Dispute Resolution Gets a Makeover

The New York Stock Exchange (NYSE) recently obtained Securities and Exchange Commission approval of a change in NYSE Rules 638 and 639, thereby allowing expiration of its 2-year pilot program that had mandated mediation and administrative conferences prior to arbitration of larger cases.

Until the new rules became effective for cases filed after February 1, 2003, NYSE had automatically scheduled a mediation session of up to 4 hours in all cases in which the claim exceeded $250,000. The NYSE covered the mediator's fee of $500 for the 4-hour session; the parties could decide to select their own mediator and pay the difference in the mediator's fee. Further, the parties could extend the mediation beyond the first session at their own expense. While this program was intended to encourage early resolution of disputes, the settlement rates were not as good as anticipated: in 1999, only 41% of industry cases settled; in 2000, the settlement rate dropped to 26%, and while rising to 40% in 2001, settlements dropped again, to 38% in 2002. The results were similarly disappointing for customer cases, with settlement rates dropping from a high of 90% in 1999 and 2000 to approximately 50% in the first half of 2002.

Parties who had participated in the NYSE mediation process complained that the mediation sessions were not useful settlement devices, and instead ended up affording opportunities for discovery, delay and posturing. The Exchange determined that mandatory mediation was in conflict with the essential nature of mediation as a voluntary dispute resolution process, and thus proposed eliminating mandatory mediation. Under the amended Rule 638, mediation will be available only if the parties agree and at no extra administrative expense to them. Parties who wish to mediate prior to arbitration will continue to be required to submit a filing fee, which will be credited to the arbitration if the mediation is unsuccessful. Similarly, under revised Rule 639, administrative conferences will only be scheduled in cases in which the parties agree or the Director or arbitration panel asks for it; such conferences will be conducted by conference call and will be limited to a discussion of procedural and scheduling matters. Thus, NYSE appears to be refocusing its efforts on promoting efficiency of its arbitration processes, thereby shifting responsibility for early dispute resolution and case management to the parties.

FMCS Proposes Online Registry

The Federal Mediation and Conciliation Service (FMCS) has proposed a regulation that would create a registry to improve public access to experienced private-sector mediators. This new initiative would provide for private-sector mediators to apply online for inclusion on the FMCS panel, and would permit interested parties online access to mediators' credentials in order to make an appropriate selection.

The FMCS's 'Access to Neutrals Initiative' should be approved in September 2003 for launch in early 2004, and will provide several improvements in the present FMCS delivery of mediation services. First, as the principal channel for applying to the panel and for users to select mediators, the FMCS Web site will deliver improved access and promote the trend toward 'e-government.' Second, the FMCS will set a high bar for those seeking to mediate on its behalf, requiring extensive information regarding the applicant's workplace dispute resolution experience, education, training, and specific casework. FMCS officials expect an initial registry of 200 or more neutrals, selected from an applicant pool that is likely to exceed 1000. Registry neutrals will need to certify that they do not engage in labor relations as an advocate, and will be required to comply with various informational, ethical and continuing education requirements established by the FMCS.

When the Access to Neutrals Program is operative, the registry will be accessible to parties through the FMCS Web site. Each user will be required to register and specify the reason for accessing the site, a requirement intended to 'screen-out casual visitors from those customers with a legitimate professional interest,' according to FMCS Commissioner Peggy McNeive. A panel of five to seven neutrals will be provided without charge; if a party requires personal FMCS assistance or a wider panel, a fee will be charged for the service.

EEOC Expands ADR Program

The EEOC has expanded its National Mediation Program in a continuing attempt to respond to mediator and party feedback about the program that has been operative since 1999. A recent comprehensive study by an independent consortium of academicians with ADR expertise found that over 91% of charging parties and 96% of employers that participated in EEOC mediation would use it again if they were party to a future charge. The EEOC reports that since implementing its mediation program, more than 44,000 mediations have been conducted, resolving over 29,000 charges, within an average processing time of 86 days. A hallmark of the EEOC's mediation program is that if a charge is sent to the Mediation Unit, the respondent does not need to submit a position statement or respond to an investigative questionnaire.

Given the successes of the EEOC's ADR program and in light of the federal government's interest in further privatizing dispute resolution processes, the EEOC has launched a pilot program in the Philadelphia District Office, known as the 'Referral Back' Mediation Program. Under this program, for employers with an EEOC-approved internal dispute resolution procedure, the EEOC will refer charges filed against the corporation 'back' to the corporation for internal processing. If the company cannot resolve the charge, it will be sent back to the EEOC, which will resume processing of the charge. The general criteria established for acceptance of an employer's program in the Pilot include: voluntary employee participation; the internal program is already established; it has written procedures that are clear and disseminated to the employees; there is no charge to the employee; it covers discrimination claims and remedies against private employers covered by the EEOC's jurisdiction; and it produces settlement agreements that are in writing and enforceable in court.

In addition, the EEOC has announced another pilot program pursuant to which state and local Fair Employment Practices Agencies (FEPAs) will mediate private sector charges filed with the EEOC on a contract basis in nine states, including New York through the City Commission on Human Rights. The participating FEPAs are directed to use facilitative mediation in an effort to resolve charges filed with the EEOC. If the FEPA is unable to resolve the charge, it will be returned to the EEOC for investigation and processing.

Legislature Considers Uniform Mediation Act

The Uniform Mediation Act (UMA) continues to wind its way through the New York State Legislature, where it has been proposed by Republican Senator Dale Volker. The bill, S. 6842, would amend the Civil Practice Law & Rules to establish a privilege for mediation communications, which would render defined communications not subject to discovery or admissible as evidence unless the privilege were waived or precluded. In addition, the UMA would require mediators to disclose conflicts of interests. The UMA has been endorsed by the American Bar Association and the New York State Bar Association, and is enthusiastically supported by dispute resolution professionals, who typically address confidentiality and privilege issues in their mediation agreements, but have not had the benefit of statutory protections.

The recent trend toward adapting, refining, and expanding use of alternative dispute resolution reflects the governmental and regulatory interest in reducing civil dockets and the Bar's growing acceptance of mediation to resolve disputes.

Ruth D. Raisfeld is an employment lawyer providing dispute resolution services in New York and Westchester.

Several governmental and regulatory bodies have announced new initiatives aimed at increasing access to their dispute resolution programs, strengthening the credentials of their neutral panels, and improving the efficiency of their dispute resolution processes. These decisions were reached, in part, after evaluating success rates and feedback relating to these dispute resolution programs.

A sampling of such initiatives demonstrates the ever-increasing value and role of Alternative dispute resolutions (ADR) in the resolution of employment as well as other legal disputes.

NYSE Ends Mandatory Mediation

The New York Stock Exchange (NYSE) recently obtained Securities and Exchange Commission approval of a change in NYSE Rules 638 and 639, thereby allowing expiration of its 2-year pilot program that had mandated mediation and administrative conferences prior to arbitration of larger cases.

Until the new rules became effective for cases filed after February 1, 2003, NYSE had automatically scheduled a mediation session of up to 4 hours in all cases in which the claim exceeded $250,000. The NYSE covered the mediator's fee of $500 for the 4-hour session; the parties could decide to select their own mediator and pay the difference in the mediator's fee. Further, the parties could extend the mediation beyond the first session at their own expense. While this program was intended to encourage early resolution of disputes, the settlement rates were not as good as anticipated: in 1999, only 41% of industry cases settled; in 2000, the settlement rate dropped to 26%, and while rising to 40% in 2001, settlements dropped again, to 38% in 2002. The results were similarly disappointing for customer cases, with settlement rates dropping from a high of 90% in 1999 and 2000 to approximately 50% in the first half of 2002.

Parties who had participated in the NYSE mediation process complained that the mediation sessions were not useful settlement devices, and instead ended up affording opportunities for discovery, delay and posturing. The Exchange determined that mandatory mediation was in conflict with the essential nature of mediation as a voluntary dispute resolution process, and thus proposed eliminating mandatory mediation. Under the amended Rule 638, mediation will be available only if the parties agree and at no extra administrative expense to them. Parties who wish to mediate prior to arbitration will continue to be required to submit a filing fee, which will be credited to the arbitration if the mediation is unsuccessful. Similarly, under revised Rule 639, administrative conferences will only be scheduled in cases in which the parties agree or the Director or arbitration panel asks for it; such conferences will be conducted by conference call and will be limited to a discussion of procedural and scheduling matters. Thus, NYSE appears to be refocusing its efforts on promoting efficiency of its arbitration processes, thereby shifting responsibility for early dispute resolution and case management to the parties.

FMCS Proposes Online Registry

The Federal Mediation and Conciliation Service (FMCS) has proposed a regulation that would create a registry to improve public access to experienced private-sector mediators. This new initiative would provide for private-sector mediators to apply online for inclusion on the FMCS panel, and would permit interested parties online access to mediators' credentials in order to make an appropriate selection.

The FMCS's 'Access to Neutrals Initiative' should be approved in September 2003 for launch in early 2004, and will provide several improvements in the present FMCS delivery of mediation services. First, as the principal channel for applying to the panel and for users to select mediators, the FMCS Web site will deliver improved access and promote the trend toward 'e-government.' Second, the FMCS will set a high bar for those seeking to mediate on its behalf, requiring extensive information regarding the applicant's workplace dispute resolution experience, education, training, and specific casework. FMCS officials expect an initial registry of 200 or more neutrals, selected from an applicant pool that is likely to exceed 1000. Registry neutrals will need to certify that they do not engage in labor relations as an advocate, and will be required to comply with various informational, ethical and continuing education requirements established by the FMCS.

When the Access to Neutrals Program is operative, the registry will be accessible to parties through the FMCS Web site. Each user will be required to register and specify the reason for accessing the site, a requirement intended to 'screen-out casual visitors from those customers with a legitimate professional interest,' according to FMCS Commissioner Peggy McNeive. A panel of five to seven neutrals will be provided without charge; if a party requires personal FMCS assistance or a wider panel, a fee will be charged for the service.

EEOC Expands ADR Program

The EEOC has expanded its National Mediation Program in a continuing attempt to respond to mediator and party feedback about the program that has been operative since 1999. A recent comprehensive study by an independent consortium of academicians with ADR expertise found that over 91% of charging parties and 96% of employers that participated in EEOC mediation would use it again if they were party to a future charge. The EEOC reports that since implementing its mediation program, more than 44,000 mediations have been conducted, resolving over 29,000 charges, within an average processing time of 86 days. A hallmark of the EEOC's mediation program is that if a charge is sent to the Mediation Unit, the respondent does not need to submit a position statement or respond to an investigative questionnaire.

Given the successes of the EEOC's ADR program and in light of the federal government's interest in further privatizing dispute resolution processes, the EEOC has launched a pilot program in the Philadelphia District Office, known as the 'Referral Back' Mediation Program. Under this program, for employers with an EEOC-approved internal dispute resolution procedure, the EEOC will refer charges filed against the corporation 'back' to the corporation for internal processing. If the company cannot resolve the charge, it will be sent back to the EEOC, which will resume processing of the charge. The general criteria established for acceptance of an employer's program in the Pilot include: voluntary employee participation; the internal program is already established; it has written procedures that are clear and disseminated to the employees; there is no charge to the employee; it covers discrimination claims and remedies against private employers covered by the EEOC's jurisdiction; and it produces settlement agreements that are in writing and enforceable in court.

In addition, the EEOC has announced another pilot program pursuant to which state and local Fair Employment Practices Agencies (FEPAs) will mediate private sector charges filed with the EEOC on a contract basis in nine states, including New York through the City Commission on Human Rights. The participating FEPAs are directed to use facilitative mediation in an effort to resolve charges filed with the EEOC. If the FEPA is unable to resolve the charge, it will be returned to the EEOC for investigation and processing.

Legislature Considers Uniform Mediation Act

The Uniform Mediation Act (UMA) continues to wind its way through the New York State Legislature, where it has been proposed by Republican Senator Dale Volker. The bill, S. 6842, would amend the Civil Practice Law & Rules to establish a privilege for mediation communications, which would render defined communications not subject to discovery or admissible as evidence unless the privilege were waived or precluded. In addition, the UMA would require mediators to disclose conflicts of interests. The UMA has been endorsed by the American Bar Association and the New York State Bar Association, and is enthusiastically supported by dispute resolution professionals, who typically address confidentiality and privilege issues in their mediation agreements, but have not had the benefit of statutory protections.

The recent trend toward adapting, refining, and expanding use of alternative dispute resolution reflects the governmental and regulatory interest in reducing civil dockets and the Bar's growing acceptance of mediation to resolve disputes.

Ruth D. Raisfeld is an employment lawyer providing dispute resolution services in New York and Westchester.