Valley Wine Class.  It was a great 90 minute session about wine making with a focus on Napa Valley wines.  BRG sponsored the event for Division 1.  We all shared what we were drinking afterwards and discussed a second wine tasting event over the next couple of months.  Below are some screenshots from the event:



We had a ton of fun on the event.  Thanks George Fink and BRG!

Today, on March 31st, we are holding a meeting about Return on Investment for Construction Claims. The program will focus on quantitative methods to evaluate whether prosecuting (or defending) a construction claim makes sense.  Thanks to our excellent panelists (see below) and the ABA team for helping us to promote this program. This program came out of D1's Programs/Concepts committee led by Joe Imperiale.  



The Dispute Resolver is doing a great job with new, current, and helpful posts.  Please provide a submission about a recent case or issue your resolved.  In the Forum's newsletter, Under Construction, Division 1 featured two articles in D1's Dispute Resolver column:
  • The Lost Art of Vouching-In by Mike Hornreich
  • Avoiding Construction Disputes: The Two Golden Rules of Leadership by Chase Callaway
Writing and getting published is a great way to obtain value out of your Forum/D1 membership in 2021!  If you want to discuss opportunities further, please contact me.  

Happy Spring Everyone!  

Tom Dunn (rtdunn@PierceAtwood.com)
Division 1 Chair

Monday, March 22, 2021

A Brief Update on the Mexican Government Contract Litigation System

The Mexican legal system treats differently disputes with respect to civil contracts (those executed by and between individuals) and disputes regarding administrative contracts (those executed by and between an individual and the public administration). A challenge to an administrative contract follows special rules relevant to the jurisdiction depending on the type of administrative act performed during the execution of a contract.

Until 2018, when the act (or omission) to be challenged in an administrative contract was lack of payment, the courts empowered to resolve the dispute were, like in a private contract, the civil or commercial courts.

However, in June 2018, Second Section of the Mexican Supreme Court of Justice issued a criterion changing the way to demand payments derived from administrative contracts, especially those governed by the Public Works and Related Services Law and the Acquisitions and Leasing for the Public Sector Law.  The criterion stated that lack of payment in administrative contracts cannot be separated from the nature of the conduct that caused the breach, which is administrative. As a consequence, a claim of breach for nonpayment was required to be brought in the administrative forum.

The judicial criterion changed the paradigm, forcing civil and/or commercial judges to reject these claims immediately, generating delays in such cases. Contractors were forced to bring several actions in order to force the administrative forum to issue a position regarding the provenance or non-provenance of the payment claim.

According to the judicial criterion, only when this situation arose or when the silence of the contracting authority creates a right or denies it, does the Contractor have a right to bring a claim before an administrative forum, which is quite different from the civil or commercial courts. As can be inferred, to get to the point that the individual is in a position to file a lawsuit, takes much longer.

Several litigators, including the author, believe that the judicial criterion is unfortunate because of, among other reasons, the issue related to time.

However, a more recent criterion (published February 19, 2021) declared the non-applicability of the previous one for contracts executed under the Mexican Petroleum Law (Law of Pemex). Under this law, it is stated that the civil and commercial principles of law are interchangeably applicable and the relationship between an individual and Pemex, when the relationship derives from a contract governed by the Law of Pemex, has a commercial nature.

This recent criterion is important because it signals a change affecting the commercial nature of the contracts ruled by laws like the Law of the Federal Electricity Commission (Law of CFE), which contains similar provisions regarding the interchangeable applicability of the commercial and civil principles to such law.

Also, the recent criterion resumes the old practice regarding the way to make a payment claim – at least payments derived from the contracts executed by and between Pemex and CFE – allowing litigators to submit payment claims directly to the civil or commercial courts as a civil lawsuit.

The foregoing will help the individual contractor in, at least, two ways. First, it gives the contractor the security that its claim can be brought as a civil lawsuit, having the opportunity to sue the contracting authority when appropriate; and second, it expedites resolution of payment disputes by allowing easier access to civil or commercial Court.

Presumably, the Mexican Judicial System will resume the old criterion regarding the appropriate way to claim the payment of administrative contracts, which means that the way to claim payments in administrative contracts will be by commercial trials. However, as of today, it will be necessary to attend to the specific law that governs the corresponding contract.

Author Juan Pablo Sandoval GarcĂ­a is an Associate at COMAD, S.C. (www.comad.com.mx). His email address is jpsandoval@comad.com.mx.

Wednesday, March 17, 2021

Neutral Evaluation Mediation Agreements

Often parties select a mediator with deep knowledge of the subject matter in dispute, only to conclude that the typical mediation format does not afford them the best use of the mediator’s expertise. As an alternative, in the right case, neutral evaluation may be exactly what parties need to position their controversy for resolution. This hybrid technique combines neutral analysis with a mediator’s proposal.

This process is intended to be used when the parties have come to a seemingly unshakeable impasse during traditional mediation of a complex case, such as a construction dispute in which each party charges the other with material breach of contract, resulting in respective damages calculations millions of dollars apart. The mediator should be experienced and respected in the area of law at issue and knowledgeable about how to conduct this type of dispute resolution. Rather than declare an impasse, the neutral continues as mediator, but in that role, assumes responsibility to “hear” and analyze the facts of the case and provide an informed, nonbinding evaluation and settlement recommendation as to the issues defined by the parties.

The mediator is provided with each party’s evidentiary presentation in an informal, mini-trial format, over a one to two-day hearing, structured by the parties however each side thinks will best present the essence of its case in the time allotted. Experts may be hot-tubbed; evidence may be provided via summaries, narratives or power point presentations; and post-hearing argument may be oral or written.

At the close of the mini-trial, the parties decide whether to go back to mediation or confirm that the mediator issue a written analysis and settlement recommendation. Assuming the parties want a neutral assessment, the mediator then issues a nonbinding, confidential analysis of the issues submitted for evaluation and a settlement recommendation based on that analysis.

Then, if the parties do not accept the mediator’s settlement recommendation, the parties may declare an impasse. Or the parties and the mediator go back to mediation, assuming the agreement and any necessary waivers by the parties under the applicable ethical rules allow the mediator to continue in that role after disclosing his or her opinions on the issues in dispute and settlement.

This approach has proven remarkably successful in providing parties the information they need to settle matters in which they were previously far apart or in deep disagreement as to likely outcome. It allows parties to obtain a non-binding, independent, but well-informed opinion of the case. This may be especially useful if party decision makers- such as public entities or the parties’ insurers - do not attend mediation or require strong support for settlement in ranges not previously authorized.

This strategy for neutral dispute resolution may raise concerns under the applicable ethical rules, including those requiring mediator neutrality. However, these concerns often may be allayed, in the right circumstances, with appropriate disclosures and consents.

Author's Note: With recognition to Ken Gibbs, JAMS, whose writings and practice define the best in mediation-evaluation.

Author Patricia H. Thompson, Esq., FCIArb, is  a full-time neutral at JAMS, with experience conducting virtual and in-person mediations, arbitrations and other ADR proceedings in construction and other complex commercial disputes.

Tuesday, March 9, 2021

Florida's Products Liability Economic Loss Rule Bars Claims Where Only Damage Sustained is to the Building Itself

Can a products liability claim survive the economic loss rule (“ELR”) where the only claimed damage to “other property” is to the finished building itself? If your state takes an “integrated” approach to the ELR, the answer to this question should be “no.”

In 2711 Hollywood Beach Condominium Association, Inc. v. TRG Holliday, Ltd., Florida’s Third District Court of Appeal provided clarity on the issue of whether the ELR bars a products liability claim where the only damages sought are repairs and replacement to a building system in which the product is a component part.  307 So.3d 869 (Fla. 3d DCA 2020). 2711 Hollywood was decided against the backdrop of the Florida Supreme Court’s decision in Tiara Condo. Ass'n, Inc. v. Marsh & McLennan Companies, Inc., where the Court limited the ELR to products liability cases. 110 So. 3d 399, 400 (Fla. 2013). The Tiara court reviewed and seemingly cited with approval its prior 1993 decision in Casa Clara Condominium Ass’n., Inc. v. Charley Toppino and Sons, Inc., 620 So.2d 1244 (Fla. 1993) in reaching this decision. Id., 401, 405-406. There, the Court held that the ELR barred a homeowner’s claims against a supplier of allegedly defective concrete, where the only alleged damages were rusting and spalling to the structure of the completed condominium units. Casa Clara Condominium Ass’n., Inc., 620 So.2d at 1245. Despite Tiara’s apparent reliance on Casa Clara, Westlaw’s “KeyCite” system continues to apply a “red flag” warning to the Casa Clara decision.

The 2711 Hollywood decision makes clear that Casa Clara’s holding still applies to product manufacturers and suppliers in Florida. In 2711 Hollywood, the condominium association sued the maker of the component fittings of the condominium’s fire suppression system (“FSS”), claiming that these fittings caused the fire suppression system to leak. 307 So.3d at 870. The association sought damages for future repairs and replacement of the FSS under negligent and strict products liability theories against the fittings maker. Id.

On appeal, the Court affirmed summary judgment entered in favor of the manufacturer based upon Casa Clara. Id. In doing so, it recognized that when a products liability claim arises in the context of real estate, courts are to apply the “object of the bargain” rule. Id. The focus of this rule is on “the product purchased by plaintiff,” rather than “the product sold by the defendant.” Id. Where a product is an “integral part of the finished product,” (i.e., the building), and the only alleged damages are to the building itself, such damage is not considered injury to “other property.” Id. The FSS fittings were an integral part of the FSS, and the completed building. As such, the ELR applied to bar the Association’s products liability claims, because the only alleged damages were the cost to replace the FSS and resulting repair damages to the building. Id.

The 2711 Hollywood decision also reinforces the applicability of the ELR in circumstances where a purchaser or installer attempts to bring a tort-based products liability claim against a downstream manufacturer or supplier. In 1995, the United States Court of Appeals for the Eleventh Circuit applied the ELR to a homebuilder’s claim against the manufacturer of chemicals applied by the homebuilder to its roof sheathing, which allegedly caused the roofs to deteriorate. Pulte Home Corp. v. Osmose Wood Preserving, Inc., 60 F.3d 734, 736 (11th Cir. 1995). It reasoned that while the homebuilder was required to remove roof components (shingles and untreated plywood) due to defective treated plywood, these components were not “damaged,” but rather, removed “as a consequence of replacing” damaged, treated plywood.  Id. at 742 (citing Casa Clara Condominium Ass’n., Inc., 620 So.2d at 1246).

2711 Hollywood provides needed clarification on the scope of cognizable tort-based products liability claims against building products manufacturers and suppliers in the Florida. Absent a showing of personal injury, or damage to property wholly unconnected with the completed building, such claims should be barred. The 2711 Hollywood decision ensures that products liability claims involving only “economic losses” will be dealt with in the manner which best suits them: “[c]ontract law, and the law of warranty in particular.” See Tiara Condo. Ass'n, Inc., 110 So. 3d at 404.

Author Brett M. Henson is a partner with the Sarasota, FL office of Shumaker, Loop & Kendrick, LLP, and is Board Certified by the Florida Bar in Construction Law. He is experienced in representing manufacturers of building products in all phases of litigation and trial.

Saturday, February 27, 2021

What's Up at Division 1 (No. 8)

February was an great month for Division 1.  The Forum had its first ever virtual construction conference co-chaired by our own Cassidy Rosenthal.  Congrats Cassidy on job well done.  I found the conference platform pretty user friendly and dynamic.  I liked the ability of attendees to submit questions and comments during the program.  I also thought the networking features were pretty cool too.  It was great seeing a lot of our Forum friends during the conference.  Going forward, I am pretty sure we will incorporate a virtual component to our programs as it allows access to those who would rather not travel.  

Division 1 had two division events during the virtual conference.  

First, we had our Toolbox Talk Series about working with experts in mediation.  Patricia Thompson, David Ponte, and Dan Becker did a great job leading the discussion of our 40+ attendees.  Some of the takeaways / considerations form the talk for me included:

  • Providing expert reports or presentations early enough so that the other side can review and process the information.  
  • Be cognizant of the confidentiality of the expert reports for mediation and take measures to avoid those reports being used later in the case by your adversary.  
  • For some disputes, particularly if the project is still ongoing, consider hiring one shared expert to help your client and the other side resolve their dispute.  Dan Becker described how he did this on one project.  
  • Sometimes it is appropriate to have the experts meet together and/or with the mediator to narrow issues.  
Second, we had our escape room event in partnership with Division 7 and Division 9 on February 25th at 3PM.  The event of 30+ attendees started out with 30 minutes of networking.  Michael Martin from LitCon Group, the sponsor of our event, introduced himself and his company's expertise.  Each of the division chairs introduced themselves and their divisions.  Then, each attendee introduced themselves.  We then broke up into groups of 4-5 people to perform the virtual escape room game.  I was randomly paired upon with Division 7 Chair (Mike Clark) and Division 9 Chair (Jeremy Brummond) and two others. We finished the game 15+ minutes early and won!  Everyone was screaming at us when we all got back together that the company had to mute us all to close out the program.  It was a blast! 

In March, Division 1 has four virtual events planned.    

1. March 8 @ 3PM ET - Monthly Meeting.  

Our monthly meetings are always on the second Monday of the month at 3PM.  We discuss future programs and meetings.  This is a good way to get involved with Division 1.  Please join us 

        Join Division 1 Zoom Meeting

        https://americanbar.zoom.us/j/6691783882?pwd=NUh3SE42eWMrc0ZrdW5pdEgyMFo0Zz09

        Meeting ID: 669 178 3882

        Password: 826501

2. March 24 @ 6:30PM ET - Wine Event

Thanks to George Fink and BRG, we are participating in a wine class followed by some networking.  We have limited tickets available. Register: https://ecommunications.thinkbrg.com/58/2021/landing-pages/rsvp-(blank).asp   



3. March 25 @ 12PM - Toolbox Talk Series

Join us for our next TTS on March 25th.  This 30 minute event is scheduled for the 4th Thursday at noon.  Please join us for this meeting:

        Join Division 1's TTS 

        https://americanbar.zoom.us/j/6691783882?pwd=NUh3SE42eWMrc0ZrdW5pdEgyMFo0Zz09

        Meeting ID: 669 178 3882

        Password: 826501

4. March 31 @ 3PM - Return on Investment of Construction Claims

Our D1 Friends from DPA and Brenda Radmacher will lead a discussion about how attorneys can more clearly answer the age-old question favored by clients - what is this going to cost me and is the return worth the fight? There is no cost to attend and it is open to all interested in the topic.  



We also have some interesting programs in the works for the coming months.  Thank you to everyone for a engaging with the Forum and Division 1 in February.  

If you have ideas, questions, or want to learn more about Division 1 or the Forum, please reach out.  

Chair, Division 1 (Litigation & Dispute Resolution)
rtdunn@PierceAtwood.com
401-490-3418



Thursday, February 25, 2021

Drafting a Better Arbitration Agreement to Stay Out of Court

A recent five-year, ten-state study proved that effectively managed arbitrations save time and money in comparison to litigation. This study found that federal court lawsuits lasted over a year longer than arbitrations decided during the same period, which delay caused direct business losses exceeding $10 billion, in part due to lost management time, the effect of prolonged litigation uncertainty on management decision-making, credit and investor concerns, and lost use of resources tied up by litigation. Delayed dispute resolution is simply bad for business.

Therefore, parties wisely draft their arbitration agreements to limit discovery and motion practice, and, equally important, they carefully select arbitrators trained to run efficient proceedings.

But more forethought is necessary for arbitration to live up to the cost savings it was intended to achieve. Too often, arbitration is delayed – sometimes for years – pending judicial resolution of allegedly ambiguous arbitration provisions. Drafters of arbitration agreements should consider the following to avoid, or at least limit, expensive side litigation.

    1.    Clearly define the scope of the arbitration agreement.

To avoid litigation, the arbitration agreement should make clear:

        a)    That its scope applies to all disputes or controversies arising out of or related to the relationship of the parties or the transaction at issue, including statutory, tort, equitable, common law or contract-based claims, including those arising before as well as after the arbitration agreement;

        b)    That objections to the scope and validity of the arbitration agreement and the underlying contract must be arbitrated; and

        c)    Whether it binds entities related to the contracting parties, whether it requires consolidation of all related disputes to avoid multiple, parallel proceedings, and whether it precludes class actions.

    2.    Define the arbitrator’s authority.

The arbitration agreement should leave no question as to the arbitrator’s authority.  It should:

        a)    Give the arbitrator sole authority to determine whether the parties have satisfied conditions to arbitration, as well as the enforceability of the underlying contract(s) and arbitration agreement, and the scope of the arbitration agreement; and

        b)    Clarify that the arbitrator has broad authority to award damages, injunctive and other equitable remedies, and assess fees, costs and sanctions.

    3.    Draft a fundamentally fair agreement.

One-sided or unconscionable arbitration agreements invite litigation. Organizations like JAMS and AAA are good resources for provisions that are clearly worded, fairly drafted, and commercially reasonable.

    4.    Avoid inconsistent contract terms.

Litigation results when language in boiler plate arbitration agreements conflicts with other standard provisions in the underlying or related contract documents. Commonly inconsistent provisions concern:

        a)    Choice of law and availability of remedies;

        b)    Inapplicable references to courts and judicial venues for dispute resolution; and

        c)    Confusion as to selection or number of arbitrators or arbitral rules.

In summary, a well drafted arbitration agreement should foster the cost-effective resolution of disputes, using language that is consciously crafted to avoid rather than result in litigation.

Author Patricia H. Thompson, Esq., FCIArb, is  a full-time neutral at JAMS, with experience conducting virtual and in-person mediations, arbitrations and other ADR proceedings in construction and other complex commercial disputes.

Monday, February 22, 2021

Meet D1's Neutrals - Melissa Dewey Brumback

Meet Melissa Dewey Brumback! She is an experienced arbitrator, with over 22 years of practice, based in North Carolina.  Although she grew up in New York state, she is now a double Tar Heel, having obtained both her undergraduate and her law degree from UNC-Chapel Hill.  In her practice, Melissa works with construction industry professionals of all stripes—architects, engineers, contractors, and developers.  However, she considers design professionals among her favorite parties to represent, and has a blog devoted to their particular legal issues: Construction Law in NC.  We sat down (virtually, of course!) with her and learned about her arbitrating style. She also shared some practical tips for her fellow ‘dispute resolvers.’ D1, meet Melissa! 

Click here for a short video intro from Melissa!




MELISSA'S ARBITRATION PRACTICE

When and why did you choose to become an arbitrator?

Becoming an arbitrator chose me, actually.  I was asked to arbitrate a dispute involving a construction business dispute by some parties that had agreed to a private arbitration.  It was rewarding being the decision maker for a change—and it got me hooked.


Can you describe your arbitrating style?

As I am usually an advocate, I know what frustrates folks, and that is an arbitrator that is unfair—that is, when an arbitrator has a bias or has pre-determined which side is more trustworthy.  I strive to stay as open-minded and neutral as possible until all the evidence is in the record.

 

What is the most important skill to have as an arbitrator?

Willingness to make tough calls.  I had one case where a party didn’t produce documents ahead of time, despite discovery obligations, but wanted to use those same documents in the hearing.  You need to force parties to keep to the rules they agreed to at the start.

 

What should drafters consider when drafting an effective arbitration clause?

The most important consideration for arbitration is how much discovery to allow.  If you allow full discovery, there is little point to having an arbitration.  On the other hand, you want to be able to know the general facts before you get to the hearing.  Carefully crafting those discovery limitations is vital.

 

What measures do you take as an arbitrator to ensure arbitration is less costly and more efficient than litigation?

One of the benefits of arbitration is the speed and lower cost.  I don’t believe that strict rules of evidence are necessary in the arbitration setting.  Forcing attorneys to follow strict document admission requirements, for example, is generally unnecessary.


GET TO KNOW MELISSA & HEAR HER TIPS FOR FELLOW DISPUTE RESOLVERS

What geographic area will you serve as a mediator/arbitrator?

Generally I will arbitrate anywhere North Carolina—from “Manteo to Murphy” as they say.  If you are in the Tar Heel state, I’ll be there.  (I’m not opposed to arbitrating in neighboring states, but haven’t had the opportunity.)

 

What is your experience and thoughts regarding virtual ADR?

I have not yet participated in a virtual arbitration, although I have participated in numerous virtual mediations and hearings, and I imagine it is similar.  I think it is a good tool to consider when folks are far away so that you can have testimony without breaking the bank.

 

How can ‘dispute resolvers’ better resolve disputes?

The most important way for 'dispute resolvers' to better resolve disputes is to be open to new ideas, new methods, and new theories.  Every other lawyer you meet can teach you something—either how to do something or how not to do something.  Don’t just do the “same old, same old” when handling a dispute, but carefully craft the theory and method for the particular case. 

 

How does the Forum and Division 1 relate to your mediation and arbitration practices?

The Forum is both fun and rewarding.  I know lawyers from across the country that I can call with questions or send clients to when necessary.  I learn a lot of hands-on, topical information from being an active part of the Forum.   I like to say it is a cult—but a good cult!

 

What was your first Forum meeting?

My first Forum meeting was the Scottsdale, Arizona and was called “My Favorite Mistakes.”  The brochure pictured a guy wide awake and stressing about his case at 3am.  I could relate, so I had to go! 


What hobbies, activities, or interests do you have/do outside of work and the Forum?

I love to read and all things books.  I am in a few different book clubs, enjoy finding little free libraries, and my idea of a great afternoon is one spent in a used book store.  Pre-COVID, I also loved to travel with my family, and hope to get back to that as soon as the world returns to normal.  (Iceland is next on my bucket list!)

_____________________________________________________________


As the litigation and dispute resolution division of the Forum, our members regularly serve as arbitrators, mediators, and other neutrals who resolve disputes. In an effort to promote and educate our membership about our talented neutrals, D1's Incoming Chair, Tom Dunn, decided to spearhead a series here on The Dispute Resolver blog to feature our Division 1 Neutrals (email him at rtdunn@pierceatwood.com if you'd like to be featured!).

_____________________________________________________________

Melissa Dewey Brumback is a litigation partner with over 20 years of experience, whose practice is focused on construction law and business disputes. She primarily represents architects and engineers, advising them on contract proposals to limit risks and defending them when litigation does arise.

Melissa’s cases have included construction administration and management claims, plan defect claims, testing failure claims and delay claims. Her practice includes the defense of all sizes of claims, from private commercial buildings to large, multi-million dollar public projects. She defends clients in State and Federal courts as well as in binding arbitration.

In addition to construction cases, Melissa handles commercial litigation, business torts, contract negotiation, medical negligence claims, product defect liability, premises liability, title insurance litigation, and director and officer liability.

Since 2009, Melissa has written and edited Construction Law in North Carolina, which is dedicated exclusively to the design professional community. The blog is critically-acclaimed at the national level, and has been awarded the “Best Construction Blog” prize by Design and Construction Report.

Outside of work, Melissa can be found with her nose buried in a good book or checking out the newest restaurants in the Triangle with her husband and daughter.


Contact Melissa: mbrumback@rl-law.com | 919.881.2214 
_____________________________________________________________

Editor Lexie R. Pereira is a third year J.D./M.B.A. candidate at Boston College Law School and Carroll School of Management, studying to become a litigator, with a specialty in construction law. Currently, she works as a Law Clerk at Consigli Construction Co., Inc., serves on the Editorial Team of the ABA’s Forum on Construction Law’s Dispute Resolver blog, and acts as the 2020 Student Liaison of the ABA's Forum on Construction Law. At school, Lexie is the President of the Real Estate Law Society and the President of the Eagle-to-Eagle Mentoring Program. Lexie grew up in the construction industry and has spent time working as an estimator, field engineer, laborer, and, of course, in the legal capacity at Consigli and formerly Hinckley Allen as a Summer Associate. 

Contact Lexie: pereirle@bc.edu | https://www.linkedin.com/in/lexie-pereira/