Online Dispute Resolution: Is It Working?

Michigan was one of the few states that was ahead of the curve when the lockdown began, because it had already implemented an online dispute resolution (“ODR”) process and trained mediators to mediate these cases in a chatroom-like mode — asynchronous, no cameras required. A good example of a court ODR system is the program in Franklin County Municipal Court in Columbus, Ohio. But a recent survey of online dispute resolution programs nationally raises questions about the effectiveness of ODR. The Markup, a nonprofit that covers stories on the impact of technology on society, found that, while some courts had success, especially with traffic cases, many parties to civil lawsuits could not access the platform, resulting in low resolution rates in small claims cases. In New Mexico, an audit determined that only 2.4% of cases filed in its statewide ODR system resulted in settlements. In Florida, three courts terminated ODR programs due to technical issues; another court said no one signed up to use it. Our own Michelle Hilliker, with Michigan’s State Court Administrative Office Office of Dispute Resolution, noted the challenge of getting the defendant to participate. The process relies on the plaintiff to supply the defendant’s email, and often the plaintiff doesn’t know it or supplies an incorrect one.

I received training to mediate ODR cases a couple years ago, mediation being an option if parties aren’t able to negotiate their own settlement. I liked the process — because the dialogue is done by typing, the process is slowed down, giving each side time to think about their next move, unlike an in-person conversation where parties may feel rushed to respond. But I had trouble with the technology, and so did the parties. I definitely think there’s a place for ODR, and I suspect we’ll view it more favorably in five or ten years, but right now, it needs some work.

Apology Atrophy?

A recent column in the New York Times by Jessica Bennett (“Hes’s Sorry, She’s Sorry, Everybody is Sorry. Does it Matter?“) notes that public apologies just don’t seem to be making us feel better these days. Where ten years ago the public apology seemed like sufficient punishment to restore the offender to society, now it is more apt to leave us unsatisfied. Is it because the public apology has become so ubiquitous, trotted out for both the large and the smallest of infractions? Have we become cynical towards public apologies, so that, while we demand them, we never find them sincere? This article preceded the Will Smith apologies for his behavior at the Academy Awards ceremony earlier this month. Has he apologized enough? There will always be a place in personal relationships for apology, but the contours of the public apology may be changing.

Celebration Church Lawsuit

It’s a little harder to celebrate at Celebration Church these days. The church, based in Jacksonville, Florida, is embroiled in litigation. The church’s trustees ousted its founding pastor, Stovall Weems, in January, and he has filed a lawsuit against the church, seeking reinstatement and demanding an investigation of “any and all wrongdoing.” The church countered with a motion to dismiss Weems’ complaint, alleging significant financial mis-management by Pastor Stovall and his wife Kerri Weems in 2021 that it is now investigating.

This is a huge church. It claims about 12,000 members, with campuses in Florida, North Carolina, Washington DC, as well as in Europe and Africa. Many people, both within and outside the church, are watching. We can only pray that the court will agree with the church that the county circuit court does not have jurisdiction over ecclesiastical matters, and dismiss the lawsuit, allowing the parties to resolve this conflict with the assistance of fellow believers, as the Apostle Paul admonishes in I Corinthians 6:1-7.

An ironic sidebar to this story is that, if you Google “Celebration Church lawsuit,” you’ll discover another church named Celebration, in Minnesota, that dealt with its own internal lawsuit a few years ago, also over alleged financial mis-management.  It’s not clear how that case was resolved. If it was resolved privately, within the church, it would probably not show up in Google. Let’s hope that’s why we don’t know the outcome of that dispute.

Proposed Michigan Rule Could Impair Christian Arbitration Clause

In my post of February 11, 2022, I wrote about legislative initiatives that could prevent arbitration clauses in contracts between Christians from being legally enforceable. Today I examine a judicial effort that would have a similar effect.

Most world religions exhort their adherents not to sue one another, but rather to resolve their disputes within the religious body itself. Jewish, Christian, Muslim and Sikh faiths are notable examples. Because Christians are directly admonished in Scripture not to take their disputes to court (I Corinthians 6:1-7), many contracts between Christians specify in their dispute resolution clause that the dispute will be resolved through mediation and, if that is not successful, then through arbitration (“med/arb”). That ensures that the dispute will not end up in court, consistent with both parties’ beliefs.

Christian lawyers include such clauses in their client engagement contracts, and I include one in my agreement with Christian mediation parties, as follows:

We further agree that any dispute with the mediator related to this Agreement shall be settled by media­tion and, if necessary, legally binding arbitration in accordance with the ICC Rules; judgment upon an arb­itra­tion award may be entered in any court otherwise having jurisdiction.

(As is explained elsewhere in the agreement, the ICC Rules of Procedure for Christian Conciliation are a well-established set of national rules for Christian mediation and arbitration.)

The Michigan Supreme Court would like to make this more complicated. They are proposing a change to the Michigan Rules of Professional Conduct, which all lawyers must follow, that would require a client to obtain independent counsel to review any lawyer-client contract containing an arbitration clause. (Order of the Michigan Supreme Court, ADM File No. 2021-07, dated December 15, 2021.)

Although the Court has not offered why it is proposing this change, we can assume that it is attempting to address the inherent conflict of interest, and likely power imbalance, when a lawyer proposes a dispute resolution process for the client to use if the client is later unhappy with the lawyer’s services. Arbitration benefits clients too, so it is not unethical for a lawyer to recommend it; but unsophisticated clients may not appreciate all the implications of an arbitration clause. By definition, the prospective client is focused on another legal matter; they’re not really thinking about a process to resolve a possible dispute with the lawyer they’re about to hire. When they learn later that they cannot sue their lawyer, they may feel that the lawyer took advantage of them. That is less likely to occur if the client has an independent lawyer review the lawyer-client agreement, and hopefully spot and explain the arbitration clause in it, before the client signs it. (I say “hopefully” because in the case that prompted the Supreme Court to propose this Rule amendment, Tinsley v Yatooma, 333 Mich App 257 (2020), the sophisticated business client had an independent lawyer review the agreement, but that lawyer apparently did not notice or inform Mr. Tinsley about the arbitration clause. The case shows that the proposed amendment will not fully fix the problem.)

The proposed Rule would require Christian lawyers who have arbitration clauses in their lawyer-client contracts to make prospective clients obtain outside counsel before signing the contract. Presumably it would cover med/arb clauses as well. Even the requirement is for the client’s benefit, it imposes an extra burden on the would-be client, in terms of both time and cost. An alternative is for the lawyer to remove the arbitration clause from the contract — thus also removing the assurance that, should the lawyer and client get into a dispute down the road, it will not go to court. Otherwise, the parties could wait until a dispute erupts then choose the process, but it’s harder to forego litigation when tempers flare, even if religious traditions demand it.

As I do not represent clients, this proposed Rule would not directly affect me. But, if it extends to “med/arb clauses,” as well as arbitration-only provisions, and if mediation parties could be considered my clients, it would impair my mediator retention agreements with Christian parties.

I applaud the effort to ensure that clients are informed about arbitration before signing agreements with arbitration clauses. I object to requiring a prospective client to obtain independent counsel to review the contract. I would prefer that it be a recommendation — that the lawyer advise the prospective client to seek independent review of a lawyer-client contract containing an arbitration clause. Then the prospective client can decide for themselves whether the unknowns of arbitration merit seeking outside counsel before signing the contract.

My understanding is that no other state is as demanding as Michigan’s proposal. Other states permit arbitration clauses in attorney-client agreements as long as the attorney explains to the client the pros and cons of arbitration. See Delaney v Dickey, 244 NJ 466, 494; 242 A2d 257 (2020). The ABA in its formal opinion on this topic (ABA Formal Opinion 02-425 Retainer Agreement Requiring the Arbitration of Fee Disputes and Malpractice Claims) agreed that an arbitration clause in a retainer agreement is ethical as long as “the client has been fully apprised of the advantages and disadvantages of arbitration.” The ABA does not require that a different attorney apprise the client.

The lack of informed consent plagues arbitration. It is especially likely in a contract between a lawyer and client. The legal profession should take extra steps to ensure that clients know what they’re giving up when they sign a contract with an arbitration clause in it. But the extra steps should not burden the client, and they should not hinder the client’s desire to honor their religious beliefs by including the arbitration clause in the contract.

Legislation Could Affect Christian Arbitration

It’s not uncommon for a contract to contain a “dispute resolution clause,” describing the process the parties will use if they have a dispute down the road regarding some aspect of their contract. Because Christians are not supposed to take their disputes to court (I Corinthians 6:1-7), many contracts between Christians – including churches, ministries, and other Christian organizations – specify in their dispute resolution clause that the dispute will be resolved through mediation and, if that is not successful, then through arbitration (“med/arb”). That ensures that the dispute will not end up in court.

These are known as “pre-dispute” arbitration clauses, because the parties select the arbitration process before they have a dispute. It is much more difficult to agree on anything, including a dispute resolution process, once the parties are in dispute. So the Christian med/arb clause is a means for Christians to bind themselves to honor the biblical proscription against lawsuits among Christians.

As with other dispute resolution processes (e.g., negotiation, mediation, litigation), arbitration has pros and cons. It is typically faster and less expensive than litigation, and the parties can choose a neutral who has subject-matter expertise and is already familiar with the industry and the lingo. Unlike mediation, arbitration will definitely resolve the dispute; even if a party withdraws, the process continues to an award. The process is private, and is subject to very limited judicial review.

Arbitration clauses are coming under increasing scrutiny. The party that did not draft the contract may not even know that it contains an arbitration clause. Or the non-drafting party may be aware of the clause, but have no leverage to negotiate a different process, as with consumer contracts for credit cards, cell phones, etc. The non-drafting party may assume that the arbitration process will be fair, only to learn later that it favors the party that inserted the arbitration clause, which is usually the more powerful party, e.g., the employer or business.

So now there are both legislative and judicial efforts to restrict pre-dispute arbitration clauses. These will make it more difficult for Christians to include enforceable pre-dispute arbitration clauses in their contracts.

One such legislative effort is known as the FAIR Act, or Forced Arbitration Injustice Repeal Act. This bill would amend the Federal Arbitration Act to prohibit a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment dispute. This would presumably affect only the “arb” portion of a med/arb clause in an employment agreement. Since many Christian employers include a med/arb clause in contracts with their employees, the “arb” portion of that clause would not be enforceable, if this bill becomes law. (It passed the House in 2019 but did not pass the Senate, and was re-introduced in both houses in 2021.)

For example, many Christian schools include a med/arb clause in teacher contracts, typically calling for the dispute to be resolved in accordance with biblical principles. The Association of Christian Schools International, among others, has adopted the model contract clause long promoted by the Institute for Christian Conciliation (ICC), which calls for any dispute to be resolved through the ICC in accordance with its Rules of Procedure. This clause has been held legally enforceable, most recently in Whitefield Academy v Alford, ___ S.W. 3d ___ (Ky. App. 2021).

Another bill that just passed the House this week, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, would make arbitration clauses unenforceable in any actionalleging conduct constituting a sexual harassment dispute or sexual assault dispute.” This Act is narrower than the FAIR Act and is projected to become law. [Update: the President signed this into law on March 3, 2022, applicable to any claim of sexual assault or harassment “that arises or accrues on or after March 3, 2022.”] It means that any Christian School teacher who believes she has experienced sexual harassment could sue the school in court, the arbitration clause notwithstanding.

Parties could still proceed as if the arbitration portion of the med/arb clause were legally enforceable. But angry Americans are wont to sue one another, and angry Americans who happen to be Christian are also tempted to sue, even if their faith discourages them from doing so. If either of these bills becomes law, courts will not be able to enforce the arbitration clause that Christians inserted in their employment contracts. Both church and state benefit when the civil courts send church disputes to a church dispute resolution process. Legislation that makes certain aspects of arbitration agreements unenforceable makes it harder for Christians to keep their disputes out of court.

Related update: The Telios law firm, a leading firm on Christian employment issues, recently offered two observations regarding application of the EFA Act to organizations that have agreements for Christian dispute resolution: “First, it is unclear that the statute would control an agreement for dispute resolution that is based on the free exercise of religion. Second, an option is to have employees agree to participate in Christian mediation before going to the courts or arbitrating” because this would not be a binding arbitration agreement and thus would not be covered by the new federal statute.

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