Jerome F. Rock, Professional Resolution Experts of Michigan
The Michigan legislature enacted Business Court legislation effective December, 2012 (2012 PA 333, MCL 600.8031, et seq.) which created significant changes to the way business and commercial disputes are submitted to the judiciary for resolution. According to the statute, the purpose of a Business Court is to:
(a) Establish judicial structures that will help all court users by improving the efficiency of the courts.
(b) Allow business or commercial disputes to be resolved with the expertise, technology, and efficiency required by the information age economy.
(c) Enhance the accuracy, consistency, and predictability of decisions in business and commercial cases.
The details that implement the new Business Court legislation are explained in the Supreme Court’s Administrative Order No. 2013-6, which sets forth the implementation of Business Court Standards as well as the Local Administrative Orders of the 17 Business Courts throughout Michigan.
This approach is a form of “Differentiated Case Management”, a concept initiated by the Civil Justice Reform Act (CJRA) of 1990, designed to improve the efficiency of case processing and reduce the demand for judicial intervention at every phase of litigation. Differentiated case management achieves these goals by the early differentiation of cases entering the judicial system in terms of the nature and extent of judicial resources they will require.
The focus of this article deals with the increasingly important and expanding role of alternative dispute resolution (ADR) under the Michigan Business Courts.
Early and active judicial intervention is the linchpin for achieving the Business Court objectives. The litigants are assured that the Business Court judge will be familiar with the claims and issues at the very beginning of the docket management phase. Standardized and pro forma scheduling orders will be things of the past. Perhaps most important of all, Business Court judges have been participating in formal training provided by the Michigan Judicial Institute, and this training is producing knowledgeable judicial advocates for ADR. Litigators will be expected to quickly adapt and respond to the preferences and suggestions of the Business Court judges.
The Local Administrative Orders for the Business Courts adopted by the various Circuits contain Docket Management instructions that include the following references to ADR:
i. Whether ADR is suitable and, if so, when and what type(s) should be employed.
ii. Whether any party believes ADR would lead to a potential resolution of the case.
iii. When counsel will report back to the court regarding progress on resolving or litigating the case, including the development of any ADR strategies.
iv. Prior settlement discussions and current status; existence of arbitration and mediation agreements, if any; ADR possibilities considered and proposed; and barriers to resolution, financial or otherwise.
v. The business court shall order the parties to complete an initial facilitation through ADR in the form and type set forth by the court within 90 days of the initial Court conference.
vi. Within 90 days of the filing of the complaint, the court may schedule the case for case evaluation.
vii. Whether a court-appointed expert would assist resolution.
viii. The parties are encouraged to explore any and all ADR options that will assist in the early resolution of the dispute.
Attorneys in Business Court cases will therefore be expected to deal with Alternative Dispute Resolution options as an integral part of their pretrial litigation strategy.
There are two significant adjustments to the attorney’s strategy: the first involves the timing of the use of ADR; and the second expands the spectrum of commonly available ADR options beyond case evaluation, mediation /facilitation and arbitration.
Litigants and their clients have become accustomed to case evaluation and voluntary or Court Ordered facilitation as part of their negotiations late in the litigation timeline, on the verge of trial. At this stage, discovery has been completed and it is likely the dispository motions have been addressed. Although case evaluation and late stage mediation / facilitation are still important ADR options, the focus of the Business Court is on the use of ADR to assist in the EARLY resolution of the case, and there are many approaches or options that may be able to deliver on this objective. This presents a paradigm shift which challenges both attorneys and clients to assess the opportunities for different ADR processes that can deliver the potential benefit of EARLY resolution. It is axiomatic that early resolution achieves the statutory objectives of improved efficiency for all stakeholders.
It will therefore be incumbent on attorneys practicing in the Business Court to become familiar with many ADR processes in addition to case evaluation, facilitation and arbitration, in order to develop and execute a formal structure best suited to the particular needs of their clients for each dispute, while maintaining a focus on achieving resolution as early as possible. Because ADR can be flexible as well as creative, attorneys will be challenged to collaborate with opposing counsel at the time of the Joint Pretrial Report to discuss and agree on any of a wide range of ADR processes, as well as the details and options that fine tune the approach to address their specific requirements. Attorneys can expect Business Court judges to be cooperative and supportive in designing and executing the optimal ADR strategy for each case, and to provide resources to litigants to achieve the common objective of efficient and early resolution.
To demonstrate the flexibility of ADR to litigants, the following common ADR methodologies are listed, along with examples of some of the choices or conditions that can be used by the parties to customize the approach best suited for each dispute.
• Mediation/Facilitation (for example, the process can start with a moderated “meet and confer” between executives, perhaps even before a case has been filed; if necessary, followed by EARLY case facilitation intended to narrow issues, discuss the exchange of information or required discovery, develop schedules for further litigation and ADR activity. The neutral in the EARLY case facilitation can remain in a “management” role enforcing the schedules and document exchange agreed by the parties and reconvening the mediation/facilitation meeting when sufficient information is available to make informed decisions on settlement. If necessary, conventional mediation/facilitation can be undertaken later in the litigation timeline, whether voluntary or under Court Order, etc.);
• Early Neutral Evaluation and Early Expert Evaluation (for example, the neutral can be a trusted facilitator or a subject matter expert; the process can be structured and formal or informal; with or without witnesses or independent fact-finding, with or without requirements for formal opinions and recommendations of the neutral, which may or may not be binding in whole or in part on the parties, etc.);
• Special Master, Discovery Master (for example, the neutral can be involved to render assistance with privilege or discovery disputes, valuation issues, etc., with or without requirements for issuance of formal opinions or recommendations by the neutral, which may or may not be binding in whole or in part on the parties, etc.);
• Dispute Resolution Board or Standing Neutral (for example, Dispute Resolution Boards comprised of subject matter experts can be established prior to an actual controversy in order to provide real-time resolution of disputes for ongoing project activities. A Standing Neutral can be viewed as a one person Dispute Resolution Board. If a settlement requires future performance by one party, a DRB or Standing Neutral can be established as part of the settlement and used to mediate or issue binding rulings necessary to accomplish the objectives of the future performance);
• Med-Arb (for example, the parties can agree in advance, if the Mediation is not successful in whole or in part, that an arbitration process would immediately follow to resolve all or portions of the dispute, with or without limits on the award, either using the same neutral serving as mediator/arbitrator, or engaging a separate arbitrator, with or without opt-out rights, limits on the award, cost shifting, appeal rights, etc.);
• Arb-Med (for example, the parties participate in a formal arbitration proceeding where the award is sealed and held in abeyance, immediately followed by mediation to attempt a voluntary resolution of the dispute);
• Arbitration (for example, a binding decision of the entire case, or any portion or issue, using a single neutral or panel of three, using party appointed neutrals or independent neutrals, using high-low or last best offer limits on arbitration award, with or without cost shifting or limits on discovery, experts and witnesses, with or without opportunity for rights of appeal, etc.);
• Private case evaluation panels (for example, party appointed panel or panel of independent neutrals with or without subject matter qualifications, with or without limits on formality of presentation, testimony of witnesses, whether or not binding on the parties, with or without cost shifting or sanctions etc.);
• Hot Tubbing or Tandem Expert Examination (for example, for matters that involve a “battle of the experts”, a technique where opposing experts give testimony while answering questions posed by the opposing expert, neutrals and attorneys. The objective is to provide clarity and definition to the assumptions and the factual and technical issues involved in the dispute; can be an integral part of Early Neutral Evaluation or Early Expert Evaluation or can be followed by mediation/facilitation);
• Mini Trial (for example using a single or three member panel, with or without a limitations on presentation and witnesses, with or without a formal advisory opinion, with or without binding authority on parties or cost shifting, can be followed by mediation/facilitation, etc.);
• Summary Jury Trial or Fast Track Jury Trail (for example with formal or informal jury panel, with or without limits on formality of presentation, with or without limits on award; whether advisory or binding on the parties. Once this ADR option is selected, the court considers the case as a settlement facilitated by a jury, so a verdict is not entered as a judgment);
• Consensual Special Magistrate (for example, private judge issues final resolution, with or without right to appeal, with or without cost shifting, etc.).
The above list suggests that neutrals involved in the various ADR processes will require a broad variety of skill sets, subject matter qualifications and experience in order to assist the parties in designing and executing the various ADR options. Subject matter qualifications may include such specialties as accounting, finance, valuation, engineering, construction, manufacturing, information technology, insurance and indemnity or business experience. An advanced level of training and experience in ADR processes is also required. The enhanced value of the neutral derives from this specialization much in the way attorneys develop special practice skills through experience and training.
In order to assist the parties and litigants in identifying appropriate qualified neutrals that may be effective in assisting with the design and execution of the agreed-upon ADR plan, some Business Courts will create rosters of approved ADR neutrals identifying their respective subject matter qualifications. The Business Court roster of ADR neutrals is not a replacement or a substitute for the roster of mediators referenced in MCR 2.410 (B). The objective of the Business Court roster of ADR neutrals is to provide the parties with expanded opportunities to effectively execute a wide range of ADR options and provide the parties with information in order to make informed decisions concerning their selection of ADR neutrals. In the event the parties are unable to mutually agree on an ADR neutral mediator, and the Business Court orders mediation, the neutral should be selected from the list of approved qualified mediators set forth in MCR 2.411( B)(3).
The Michigan Business Courts were created to provide a case management structure that facilitates timely effective resolution of complex business cases. Creative approaches to early case resolution will be encouraged and best practices will be identified and instituted. There is a new and not yet fully explored emphasis on alternative dispute resolution as an integral component of the case management structure of the Business Courts. This should be an exciting time that will encourage practitioners to move out of their conventional ADR comfort zone and reward all stakeholders with a creative and collaborative approach to ADR.
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Jerome F. Rock is an attorney, engineer, and former business executive who maintains a full-time practice as a mediator and arbitrator for general civil, insurance and indemnity, business, technology, and construction industry disputes. He is on the panel of arbitrators for the American Arbitration Association for commercial, construction, labor, and large complex cases. Mr. Rock is also on the panel of civil mediators for the Wayne, Oakland, Macomb, and Washtenaw County Circuit Courts, with a focus on early case intervention and enhanced multi stage facilitation for complex cases. He is on the roster of approved ADR neutrals for the Business Court for the Third and Sixteenth Judicial Circuits. He has served as court-appointed mediator and special master in federal and state courts and acts as a facilitator of negotiations for complex business transactions. Mr. Rock has been awarded the Martindale Hubbell Peer Review Rating of Preeminent. Mr. Rock is also a member of the Professional Resolution Experts of Michigan (PREMi, http://premiadr.com/). His website is www.JeromeRockLaw.com.
