A colleague, Elizabeth Bader, wrote a very interesting article discussing the link between psychology and mediation entitled The Psychology of Mediation: Issues of Self and Identity and the IDR Cycle, 10 Pepperdine Dispute Resolution Law Journal 183 (2010).  In it, Ms. Bader shows the reader that the identity of self about which we all learned in psychology class plays a much more important role in negotiation and mediation than we think.

            In simple terms, Ms. Bader delves into rudimentary child psychology, explaining how initially an infant sees himself and his mother as one and the same with ongoing “mirroring” by the mother. Thus, the infant is in a narcissistic phase as the infant has “a sense of omnipotence derived largely from the sense that he shares in his mother’s powers” (Id. at p. 186). Eventually, the infant begins to enter the “terrible twos” in which he “… begins to discover that “contrary to his earlier narcissistic sense of omnipotence, he is, in fact, a very small person in a very big world.” ” (Id. at p. 187). The child is in conflict: he wants to be independent but needs his mother’s help about which he is in denial.

            Finally, the child does develop an independent self and “develops the capacity to internalize an image or representation of mother in his mind.” (Id.) So, while his mother may not be physically present all the time, she is still in the toddler’s mind’s eye.

            Ms. Bader argues that a mediation has this same cycle! Initially, the parties enter mediation with “overconfident expectations” (Id. at p. 204). Ms. Bader explains that the overconfidence is actually a type of grandiosity and thus may be correlated to narcissism, or “inflated positive views of the self” just as with an infant:

“One chooses to experience an idealized sense of one’s negotiating possibilities (and implicitly one’s self) in part as a defense to the sense of vulnerability and anxiety attendant upon participation in negotiation and mediation.” (Id. at p. 205).

           Then comes the offer or first counter-offer. The initial stage of narcissistic inflation hits a bump in the road, resulting in deflation and disappointment. Ms. Bader argues that the mediator’s response becomes crucial here: by showing respect to the parties, the mediator addresses the psychological issue of sense of self of each party. By mirroring and validating each party, the mediator assists each party to become less defensive and thus assists each party to traverse the stage of deflation (or the child’s equivalent of the “terrible twos”).

            Ms. Bader continues:

“Painful as it may sometimes be, as the negotiation continues, the parties begin to acquire greater resilience and more information about the other side’s interests and positions. They also begin to learn just what in their own previously over confident assessment are unrealistic.” (Id. at p. 208).

            Slowly, each party begins to acknowledge not only the strengths but also the weaknesses of her position. Each obtains a more reality based view of the matter and slowly grows into settlement, thus entering the third stage – realistic resolution.

            Ms. Bader suggests that the mediator, herself, travels through these same three cycles during a mediation; initially an overconfidence in being able to settle the matter (i.e. narcissistic inflation); then hitting the impasse and with it a fear of failure or not “performing” (i.e. deflation) and then – if the mediator is able to “let go” of her self image as the “great” mediator and is able to get the parties also to “let go” of their egos and self identity, the mediator enters the third and final stage of realistic resolution. (Id. at p. 209.)

            In sum, Ms. Bader urges that a mediation goes through the stages of early childhood development: narcissistic inflation, deflation and then realistic resolution or IDR for short. (Id. at p. 184).

            Quite a lot to chew on. . . .!

            . . . Just something to think about!

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            I finally had the opportunity to read the book my colleague Victoria Pynchon, J. D., LL.M, recently published, A is for Asshole – The Grownups’ ABCs of Conflict Resolution (Reason Press 2010) and discovered that I should have read it much sooner as it is delightful!

            The chapter that struck me the most is entitled “L is For Lawyer”. In it, Ms. Pynchon recites the story of being asked to mediate a probate dispute even though she knows absolutely nothing about probate law. It took some moments for Ms. Pynchon to understand that the family members caught up in the will contest were not concerned with their “legal” rights; they wanted to find a resolution that was “right” for them. They were not concerned about the “relevant” facts but about the “irrelevant” ones – the emotional, financial and other non-legal issues that had to be considered in order to repair and heal the family relationships.

            As Ms. Pynchon points out:

“ “Irrelevant” facts and principles sometimes run contrary to the law, and are often more personally compelling. These irrelevancies often lie at the heart of a client’s insistence to pursue litigation; of his decision that it is not worth further expense or of his hesitancy to accept an offer rather than go to trial. These emotional responses and value choices are often the key that unlocks the door of resolution, not a barrier to the dispute’s conclusion.” (Id. at p. 80).

            These words rang so true with me because I had recently conducted a mediation in which one party was concerned solely with the “relevant” facts (that is, the law) while the other party was concerned with the “irrelevant” facts, (that is, the psychological impact of what she was being asked to do). It involved a deed of trust worth several millions of dollars. On a motion for summary judgment, the trial court ruled that the trust deed did not cover the real property in question. Thus, the deed of trust was worth zero dollars! The deed of trust holder appealed and even though she knew that there was a strong likelihood that the appellate court would affirm the ruling of the trial court, she simply could not walk away from several millions of dollars; she had to be paid something! The psychological impact (that is, the “irrelevant “facts) was too great.

            On the other side, the property owner who had won the summary judgment motion insisted on using only “relevant” facts (that is, the law) in the mediation. Although she knew there was a small likelihood that the appellate would reverse and remand the matter back to the trial court for more motions and a trial (and thus more expense), she refused to address the emotional, psychological and most importantly, the financial impact to the deed of trust  holder of losing several millions of dollars. The property owner absolutely refused to pay one penny to the deed of trust holder, adamantly standing on her “relevant” facts and completely discounting the time and expense that she will incur should the appellate court reverse the trial court’s grant of summary judgment so that the matter ends up in the trial court once again. She insisted that the trust deed holder simply “walk away” from everything.

            So, as you can guess, the matter did not settle. Although the “irrelevant” facts ran contrary to the law (according to the judge who decided the summary judgment motion in favor of the property owner), they are more important to the trust deed holder than the “relevant” facts Similarly, the “relevant” facts were the only thing important to the property owner. Try as I might, I was unable to nudge one or the other onto the playing field of the other party.

            What is going to happen? These parties will probably spend a lot of time and money going round and round on this . . .  and in the end. . . neither will be happy; their “day in court” will be a letdown and may be missing some “justice”. What is legally “right” is not always “fair” and what is “fair” is not always legally “right.”

            It is so true that often times, the “irrelevant” facts – are more important than the “relevant” facts. While the “legal” issues are important, it is the psychological, emotional, financial and personal issues that often control a dispute. If these can be resolved, more times than not, the dispute can be resolved.

            . . . Just something to think about! 

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            A few weeks ago, my colleague Maria Simpson, PhD., in her weekly Two Minute Training (February 15, 2011), mentioned a story she had heard the previous day on National Public Radio’s Morning Edition about a pre-school that was teaching conflict resolution to four year olds. Contrary to what occurs in most pre-schools, while these pre-schoolers had lots of energy and were very active, they did not fight, yell or whine.

            Intrigued, I hunted down the story on NPR and learned that the school was The Clara Barton Children’s Center in Cabin John, Maryland (http://clarabartoncenter.org/), and passed this information on to my colleague.

            But, I was still curious about this success of conflict resolution among 4 year olds. So was my colleague as she took up this topic again in her next Two Minute Training column on February 22, 2011. It seems that this school employs a “Solution Kit” provided by the Center on the Social and Emotional Foundations for Early Learning (CSEFEL) at Vanderbilt University (http://csefel.vanderbilt.edu./). This “Solution Kit” is simply a poster that, using pictures, shows 10 different ways to end an argument:

1.  “Get a teacher” (i.e., use a mediator or a third party objective neutral.);

2.  “Ask nicely” (i.e., have a calm non-confrontational conversation about the issue; make it a conversation of curious inquiry, not a cross-examination.);

3.  “Ignore” (i.e., don’t react to negative personal attacks ; let them roll off your back, remain focused on the needs and interests of the parties or on the issues; NOT on the person.);

4.  “Play together” (i.e., work co-operatively and together to create options by which each party will gain, thereby developing a “win-win” resolution.);

5.  “Say “Please Stop”” (i.e., have a discussion about the opposing and/or conflicting underlying needs and interests of each party and how best to meet them; again, focus on the interests of each party and create options that will meet each party’ s needs.)

6.   ”Say, “Please”” (i.e. be polite and respectful  to the other party; separate the people from the problem – be soft on the person, but hard on the problem.);

7.  “Share” (i.e., compromise; do not engage in distributive bargaining in which the goal is that one person wins, and the other loses (zero sum game) but rather engage in integrative bargaining by which both parties “win” by compromising.);

8.  “Trade” (i.e., engage in “give and take”. Prioritize your interests and  concede issues that may be of little value to you but important to the other party in exchange for ones that ARE important to you but of little value to the other party so that each party obtains what is important to her.);

9.  “Wait and Take Turns” (i.e., be patient; actively listen – really listen, and don’t interrupt – to what the other party is saying so that you can understand what are the needs and interests of the other party and thus be able to figure out collaboratively how to meet both her needs and interests and yours.); and

10. “Get a Timer” (i.e., use the element of time as a way to resolve the dispute either by setting a time limit on the discussions which will force the parties to focus and concentrate on the issues: or by setting up a timetable by which certain elements of the resolution must be accomplished (e.g. an installment plan).)

(http://csefel.vanderbilt.edu/modules/2006/solutionkit.pdf)

      If four year olds can grasp these basic concepts of conflict resolution, shouldn’t we adults be able to so, as well?

      When I first read about this “Solution Kit”, my initial reaction was to get a hold of one and send it to Congress. I am still half toying with the idea of doing so! In the meanwhile, perhaps there are some other adults amongst us that could benefit from its use, as well.

        . . .Just something to think about! 

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            As I do not conduct arbitration hearings, I normally do not pay close attention to court decisions on the subject. But one issued on January 4, 2011 by the Fourth Appellate District of the California Court of Appeal caught my attention. In MKJA, Inc. v. 123 Fit Franchising, LLC, Case No. D055967, the appellate decision may well have placed plaintiffs in a “no-win” situation denying them their day in court and justice.

            Plaintiffs are franchisees who signed health club franchise agreements with defendant franchisor. Claiming that defendants failed to provide plaintiffs with the operational support required by the agreements, plaintiffs sued the franchisor and others for violation of the California Franchise Investment Law (Corp. Code §3100 et seq.), breach of contract, unfair business practices (Business and Professions Code §17200 et seq.) and fraudulent inducement. (Id. at p.3). 

            In November 2006, the defendants moved the California trial court to stay the action because the franchise agreement provided that the parties would arbitrate such disputes before an arbitrator with the American Arbitration Association (AAA) in Denver, Colorado. In response, the plaintiffs moved to have the provision deemed unenforceable. In January 2007, the trial court, noting that under California Code of Civil Procedure §1281.4, it was required to stay the action, did so. Staying the action, the court stated it did not have jurisdiction to decide whether the provision was enforceable.

            From January 2007 to September 2008, nothing occurred in the California court in this matter. Then in September 2008, plaintiffs filed a motion to lift the stay and for a declaration that the arbitration provision was unconscionable. In support of their motion, plaintiffs noted that the Colorado court had granted the defendants’ motion to compel arbitration in October 2007 but when they attempted to arbitrate, they found the cost to arbitrate to be prohibitive, including a $6,000 filing fee, a $2,500 case service fee, an estimated cost of $10,000-$14,000 in arbitrator fees and an estimated $20,000 in attorney’s fees bringing the total to $38,000-$42,000 per case. (Id. at p.6). As plaintiffs had already incurred hundreds of thousands of dollars in debt in connection with this franchise, plaintiffs claimed that they simply could not afford to arbitrate. They did not have the money, and the AAA would not agree to waive its fees. (Id. at p.7).

            After a hearing, the trial court lifted the stay of litigation and declared the arbitration provision to be unenforceable and/or unconscionable. (Id. at p. 9).

            The appellate court reversed finding that there was no provision in California’s arbitration statute authorizing the trial court to lift a stay of the litigation on the grounds that plaintiffs cannot afford the costs of arbitration. (Id. at pp. 15-23). Reviewing the case law and the purpose behind the stay, the appellate court noted that the reason for the stay:

“. . . is to protect the jurisdiction of the arbitrator by preserving the status quo until the arbitration is resolved (citations omitted). Preserving the arbitrator’s jurisdiction through a stay of related litigation is essential to the enforceability of an arbitration agreement since, in the absence of such a stay, a party could simply litigate claims that it had agreed to arbitrate. Given the purpose of the statute, the most reasonable interpretation of the stay provision is that it grants a trial court discretion to lift a stay prior to the completion of arbitration only under circumstances in which lifting the stay would not frustrate the arbitrator’s jurisdiction.” (Id. at pp. 20-21).   

            As might be surmised, the appellate court also held that the trial court lacked jurisdiction to determine whether the arbitration provision was unenforceable and/or unconscionable. (Id. at p. 23).

            In sum, the appellate court reversed. On first blush, it might seem that plaintiffs were left without a remedy or a way to litigate their claims. But two questions come to mind: (1) didn’t plaintiffs spend a lot of money litigating this case and is this perhaps the reason why they were broke? (2) Why didn’t they file this motion in the Colorado court since the franchise agreement indicated that Colorado had the jurisdiction?

            The more important issue involves drafting of alternative dispute resolution (“ADR”) clauses. While in recent years, arbitration has been touted as a favorable alternative to trials, given the latter’s expense in time and money, this decision highlights the dangers of not paying close attention to an arbitration (or mediation and/or any other type of ADR) clause and/or failing to negotiate it in detail. Arbitration (or any other ADR procedure) can be very expensive-  if not carefully managed – more so than a trial and, as here, leave a plaintiff without a “remedy” or means to obtain “justice.” No doubt, the plaintiffs here read the franchise agreement with its arbitration provision requiring the use of the American Arbitration Association but did not investigate the cost and so did not realize how expensive an arbitration can be. As a result, they did not even attempt to negotiate this clause. But this, too, begs the question! Even if they did investigate and realize the costs, did they really have the leverage or bargaining power to negotiate a more favorable or streamlined, less expense incurring provision with the franchisor? Who knows? The morale of the story, though, is to pay attention to what you are agreeing to.

            While this appellate court may have “properly” interpreted the statutes, did it do “justice”? Did the court lose sight of the forest for the trees, or be so myopic that it left the plaintiffs without remedy at all? Or, did plaintiffs bring it upon themselves by  not doing their due diligence into the nature and expense of ADR and then negotiating a streamlined less expensive ADR procedure?

            U.S. Supreme Court Justice Black noted in Griffin v. Illinois, 351 US 12,19 (1956) “There can be no equal justice where the kind of trial a man gets depends on the amount of money he has.”

            . . .Just something to think about!

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          While none of us ADR Professionals were looking, California enacted a new form of alternative dispute resolution in the form of a summary jury trial. Entitled the “Expedited Jury Trial Act” (Assembly Bill 2284),  this new law (to take effect January 1, 2011) establishes procedures for conducting expedited jury trials in civil cases in which the parties sign a consent order stipulating that such procedures shall apply. These expedited procedures include a jury comprised of 8 or fewer members (of which 6 must agree on a verdict)  with no alternates, a limit of 3 preemptory challenges for each side and a limit of 3 hours for each side to present its case, including cross-examination. Further, voir dire will be limited to approximately one hour with each side and the judicial officer having 15 minutes each, respectively. The goal is to complete the jury trial in one full trial day or less. In sum, it is a “down and dirty” trial.

            According to the Report To The Judicial Council (October 29, 2010);

“The expedited jury trial proposal was developed to address litigants’ lack of access to the courts in smaller civil cases and the high expense of going to trial under current laws and procedures. The expedited jury trial procedures . . . establish an alternative, streamlined method for handling civil actions to promote the speedy and economic resolution of cases and conserve judicial resources.”

           (Id.  at p. 4)

           Consequently, the verdict of the jury is binding, and the parties are quite limited in the post trial motions or motions that they can file. Such motions can only be based on judicial misconduct, juror misconduct, or corruption, fraud or other undue means used at trial that precluded a fair trial. Further, the parties can agree to relax the rules of evidence or use other streamlined procedures for the trial. (See, California Rules of Court, Rule 630.09).

           One very interesting feature is the use of a “high/low agreement” which is defined as:

“. . .a written agreement entered into by the parties that specifies a minimum amount of damages that a plaintiff is guaranteed to receive from a defendant, and a maximum amount of damages that the defendant will be liable for, regardless of the ultimate verdict returned by the jury. Neither the existence of, nor the amounts contained in any high/low agreements may be disclosed to the jury.” (C.C.P. §630.01(b)).

           For example, if the parties agree to a low of $20,000 and a high of $80,000 the following occurs; if the jury returns a verdict for defendant, thereby awarding plaintiff $00.00, under  the agreement, plaintiff receives $20,000. If the jury returns a verdict for plaintiff in any amount more than $80,000 (e.g. $100,000), defendant pays only $80,000 and not the amount returned by the jury. If the jury returns a verdict for plaintiff somewhere between $20,000 and $80,000 (let’s say $60,000), then the defendant pays that amount (i.e. $60,000). This provision harkens back to the “Mary Carter” agreements first discussed in J.D. Booth v. Mary Carter Paint Company, 202 So. 2d. 8, 10-11 (Fla. app. 1967).

            Of note, neither the Judicial Council recommended nor did the legislature adopt any limitations on the type of cases that can take advantage of this new procedure. There is neither a monetary limitation nor a subject matter limitation. A very complex case can utilize this procedure where there is one pivotal issue (e.g. liability) that once it is decided, the remaining issues such as damages are easily resolvable. Or, this procedure can be used where the only issue is the amount of damages (as liability has been conceded) with plaintiff demanding one sum and defendant offering a lot less.

            This new procedure fits in nicely with mediation as the parties can attend mediation to resolve as many of the issues in the case as possible and then use the expedited jury trial procedure to resolve the remaining issue(s). By using a high/low agreement, plaintiff can still have her “day in court” (knowing she will “win” at least a minimal amount of money) while a defendant can limit her risk and exposure.

            Further, through the mediation process, the parties can negotiate the optional content of the proposed consent order, including modifications of the timeliness for pretrial submissions, limitations on the number of witnesses per party, including expert witness information and their presentation of testimony, allocation of the time allotted to each party, and stipulations regarding evidentiary matters or the presentation of evidence or exhibits. (See California Rule of Court, Rule 3.15456(b)).

            Clearly, a new dawn is coming to ADR in California on January 1, 2011. But, unless otherwise changed before then, that day is destined to sunset on January 1, 2016. We shall see what happens. . . .

            . . .Just something to think about!

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