H. Rept. 105-487 - ALTERNATIVE DISPUTE RESOLUTION ACT OF 1998105th Congress (1997-1998)
Committee Report
H. Rept. 105-487 - 105th Congress (1997-1998)
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House Report 105-487 - ALTERNATIVE DISPUTE RESOLUTION ACT OF 1998
[House Report 105-487]
[From the U.S. Government Publishing Office]
105th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 105-487
_______________________________________________________________________
ALTERNATIVE DISPUTE RESOLUTION ACT OF 1998
_______
April 21, 1998.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Coble, from the Committee on the Judiciary, submitted the following
R E P O R T
[To accompany H.R. 3528]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the
bill (H.R. 3528) to amend title 28, United States Code, with
respect to the use of alternative dispute resolution processes
in United States district courts, and for other purposes,
having considered the same, reports favorably thereon with an
amendment and recommends that the bill as amended do pass.
TABLE OF CONTENTS
Page
The Amendment.............................................. 1
Purpose and Summary........................................ 5
Background and Need for the Legislation.................... 5
Hearings................................................... 6
Committee Consideration.................................... 6
Committee Oversight Findings............................... 6
Committee on Government Reform and Oversight Findings...... 6
New Budget Authority and Tax Expenditures.................. 6
Congressional Budget Office Cost Estimate.................. 6
Constitutional Authority Statement......................... 8
Section-by-Section Analysis and Discussion................. 8
Changes in Existing Law Made by the Bill, as Reported...... 10
The amendment is as follows:
Strike out all after the enacting clause and insert in lieu
thereof the following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Alternative Dispute Resolution Act
of 1998''.
SEC. 2. ALTERNATIVE DISPUTE RESOLUTION PROCESSES TO BE AUTHORIZED IN
ALL DISTRICT COURTS.
Section 651 of title 28, United States Code, is amended to read as
follows:
``Sec. 651. Authorization of alternative dispute resolution
``(a) Definition.--For purposes of this chapter, an alternative
dispute resolution process includes any process or procedure, other
than an adjudication by a presiding judge, in which a neutral third
party participates to assist in the resolution of issues in
controversy, through processes such as early neutral evaluation,
mediation, minitrial, and arbitration as provided in sections 654
through 658.
``(b) Authority.--Each United States district court shall
authorize, by local rule, the use of alternative dispute resolution
processes in all civil actions, including adversary proceedings in
bankruptcy, in accordance with this chapter, except that the use of
arbitration may be authorized only as provided in section 654. Each
United States district court shall devise and implement its own
alternative dispute resolution program by local rule to encourage and
promote the use of alternative dispute resolution in its district.
``(c) Existing Alternative Dispute Resolution Programs.--In those
courts where an alternative dispute resolution program is in place on
the date of the enactment of the Alternative Dispute Resolution Act of
1998, the court shall examine the effectiveness of that program and
adopt such improvements to the program as are consistent with the
provisions and purposes of this chapter.
``(d) Administration of Alternative Dispute Resolution Programs.--
Each United States district court shall retain or designate an existing
employee knowledgeable in alternative dispute resolution practices and
processes to implement, administer, oversee, and evaluate the court's
alternative dispute resolution program. Such person may also be
responsible for recruiting, screening, and training attorneys to serve
as neutrals and arbitrators in the court's alternative dispute
resolution program.
``(e) Title 9 Not Affected.--This chapter shall not affect title 9.
``(f) Program Support.--The Federal Judicial Center and the
Administrative Office of the United States Courts are authorized to
assist the district courts in the establishment and improvement of
alternative dispute resolution programs by identifying particular
practices employed in successful programs and providing additional
assistance as needed and appropriate.''.
SEC. 3. JURISDICTION.
Section 652 of title 28, United States Code, is amended to read as
follows:
``Sec. 652. Jurisdiction
``(a) Consideration of Alternative Dispute Resolution in
Appropriate Cases.--Notwithstanding any provision of law to the
contrary and except as provided in subsections (b) and (c), each
district court shall, by local rule, require that litigants in all
civil cases consider the use of an alternative dispute resolution
process at an appropriate stage in the litigation. Each district court
shall provide litigants in all civil cases with a choice of alternative
dispute resolution processes, including, but not limited to, mediation,
early neutral evaluation, minitrial, and arbitration as authorized in
sections 654 through 658. Any district court that elects to require the
use of alternative dispute resolution in certain cases may do so only
with respect to mediation, early neutral evaluation, and, if the
parties consent, arbitration.
``(b) Actions Exempted From Consideration of Alternative Dispute
Resolution.--Each district court may exempt from the requirements of
this section specific cases or categories of cases in which use of
alternative dispute resolution would not be appropriate. In defining
these exemptions, each district court shall consult with members of the
bar, including the United States Attorney for that district.
``(c) Authority of the Attorney General.--Nothing in this section
shall alter or conflict with the authority of the Attorney General to
conduct litigation on behalf of the United States, with the authority
of any Federal agency authorized to conduct litigation in the United
States courts, or with any delegation of litigation authority by the
Attorney General.
``(d) Confidentiality Provisions.--Until such time as rules are
adopted pursuant to chapter 131 of this title providing for the
confidentiality of alternative dispute resolution processes under this
chapter, each district court shall by local rule provide for the
confidentiality of the alternative dispute resolution processes and to
prohibit disclosure of confidential dispute resolution
communications.''.
SEC. 4. MEDIATORS AND NEUTRAL EVALUATORS.
Section 653 of title 28, United States Code, is amended to read as
follows:
``Sec. 653. Neutrals
``(a) Panel of Neutrals.--Each district court that authorizes the
use of alternative dispute resolution processes shall maintain a panel
of neutrals available for use by the parties for each category of
process offered. Each district court shall promulgate its own
procedures and criteria for the selection of neutrals on its panels.
``(b) Qualifications and Training.--Each person serving as a
neutral in an alternative dispute resolution process should be
qualified and trained to serve as a neutral in the appropriate
alternative dispute resolution process. For this purpose, the district
court may use, among others, magistrate judges who have been trained to
serve as neutrals in alternative dispute resolution processes,
professional neutrals from the private sector, and persons who have
been trained to serve as neutrals in alternative dispute resolution
processes. Until such time as rules are adopted pursuant to chapter 131
of this title relating to the disqualification of neutrals, each
district court shall issue rules relating to the disqualification of
neutrals (including, where appropriate, disqualification under section
455 of this title, other applicable law, and professional
responsibility standards).''.
SEC. 5. ACTIONS REFERRED TO ARBITRATION.
Section 654 of title 28, United States Code, is amended to read as
follows:
``Sec. 654. Arbitration
``(a) Referral of Actions to Arbitration.--Notwithstanding any
provision of law to the contrary and except as provided in subsections
(b) and (c) of section 652 and subsection (d) of this section, a
district court may allow the referral to arbitration of any civil
action (including any adversary proceeding in bankruptcy) pending
before it, except that referral to arbitration may not be made where--
``(1) the action is based on an alleged violation of a
right secured by the Constitution of the United States;
``(2) jurisdiction is based in whole or in part on section
1343 of this title; or
``(3) the relief sought consists of money damages in an
amount greater than $150,000.
``(b) Safeguards in Consent Cases.--Until such time as rules are
adopted pursuant to chapter 131 of this title relating to procedures
described in this subsection, the district court shall by local rule
establish procedures to ensure that any civil action in which
arbitration by consent is allowed under subsection (a)--
``(1) consent to arbitration is freely and knowingly
obtained; and
``(2) no party or attorney is prejudiced for refusing to
participate in arbitration.
``(c) Presumptions.--For purposes of subsection (a)(3), a district
court may presume damages are not in excess of $150,000 unless counsel
certifies that damages exceed such amount.
``(d) Existing Programs.--Nothing in this section is deemed to
affect any action in which arbitration is conducted pursuant to section
906 of the Judicial Improvements and Access to Justice Act (Public Law
100-102), as in effect prior to the date of its repeal.''.
SEC. 6. ARBITRATORS.
Section 655 of title 28, United States Code, is amended to read as
follows:
``Sec. 655. Arbitrators
``(a) Powers of Arbitrators.--An arbitrator to whom an action is
referred under section 654 shall have the power, within the judicial
district of the district court which referred the action to
arbitration--
``(1) to conduct arbitration hearings;
``(2) to administer oaths and affirmations; and
``(3) to make awards.
``(b) Standards for Certification.--Each district court that
authorizes arbitration shall establish standards for the certification
of arbitrators and shall certify arbitrators to perform services in
accordance with such standards and this chapter. The standards shall
include provisions requiring that any arbitrator--
``(1) shall take the oath or affirmation described in
section 453; and
``(2) shall be subject to the disqualification rules under
section 455.
``(c) Immunity.--All individuals serving as arbitrators in an
alternative dispute resolution program under this chapter are
performing quasi-judicial functions and are entitled to the immunities
and protections that the law accords to persons serving in such
capacity.''.
SEC. 7. SUBPOENAS.
Section 656 of title 28, United States Code, is amended to read as
follows:
``Sec. 656. Subpoenas
``Rule 45 of the Federal Rules of Civil Procedure (relating to
subpoenas) applies to subpoenas for the attendance of witnesses and the
production of documentary evidence at an arbitration hearing under this
chapter.''.
SEC. 8. ARBITRATION AWARD AND JUDGMENT.
Section 657 of title 28, United States Code, is amended to read as
follows:
``Sec. 657. Arbitration award and judgment
``(a) Filing and Effect of Arbitration Award.--An arbitration award
made by an arbitrator under this chapter, along with proof of service
of such award on the other party by the prevailing party or by the
plaintiff, shall be filed promptly after the arbitration hearing is
concluded with the clerk of the district court that referred the case
to arbitration. Such award shall be entered as the judgment of the
court after the time has expired for requesting a trial de novo. The
judgment so entered shall be subject to the same provisions of law and
shall have the same force and effect as a judgment of the court in a
civil action, except that the judgment shall not be subject to review
in any other court by appeal or otherwise.
``(b) Sealing of Arbitration Award.--The district court shall
provide by local rule that the contents of any arbitration award made
under this chapter shall not be made known to any judge who might be
assigned to the case until the district court has entered final
judgment in the action or the action has otherwise terminated.
``(c) Trial de Novo of Arbitration Awards.--
``(1) Time for filing demand.--Within 30 days after the
filing of an arbitration award with a district court under
subsection (a), any party may file a written demand for a trial
de novo in the district court.
``(2) Action restored to court docket.--Upon a demand for a
trial de novo, the action shall be restored to the docket of
the court and treated for all purposes as if it had not been
referred to arbitration.
``(3) Exclusion of evidence of arbitration.--The court
shall not admit at the trial de novo any evidence that there
has been an arbitration proceeding, the nature or amount of any
award, or any other matter concerning the conduct of the
arbitration proceeding, unless--
``(A) the evidence would otherwise be admissible in
the court under the Federal Rules of Evidence; or
``(B) the parties have otherwise stipulated.''.
SEC. 9. COMPENSATION OF ARBITRATORS AND NEUTRALS.
Section 658 of title 28, United States Code, is amended to read as
follows:
``Sec. 658. Compensation of arbitrators and neutrals
``(a) Compensation.--The district court shall, subject to limits
set by the Judicial Conference of the United States, establish and pay
the amount of compensation, if any, that each arbitrator or neutral
shall receive for services rendered in each case under this chapter.
``(b) Transportation Allowances.--Under regulations prescribed by
the Director of the Administrative Office of the United States Courts,
a district court may reimburse arbitrators for actual transportation
expenses necessarily incurred in the performance of duties under this
chapter.''.
SEC. 10. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated for each fiscal year such
sums as may be necessary to carry out chapter 44 of title 28, United
States Code, as amended by this Act.
SEC. 11. CONFORMING AMENDMENTS.
(a) Limitation on Money Damages.--Section 901 of the Judicial
Improvements and Access to Justice Act (28 U.S.C. 652 note) is amended
by striking subsection (c).
(b) Other Conforming Amendments.--(1) The chapter heading for
chapter 44 of title 28, United States Code, is amended to read as
follows:
``CHAPTER 44--ALTERNATIVE DISPUTE RESOLUTION''.
(2) The table of contents for chapter 44 of title 28, United States
Code, is amended to read as follows:
``Sec.
``651. Authorization of alternative dispute resolution.
``652. Jurisdiction.
``653. Neutrals.
``654. Arbitration.
``655. Arbitrators.
``656. Subpoenas.
``657. Arbitration award and judgment.
``658. Compensation of arbitrators and neutrals.''.
(3) The item relating to chapter 44 in the table of chapters for
Part III of title 28, United States Code, is amended to read as
follows:
``44. Alternative Dispute Resolution........................ 651''.
Purpose and Summary
H.R. 3528 is designed to address the problem of the high
caseloads burdening the federal courts. This legislation will
provide a quicker, more efficient method by which to resolve
some federal cases when the parties or the courts so choose.
H.R. 3528 directs each federal trial court to establish some
form of alternative dispute resolution (``ADR''), which could
include arbitration, mediation, mini trials, or early neutral
evaluation or some combination of those for certain civil
cases. The bill also provides for the confidentiality of the
alternative dispute resolution process and prohibits the
disclosure of such confidential communications. It also directs
the courts to establish standards for the neutrals and
arbitrators to follow, and authorizes the Judicial Conference
and the Administrative Office of the United States Courts to
assist courts with their programs.
This legislation will provide the federal courts with the
tools necessary to present quality alternatives to expensive
federal litigation.
Background and Need For Legislation
Over the past years, the Article III Federal Courts have
witnessed an explosion in the number of cases brought before
them. On March 10, 1998, the Administrative Office of the U.S.
Courts issued a report which indicated the caseload of the
Federal Judiciary increased in fiscal year 1997 to historic
levels in nearly every category. Filings in the courts of
appeals rose 1 percent to reach an all-time high. Total filings
in the district courts rose 2 percent, with civil case filings
increasing for the fourth consecutive year, with criminal case
filings reaching their highest levels since 1933. Bankruptcy
filings climbed 23 percent to a record level and the number of
persons under the supervision of the federal probation system
increased 3 percent. The number of civil and criminal cases
filed in district courts totaled 322,390 in 1997, a 2 percent
increase over 1996. The increase sent filings per authorized
judgeship up from 490 to 498.
The burdens of these sky-rocketing numbers have not been
lost on the Congress, particularly because such numbers reflect
directly on citizens' ability to have their day in court. This
bill incorporates various suggestions of a number of witnesses
who testified at the Subcommittee hearing, and suggested courts
should be able to decide which alternative dispute resolution
(``ADR'') method is best suited for that particular court. The
legislation expands the current arbitration programs operating
in twenty districts throughout the country by requiring each
District Court to establish some form of ADR.
Hearings
The provisions of this legislation were considered during a
legislative hearing on H.R. 2603, the ``Alternative Dispute
Resolution and Settlement Encouragement Act'' on October 9,
1997. Testifying at the hearing on the issue of alternative
dispute resolution were Peter R. Steenland, Senior Counsel for
ADR, United States Department of Justice; Judge E. Brock
Hornby, United States Chief District Judge for the District of
Maine; Professor E. Allan Lind of the Fuqua School of Business,
Duke University; and Mitchell F. Dolin on behalf of the
American Bar Association.
Committee Consideration
The Subcommittee on Courts and Intellectual Property
conducted a markup on a Committee Print of this legislation on
March 18, 1998. The Subcommittee reported the Committee Print
to the Full Committee for further consideration by voice vote.
The print introduced as H.R. 3528 on March 23, 1998, by
Subcommittee Chairman Howard Coble. On March 24, 1998, the
Committee met in open session and ordered reported favorably
the bill H.R. 3528, as amended, by voice vote, a quorum being
present.
Committee Oversight Findings
In compliance with clause 2(1)(3)(A) of rule XI of the
Rules of the House of Representatives, the Committee reports
that the findings and recommendations of the Committee, based
on oversight activities under clause 2(b)(1) of Rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
Committee on Government Reform and Oversight Findings
No findings or recommendations of the Committee on
Government Reform and Oversight were received as referred to in
clause 2(1)(3)(D) of rule XI of the Rules of the House of
Representatives.
New Budget Authority and Tax Expenditures
Clause 2(1)(3)(B) of House Rule XI is inapplicable because
this legislation does not provide new budgetary authority or
increased tax expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 2(l)(C)(3) of rule XI of the
Rules of the House of Representatives, the Committee sets
forth, with respect to the bill, H.R. 3528, the following
estimate and comparison prepared by the Director of the
Congressional Budget Office under section 403 of the
Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, April 20 16, 1998.
Hon. Henry J. Hyde,
Chairman, Committee on the Judiciary,
House of Representatives, Washington, DC.
The Congressional Budget Office has prepared the enclosed
cost estimate for H.R. 3528, the Alternative Dispute Resolution
Act of 1998.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Susanne S.
Mehlman (for federal costs), who can be reached at 226-2860,
and Leo Lex (for the state and local impact), who can be
reached at 225-3220.
Sincerely,
June E. O'Neill, Director.
Enclosure.
cc: Honorable John Conyers, Jr.,
Ranking Minority Member.
H.R. 3528--Alternative Dispute Resolution Act of 1998
CBO estimates that implementing H.R. 3528 would result in
no significant net costs to the federal government. Because
this bill would not affect direct spending or receipts, pay-as-
you-go procedures would not apply. The legislation contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act of 1995. The bill would only
affect the budgets of state, local, or tribal governments if
those governments were parties to a case in federal district
court and if they chose to participate in an alternative form
of dispute resolution. In those cases, state, local, and tribal
governments might realize some savings from lower litigation
costs.
Enacting H.R. 3528 would require all 94 federal district
courts to establish an alternative dispute resolution (ADR)
program for resolving certain civil cases. An ADR program could
include such processes as arbitration, mediation, neutral
evaluation, and mini-trials. Under the bill, the courts could
mandate that litigants in a civil case use an ADR process,
except arbitration, which would require the consent of all
parties to the case. According to the Administrative Office of
the United States Courts (AOUSC), about 75 federal district
courts presently have some form of ADR in operation.
Based on information from the AOUSC, CBO expects that under
H.R. 3528 the district courts without an ADR program (fewer
than 20) would establish some type of program beginning in
fiscal year 1999. Because the bill also would require that an
existing employee in each district administer the ADR program,
CBO expects that additional appropriations would be required
only to fund the expenses of arbitrators and other neutral
parties that would be used in the various ADR processes for
those district courts without an existing program. Based on
current costs required to support a typical program's expenses,
CBO estimates that such expenditures would average about $6,000
(in 1998 dollars) per district each year. Costs in subsequent
years could increase if participation in the ADR programs
increases as courts become more accustomed to using
alternatives to trials. In any case, CBO estimates that added
costs would be less than $500,000 annually, subject to the
availability of appropriated funds.
CBO expects that expanding the use of ADR processes to all
district courts could yield some net savings in the costs of
court administration. However, CBO expects that any such
savings would not be significant over the next five years.
The staff contacts for this estimate are Susanne S. Mehlman
(for federal costs), who can be reached at 226-2860, and Leo
Lex (for the state and local impact), who can be reached at
225-3220. This estimate was approved by Robert A. Sunshine,
Deputy Assistant Director for Budget Analysis.
Constitutional Authority Statement
Pursuant to Rule XI, clause 2(1)(4) of the Rules of the
House of Representatives, the Committee finds the authority for
this legislation in Article III, section 1 of the Constitution.
Section-by-Section Analysis and Discussion
Section One:
The short title of the act will be the ``Alternative
Dispute Resolution Act of 1998.''
Section Two: Alternative Dispute Resolution
This section requires all Federal district courts to
establish an alternative dispute resolution (ADR) program,
which in the discretion of the court could be either voluntary
or mandatory. Under no circumstances shall a court be able to
mandate a party to participate in arbitration. Alternative
dispute resolution may include such processes as early neutral
evaluation, mediation, mini trials, and arbitration. This will
provide more options for litigants, while reducing cost, delay,
and court burdens. In those courts where an ADR program is
already in place, the court will examine that programs
effectiveness and make such improvements as are consistent with
this legislation. Each District Court shall designate or retain
an employee to administer the court's ADR program. The Federal
Judicial Center and the Administrative Office of the United
States Courts shall assist the courts in the establishment and
improvement of ADR programs.
Section Three: Jurisdiction
Each District Court shall provide litigants in all civil
cases a choice of alternative dispute resolution processes. If
a court requires the use of ADR by local rule, it may only do
so with respect to mediation or early neutral evaluation.
Courts may not require litigants to participate in mini trials
or arbitration. Each District Court may exempt specific cases
or categories of cases in which the use of ADR would not be
appropriate. Nothing in this legislation would conflict with
the authority of the Attorney General to conduct litigation on
behalf of the United States, or with the authority of any
federal agency to conduct litigation in the United States, or
with any delegation of litigation authority by the Attorney
General. Until adopted pursuant to the Rules Enabling Act, each
District Court shall enact local rules to provide for
confidentiality of the ADR processes and to prohibit disclosure
of confidential dispute resolution communications.
Section Four: Mediators and Neutral Evaluators
Each court which authorizes the use of alternative dispute
resolution processes shall maintain a panel of neutrals
available for use by litigants. Each District Court shall
promulgate its own procedures and criteria for selecting
neutrals. Each neutral shall by qualified and trained to assist
in the ADR process. Each District Court may use trained
Magistrate Judges, professional neutrals from the private
sector, and persons trained to serve the ADR process. Each
District shall issue rules relating to the qualifications of
neutrals, until such rules are adopted pursuant to the Rules
Enabling Act.
Section Five: Actions Referred To Arbitration
This section, and several of the succeeding sections,
address the use of arbitration as a method of alternative
dispute resolution. A District Court may allow the referral to
arbitration of any civil action pending before it, except that
referral to arbitration may not be made where (1) the action is
based on an alleged violation of a right secured by the
Constitution of the United States, or (2) jurisdiction is based
in whole or in part on section 1343 of this title, or (3) the
relief sought consists of money damages in an amount greater
than $150,000. Where consent to arbitration is required, the
District Court shall establish procedures to ensure that
consent to arbitration is freely and knowingly obtained, and no
party or attorney is prejudiced for refusing to participate in
arbitration. A District Court may presume damages are not in
excess of $150,000 unless counsel certifies that the damages
exceed that amount. Nothing in this section is effects the
operation of existing mandatory arbitration programs conducted
pursuant to section 906 of Title IX of Public Law 100-702.
Section Six: Arbitrators
An arbitrator to whom an action is referred shall have the
power within the judicial district of that District Court to
conduct arbitration hearings, to administer oaths and
affirmations, and to make awards. Each court shall establish
standards for the certification of arbitrators which shall
include provisions requiring that any arbitrator take the oath
or affirmation described in section 453, and shall be subject
to the disqualification rules of section 455. All individuals
serving as arbitrators are performing quasi-judicial functions
and are entitled to the immunities and protections that the law
accords those serving in such capacity.
Section Seven: Subpoenas
This section clarifies that Rule 45 of the Federal Rules of
Civil Procedure applies to subpoenas for the attendance of
witnesses and the production of evidence at an arbitration.
Section Eight: Arbitration Award and Judgment
An arbitration award made by an arbitrator shall be filed
promptly after the hearing is concluded with the appropriate
clerk of the district court. After time has expired for
requesting a trial de novo, the award shall be entered as the
judgment of the court. By local rule, the district court shall
provide that the contents of any arbitration award shall not be
made known until the final judgment has been entered by the
court. Any party may file a written demand for a trail de novo
within thirty days after the filing of an arbitration award.
That action shall be restored to the court's docket as if it
had not been referred to arbitration. No evidence from the
arbitration proceeding shall be admissible at the trial de
novo, unless otherwise admissible under the Federal Rules of
Evidence or unless the parties stipulate.
Section Nine: Compensation of Arbitrators and Neutrals
The district court shall establish and pay the amount of
compensation, if any, that each arbitrator or neutral shall
receive for services rendered. This compensation shall be
subject to limits set by the Judicial Conference of the United
States. The court may also reimburse arbitrators for the actual
transportation expenses incurred in the performance of their
duties.
Section Ten: Authorization of Appropriations
This section authorizes the annual appropriations of such
sums necessary to carry out the provisions of this legislation.
H.L.C.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3 of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, existing law in which no change
is proposed is shown in roman):
TITLE 28, UNITED STATES CODE
* * * * * * *
PART III--COURT OFFICERS AND EMPLOYEES
Chap. Sec.
* * * * * * *
[44. Arbitration.................................................. 651]
44. Alternative Dispute Resolution................................ 651
* * * * * * *
[CHAPTER 44--ARBITRATION
Sec.
[651. Authorization of arbitration.
[652. Jurisdiction.
[653. Powers of arbitrator; arbitration hearing.
[654. Arbitration award and judgment.
[655. Trial de novo.
[656. Certification of arbitrators.
[657. Compensation of arbitrators.
[658. District courts that may authorize arbitration.
[Sec. 651. Authorization of arbitration
[(a) Authority of Certain District Courts.--Each United
States district court described in section 658 may authorize by
local rule the use of arbitration in any civil action,
including an adversary proceeding in bankruptcy. A district
court described in section 658(1) may refer any such action to
arbitration as set forth in section 652(a). A district court
described in section 658(2) may refer only such actions to
arbitration as are set forth in section 652(a)(1)(A).
[(b) Title 9 Not Affected.--This chapter shall not affect
title 9.
[Sec. 652. Jurisdiction
[(a) Actions That May Be Referred to Arbitration.--(1)
Notwithstanding any provision of law to the contrary and except
as provided in subsections (b) and (c) of this section, and
section 901(c) of the Judicial Improvements and Access to
Justice Act, a district court that authorizes arbitration under
section 651 may--
[(A) allow the referral to arbitration of any civil
action (including any adversary proceeding in
bankruptcy) pending before it if the parties consent to
arbitration, and
[(B) require the referral to arbitration of any
civil action pending before it if the relief sought
consists only of money damages not in excess of
$100,000 or such lesser amount as the district court
may set, exclusive of interest and costs.
[(2) For purposes of paragraph (1)(B), a district court may
presume damages are not in excess of $100,000 unless counsel
certifies that damages exceed such amount.
[(b) Actions That May Not Be Referred Without Consent of
Parties.--Referral to arbitration under subsection (a)(1)(B)
may not be made--
[(1) of an action based on an alleged violation of
a right secured by the Constitution of the United
States, or
[(2) if jurisdiction is based in whole or in part
on section 1343 of this title.
[(c) Exceptions From Arbitration.--Each district court
shall establish by local rule procedures for exempting, sua
sponte or on motion of a party, any case from arbitration in
which the objectives of arbitration would not be realized--
[(1) because the case involves complex or novel
legal issues,
[(2) because legal issues predominate over factual
issues, or
[(3) for other good cause.
[(d) Safeguards in Consent Cases--.In any civil action in
which arbitration by consent is allowed under subsection
(a)(1)(A), the district court shall by local rule establish
procedures to ensure that--
[(1) consent to arbitration is freely and knowingly
obtained, and
[(2) no party or attorney is prejudiced for
refusing to participate in arbitration.
[Sec. 653. Powers of arbitrator; arbitration hearing
[(a) Powers.--An arbitrator to whom an action is referred
under section 652 shall have, within the judicial district of
the district court which referred the action to arbitration,
the power--
[(1) to conduct arbitration hearings,
[(2) to administer oaths and affirmations, and
[(3) to make awards.
[(b) Time for Beginning Arbitration Hearing.--An
arbitration hearing under this chapter shall begin within a
time period specified by the district court, but in no event
later than 180 days after the filing of an answer, except that
the arbitration proceeding shall not, in the absence of the
consent of the parties, commence until 30 days after the
disposition by the district court of any motion to dismiss the
complaint, motion for judgment on the pleadings, motion to join
necessary parties, or motion for summary judgment, if the
motion was filed during a time period specified by the district
court. The 180-day and 30-day periods specified in the
preceding sentence may be modified by the court for good cause
shown.
[(c) Subpoenas.--Rule 45 of the Federal Rules of Civil
Procedure (relating to subpoenas) applies to subpoenas for the
attendance of witnesses and the production of documentary
evidence at an arbitration hearing under this chapter.
[Sec. 654. Arbitration award and judgment
[(a) Filing and Effect of Arbitration Award.--An
arbitration award made by an arbitrator under this chapter,
along with proof of service of such award on the other party by
the prevailing party or by the plaintiff, shall, promptly after
the arbitration hearing is concluded, be filed with the clerk
of the district court that referred the case to arbitration.
Such award shall be entered as the judgment of the court after
the time has expired for requesting a trial de novo under
section 655. The judgment so entered shall be subject to the
same provisions of law and shall have the same force and effect
as a judgment of the court in a civil action, except that the
judgment shall not be subject to review in any other court by
appeal or otherwise.
[(b) Sealing of Arbitration Award.--The district court
shall provide by local rule that the contents of any
arbitration award made under this chapter shall not be made
known to any judge who might be assigned to the case--
[(1) except as necessary for the court to determine
whether to assess costs or attorney fees under section
655,
[(2) until the district court has entered final
judgment in the action or the action has been otherwise
terminated, or
[(3) except for purposes of preparing the report
required by section 903(b) of the Judicial Improvements
and Access to Justice Act.
[(c) Taxation of Costs.--The district court may by rule
allow for the inclusion of costs as provided in section 1920 of
this title as a part of the arbitration award.
[Sec. 655. Trial de novo
[(a) Time for Demand.--Within 30 days after the filing of
an arbitration award with a district court under section 654,
any party may file a written demand for a trial de novo in the
district court.
[(b) Restoration to Court Docket.--Upon a demand for a
trial de novo, the action shall be restored to the docket of
the court and treated for all purposes as if it had not been
referred to arbitration. In such a case, any right of trial by
jury that a party otherwise would have had, as well as any
place on the court calendar which is no later than that which a
party otherwise would have had, are preserved.
[(c) Limitation on Admission of Evidence.--The court shall
not admit at the trial de novo any evidence that there has been
an arbitration proceeding, the nature or amount of any award,
or any other matter concerning the conduct of the arbitration
proceeding, unless--
[(1) the evidence would otherwise be admissible in
the court under the Federal Rules of Evidence, or
[(2) the parties have otherwise stipulated.
[(d) Taxation of Arbitrator Fees as Cost.--(1)(A) A
district court may provide by rule that, in any trial de novo
under this section, arbitrator fees paid under section 657 may
be taxed as costs against the party demanding the trial de
novo.
[(B) Such rule may provide that a party demanding a trial
de novo under subsection (a), other than the United States or
its agencies or officers, shall deposit a sum equal to such
arbitrator fees as advanced payment of such costs, unless the
party is permitted to proceed in forma pauperis.
[(2) Arbitrator fees shall not be taxed as costs under
paragraph (1)(A), and any sum deposited under paragraph (1)(B)
shall be returned to the party demanding the trial de novo,
if--
[(A) the party demanding the trial de novo obtains
a final judgment more favorable than the arbitration
award, or
[(B) the court determines that the demand for the
trial de novo was made for good cause.
[(3) Any arbitrator fees taxed as costs under paragraph
(1)(A), and any sum deposited under paragraph (1)(B) that is
not returned to the party demanding the trial de novo, shall be
paid to the Treasury of the United States.
[(4) Any rule under this subsection shall provide that no
penalty for demanding a trial de novo, other than that provided
in this subsection, shall be assessed by the court.
[(e) Assessment of Costs and Attorney Fees.--In any trial
de novo demanded under subsection (a) in which arbitration was
done by consent of the parties, a district court may assess
costs, as provided in section 1920 of this title, and
reasonable attorney fees against the party demanding the trial
de novo if--
[(1) such party fails to obtain a judgment,
exclusive of interest and costs, in the court which is
substantially more favorable to such party than the
arbitration award, and
[(2) the court determines that the party's conduct
in seeking a trial de novo was in bad faith.
[Sec. 656. Certification of arbitrators
[(a) Standards for Certification.--Each district court
listed in section 658 shall establish standards for the
certification of arbitrators and shall certify arbitrators to
perform services in accordance with such standards and this
chapter. The standards shall include provisions requiring that
any arbitrator--
[(1) shall take the oath or affirmation described
in section 453, and
[(2) shall be subject to the disqualification rules
of section 455.
[(b) Treatment of Arbitrator as Independent Contractor and
Special Government Employee.--An arbitrator is an independent
contractor and is subject to the provisions of sections 201
through 211 of title 18 to the same extent as such provisions
apply to a special Government employee of the executive branch.
A person may not be barred from the practice of law because
such person is an arbitrator.
[Sec. 657. Compensation of arbitrators
[(a) Compensation.--The district court may, subject to
limits set by the Judicial Conference of the United States,
establish and pay the amount of compensation, if any, that each
arbitrator shall receive for services rendered in each case.
[(b) Transportation Allowances.--Under regulations
prescribed by the Director of the Administrative Office of the
United States Courts, a district court may reimburse
arbitrators for actual transportation expenses necessarily
incurred in the performance of duties under this chapter.
[Sec. 658. District courts that may authorize arbitration
[The district courts for the following judicial districts
may authorize the use of arbitration under this chapter:
[(1) Northern District of California, Middle
District of Florida, Western District of Michigan,
Western District of Missouri, District of New Jersey,
Eastern District of New York, Middle District of North
Carolina, Western District of Oklahoma, Eastern
District of Pennsylvania, and Western District of
Texas.
[(2) Ten additional judicial districts, which shall
be approved by the Judicial Conference of the United
States. The Judicial Conference shall give notice of
the 10 districts approved under this paragraph to the
Federal Judicial Center and to the public.]
CHAPTER 44--ALTERNATIVE DISPUTE RESOLUTION
Sec.
651. Authorization of alternative dispute resolution.
652. Jurisdiction.
653. Neutrals.
654. Arbitration.
655. Arbitrators.
656. Subpoenas.
657. Arbitration award and judgment.
658. Compensation of arbitrators and neutrals.
Sec. 651. Authorization of alternative dispute resolution
(a) Definition.--For purposes of this chapter, an
alternative dispute resolution process includes any process or
procedure, other than an adjudication by a presiding judge, in
which a neutral third party participates to assist in the
resolution of issues in controversy, through processes such as
early neutral evaluation, mediation, minitrial, and arbitration
as provided in sections 654 through 658.
(b) Authority.--Each United States district court shall
authorize, by local rule, the use of alternative dispute
resolution processes in all civil actions, including adversary
proceedings in bankruptcy, in accordance with this chapter,
except that the use of arbitration may be authorized only as
provided in section 654. Each United States district court
shall devise and implement its own alternative dispute
resolution program by local rule to encourage and promote the
use of alternative dispute resolution in its district.
(c) Existing Alternative Dispute Resolution Programs.--In
those courts where an alternative dispute resolution program is
in place on the date of the enactment of the Alternative
Dispute Resolution Act of 1998, the court shall examine the
effectiveness of that program and adopt such improvements to
the program as are consistent with the provisions and purposes
of this chapter.
(d) Administration of Alternative Dispute Resolution
Programs.--Each United States district court shall retain or
designate an existing employee knowledgeable in alternative
dispute resolution practices and processes to implement,
administer, oversee, and evaluate the court's alternative
dispute resolution program. Such person may also be responsible
for recruiting, screening, and training attorneys to serve as
neutrals and arbitrators in the court's alternative dispute
resolution program.
(e) Title 9 Not Affected.--This chapter shall not affect
title 9.
(f) Program Support.--The Federal Judicial Center and the
Administrative Office of the United States Courts are
authorized to assist the district courts in the establishment
and improvement of alternative dispute resolution programs by
identifying particular practices employed in successful
programs and providing additional assistance as needed and
appropriate.
Sec. 652. Jurisdiction
(a) Consideration of Alternative Dispute Resolution in
Appropriate Cases.--Notwithstanding any provision of law to the
contrary and except as provided in subsections (b) and (c),
each district court shall, by local rule, require that
litigants in all civil cases consider the use of an alternative
dispute resolution process at an appropriate stage in the
litigation. Each district court shall provide litigants in all
civil cases with a choice of alternative dispute resolution
processes, including, but not limited to, mediation, early
neutral evaluation, minitrial, and arbitration as authorized in
sections 654 through 658. Any district court that elects to
require the use of alternative dispute resolution in certain
cases may do so only with respect to mediation, early neutral
evaluation, and, if the parties consent, arbitration.
(b) Actions Exempted From Consideration of Alternative
Dispute Resolution.--Each district court may exempt from the
requirements of this section specific cases or categories of
cases in which use of alternative dispute resolution would not
be appropriate. In defining these exemptions, each district
court shall consult with members of the bar, including the
United States Attorney for that district.
(c) Authority of the Attorney General.--Nothing in this
section shall alter or conflict with the authority of the
Attorney General to conduct litigation on behalf of the United
States, with the authority of any Federal agency authorized to
conduct litigation in the United States courts, or with any
delegation of litigation authority by the Attorney General.
(d) Confidentiality Provisions.--Until such time as rules
are adopted pursuant to chapter 131 of this title providing for
the confidentiality of alternative dispute resolution processes
under this chapter, each district court shall by local rule
provide for the confidentiality of the alternative dispute
resolution processes and to prohibit disclosure of confidential
dispute resolution communications.
Sec. 653. Neutrals
(a) Panel of Neutrals.--Each district court that authorizes
the use of alternative dispute resolution processes shall
maintain a panel of neutrals available for use by the parties
for each category of process offered. Each district court shall
promulgate its own procedures and criteria for the selection of
neutrals on its panels.
(b) Qualifications and Training.--Each person serving as a
neutral in an alternative dispute resolution process should be
qualified and trained to serve as a neutral in the appropriate
alternative dispute resolution process. For this purpose, the
district court may use, among others, magistrate judges who
have been trained to serve as neutrals in alternative dispute
resolution processes, professional neutrals from the private
sector, and persons who have been trained to serve as neutrals
in alternative dispute resolution processes. Until such time as
rules are adopted pursuant to chapter 131 of this title
relating to the disqualification of neutrals, each district
court shall issue rules relating to the disqualification of
neutrals (including, where appropriate, disqualification under
section 455 of this title, other applicable law, and
professional responsibility standards).
Sec. 654. Arbitration
(a) Referral of Actions to Arbitration.--Notwithstanding
any provision of law to the contrary and except as provided in
subsections (b) and (c) of section 652 and subsection (d) of
this section, a district court may allow the referral to
arbitration of any civil action (including any adversary
proceeding in bankruptcy) pending before it, except that
referral to arbitration may not be made where--
(1) the action is based on an alleged violation of
a right secured by the Constitution of the United
States;
(2) jurisdiction is based in whole or in part on
section 1343 of this title; or
(3) the relief sought consists of money damages in
an amount greater than $150,000.
(b) Safeguards in Consent Cases.--Until such time as rules
are adopted pursuant to chapter 131 of this title relating to
procedures described in this subsection, the district court
shall by local rule establish procedures to ensure that any
civil action in which arbitration by consent is allowed under
subsection (a)--
(1) consent to arbitration is freely and knowingly
obtained; and
(2) no party or attorney is prejudiced for refusing
to participate in arbitration.
(c) Presumptions.--For purposes of subsection (a)(3), a
district court may presume damages are not in excess of
$150,000 unless counsel certifies that damages exceed such
amount.
(d) Existing Programs.--Nothing in this section is deemed
to affect any action in which arbitration is conducted pursuant
to section 906 of the Judicial Improvements and Access to
Justice Act (Public Law 100-102), as in effect prior to the
date of its repeal.
Sec. 655. Arbitrators
(a) Powers of Arbitrators.--An arbitrator to whom an action
is referred under section 654 shall have the power, within the
judicial district of the district court which referred the
action to arbitration--
(1) to conduct arbitration hearings;
(2) to administer oaths and affirmations; and
(3) to make awards.
(b) Standards for Certification.--Each district court that
authorizes arbitration shall establish standards for the
certification of arbitrators and shall certify arbitrators to
perform services in accordance with such standards and this
chapter. The standards shall include provisions requiring that
any arbitrator--
(1) shall take the oath or affirmation described in
section 453; and
(2) shall be subject to the disqualification rules
under section 455.
(c) Immunity.--All individuals serving as arbitrators in an
alternative dispute resolution program under this chapter are
performing quasi-judicial functions and are entitled to the
immunities and protections that the law accords to persons
serving in such capacity.
Sec. 656. Subpoenas
Rule 45 of the Federal Rules of Civil Procedure (relating
to subpoenas) applies to subpoenas for the attendance of
witnesses and the production of documentary evidence at an
arbitration hearing under this chapter.
Sec. 657. Arbitration award and judgment
(a) Filing and Effect of Arbitration Award.--An arbitration
award made by an arbitrator under this chapter, along with
proof of service of such award on the other party by the
prevailing party or by the plaintiff, shall be filed promptly
after the arbitration hearing is concluded with the clerk of
the district court that referred the case to arbitration. Such
award shall be entered as the judgment of the court after the
time has expired for requesting a trial de novo. The judgment
so entered shall be subject to the same provisions of law and
shall have the same force and effect as a judgment of the court
in a civil action, except that the judgment shall not be
subject to review in any other court by appeal or otherwise.
(b) Sealing of Arbitration Award.--The district court shall
provide by local rule that the contents of any arbitration
award made under this chapter shall not be made known to any
judge who might be assigned to the case until the district
court has entered final judgment in the action or the action
has otherwise terminated.
(c) Trial de Novo of Arbitration Awards.--
(1) Time for filing demand.--Within 30 days after
the filing of an arbitration award with a district
court under subsection (a), any party may file a
written demand for a trial de novo in the district
court.
(2) Action restored to court docket.--Upon a demand
for a trial de novo, the action shall be restored to
the docket of the court and treated for all purposes as
if it had not been referred to arbitration.
(3) Exclusion of evidence of arbitration.--The
court shall not admit at the trial de novo any evidence
that there has been an arbitration proceeding, the
nature or amount of any award, or any other matter
concerning the conduct of the arbitration proceeding,
unless--
(A) the evidence would otherwise be
admissible in the court under the Federal Rules
of Evidence; or
(B) the parties have otherwise stipulated.
Sec. 658. Compensation of arbitrators and neutrals
(a) Compensation.--The district court shall, subject to
limits set by the Judicial Conference of the United States,
establish and pay the amount of compensation, if any, that each
arbitrator or neutral shall receive for services rendered in
each case under this chapter.
(b) Transportation Allowances.--Under regulations
prescribed by the Director of the Administrative Office of the
United States Courts, a district court may reimburse
arbitrators for actual transportation expenses necessarily
incurred in the performance of duties under this chapter.
* * * * * * *
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SECTION 901 OF THE JUDICIAL IMPROVEMENTS AND ACCESS TO JUSTICE ACT
SEC. 901. ARBITRATION AUTHORIZATION BY DISTRICT COURTS.
(a) * * *
* * * * * * *
[(c) Exception to Limitation on Money Damages.--
Notwithstanding section 652 (as added by subsection (a) of this
section), establishing a limitation of $100,000 in money
damages with respect to cases referred to arbitration, a
district court listed in section 658 (as added by subsection
(a) of this section), whose local rule on the date of the
enactment of this Act provides for a limitation on money
damages, with respect to such cases, of not more than $150,000,
may continue to apply the higher limitation.]