Virginia Alternative Dispute Resolution - Va ADR - Arbitration, mediation, negotiation

VIRGINIA ALTERNATIVE DISPUTE RESOLUTION & EMPLOYMENT CONTROVERSIES

By: D. Patience Welch
Law Student - Widener University School of Law (ADR Seminar-2001)

Prepared:November 26, 2001

I. INTRODUCTION: ADR in the State of VIRGINIA

Virginia, like most states within the Unites States, views Alternative Dispute Resolution (ADR) as an advantageous tool within its judicial system, yet not one without its own issues. The following information will review some categories of ADR utilized in the state of Virginia and the state statutes that apply. In addition, a formal discussion of ADR and how it applies to Employment Law substantiated by case law within Virginia will be reviewed.

II. VIRGINIA STATE ARBITRATION STATUTE:

One category of ADR employed in Virginia is arbitration. Virginia's State Arbitration Statute, provides for controversies needing to be settled, whether or not a suit is pending before the courts, to be submitted to arbitration. The ability to submit to arbitration can be either contracted for outside the court or be agreed upon by both parties consenting. Va. Code Ann. §8.01-577 http://www.adr.org/law/statutes/virginia_statute.html

In order to apply for arbitration an application should be submitted to the court of the city or county cited in the arbitration agreement for proper venue. Upon that application all other applications or requests should be directed at that initial court or the court in the city or county where the hearing was heard. Va. Code Ann. §8.01-581.015 http://www.adr.org/law/statutes/virginia_statute.html

It is important to note that all applications to the court by either party shall be by motion and then the laws for that motion shall provide the manner in which it is heard. Unless the parties agree otherwise an initial application for an order shall be served in the same manner as service of a summons in an action. Va. Code Ann. §8.01-581.013 http://www.adr.org/law/statutes/virginia_statute.html

Nevertheless, once arbitration is agreed upon the parties will submit to the award, which will be decided in arbitration. Va. Code Ann. §8.01-577(A) http://www.adr.org/law/statutes/virginia_statute.html Although somewhat ambiguous, Va. Code Ann. §8.01-577(B) http://www.adr.org/law/statutes/virginia_statute.html states that "neither party shall have the right to revoke an agreement to arbitrate except on a ground which would be good for revoking or annulling other agreements." Case law reviewed later will highlight this ambiguity and how the Virginia Courts address and analyze the issue of defining a "good ground".

Parties agreeing to arbitration shall do so under the condition that arbitration will be a condition precedent to instituting a lawsuit. Of course, the parties can by agreement state that arbitration will not be a condition precedent to a lawsuit. Va. Code Ann. §8.01-577(B) http://www.adr.org/law/statutes/virginia_statute.html

The validity of the arbitration agreement whether as a provision in a written contract or a written agreement by consenting parties is valid and will only be invalidated by existing law or equity as it pertains to revocation of a contract. Va. Code Ann. §8.01-581.01 http://www.adr.org/law/statutes/virginia_statute.html It is important to note that the drafters of Virginia's arbitration statute intentionally and in writing stated that this article also applies to arbitration agreements between employers and employees. Va. Code Ann. §8.01-581.01 http://www.adr.org/law/statutes/virginia_statute.html Although in the general provision statute it specifically states "any controversy" there was obvious confusion and controversy in the past over the arbitration statute's applicability in employment disputes.

However, the use of arbitration does not create a right to arbitration for any issues under controversy of employment or condition of employment with an officer or employee of the Commonwealth of Virginia. Va. Code Ann. §8.01-581.01 http://www.adr.org/law/statutes/virginia_statute.html

Not only can parties agree to arbitration in Virginia, they may also agree on how the arbitrator shall be appointed. Yet in the absence of such an agreement the court can appoint one or more arbitrators. If the method to appoint an arbitrator in the parties' agreement is not valid, hence a court appointed arbitrator is selected, the same powers granted to the arbitrator in the agreement shall be the same for the appointed arbitrator as it would have been for the parties intended arbitrator. Va. Code Ann. §8.01-581.03 http://www.adr.org/law/statutes/virginia_statute.html

The actual arbitration hearing and its logistics can also be set up by agreement of the parties. However, if not upon agreement, the arbitrator(s) must set up a place and time for the hearing and give notification to the parties no less than 5 days before the hearing. Va. Code Ann. §8.01-581.04 http://www.adr.org/law/statutes/virginia_statute.html During the hearing an arbitrator may adjourn the hearing on their own or at request of either party. In addition, the arbitrator may postpone a hearing to a different time, but no later than the date accompanying the agreement and for making an award, at least not without the consent of the parties. Va. Code Ann. §8.01-581.04 http://www.adr.org/law/statutes/virginia_statute.html

The arbitrator then may hear the controversy and the evidence produced, if all parties are present. The court, however, may step in upon application and direct the arbitrator to proceed promptly with the hearing and the determination of the controversy. This suggests that the court upon application can and will step in to insure process flow and timeliness. Va. Code Ann. §8.01-581.04 http://www.adr.org/law/statutes/virginia_statute.html

The hearing process and the information reviewed can come in several forms. Understandably, each party has the right to have an attorney present at the proceeding or hearing. This representation cannot be waived prior to the hearing. Va. Code Ann. §8.01-581.05. http://www.adr.org/law/statutes/virginia_statute.html Witnesses are permitted at the hearing and in fact, an arbitrator may issue a subpoena for a witness to attend. The arbitrator also has the power to administer oaths. These arbitrator subpoenas may also be issued for books, records, documents and all other evidence. Va. Code Ann. §8.01-581.06 http://www.adr.org/law/statutes/virginia_statute.html Nevertheless, if a witness is unable to be subpoenaed or if they cannot attend, the arbitrator may allow for depositions to be taken and have the power to mandate the manner and terms of how the deposition shall be obtained. Va. Code Ann. (8.01-581.04) http://www.adr.org/law/statutes/virginia_statute.html

The awards emerging from the arbitration hearing will be in writing and signed by the arbitrators. It is the responsibility of the arbitrator to deliver a copy of the award document to each party, unless otherwise agreed upon. The timing of the award will be based on the arbitration agreement and if silent then as per the arbitrator. However, a party by application to the court may request the court to order such a date. Va. Code Ann. §8.01-581.07 http://www.adr.org/law/statutes/virginia_statute.html

The parties can also extend the agreed upon date in writing. However, once the award is delivered a party cannot object to the timeliness of the award. All award objections regarding timing must be made prior to the delivery. Va. Code Ann. §8.01-581.07. In addition, the arbitrators' expenses and fees and all other fees sans attorney fees will be provided in the award, again unless otherwise agreed upon in the arbitration agreement. Va. Code Ann. 8.01-581.07 http://www.adr.org/law/statutes/virginia_statute.html

Not surprisingly, an award may be vacated by application to the court of one of the parties for several reasons. Most notably is if the award was obtained by corruption, fraud or abuse. Another reason directs attention to the arbitrator and his/her partiality or the partiality of other arbitrators present. A vacating of an award can also be issued if an arbitrator exceeds their power, or if they refuse to postpone the hearing or hear evidence that would "substantially prejudice one of the parties". Va. Code Ann. §8.01-581.010 http://www.adr.org/law/statutes/virginia_statute.html Of course, if it is found that no arbitration agreement existed upon an initial objection by one of the parties the award can also be vacated.

However, it is important to note that an award will not be vacated just upon a showing that the award is not one that would have been obtained in a court of law of equity. Va. Code Ann. §8.01-581.010 http://www.adr.org/law/statutes/virginia_statute.html consequently, timing also plays a role in the vacating of an award. An application to vacate an award will need to be made within 90 days after the delivery of a copy of the award to a the moving party. These 90 days will be different if the vacating of the award is predicated on corruption or fraud. In this case, the application to vacate the award must be within 90 days of when the corruption or fraud becomes known or should have reasonable been known. Va. Code Ann. §8.01-581.010 http://www.adr.org/law/statutes/virginia_statute.html

The court will make initial confirmation of an award, not questioned. Va. Code Ann. §8.01-581.09 http://www.adr.org/law/statutes/virginia_statute.html However, the court will also make a confirmation of the award if the motion to vacate an award is denied and no motions for modification of the award have been made. Va. Code Ann. §8.01-581.010 http://www.adr.org/law/statutes/virginia_statute.html

If a party does not want to vacate an award but only modify the award, the court will do such if the application to modify is made within 90 days of delivery of the award and the moving party has evidenced several factors. Va. Code Ann. §8.01-581.011 http://www.adr.org/law/statutes/virginia_statute.html l These factors include but are not limited to:

   1. A miscalculation of figures or a mistake in the description of a
              a person, place or thing described in the award

2. The arbitrator(s) have made an award based on something not submitted to them

3. The award would be imperfect in form

Again, the imperfections or mistakes made can be modified if the modification does not affect the merits of the controversy. Va. Code Ann. §8.01-581.011 http://www.adr.org/law/statutes/virginia_statute.html A party applying for modification may also attach an application to vacate the award if the modification cannot be made.

Lastly, judgment or a decree is made on the award and is entered in conformity and will be docketed and enforced. The judgment on an arbitration award is no different than any judgment or decree made by the court and will be treated as such. Nevertheless, costs of the application, the proceedings as well as disbursements may and typically are awarded by the court. Va. Code Ann. §8.01-581.012 http://www.adr.org/law/statutes/virginia_statute.html

Similar to other judgments and decrees the Virginia Arbitration Statute also provides for appeals of arbitrations. All motions, applications, vacates and modifications can be appealed. The manner of the appeal will be the same as from orders or judgments in a civil action. Va. Code Ann. §8.01-581.016 http://www.adr.org/law/statutes/virginia_statute.html

Conclusively, it is apparent that Virginia's arbitration statute and local rules were established in order to support another means of resolution for disputes and controversies. Again, like most states this lessens the time and expense on the state judicial system while simultaneously enabling parties to "settle" their disagreements efficiently, effectively, fairly and in a much timelier manner than trials and other court proceedings. For forms used in Virginia arbitration see, http://www.adr.org/law/statutes/virginia_statute.html

III. VIRGINIA MEDIATION

Another category of alternative dispute resolution utilized by the state of Virginia is mediation. Mediation enables the parties to have complete control of the outcome of their controversy. No stipulations or imposed awards or recommendations are issued. Mediation allows for both sides to have time to speak about their issues and viewpoint while the other party has a chance to listen. The mediator as he/she is termed is a true facilitator only ensuring that the parties are helped when attempting to identify the disputed issues and resolutions. Based on VAST§8.01581.21 http://www.courts.state.va.us/text/drs/upl/code_of_virginia.html
the formal definition of mediation is "the process by which a mediator assists and facilitates two or more parties to a controversy in reaching a mutually acceptable resolution of the controversy and includes all contacts between the mediator and any party or parties, until such time as a resolution is agreed to by the parties or the parties discharge the mediator." In mediation the mediator acts an impartial third party selected by agreement of the parties to a controversy to assist them in mediation.

The state of Virginia has instituted several "Mediation Programs" in which a mediator is made available, as is the process of mediation. Typically there is a list of mediation programs in the clerk's office of every court in the state of Virginia. http://www.courts.state.va.us.htm A "Mediator" is a person who is often selected by the parties, who are in controversy, via an agreement. The main fact that the Mediator is impartial and an objective third party is the key to all of the mediation success stories.

Due to the fact that Virginia is supportive of mediation, they have created a Directory of Court Mediators. This list is of mediators who are eligible to receive cases from the Virginia court system. In fact, when parties who are in a case are not able to reach agreement on who the mediator should be, the judge will pick a mediator out of this directory. http://www.courts.state.va.us/mediate3/mediate 3.htm

Not only does Virginia have a directory of Court Mediators they continually provide information with regards to community programs for mediation as well as dispute resolution. In reviewing the applicability of mediation for a particular case many people will turn to an attorney. In Virginia, the parties may also contact The Department of Dispute Resolution Services in Richmond, VA. http://www.courts.state.va.us/mediate2/page 1.htm

Not unlike many judicial or legal proceedings confidentiality is also a main factor to be taken seriously. In fact, confidentiality is one of the main reasons for selecting mediation as a dispute resolution. Any work product or materials of a dispute that is in a mediation program or of a mediator must remain confidential. Va. Code Ann. §8.01-581.22 http://www.courts.state.va.us/text/drs/upl/code_of_virginia.html In fact, any communication that relates to the matter in dispute whether it is between parties, to a mediator or to any one at the mediation is to be confidential. Va. Code Ann. §8.01-581.22 http://www.courts.state.va.us/text/drs/upl/code_of_virginia.html

Ironically, a mediation agreement is not confidential unless the parties agree otherwise. This "otherwise agreement" to make it confidential must be in writing. However, the matters that are confidential during mediation may not be disclosed in any judicial, legal or administrative proceeding. The only exceptions to this are:

   1.  Where all parties to the mediation agree, in writing, to waive the 
            confidentiality,

2. In a subsequent action between the mediator and a party to the mediation for damages arising out of the mediation, or

3. Statements, memoranda, materials and other tangible evidence, otherwise subject to discovery, which were not prepared specifically for use in and actually used in the mediation.

These exceptions are listed in Va. Code Ann. §8.01-581.22 http://www.courts.state.va.us/text/drs/upl/code_of_virginia.html As a matter of fact, often mediation is chosen over arbitration when there is a relationship between the two parties. For example: Landlord/Tenant; Employee/Employer; Neighbors; Siblings and Spouses; Contractors and Subcontractors and the ever-present Consumer and Business. http://www.courts.state.va.us/mediate2/page1.htm

On a curious note, lawyers are often asked to be mediators. Parties may not necessarily want to go to court to settle their disputes but for obvious reasons they want to insure their success by employing a prepared and experienced mediator. Hence, a party has propensity to go towards someone with a legal education and ability to facilitate results.

Unfortunately, in response to this constant request the Virginia Code was silent. Legal Ethics Opinions (e.g., LEO 590 (May 17, 1985) have approved of lawyers serving as mediators. http://www.abcny.org/eth1999.htm Different approaches to and styles of mediation ranging from pure facilitation to evaluation of positions are being offered. However, the Committee on professional conduct adopted the Rules of Professional Conduct, Rule 2.11, and Mediator. VA R S CT PT 6 § 2 RPC Rule 2.11 http://www.iso.gmu.edu/~retters/VRPC2.11.htm This is part of the Virginia Court rules of the Supreme Court of Virginia Part 6 (Six) and an integration of the State Bar Section II.

This was not as part of the ABA Model Rules, but to give further guidance to lawyers who serve as mediators. The basic requirement of this rule is for lawyer-mediators to consult with prospective parties about the lawyer- mediators' approach, style and subject matter expertise and to honor the parties' choice and expectations. One specific requirement of the rule states:

(b) Prior to agreeing to mediate and throughout the mediation process a 
               lawyer-mediator should reasonably determine that:

(1) mediation is an appropriate process for the parties;

(2) each party is able to participate effectively within the context of the mediation process; and

(3) each party is willing to enter and participate in the process in good faith.

Ironically under this rule a lawyer-mediator "shall not offer any of the parties legal advice which is a function of the lawyer who is representing a client. However, a lawyer- mediator may offer legal information under the conditions outlined in paragraph (c). Offering legal information is an educational function, which aids the parties in making informed decisions. Neutral evaluations in the mediation process consist of, for example, opining as to the strengths and weaknesses of positions, assessing the value and costs of alternatives to settlement or assessing the barriers to settlement." VA R S CT PT 6 § 2 RPC Rule 2.11(7) http://www.iso.gmu.edu/~retters/VRPC2.11.htm

Mediation is certainly an alternative tool for dispute resolution. However, it would appear that the laws and statutes governing mediation in Virginia are still being tested and supplemented with additional law.

IV. LEADING VIRGINIA CASES:

EMPLOYMENT CONTROVERSIES and the
USE of ALTERNATIVE DISPUTE RESOLUTION

The use of ADR is ever increasing as a means to reduce costs and reduce litigation while ensuring efficiency and welcomed outcomes. In the area of employment law this increase use of ADR solutions could not be any greater. In fact both binding and nonbinding ADR procedures are occurring more and more. Certainly the Supreme Court as well as Congress have readily supported and strongly recommended the use of ADR in employment controversies. Textile Workers Union v. Lincoln Mills of Alabama (1957) 353 US 488. http://www.adr.org/law/statutes/virginia_statute.html

For a more historic review of ADR and its many uses in Employment one should review 57 AMJUR TRIALS 255. http://www.adr.org/law/statutes/virginia_statute.html In addition to the historical review, the full documented text also reviews future attributes of ADR techniques in Employment Law as well as the policies and the three government branches' support of ADR in regards to employment controversies.

Following is a brief analysis of the landmark cases that have set the stage for ADR in employment disputes. The analysis will cite Virginia case law in addition to strong precedent set by the United States Supreme Court. Early on ADR was used in employment disputes specifically pertaining to unionized workers. An older yet landmark case Textile Workers Union v. Lincoln Mills of Alabama (1957) 353 US 488 http://www.usscplus.com/topk/list_alpha.htm had the Supreme Court of the United States actually establish binding arbitration as the "preferred means of dispute resolution within organizations that are unionized. In this case a union entered into a one-year collective bargaining agreement with their employer that would run year after year. Part of the agreement was that there would be no strikes or stoppage of work by the union. If there were any grievances they had to follow their grievance process. However, the last part of this process was to go to arbitration and either side could choose this step in the process.

There were grievances that had to do with workloads and schedules so the union followed the outlined grievance process. Unfortunately for the union the employer denied all of their grievances. This led the union to arbitration, however, the employer refused and that is when the union brought this claim to court. The district court granted the arbitration and upon appeal the court of appeals denied it. When it finally reached the Supreme Court of the United States, the Court held that "the "Taft-Hartley Act subsection not only gives federal District Courts jurisdiction of controversies involving labor contracts in industries affecting commerce, without regard to diversity of citizenship or amount in controversy, but also authorizes federal courts to fashion a body of federal law for enforcement of those collective bargaining agreements, and includes within that federal law specific performance of promises to arbitrate grievances under collective bargaining agreements." Thus, the Supreme Court reversed the Court of Appeals and institutionalized arbitration as a preferred means to be used with union employment.

In addition to a union being able to take their claims to arbitration, they are also as individual employees permitted to go to arbitration under the Equal Employment Opportunity Commission even after potentially failing during their first arbitration as a union member. This double use of arbitration can be seen in Alexander v. Gardner-Denver Co. (1974) 415 US 36. http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?navby=case&court=us&vol=415&invol=36 Here, the Supreme Court permitted a union member to use his overlapping rights of Title VII of the 1964 Civil Rights Act, 42 USCA §2000e http://ec.msfc.nasa.gov/hq/library/lawsalph.html and stated that the individual rights of a person cannot be preempted by a labor contract.

Distinguishing union employment from individual employment contracts the Supreme Court would not enable an employee who after failing in binding employment arbitration, based on his right to arbitration via an employment contract; to file an age-discrimination claim in district court. Gilmer v. Interstate/Johnson Lane Corp. (1991) 500 US 20. http://supct.law.cornell.edu/supct/html/90-18.ZO.html This holding was contrary to the holding in the Alexander case. However, the Court focused much of their distinction to the fact that Gilmer was a sophisticated plaintiff who voluntarily signed his individual employment contract.

In Virginia, a current leading ADR/Employment case is Brown v. Trans World Airlines (1997) 127 F.3d 337. http://www.law.emory.edu/4circuit/2nd-idx.html Here, the plaintiff sued for sexual harassment under Title VII as well as for violation of the Family Medical Leave Act of 1993 (FMLA), 29 USCA § 2601. http://ec.msfc.nasa.gov/hq/library/lawsalph.html The Court of Appeals reversed the district court's dismissal of the Title VII claim stating that, her sexual harassment claims fell outside of mandatory arbitration provisions of the collective bargaining agreement she was under. This holding would suggest unlike the Gilmer case that certain claims protected under additional laws may not necessarily be covered under a collective bargaining agreement to binding arbitration.

Most recently on October 31, 2001, the District Court of the Western District of Virginia in Gardner v. Ryan's, 2001 WL 1352113 http://www.westlaw.com/ heard a similar case to TWA where the plaintiff filed an action alleging racial discrimination by her employer. Here, plaintiff had signed an employment application that contained an arbitration agreement and was arguing that the arbitration clause was unconstitutional and violated her equal protection and due process of law rights. After the employee was terminated for fighting with another employee she instituted this claim. The court responded that not only does the Supreme Court of the United States make it clear that the Federal Arbitration Act, 9 U.S.C.A. 1-307 http://www.chamber.se/arbitration/shared_files/laws/arbitract_us_cont.html supports a federal policy recognizing arbitration as a forum for employee disputes, but also that the Virginia court system has precedence supporting the same policy.

In fact the court citing, Hooters of America, Inc. v. Phillips, 173 F.3d 933 http://www.uscaselaw.com/4th/982482p.html has held in the fourth circuit that arbitration agreements involving Title VII claims are "valid and enforceable". Hence, this court ordered the parties to proceed to arbitration pursuant to their employee agreement.

It appears that arbitration will continue to be an alternative dispute resolution widely accepted by the judicial system but also Congress as well as businesses alike. The case law surrounding ADR in relationship with employment law although somewhat new appears to be ever increasing, yet consistent in its holdings.

V. CONCLUSION

In today's sue-happy climate yet overburdened court system, the need for effective and efficient techniques for solving controversies is at a premium. Therefore, the use of Alternative Dispute Resolution should increase drastically over the next couple of years. As with any resolution technique the parties will have a choice in most cases. Hence, the choice of ADR should be made apparent to the public by means of advertising, attorney recommendation and public as well as government supportive agencies.

If there is a future concern with regards to ADR it most certainly will not be its use. However, the one potential concern may very well be the need for objective arbitrators, mediators and negotiators. If the use of ADR does increase as drastically as projected there will be a drought of professionals to play the key role of facilitation that all ADR techniques require.

Training, availability, selection of these key facilitators will be in high demand. This would suggest the potential of more laws and or additional statutes needed. One might speculate that these future laws would be less stringent with regards to selection because of lack of available arbitrators or mediators. Which in the mode of attempting to guess at hindsight could lead the ADR techniques into a viscous cycle of lessening its importance and even more importantly its credibility.