Delaware Response to Arbitration, Mediation Is Growing

Delaware Law Weekly
Volume 9; Issue 21
Copyright 2006 ALM Properties, Inc. All Rights Reserved

True to the reputation Delaware courts enjoy for efficiency and innovation, the state's Superior Court was among the first in the country to develop an alternative dispute resolution program, and the use of arbitration and mediation has grown over the years.

In Delaware, ADR benefits from the services of a number of highly qualified former judges including Vincent A. Bifferato Sr., who works on contract issues, personal injury and bankruptcy; Joshua W. Martin III, who works on personal injury, wrongful death, commercial matters and sexual harassment suits; Vincent J. Poppiti, who specializes in complex civil litigation; and Joseph T. Walsh, who primarily handles business and corporate disputes.

Mediators and arbitrators with bench experience may make it easier for lawyers to sell ADR in complex corporate litigation, and the judiciary itself has been actively encouraging the practice, according to Myron T. Steele, chief justice of the Supreme Court.

"It results in faster dispositions and the ability to focus on cases that must be tried," Steele said.

In the latest statistics available, Margaret Derrickson, the Superior Court's special program director, reported that in fiscal year 2004 there was an 8 percent increase in ADR filings in that court over the previous year.  In fiscal year 2005 filings increased by 4.6 percent.  The number of filings has reached about 4,000 per year.

The most recent annual report from the judiciary indicated that the disposition rate of ADR cases in Superior Court shot up by 13.5 percent in fiscal year 2005.

In addition, in 2003 the Court of Chancery was given the ability to mediate technology and business disputes, according to the annual report.

The U.S. Bankruptcy Court for the District of Delaware mandated in 2004 that all adversary proceedings filed after May of that year would have to go into mediation, according to information posted on its Web site.

And of course, there is Magistrate Judge Mary Pat Thynge of the district court who enjoys a national reputation as a patent-dispute mediator.

According to Bifferato, senior counsel at Bifferato Gentilotti Biden & Balick and a retired Superior Court judge who was instrumental in the emergence of ADR in Delaware back in the late 1980s, the practice has taken off because "litigation is getting very expensive.  I think mediation is a faster way of resolving cases.  ...  It's quicker its cheaper and both parties believe they've had some semblance of a trial.  Both sides get the opportunity to explain their positions and that means a lot to some parties."

Martin, another former Superior Court judge and ADR pioneer who is now a partner with Potter Anderson & Corroon, agrees that time and money are factors, and also notes flexibility.

"I think it offers an alternative to the crowded court system that litigants now face.  More important, you can get a better outcome from mediation.  You can explore creative options in mediation that you wouldn't have access to in court."

ADR can be court encouraged or mandated, or private.  It can be either mediation or arbitration.

The former "is a process whereby a third party attempts to achieve a settlement that the parties craft for themselves.  The mediator is there as a facilitator," said Walsh, of counsel with McCarter & English in Wilmington and former Superior Court judge, vice chancellor and Supreme Court justice.

"In arbitration, particularly arbitration which is mandatory, the arbitrator essentially issues a judgment, but arbitration can be voluntary also," Walsh said, adding that anything binding is most often agreed to in writing.

Poppiti, a partner with Blank Rome in Wilmington as well as a former Superior Court judge and chief judge of Family Court, pointed out that ADR holds some value even if it fails.

"As an arbitrator, if I award for the plaintiff or I award for defendant, and I say these are the reasons, if it's binding that's it.  And if not, it becomes neutral advice and there is some value to that," he said.

If mediation fails, Poppiti said, "At least it gives the parties another chance outside court to revisit issues and see how their issues play live with the other side."

Of course, one of the drawbacks to ADR is that if it does fail, a lot of time has been wasted and mediators and arbitrators do not come cheap, according to Bifferato.  Both sides do take a chance.

Central to the success of ADR is the willingness to negotiate, and if the parties don't have that mindset, it can reach an impasse rather quickly, Poppiti said.

"My sense is that commercial disputes more frequently resolve than disputes involving personal injury," or other such emotion-laden matters, he added.  "It is just a matter of business. ...  And it doesn't mean you're not going to do business in the future."

Bifferato has a similar take on the elements of successful ADR:  "I do about six mediations a week, although they don't all settle at the time of mediation," Bifferato said.  "The success rate is 75 to 80 percent.  Of course, the people that come to mediation want to solve the case.  Mediation is strictly voluntary, and the ones that don't want to come, don't settle."

Parties' desire to continue their business relationships is a big reason Bifferato turned his attention to ADR in the late eighties when he was on the Superior Court.

Back then there was an explosion in coverage cases in which big companies were suing their insurance carriers over matters such as the clean up of toxic waste.

"During a couple of the trials I saw a benefit in mediation, and it worked very well," Bifferato said.  "One of the reasons it worked so well, there was an ongoing relationships between the parties.  There was an interest to keep that relationship going and mediation was encouraged even where there were adversarial positions.  As a result I was able to get a lot of cases settled.  I became very interested."

As a result he took classes in alternative dispute resolution and worked hard to increase its use to create a more efficient court.

Bifferato said that his colleague Martin practically wrote the rules back then and has continued his involvement in ADR, even when he was in the private sector.

Martin said he took a limited number of referrals when he was president and CEO of Verizon Delaware.

"It's been enjoyable and one of the things that really brings me pleasure is to see how satisfied the parties can be," Martin said.

Any given ADR can take a few hours, or stretch out for months, Martin said, adding that he likes to increase the chances of success with thorough preparation.

"I will ask those parties I am involved with to submit a statement that's confidential, which gives me background such that the mediation meeting becomes fairly efficient.  The beauty of mediation is its confidentiality," he said.