Local Rule Rule 9019-1: Compromise or Settlement; Arbitration.

Rule 9019-1. Compromise or Settlement; Arbitration.

Introduction and Purpose. Alternate dispute resolution ("ADR") has the potential to provide a variety of benefits, including greater satisfaction of the parties, innovative methods of resolving disputes, and greater efficiency in achieving settlements.

These rules, modeled largely after the ADR provisions in the Local Rules of the United States District Courts for the Northern and Southern Districts of Mississippi, are designed to provide access to modern ADR settlement techniques and to encourage mutually satisfactory resolutions of disputes in all stages of litigation.

The bankruptcy courts have determined that mediation is the alternative dispute resolution process that best serves the needs of litigants and their attorneys in the timely and efficient resolution of cases. However, nothing in these rules shall prevent the parties from voluntarily engaging in other forms of ADR, such as arbitration, early neutral evaluation, mini-trial, or other appropriate ADR processes.

(d) Definition. Mediation is a process in which impartial and neutral persons assist parties in reaching agreed settlements. Mediators facilitate communications between the parties and assist them in their negotiations. When appropriate, mediators may also offer objective evaluations of cases and may make settlement recommendations.

(e) Cases Appropriate for Referral to Mediation. The determination of whether a matter should be referred for mediation is addressed to the sound discretion of the judicial officer assigned to the case.

(f) Referral Procedure.

(1) A bankruptcy judge may refer a case to mediation on the judge's own motion. If the court determines that a case is appropriate for referral to mediation, the court shall enter an order directing the parties to schedule and complete a mediation conference as set forth in these rules within such time frame as the court may specify. Within 14 days of the entry of the order of referral, a party may file a written objection to the referral order, stating concisely the reasons the case should not be referred for mediation. The objection shall be served on all parties. The court may rule on any objection without a hearing or, in its discretion, may conduct a hearing either in person or by telephone.

(2) A party may request that a case be referred to mediation. The request shall be made by motion addressed to the bankruptcy judge assigned to the case.

(3) The order of referral shall state a time period within which the mediation shall be completed.

(4) A court may not order a case to mediation more than one time except upon a showing of exceptional circumstances or upon the request of all parties.

(5) Upon the court's entry of an order referring the case to mediation, and upon all objections having been disposed of by the court, the parties shall have a period of 21 days from the date of entry of the court's final order to schedule the mediation. If the parties are unable to schedule the mediation within the twenty-one day period or to agree on a date and/or a mediator, the court shall assign a mediator and shall order the date, time, and place for the mediation, which shall be binding on the parties.

(g) Pre-mediation Documents.

(1) The mediator may submit to the parties a list of required pre-mediation documents and agreements at least 14 days prior to the scheduled date for mediation. All objections to pre-mediation documents shall be addressed to the mediator not less than 7 days prior to the scheduled date and a mediation agreement shall be entered prior to commencement of mediation.

(2) If pre-mediation documents are not furnished within 7 days of the scheduled mediation, any party and/or the mediator may apply to the court, which shall determine the disputed terms and conditions of the mediation.

(3) Failure to reasonably agree to the pre-mediation agreements and/or to timely raise objections to pre-mediation agreement which delays or encumbers the mediation process will be considered a failure to comply with the order of referral and the mediator and/or parties shall report such failure to the court. The court may enter such orders as it deems appropriate.

(h) Authority to Settle.

(1) Appearance at Mediation. Counsel, including lead trial counsel, for all parties must appear at the mediation unless otherwise ordered by the court.

(2) Attendance of Parties. All unrepresented individual parties must appear in person at the mediation unless excused in advance by the court. Representatives of corporate parties, organizations, insurance carriers (if applicable) or other entities must also appear at the mediation or be available by telephone, as the mediator or the court may direct, throughout the entire mediation. Office closings and time zone differences do not excuse a company representative from continued participation in mediation under this rule. Each party representative participating in the mediation must have full authority to settle the case.

(i) Sanctions. If a party, or party representative, or attorney fails to appear or be available as provided by these rules at a scheduled mediation, or if a party, or party representative, or attorney is substantially unprepared to participate in the mediation, or if a party, party representative, or attorney fails to participate in good faith during a mediation session, a judge, upon motion or upon the judge's own initiative, may impose appropriate sanctions, including attorneys' fees and reasonable expenses incurred.

(j) Standards for Neutrals.

(1) Qualifications and Training. Neutrals shall have such experience and training as the parties may agree or the court may determine are appropriate to help the parties resolve the dispute over which the neutral will mediate.

(2) Oath of Neutrals. Every neutral serving under these rules shall execute and file with the clerk the oath or affirmation prescribed by 28 U.S.C. §453 upon qualification and confirmation of appointment.

(3) Immunity. Neutrals or others authorized to serve in a specific case are performing quasi-judicial functions and are entitled to the immunities and protections that the law accords to persons serving in such capacity.

(4) Codes of Ethics and Standards of Conduct. Any neutral serving under these rules shall be subject to all codes of ethics and standards of conduct set by statute, by the Judicial Conference of the United States, and by other professional organizations to which the neutral may belong and or that may be approved or adopted by the court.

(k) Selection of neutrals.

(1) Parties to Confer. Unless otherwise ordered, the parties must confer in good faith and attempt to agree on a neutral. Before nominating a neutral, the parties must have confirmed the neutral's availability and willingness to serve within the time frame proposed.

(2) Appointment of the Neutral When Parties Agree. If the parties agree on a neutral and confirm the neutral's availability, the parties must identify the nominee in the proposed order submitted to the court and provide the court with the following information:

(A) The name, address and telephone number and, if applicable, the e-mail address of the mediator;

(B) Briefly describe the training, experience or other qualifications of the mediator;

(C) State the rate of compensation of the mediator;

(D) State that the mediator and the parties have agreed upon the selection and rate of compensation;

(E) State whether any portion of the mediator's fees will be paid from property of the bankruptcy estate, and, if so, the extent of the payment; and

(F) State the estimated time period within which the mediation will be held.

(3) Ruling on Appointment of Mediator.

(A) No Hearing Required. The bankruptcy judge shall rule on the selection of the mediator without a hearing, and absent substantial countervailing considerations, the bankruptcy judge will appoint the neutral whom the parties have jointly nominated and who is willing to serve.

(B) Findings Required if any Compensation is Paid by Bankruptcy Estate. In the event any of the compensation of the mediator is to be paid by the estate, the court also shall consider and approve the rate of compensation of the mediator and the allocation of costs between or among the parties in the order appointing the mediator.

(4) Appointment of a Neutral When Parties Disagree. If the parties cannot agree on a neutral, they shall so advise the court. Upon being so advised, the bankruptcy judge, at his or her discretion, may select a neutral and enter an order of referral to mediation and establish such parameters and guidelines for the mediation as are appropriate under the circumstances of the case.

(5) Documents Provided by the Court to the Neutral. Promptly after the neutral is designated, the court shall provide the neutral with a copy of the order of referral.

(6) Disqualification of Neutrals. No person may serve as a neutral in a mediation in violation of:

(A) The standards set forth in 28 U.S.C. § 455;

(B) Any applicable standard of professional responsibility or rule of professional conduct;

(C) Any additional standards adopted by the court; or

(D) The neutral discovers a circumstance requiring disqualification and immediately submits to the parties and to the court a written notice of recusal.

(E) The parties may not waive a basis for disqualification described in 28 U.S.C. § 455(b).

(7) Proposed Order of Referral.

(A) Submission to Court. If the parties recommend mediation, counsel must prepare a proposed order of referral for submission to the court.

(B) Contents of Proposed Order. The proposed order of referral must:

(i) State that mediation is appropriate for the case;

(ii) Identify by name the available neutral whom the parties nominate to mediate the case;

(iii) Specify the time frame within which the parties propose that the mediation will be completed and the date by which the neutral must file written confirmation of that completion; and

(iv) Suggest and explain any modifications or additions to the case management and scheduling order that would be advisable because of the reference to mediation.

(8) Neutral's Post-Mediation Report to Court. Within 14 days of the completion of a mediation conducted pursuant to this rule, the neutral shall advise the bankruptcy judge in writing whether the case was resolved by mediation.

(l) Confidentiality of Proceedings.

(1) General Rule of Confidentiality. Except as otherwise provided in these rules or required by law, all communications made in connection with mediation proceedings under these rules shall be confidential. Mediation-related communications shall not be subject to disclosure and may not be used as evidence against any participant in any judicial or administrative proceeding.

(2) No Compelled Disclosure. A party, a party's attorney, a party's representative, and the neutral may not be compelled to testify in any proceedings related to matters occurring during a mediation under these rules. A party, a party's attorney, a party's representative, and the neutral may not be subject to process requiring disclosure of confidential information or data related to a mediation conducted under these rules.

(3) Limitations on Communications with Court. A person participating in a mediation under these rules may not be compelled to disclose to the court any communication made, position taken, or opinion formed by any party or neutral in connection with mediation proceedings.

(4) Exception to the General Rule of Confidentiality. The only event that may make it appropriate for either the neutral or either of the parties to disclose a confidential communication arising from proceedings governed by these rules is a finding by the court that such testimony or other disclosure is necessary to:

(A) prevent a manifest injustice;

(B) help establish a violation of law; or,

(C) prevent harm to the public health or safety.

(5) Compensation of Neutrals.

(A) In general. Unless otherwise established by statute, directed by the court, or unless proceeding pro bono, neutrals may charge reasonable fees and charges for services and expenses.

(B) Allocation of costs. Unless otherwise agreed to by the parties in writing or ordered by the court, the costs of the neutral's services shall be paid in equal shares by the parties.

(C) Payment of costs. The parties shall pay the neutral within 30 days from the receipt of the statement from the neutral. Except when excused by these rules or by order of the court, the failure of a party to pay that party's share of a neutral's fee within the required time may result in the imposition of sanctions.