Alternative Dispute Resolution

ALTERNATIVE DISPUTE RESOLUTION

FINAL EXAMINATION

Spring 2011

(2 Hours)

1.  (10 points) Part A: John Smith purchases a cell phone from AT&T, signing AT&T’s standard contract, which contains a broad, detailed arbitration clause that is silent as to the possibility of a class arbitration or consolidation. After using the phone for a few months, Smith becomes convinced that AT&T is in breach of the contract and violation of law in its pricing, as to all of its cell phone customers.

He brings an action in Arizona state court on behalf of all such customers, and recovers a Big Class Judgment, which is upheld by the Arizona Supreme Court. AT&T has properly preserved its legal arguments regarding the propriety of the class action, and now appeals to the United States Supreme Court. AT&T prefers individual arbitration, but individual litigation would be preferable to a class action of any kind. Make its argument to the United States Supreme Court.

(10 points) Part B: Shortly after reading about the litigation in Part A, Verizon’s General Counsel adds to its standard cell phone contract a waiver, by both parties, of any right to a class arbitration or consolidation. Mary Jones, of Rio Linda, California, purchaser of a phone under the revised contract, believes Verizon is in breach of the contract and violation of law in its pricing, as to all of its cell phone customers. Mary also brings a class action in state court and also recovers a Big Class Judgment after the California courts rule that such waivers are unconscionable, whether in arbitration or litigation. What is Verizon’s argument in the United States Supreme Court?

2.  (10 points) Define or describe the following as they relate to ADR, including, where appropriate, the issues surrounding them:

(a)  On Riskin’s Grid, an Evaluative/Broad Mediator

(b)  Last-Offer Arbitration

(c)  High-Low Arbitration

(d)  Litigotiation

(e)  The Negotiator’s Dilemma

(f)  Collaborative Law Practice

(g)  Procedural Arbitrability

(h)  Confirmation

(i)  Caucus

(j)  Agent of Reality.

3.  (10 points) Frederika, a resident of Oxford, Mississippi, has a joint venture with the Outlaws motorcycle gang in Los Angeles. She grows opium poppies and produces heroin, and the gang distributes it. Fresh from a rally of the Community Peace League, they sign an agreement saying that if any disagreements arise, they will “let Shorty arbitrate it”, and that “Shorty’s decision will be the final word”. Shorty is a third party not involved in the deal who is discreet and has the trust of both parties. Presently a dispute arises, with Frederika claiming the gang owes her money. Shorty’s decision is that Frederika is owed nothing. Frederika, now in law school although under indictment, sues the gang (which has a local chapter) in Mississippi state court for the money she claims she is owed for the latest shipment of heroin, and the gang pleads the “arbitration decision” as a defense. How should the Mississippi court rule and why?

4.  (10 points) A newly-admitted lawyer accepts the representation of a plaintiff in an auto accident case, and advises her that she has a very good case, based on the defendant’s clear negligence. As the case develops, the young lawyer realizes that the plaintiff has been contributorily negligent in a way that will bar a recovery. The defense files its summary judgment motion, and the plaintiff’s lawyer sees the handwriting on the wall.

A modest settlement has been offered by the defendant. However, the lawyer desperately wants to avoid having to tell the client that his original assessment was overly optimistic. Therefore, he will probably allow the case to go to trial. A mediation takes place a few days before the motion will be heard.

You are the mediator – a trial lawyer experienced in negligence cases. Your mediation group, Scrupulously Neutral, favors a facilitative, non-directive style of mediation. You think perhaps you should make an exception here. What are the pros and cons?

5.  (10 points) Tenanna recently arrived in the U.S. from Ukraine to pursue her modeling career, and is adventurous but speaks no English. She is now shopping for an apartment at Welcoming Landlord Arms, which offers a no-questions-asked lease arrangement. Using hand signals and numbers on a yellow pad, she selects an apartment and signs a form containing an arbitration clause. As it turns out, the form calls for rent in an amount that escalates sharply in the second month and every month thereafter, obligates Tenanna to repair even the roof of the building, allows unilateral termination of the lease by Landlord at any time, with or without cause, and gives Landlord access to her bank account for six months’ advance rent. Tenanna now consults you (through an interpreter) as to whether, and how, she must respond to an arbitration demand made by Landlord.

6.  (10 points) Big Telephone Company provides cell phone service to Sally Brown. Sally, having taken an ADR course in law school, dislikes arbitration intensely. The contract contains a broad arbitration clause on a separate, unnumbered page. It provides, in part, that “all questions whatsoever concerning arbitrability shall be decided exclusively and finally by the arbitrator”. Unfortunately, when Sally signed the contract, the salesperson secretly removed, and later re-inserted, the page containing the arbitration clause. Sally wishes to sue Big over an allegedly fraudulent pricing scheme. Who will decide whether she is obliged to arbitrate?

7.  (10 points) Your client, a home builder, asks you to represent her in a dispute regarding the interpretation of a contract with a Spanish company to import tile from Spain to the U.S. The contract specifies no controlling law but contains an arbitration clause designating Barcelona as the seat of the arbitration. Your client, a novice in these matters, asks what this means, particularly with respect to (i) where she will have to go for hearings, (ii) what law will govern the interpretation of the contract, (iii) what law will govern the conduct of the arbitration proceeding.

8.  (5 points) Your client has had bad experience with the AAA and other agencies in arbitration. He wishes to require arbitration under all his contracts. In any event, if he wants to do business in his industry, he must use arbitration. In light of his poor opinion of arbitrating agencies, what alternatives can you offer him?

9.  (5 points) Deal making negotiation differs from dispute settlement negotiation in several characteristics. Discuss the characteristic you believe would be most important in resolving, say, a custody dispute between divorcing parents.

10.  (5 points) As a negotiator, when should you make the first offer? When should you not?

11.  (5 points) In what way or ways may trust between the parties bring value to a negotiation? Conversely, may the absence of trust affect the negotiating process in negative ways?

– End of Exam –

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