Young Lawyers: Motion Practice in Arbitrations
By J. Timothy Eaton – June 24, 2013
Perhaps stalwarts of arbitration would prefer the issue put as a question: Should motion practice be part of arbitrations? Certainly, some would argue that the answer to the question should be “no,” fearing that allowing some type of motion practice in arbitrations would be yet another sign that arbitrations have morphed into litigation. But the reality is that discovery motions and dispositive motions are becoming a staple in more complex arbitrations; and they are being filed in even less complex arbitrations as well. When are motions appropriate, and are they advancing or impeding the efficiency and speed of arbitrations?
Motion Practice in General
Case law in both federal and state jurisdictions have lauded arbitration as a dispute resolution process that is more expeditious and less expensive than litigation. The universal concept that has emerged from case law is that efficiency, reduced delay, and cost effectiveness are the historical attributes for arbitration. Yet, some have challenged whether these traditional attributes of arbitration have been weakened by the expansion of discovery in arbitration—leading some to complain that arbitration has morphed into “arbigation.” But as arbitration has addressed more complex disputes, more sophisticated discovery beyond exchanging documents was bound to follow. Even though efficiency and the speed of resolution may be sacrificed in part, the heart of the process is still intended to reach a fair result. Allowing parties to engage in more discovery than a simple document exchange makes sense.
It would have been naïve to believe, however, that as discovery became more expansive there would not be more disputes over discovery issues. Hence, there are motions to enumerate or clarify arbitration claims to determine what discovery is relevant; and motions to amend once discovery is at least partially completed, as well as motions to compel discovery, were both expected and increasingly common. And once these developments occurred, one would certainly predict and find that dispositive motions were not far behind. Nevertheless, if properly controlled and limited, this progression into motion practice in arbitrations is not the end of the world. In fact, it may lead to more efficient and speedier resolutions.
The following are motions frequently encountered in arbitrations:
Motions to Dismiss
Based on arbitrability of an issue or jurisdiction of the tribunal. At the prehearing, the parties should indicate whether there is a question as to arbitrability of any of the issues raised in any of the claims or defenses, or any questions regarding the jurisdiction of the tribunal. If there are such questions, then some type of briefing on those questions should be set immediately and determined, in most instances, even before a discovery schedule is established.
Based upon specificity in the pleading. Generally speaking, arbitrations are initiated with a very succinct claim. A more formal claim pleading is certainly permitted, but it is not necessary. Therefore, dismissals based on formalistic pleading requirements should be rare at the early stages.
But the specificity of a claim does become relevant in determining the scope of discovery. If there is a question as to whether or not certain issues are really being raised and, if so, what discovery may be relevant to those issues, then at the preliminary hearing the panel may ask the claimant (or respondent, if a pleading is filed by the respondent) to provide more specificity to determine what documents may be relevant to the proceeding. Generally, the panel may do this by making a simple request, rather than by engaging in motion practice.
Based upon limitations periods. The statute of limitations defense may be difficult to ascertain at the beginning of the arbitration. Until there has been some discovery related to dates of certain events, it is generally premature to entertain any such motions. The resolution of any statute of limitations defense may be more appropriate at either the summary disposition stage in longer, more complex arbitrations, or after the hearing in less complex arbitrations.
Based upon failure to state a cause of action. One would assume that because arbitration is a creature of contract, the claimant will at the very least be able to state a breach of contract claim, assuming there is a breach and damages are sufficiently alleged. If additional causes of action based upon tort are pled, more analysis of the claims may be required after discovery or at the hearing. This will be necessary because different causes of action may become relevant in determining what types of damages are permitted, assuming the arbitration clause itself does not limit those damages. More often than not, deficiencies in the elements of certain causes of action or in remedies can be raised in prehearing briefs and at arguments at the hearing without a formal motion being filed.
Motion to Amend
At the prehearing status conference, it is a good practice to determine a cut-off date for any amendments to the claims and defenses. Once a cut-off date is in the scheduling order, the parties can then freely amend their pleadings without leave of the panel prior to that date. This cut-off date should be fairly early in the discovery process, so amendments do not delay the hearing. After the cut-off date, substantive amendments to the claims or defenses should not be favored.
Motions to Extend Deadlines in Scheduling Order
Once the scheduling order for the arbitration has been entered, changes to any of the deadlines involving discovery should be freely allowed unless it is going to change the hearing date. Sometimes extensions to certain discovery deadlines are necessary because of discovery disputes, large volumes of document productions, unavailability of witnesses, or circumstances affecting counsel’s availability. In those circumstances, the deadlines should be extended even if this affects the hearing date because, despite the desire that arbitrations be expedited, you do not want to prejudice the parties by forcing them to a hearing when they are not prepared. A failure to grant such an extension could well be grounds for a motion to vacate the arbitration award if the matter proceeds.
Minor extensions of a few days to produce documents or schedule depositions should be able to be worked out between the parties without having to seek permission of the panel as long as the hearing date is not affected.
Motions to Compel
Some disputes over discovery should be expected, particularly now that more discovery than mere document exchanges is prevalent in arbitrations. More opportunities for disagreement present themselves. At a minimum, every panel should set forth in the scheduling order a requirement that the parties meet and confer regarding discovery disputes before filing anything with the panel. But no matter how much counsel try in good faith to resolve their disputes, the panel may need to get involved.
Simple disputes may not require a formal motion and response—a simple letter to the panel setting forth the dispute and a letter by opposing counsel may provide enough information for the panel to resolve the dispute. In more complex cases, a formal motion with attached exhibits–– usually the document request––may be necessary. The panel should review material quickly and respond with a ruling as soon as possible. If the matter warrants, a hearing may be held so the parties can verbally present their case or, at the very least, answer questions the panel may have. Sometimes these issues can be addressed verbally at a status call and the matter resolved without any written submissions.
Motions in Limine
Some parties file motions in limine prior to a hearing, but they are largely unnecessary because there is no jury and the arbitrators are sophisticated enough to disregard matters that are objectionable and should not be admitted. A motion to exclude evidence does serve the purpose of alerting the panel as to disputed exhibits or testimony, but one can accomplish the same thing in the prehearing briefs. Most motions in limine will either be denied or taken under advisement and ruled upon at the time the disputed evidence is being introduced.
Motions for Directed Verdict
A motion for a directed verdict at either the close of a claimant’s case or at the close of the hearing is generally filed when there is a jury or to preserve issues for appeal. Because neither of these circumstances are relevant in arbitration, there is no need to file them.
Under the AAA Commercial Arbitration Rules, (Rule 30), “[E]ach party has the right to be heard and is given a fair opportunity to present its case.” In Illinois, the Illinois Arbitration Act provides in section 5/5(b), “The parties are entitled to be heard, to present evidence material to the controversy and cross-examine witnesses appearing at the hearing. . . .” This raises the question of whether motions that are completely dispositive of all issues in arbitration and result in no hearing are permitted. The answer is increasingly, “Yes.”
Arbitrators have the authority to conduct the hearing in any way they deem reasonable that is fair to both sides. Courts have recognized this authority and are affirming results where dispositions prior to a hearing are made. This is true even when the parties’ agreement does not cover such a procedure.
Most arbitrators would agree, however, that granting dispositive motions should be done sparingly, particularly when a hearing itself is imminent and may not be too long. In those situations, dispositive motions should be discouraged, and the parties should move forward with the hearing. But in more complex cases where purely legal issues can be resolved and where facts are truly uncontested, the savings to the parties may justify granting such a motion.
On the other hand, motions for partial disposition of issues, claims, or defenses are often better received and, in fact, are more common. Such motions have the desired effect of eliminating issues that might prolong the hearing and allowing the parties to be more focused at the hearing when they are presenting their evidence. If the case is large enough to justify the additional expense of such a motion for partial disposition, it may expedite the preparation for the hearing and the hearing itself.
At the preliminary hearing a deadline should be set for the filing of dispositive motions. This deadline should follow the discovery cutoff, and it should be well in advance of the hearing, so the hearing itself is not delayed when the parties are briefing the motion.
Motions to Reconsider
Generally speaking, under the common law doctrine of functus officio, once the arbitrator issues a final award, the arbitrator loses his or her authority, or jurisdiction, to reconsider the award. An exception under the AAA Commercial Rules, Rule 46, is when a party files a motion to modify the award to correct a clerical, typographical, or computational error. Only under those narrow circumstances is a motion to modify allowed. The rule specifically bars a motion to reconsider a claim already decided.
But if the award is not designated as final, or the agreement itself does not make clear that the entry of an award gives the arbitration finality, then a motion to reconsider on the merits may be allowed in some jurisdictions—and it would be an error not to consider it. The agreement controls. But even assuming that such a motion is “allowed” under the agreement, unless the party is raising a new fact that could not have been raised earlier, or a change in the law that has occurred since the hearing was closed, a motion to reconsider would be likely be denied.
Although “motion practice in arbitrations” may at first seem to be an oxymoron, it need not be. Like discovery, it can be a tool to prepare the case for hearing; and like expanded discovery in more recent arbitrations, it can shorten rather than lengthen the hearing and reduce the expenses involved both prehearing and at the hearing. If properly managed, motions can increase the efficiency and effectiveness of arbitrations.
Keywords: ADR, litigation, arbitration practice; arbitration process, motions in arbitration, arbitration procedures
J. Timothy Eaton is with Shefsky & Froelich Ltd in Chicago, Illinois.