Arbitration

Trending ADR Topics

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By: Melissa Fuller, WAMS House Counsel

As House Counsel at WAMS, I take great pride in my affiliation with an organization that is intensely committed to providing top-quality dispute resolution services statewide while simultaneously acting as an informational and educational resource to our clients and the community for over 30 years. I have always been motivated to be of help and service to people in the midst of conflict. That motivation steered me towards a career in law and, ultimately, a focus in alternative dispute resolution. As a trial lawyer since 2001, I gained great experience in the areas of employment, personal injury, construction and complex litigation. I have had the unique opportunity to advise and advocate for a wide range of clients, including injured plaintiffs and insureds, government agencies, employees, employers, corporations and business partners. I’ve educated clients on applicable law and procedure and provided good counsel and an empathetic ear during what was an intensely stressful and challenging experience for most. Taking a cue from numerous mentors, I encouraged my litigation clients to utilize mediation with great success.

Now I have the distinct pleasure of interacting with WAMS’ clients and responding to inquiries regarding current issues and case law impacting ADR. By way of recent example, WAMS Staff Attorney Judy Mikel and I met with a long-time client to discuss a recent Division One opinion, Evans v. Mercado, et al., No. 71390-6-I (Nov. 17, 2014), and the court’s analysis of the admission of insurance limits in a case adjudicated under mandatory arbitration rules. The Evans court concluded that nothing in RCW 7.06 et seq. prevents an arbitrator from admitting evidence of insurance limits. We discussed that opinion in the context of a WAMS UM/UIM arbitration guideline that asks parties to refrain from disclosing underlying policy limits and offsets so arbitrators may determine liability and damages without exposing themselves to potentially prejudicial factors. WAMS encourages clients to bring current issues to our attention and we appreciate candid discussions of WAMS policies and guidelines.

Another topic for discussion in ADR is the use/nonuse of the joint session in commercial mediation. A traditional cornerstone of the mediation process, the joint session is used to bring participants together initially in the same room with the mediator for face-to-face discussion and negotiation. Some in the ADR community speculate that the noticeable trend to abandon the joint session is primarily driven by the opinions of lawyers and mediators that joint sessions are “a waste of time” or too risky when emotions among participants are high at the outset of mediation. Experienced mediators know, however, that when joint sessions are properly orchestrated, they can provide a sense that positions and interests have been advocated and heard by all and an opportunity for parties to express regret without admitting liability. WAMS mediator John Cooper’s view is that joint sessions also offer a useful opportunity for parties to better assess case value. For example, in a pre-suit matter or when little or no discovery has been completed in a case, the joint session allows parties to identify certain factors or nuances that might impact their respective evaluations. John points out, however, that there are risks associated with having a joint session. For example, counsel could use the opportunity to assert a damaging positional statement or argument that isolates the parties. The time it takes for emotions to cool and for the mediator to get the parties and negotiations back on track eats up valuable time. WAMS mediator Harry Goldman always offers the opportunity for a joint session to his clients and uses it to explain the process to the participants, invite their comments and allow them to see who’s in the other rooms. Harry says the current trend is a complete departure from the early days of mediation practice when joint sessions were always used. He finds joint sessions problematic when counsel use the time to advance argument and make comments of no significance to the negotiations. I fully expect the topic of joint sessions to be part of an ongoing discussion in ADR circles this year.

As usual, 2015 will find WAMS neutrals and staff offering informative materials and presentations on topics ranging from ADR basics to more specialized and current issues of interest to our clients, the legal community and the community at large. WAMS mediator Kathleen Wareham will be moderating an intriguing presentation at the American Bar Association’s 17th  Annual Section of Dispute Resolution Spring Conference, April 15 – 18, at the Westin Seattle. Kathleen’s presentation, The Effective Interview: Tips from Journalists and Storytellers for Lawyers and Mediators , will enlist a panel comprised of experienced journalists and a performance artist to share interview techniques that cross over from the discipline of journalism to law and mediation. As Kathleen explains, “Communication is an important part of any lawyer’s job. We are asked to ‘listen attentively,’ but what does that mean?” The panel will describe the skills used when interviewing a subject and how to effectively listen to identify the real issues and ask the sort of follow-up questions that get people to talk.

I am honored to act as Content Editor of Alternatives to Litigation: Arbitration and Mediation, a chapter devoted to ADR in the Washington Lawyers Practice Manual, an annual project of the King County Bar Association designed to serve as a comprehensive legal reference for lawyers statewide. Chapter content has been provided over the past 20+ years by various WAMS staff attorneys, mediator Bill Joyce, and family law attorney John Kydd. The updated publication will be available through the KCBA, with proceeds used to support local pro bono programs.

WAMS staff and panel members work hard to stay current and provide the opportunity and resources to learn about and effectively use ADR, so please take advantage of everything we have to offer.

UIM Arbitration: 2009 Update

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By: Pat Duffy | Mediator, Arbitrator

duffyAs Congress considers the proposed Arbitration Fairness Act of 2009 to address several problems with the use of contractual arbitration clauses (see HR 1020), it’s a good opportunity to re-examine the evolution of arbitration in Washington and how changes in the act may impact arbitration as a method of resolving UM/UIM claims.

In the 1950’s, insurers began to voluntarily offer uninsured motorist coverage to their insureds in exchange for payment of an additional premium. In the late 1960’s, legislation was passed requiring insurers to offer uninsured motorist coverage. Later, some insurers began to offer policies that contained both uninsured and underinsured motorist coverage. In 1980, the legislature passed comprehensive uninsured/underinsured motorist legislation (which can be found at RCW 48.22.030).

Historically, automobile insurance policies have provided that UM/UIM injury claims would be decided by 3-person arbitration panels. Each party nominated one arbitrator and those two “party arbitrators” then agreed upon a neutral or “swing” arbitrator. Traditionally, a decision by a majority of the panel members was binding and the arbitrators’ fees were shared equally by the parties. This format satisfied each side’s desire to have its own “advocate” on the panel, although it certainly can be argued that the “party arbitrators” nullified each other and left the decision to essentially be made by the swing member of the panel.

But after the courts ruled in 1989 that payment of arbitrators under UM/UIM policies was the sole responsibility of insurers, there was a gradual transition by most carriers to the use of only one arbitrator. Using a sole arbitrator has undeniably saved insurers a substantial amount of arbitrator hearing fees.

Whether accurate or not, a perception began to develop with insurers that arbitrators’ awards were overly generous in favor of claimants. This view led to the advent of “sue me” clauses, which are now common in UM/UIM policies. While most policies have continued to provide for arbitration, it was to be utilized only if both parties agreed to arbitrate. If not, the only option for claimants was to initiate a lawsuit for damages against the insurer. A typical policy might now read as follows:

 If we and the insured do not agree…the dispute maybe resolved:

 a) In a binding arbitration proceeding, but only if both sides agree to arbitration, or

(b) By civil lawsuit brought by you in a court of competent jurisdiction.

Advocates for claimants have decried these changes and attempted, so far unsuccessfully, to have “sue me” clauses declared void. The plaintiff’s bar has consistently argued that the high expense and protracted delay in getting to trial is placing an unfair burden upon insureds. In turn, the plaintiffs’ bar has been soundly ridiculed for its so-called hypocrisy in attacking the right to trial by jury.

As of this writing in 2009, claimants and insurers continue to arbitrate many, if not most, uninsured/underinsured cases. Both sides have an interest in getting claims resolved without the delay and expense of a jury trial, and there is little argument about the cost and time savings associated with UM/UIM arbitration. In fact, many arbitrators like me are now seeing parties agree to resolve third party claims in binding arbitration as an alternative to trial. There is often a “high-low” agreement, not disclosed to the arbitrator, which provides for the award to be modified if it falls outside the range set by the parties.

I think it’s fair to say that arbitration is still widely viewed as an expeditious and cost-effective method of resolving UM/UIM claims. The benefits of arbitration are endorsed by Civil Rule 1 that states, in part:

These rules…shall be construed and administered to secure the just, speedy and inexpensive determination of every action.

Arbitration should continue to serve as a popular method of dispute resolution for UM/UIM claims, since the benefits of arbitration are many, including:

  •  Reliability of the hearing date
  • Privacy – no public record
  • Special expertise of neutral
  • Parties select neutral
  • Expeditious compared to trial
  • Achieves finality
  • Very narrow scope of appeal
  • Usually less costly than trial

The Arbitration Fairness Act will potentially impact UM/UIM arbitration only insofar as some policies may be considered to be “anti-consumer” by virtue of any discovery, timing, arbitrator or cost constraints that may still be used by some carriers. For the most part, however, UM/UIM arbitration in Washington is likely to remain a good choice for many disputed claims.