ADR is here to stay and should be

October 2015  |  SPECIAL REPORT: INTERNATIONAL DISPUTE RESOLUTION

Financier Worldwide Magazine

October 2015 Issue

October 2015 Issue


How can you not admire a judge who begins his 110 page post-trial Opinion with these words, “I did not try this case very well. I did try it fairly. As the Supreme Court has recognised, ‘a litigant is entitled to a fair trial but not a perfect one’.”

The judge is Hon. William Young of the United States District Court for the District of Massachusetts. His Opinion included discussion of two motions for a new trial and a motion for permanent injunction in a class action Multi-District litigation. The relief sought involved a determination that a reverse payment settlement agreement reached by a brand manufacturer with other pharmaceutical companies was anti-competitive under Section 1 of the Sherman Act and a request for a permanent injunction. Judge Young noted that the case was tried to a jury in “a rip-roaring six-week trial”. The jury concluded that the settlement agreement was unreasonably anticompetitive. The jury then answered ‘no’ to the following question, which effectively ended the case, “Had it not been for the unreasonably anticompetitive settlement, would AstraZeneca have agreed with Ranbaxy that Ranbaxy might launch a generic version of Nexium before 27 May 2014?”

The comments offered below about the place of ADR in major commercial endeavours will not plumb the depths of the fascinating trial and its resolution. Instead, that litigation is taken as an example of how the jury trial system can work at its very best. Most lawyers will say that kind of resolution is what they want in a jury trial but that is not what they have been getting, nor what they expect to get. Experience and common sense make clear that those kinds of trials are relatively rare. People in business with major commercial disputes experience dismay because they cannot count on that kind of trial occurring very often. Certainly not often enough to choose that form of dispute resolution over a binding arbitration. Why? There are at least three reasons.

First, the likelihood of drawing a judge as good as Judge Young and a jury equal to one which patiently heard the evidence and apparently understood a Section 1 suit is slim. An arbitration of such a dispute, on the other hand, takes a jury out of the equation and places the entire decision in the hands of an arbitrator. Thus those with major commercial disputes are careful about their decision of who will be the arbitrator. Sometimes the decision is made in advance of any dispute, e.g., a person or organisation is designated in a contract. Sometimes it is made once the dispute arises, either because the parties so agree or the agreement in dispute compels such a designation.

Second, the pretrial discovery demon. True, some change in pretrial production of electronic material is about to occur. Nevertheless, the often open-ended discovery found in modern American litigation, both complex and minor, usually is not worth the time and money it devours. While there is some discovery in ADR matters, it is modest or, at least controlled, as it should be. In the end the parties are relying on the experience and common sense of the arbitrator. On any given day, an arbitrator will more likely get it right most of the time. The same cannot be said for all jurors who must rely on judicial charges which might be inaccurate.

Third, money. The trial of a suit is subject to many scheduling variables. The parties must undergo pre-trial expense which is often a lost endeavour when the case is postponed, as so often occurs. Arbitration’s great attraction is a day certain (or two weeks certain or whatever time is needed).

Let us return to Judge Young and what he had to say about the benefits and detriments of jury trials in modern times. While he favours the use of juries, even in complex cases, he was right on the mark when he wrote of the ‘marginalisation’ of the federal trial process itself. Part of it, he suggests, comes from the fact that federal trial judges act like docket managers, not trial judges. Citing another jurist, Judge Young says trial judges should “start treating jury trials as a vindication of the justice system rather than a failure of the justice system”. That is likely a polite way of saying to his colleagues that they should be judged on getting their cases to trial and then trying them well.

His only specific comment about ADR is when he believes it has been “forced” and can destroy individual rights. He refers to mandatory arbitration clauses in many consumer commercial agreements. He believes those agreements are built on “questionable jurisprudence”. Some share that view but, in the end, the law is the law. Of more practical importance is that the ADR remedy is available with all the benefits it has over entering into the American litigation system to settle a dispute. And it should not be overlooked that successful American businesses which put mandatory arbitration into their commercial agreements want to keep most of their customers, not drive them away. Worthy consumer claims more often than not get resolved in a fair manner in the ADR process.

So tip your hats to Judge Young and the jury which heard the dispute. While reasonable people may legitimately believe otherwise in this particular case, all of us will benefit if judges and juries acted with the dispatch and attention they did.

 

Thomas Campion and Kenneth A. Murphy are partners at Drinker Biddle & Reath. Mr Campion can be contacted on +1 (973) 549 7300 or by email: thomas.campion@dbr.com. Mr Murphy can be contacted on +1 (215) 988 2837 or by email: kenneth.murphy@dbr.com.

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