1

Agenda for 19th Class• Admin– Handouts– Name plates– Mock mediation on Friday• Remember to go directly to the assigned room (not this

classroom)• Review of German procedure• Discussion of court visit• Settlement• ADR, focusing on arbitration• Introduction to fees and costs

Assignment– Friday

• Prepare for Mediation• No Writing Assignment

– Monday• Shavell handout• Finish A Civil Action

– Pay special attention to fees• Questions / Writing Assignment

– Problems on last page of Shavell handout– Given the settlement in A Civil Action, how did they calculate how much

Schlichtmann and the other lawyers received?

2

Review of German Civil Procedure– Judicial control of fact finding• Judge questions witnesses• Judge selects experts• judge decides sequence

– Career judiciary– De novo appellate review• But based on trial judge’s summary of evidence

– Possibly cheaper and more accurate – Depends on adequate supply and quality of judges

3

Court Visit– Comments or questions?

– Variety of Judicial Styles– Iqbal

4

Settlement– Settlement Problems– Settlement and A Civil Action • In what ways does A Civil Action confirm the validity of Polinsky’s

economic model of settlement?• In what ways does A Civil Action contradict Polinsky’s economic

model of settlement or suggest that the real world is more complex than that model?

6

Arbitration I• Adjudication by private judge under rules agreed to by parties• Must be agreed to by parties

– Pre-dispute. In contract, before dispute arises– After dispute arises

• Arbitration is legally binding– Party that agreed to arbitration and then changes its mind can be compelled to

arbitrate• Court will dismiss case• Arbitrator can enter equivalent of default judgment

– Arbitration awards are enforceable in court– Arbitration awards are not generally appealable

• Arbitration may be through established organizations (non-profit or for profit)– American Arbitration Association, JAMS– Organizations have panels of arbitrators and set rules

7

Arbitration II• Parties to arbitration generally have control over who arbitrators are

– Either agree on arbitrators in advance• Or agree to procedure for selecting arbitrator

– E.g. Start with list and each side strikes those like least, etc.– Procedure may be set out in organization rules (AAA or JAMS) or may be

negotiated by parties– Often arbitrators are retired judges, but can be anyone

• E.g. Writers Guild has writers as arbitrators• Parties to arbitration generally have control over procedures

– AAA and JAMS have rules that can choose– Or can set out own rules

• E.g. Writers Guild. Everything in writing, no oral hearing or testimony•

8

Arbitration III• Arbitration is controversial

– Especially in consumer contracts• Where business may put arbitration clause in form contract stipulating

defendant friendly arbitrators and procedures (e.g. no class actions)• Federal law promotes arbitration

– Federal American Arbitration Act is interpreted to require states to enforce arbitration agreements, except in rare circumstances• Agreement was unconscionable or otherwise defective under ordinary

state law contract principles (e.g. fraud, duress), or• Procedure violative of due process (e.g. biased judges)

– Very hard to prove, even though probably often true, because business generally chooses arbitration procedures, including rules for selection of arbitrators

– Businesses are “repeat players”» So arbitration providers have incentive to please business,

otherwise business will choose other arbitration provider in future.

Next Class– Fees = Compensation to lawyer

• Generally large. Approximately 1/3rd of judgment• English rule. Loser pays other side’s attorney fees• American rule, no reimbursement of other side’s lawyer’s fees

» Except when explicitly allowed or mandated by statute– Costs = court fees

• Generally small. • Loser pays, even in U.S.

9