30 May 2009

The Multi-Door Courthouse Has Finally Arrived: New Settlement Procedures are Now Available in Superior Court

By J. Anderson Little

In 1983, a Task Force on Dispute Resolution was created by North Carolina Bar Association President Charles L. Fulton of Raleigh. The Task Force “set out to explore and propose new and promising alternative methods of dispute resolution. The fundamental goal of the Task Force [was] to enhance the quality and reach of the practice of conflict resolution for the people of North Carolina.”

In 1985, the Task Force issued a report of its study and recommended that the Bar Association and other leaders in the State support the development of ADR in the courts of North Carolina and in the public sector through the work of community-based organizations. The insights in that report shaped and informed the development of ADR by its succession organizations, the Dispute Resolution Committee and the Dispute Resolution Section of the N.C. Bar Association.

The cover of the report depicts the front elevation of a fanciful courthouse with the seal of North Carolina on its pediment, and with three front doors labeled “Litigation”, “Arbitration”, and “Mediation”. These are the three doors of the “multi-door courthouse”.

The phrase, multi-door courthouse, was heard frequently in the eighties and early nineties. As states began to investigate the use of ADR in their court systems, the ABA’s Special Committee on Alternative Dispute Resolution promoted the term, and the administrative mechanism it implies, throughout the country. During that period, our own Chief Justice Exum began to sprinkle his articles and speeches with the same evocative image.

In reality, the multi-door courthouse has proven to be impractical and expensive. As a metaphor, however, the multi-door courthouse has had a useful life. It represents the many settlement procedures available to litigants to assist them in the resolution of their cases. And it inspires those who participate in the design of court improvements to keep the advantages of all ADR procedures in mind.

In North Carolina during the 1990s, the image of the multi-door courthouse has gradually given way to the computer oriented image of the ADR menu. An ADR menu is an array of settlement procedures from which the parties may choose

The 1995 legislation implementing mediated settlement conferences state-wide (G.S. 7A-38.1) was drafted by the Dispute Resolution Section with a menu format in mind. It authorized the implementation of Mediated Settlement Conferences state-wide and it authorized the Supreme Court to provide for the use of other settlement procedures in the event that the parties agree to their use. So the multi-door courthouse arrived in the superior courts of North Carolina in the form of a menu of settlement proceedings available in every superior court case, with mediated settlement conferences assuming the default position.

The term “other settlement procedures” is a phrase found in Section (i) of the 1995 legislation implementing Mediated Settlement Conferences state-wide (G.S. 7A-38.1)

(i) Promotion of other settlement procedures. Nothing in this section is intended to preclude the use of other dispute resolution methods within the superior court. Parties to a superior court civil action are encouraged to select other available dispute resolution methods. The senior resident superior court judge, at the request of and with the consent of the parties, may order the parties to attend and participate in any other settlement procedure authorized by rules of the Supreme Court or by local superior court rules, in lieu of attending a mediated settlement conference. Neutral third-parties acting pursuant to this section shall be selected and compensated in accordance with such rules or pursuant to agreement of the parties. Nothing in this section shall prohibit the parties from participating in, or the court from ordering, other dispute resolution procedures, including arbitration, to the extent authorized under State or Federal law.

There are five points I would like to make about it in order to set the stage for a discussion of the procedures set out in that section.

  1. The goal of “other settlement procedures” is the same as the goal of the mediated settlement conference: to create an event in the life of civil litigation which focuses on settlement rather than trial preparation. Binding forms of ADR have never been recommended by the Bar Association or adopted by the General Assembly as procedures of choice in court ordered ADR programs. Non-binding forms of ADR are procedures which attempt to foster settlement discussions rather than summarily dispose of cases. Although binding forms of arbitration and summary trials are mentioned and authorized in this section, settlement is clearly the focus of “other settlement procedures”.
  2. The mediated settlement conference retains its position as the settlement procedure of choice in the superior courts. It has the “default position” among the several settlement tools in the ADR menu. Mediation at its core is about discussion and negotiation. It is the most direct form of settlement procedure in the ADR menu.
  3. Closely related to the preceding discussion, the decision to utilize other settlement procedures rests with the parties and is used in lieu of a mediated settlement conference. The court holds veto power only. Without the parties’ agreement, the court may order only a mediated settlement conference; it cannot order another settlement procedure.This formulation is based on two notions; that the parties are in the best position to know their needs with respect to settlement, and that no one party should be able to dictate to the other what procedure should be utilized. The court does hold veto power over the parties’ selection and would probably exercise it if the court believed the parties, by selecting another procedure, were attempting to avoid engaging in settlement efforts altogether.
  4. The persons who serve as neutrals in “other settlement procedures” are selected by the parties without judicial intervention or approval. If the parties cannot agree on the person to be selected, the compensation to be paid or the attendance requirements to be applied, then the court may not appoint a neutral, as the court must do in a mediated settlement conference, or order the use of another settlement procedureIf the parties cannot agree on those items, then they must attend a mediated settlement conference as originally ordered by the court. To utilize “other settlement procedures” the parties must achieve complete agreement as to the type of procedure to be used, the identity and compensation of the neutral, and the attendance requirements to be applied.
  5. Finally, Section (i) of the 1995 legislation gave the power and authority for implementing “other settlement procedures” to the Supreme Court. The new rules promulgated by the Supreme Court last week authorize three ADR procedures for use in lieu of mediated settlement conferences: neutral evaluation, arbitration, and summary trials. Settlement procedures described and approved by local rules or orders may be utilized in addition to the three authorized by the Supreme Court Rules.

RULE 1.A.(2) MOTION TO AUTHORIZE THE USE OF OTHER SETTLEMENT PROCEDURES. A party interested in utilizing another settlement procedure in lieu of a court-order mediated settlement conference should seek the agreement of the other parties as to the type of procedure to be used, the identity of the neutral who will assist the parties, the neutral’s rate of compensation, and the attendance requirements to be applied.

The time frame in which the court is notified of the parties’ decision to utilize another settlement procedure is the same as for the selection of a mediator. It should be familiar to attorneys who are accustomed to selecting their own mediators under existing rules. However, the time for making these decisions occurs early in the formal settlement process. Attorneys should be prepared to process these decisions in a timely fashion if they wish to preserve their options under Section (i).

RULE 10.A.&B. OTHER SETTLEMENT PROCEDURES. The settlement procedures identified and authorized by this rule are three: neutral evaluation, arbitration, and summary trial. Notice that arbitration and summary trials come in two forms, non-binding and binding. The non-binding forms are truly settlement devices and are intended to promote settlement discussions after the parties receive the neutral’s advisory decision. The binding forms are truly adjudicatory devices in which the neutral’s decision is final.

RULE 10.C. GENERAL RULES APPLICABLE TO OTHER SETTLEMENT PROCEDURES. Portions of the rules governing other settlement procedures which are common to all of the procedures are set out in this rule in order to avoid repetition.

(1)&(3) Deadlines. The deadline for completion of all settlement procedures is the same as that set for the mediated settlement conference in the court’s original order. It may be extended by order of the court upon the filing of a motion by a party or neutral, as in the case of a mediated settlement conference.

(2) Authority and Duties of Neutrals. This provision sets out the duties and authority of those acting as neutrals for other settlement procedures and basically tracks Rule 6 of the rules for mediated settlement conferences.

(6) Inadmissibility. However, in reference to the inadmissibility of statements and conduct referred to in (2)(b)(i)(d), it should be pointed out that Section (l) of G.S. 7A-38.1 makes no reference to “other settlement procedures”. Whether or not the protections of that provision apply to “other settlement procedure” is uncertain. This provision [Rule 10.C.(6)] takes the language of Section (l) of the statute and makes it applicable to “other settlement procedures”. May the Court by rule adopt what amounts to a rule of evidence? Hopefully, amendments to G.S. 7A-38.1 will be offered in the near future to clarify that Section (l) applies to all procedures authorized by that statute.

(4)&(5) Location & Delay. These provisions are the same as those for mediated settlement conferences.

(7) Record of the Proceeding. This provision is new and provides for a record when the procedure involves a binding form of settlement procedure.

(8) Ex Parte Communications. Other settlement procedures differ from mediated settlement conferences in that they require the neutral to make a substantive decision. Therefore, the neutral acts more like a judge than a mediator and the prohibition against ex parte communications is appropriate.

(9) Duties of the Parties. The attendance requirements of this provision are very different from Rule 4 of the mediated settlement conference rules in that the parties may fashion their own requirements for the attendance of parties, attorneys, and other persons with authority to settle the case. This provision tracks the district court non-binding arbitration program in not requiring much in the way of attendance; it makes attendance one of the items the parties must agree upon in order to use another settlement procedure in lieu of a mediated settlement conference. This provision has produced much comment. We would appreciate any thoughts you have about it.

(10)&(12) Selection and Compensation of Neutrals. As I have indicated in previous comments, the parties must agree upon a neutral to use “other settlement procedures” in lieu of a court ordered mediated settlement conference. There are no certification requirements or procedures for neutrals acting pursuant to these rules. Since the court is not involved in the selection process, the parties control the selection of the neutral and are the sole arbiters of the neutral’s competence. Again, the use of “other settlement procedures” requires a high degree of agreement; it is a completely consensual process.

(11) Disqualification. This provision is similar to the disqualification provision of Rule 2.E.

(13) Sanctions. This provision is the same as Rule 5 of the mediated settlement conference rules. Remember that a party may be sanctioned only for failure to attend “other settlement procedures” and that attendance requirements are fashioned by the parties

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