Local Rule LR16.5: Federal Arbitration Program

LR16.5 Federal Arbitration Program

(a) Arbitration Referrals and Withdrawals.

The Court may refer any civil action (including any adversary proceeding in bankruptcy) to Arbitration under the provisions of this Rule if the parties consent to such reference. Such reference may not be made, however, where -- (1) the action is exempted from alternative dispute resolution pursuant to Local Rule 16.3(b); (2) the action is based on an alleged violation of a right secured by the Constitution of the United States; (3) jurisdiction is based in whole or part on 28 U.S.C. § 1343; or, (4) the relief sought consists of money damages in an amount greater than $150,000, exclusive of punitive damages, interest, costs, and attorney fees.

Any Arbitration reference may be withdrawn by the presiding judge upon a determination for any reason that the matter referred is not suitable for Arbitration. Once an order is entered directing the parties to participate in Arbitration, the parties will be required to complete the Arbitration process unless the Court enters an order withdrawing the Arbitration reference.

(b) Definitions.

For purposes of this Rule:

(1) "Arbitrator" means a person approved by the Court in accordance with paragraph (k) of this Rule. (2) "Arbitration" means a procedure presided over by an approved Arbitrator and conducted in accordance with this Rule and 28 U.S.C. §§ 654-658. (3) "Arbitration hearing" is the proceeding conducted before an approved Arbitrator for the purpose of presenting evidence, arguments of counsel, briefs of law, etc., to the arbitrator to enable him or her to make an Arbitration award. It is an expedited, adversarial hearing which is intended to reduce cost and delay in appropriate cases. (4) "Presiding judge" means the judicial officer assigned to a civil action. A magistrate judge is deemed to be a "presiding judge" only if the case has been referred to the magistrate judge pursuant to 28 U.S.C. § 636(c). (5) "Arbitration Reference Order" means an agreed order which is presented by the parties to the presiding judge, which is approved by him and which is filed by the Clerk. The agreed order shall be in substantially the same form as Appendix I to this Rule. Forms are available from the Clerk. (6) "Arbitrator panel" is the panel of Arbitrators approved by the Court. (7) "Arbitration award" is the written decision of the Arbitrator. (8) "Standing Committee on Arbitrator Approval" shall include the judicial officer or court employee selected to serve as the Administrator of the Arbitration program and two other members. This committee shall be appointed by the chief judge and serve at the chief judge's pleasure.

(9) The Court's Arbitration program shall be known as "The Federal Arbitration Program."

(c) Approval of Arbitrators.

The Court shall approve those persons who are eligible and qualified to serve as Arbitrators. The Court shall have complete discretion and authority to withdraw the approval of any Arbitrator at any time.

(d) List of Approved Arbitrators.

A list of those Arbitrators comprising the Arbitration panel shall be maintained in the office of the Clerk and shall be made available to counsel and to the public upon request.

(e) Neutrality of an Arbitrator.

No Arbitrator shall accept an engagement in an Arbitration proceeding in circumstances in which he or she has a personal bias or prejudice relative to the parties or issues involved in the dispute being Arbitrated.

(f) Arbitrators as Counsel in Other Cases.

No Arbitrator who has been engaged as an Arbitrator shall appear as counsel in the matter for which he or she was engaged as an Arbitrator or in any substantially related matter. No person who is approved and designated as an Arbitrator shall for that reason be disqualified from appearing and acting as counsel in any other case pending before the Court.

(g) Disclosure of Conflicts.

Prior to accepting an engagement as an Arbitrator, each Arbitrator shall disclose to the parties all actual or potential conflicts of interest reasonably known to the Arbitrator, any current, past, or expected future professional relationship, consulting relationship, personal relationship, or pecuniary interest with or in any party or attorney involved in the Arbitration, as well as any other circumstance or matter which would result in the disqualification of a judicial officer under 28 U.S.C. § 455. Pursuant to 28 U.S.C. § 655(b)(2), Arbitrators are subject to the disqualification rules set forth in 28 U.S.C. § 455. Arbitrators will also disclose to all parties any offer made to the Arbitrator before completion of the Arbitration process of a future professional, consulting, or pecuniary relationship with any party or attorney or law firm involved in the underlying dispute.

(h) Confidentiality and Restrictions on the Use of Information.

The Arbitration hearing and all proceedings relating thereto, including statements made by any party, attorney, or other participant, are confidential and are inadmissible in evidence at the trial de novo except as permitted by 28 U.S.C. § 657(c)(3). Arbitration proceedings may be closed to the public by the Arbitrator.

(i) Compensation of Arbitrators.

Subject to any regulations which may be promulgated by the Judicial Conference of the United States, Arbitrators shall be compensated at rates to be agreed upon by the parties and the Arbitrator. Compensation and expenses for any Arbitrator's services shall be borne equally by the parties to the Arbitration unless other arrangements are agreed to by the parties.

(j) Subpoenas/Immunity.

Federal Rule of Civil Procedure 45 shall apply to the issuance of subpoenas for the attendance of witnesses and the production of documentary evidence at any Arbitration hearing. Neither the parties to the Arbitration nor any other person in any forum shall attempt to subpoena the Arbitrator or any documents created in connection with, and for the purpose of, Arbitration without first obtaining leave of court to do so. All individuals serving as Arbitrators pursuant to this Rule are performing quasi-judicial functions and are entitled to the immunities and protections that the law accords persons serving in such capacity.

(k) Qualification of Arbitrators.

An individual may be approved to serve as an Arbitrator if, within the discretion of the Court, he or she meets the following qualifications:

• All Arbitrators must be approved by the chief judge and must be listed on the roster of approved Arbitrators of the American Arbitration Association, the Federal Mediation and Conciliation Service, a similar, reputable Arbitration service, or must be lawyers, licensed to practice in the state of Tennessee, and admitted to practice before the United States District Court for the Eastern District of Tennessee. • All Arbitrators, except those approved as non-lawyer Arbitrators, must have practiced law at least 5 years. • All Arbitrators shall take the oath or affirmation described in 28 U.S.C. § 453 and shall complete any training required by the Court. • All Arbitrators must agree that they will be available to conduct at least one Arbitration per year without compensation. • All Arbitrators must commit to at least one year of service on the Arbitration panel. • All Arbitrators must agree to comply with 28 U.S.C. §§ 654-658, the provisions of this Rule and of any Standing Order which may be entered in any Division of this Court for purposes of implementing this Rule. • All Arbitrators must agree to provide to the Court such biographical and other information as the Court may require. • All Arbitrators must be recommended by the Standing Committee on Arbitrator Approval and determined by the chief judge to be competent to perform the duties of Arbitrator. Arbitrators may be approved based on formal training in Arbitration procedures, prior experience as an Arbitrator, or some combination thereof. The chief judge shall certify, in his discretion, as many Arbitrators as are determined to be necessary for proper operation of the program. The Court specifically reserves the right to limit the size of the Arbitrator panel. Any person whose name appears on the list of approved Arbitrators may ask at any time to have his/her name removed or, if selected to decide a case, decline to serve but remain on the list. • Applications to become an approved Arbitrator shall be submitted to the Administrator of the Court's Arbitration program. Applications shall be submitted in the form set forth in Appendix II to this Rule. Forms are available from the Clerk.

(l) Procedures in Connection with the Reference to Arbitration.

(1) The approval and entry of the Arbitration Reference Order by the presiding judge begins the Arbitration process. See Appendix I.

(2) Upon entry of the Arbitration Reference Order, the Clerk shall serve copies of it on the designated Arbitrator, counsel of record, and any parties proceeding pro se.

(3) The presiding judge may refuse to approve a proposed Arbitration Reference Order if, in the Court's discretion, the case is not appropriate for Arbitration or if such approval would cause undue delay in the prompt resolution of the case. A proposed Arbitration Reference Order submitted within 30 days of the filing of a scheduling order in the case will be presumptively timely. Once an Arbitration Reference Order is approved by the presiding judge and filed, any trial date previously scheduled is automatically canceled, unless otherwise ordered by the Court.

(4) Unless otherwise stipulated by all parties, formal discovery pursuant to Fed. R. Civ. P. 26 through 37 will be stayed upon entry of an Arbitration Reference Order. Notwithstanding this stay, the Arbitrator may allow, or the parties may agree to, limited discovery utilizing the procedures set forth in Fed. R. Civ. P. 26 through 37 or other less formal means. The Arbitrator shall have the authority and discretion to control the course, scope and manner of discovery while the case is under reference to Arbitration. The Arbitrator shall also have authority to resolve discovery disputes while the case is under reference to Arbitration.

(m) Procedures for the Arbitration Hearing and the Filing of the Arbitration Award

(1) Once the Arbitration Reference Order is served on the Arbitrator, he or she shall consult promptly thereafter with counsel of record and any pro se parties for the purpose of arranging a schedule for completion of any pre-hearing discovery, any other necessary pre-hearing preparations and the setting of a date, time and place for the Arbitration hearing.

(2) Within 30 days of service of the Arbitration Reference Order on the Arbitrator, he or she shall file with the Clerk an "Arbitrator's Notice of Scheduling" in substantially the same form as Appendix III hereto. Forms are available from the Clerk.

(3) The Arbitration hearing shall be held in a suitable place designated by the Arbitrator or, if space is available, in the United States Courthouse in a space assigned by the Clerk.

(4) The Arbitration hearing and the filing of the Arbitration award shall take place not later than 150 days after entry of the Arbitration Reference Order unless the parties obtain an order from the Court granting an extension based on good cause shown.

(5) If the Arbitration award is not filed within the time allowed in paragraph 4 of this section, the Clerk shall automatically restore the case to the docket of the presiding judge and notify him and the parties that the Arbitration has been terminated.

(6) The hearing before the Arbitrator may proceed in the absence of any party who, after notice, fails to be present. Additionally, if a party fails to participate in the hearing, the Court may impose appropriate sanctions including, but not limited to, the striking of any demand for a trial de novo filed by that party. See also Fed. R. Civ. P. 16(c)(9) and (f). If any party fails to pay the Arbitrator's fees or expenses in a timely manner, the cost of his or her services, or any portion thereof, may be taxed as costs.

(7) The Arbitrator is authorized to administer oaths or affirmations and each party shall have the right to cross-examine witnesses. The Arbitrator shall be authorized to make reasonable rules and issue orders necessary for the fair and efficient conduct of the hearing including, but not limited to, requiring the parties to submit pre-hearing statements to the Arbitrator and requiring service of same on parties.

(8) The Federal Rules of Evidence shall be used as the guide to the admissibility of evidence, but shall not be controlling. The Arbitrator shall control the admission of evidence at the Arbitration hearing.

(9) A party may have a recording and transcript made of the Arbitration hearing at the party's expense.

(10) Unless otherwise stipulated by the parties, the Arbitration award shall state in writing the reasoning underlying the award.

(11) It shall be the responsibility of the Arbitrator to serve counsel of record and any pro se parties with a copy of the Arbitration award. In accordance with 28 U.S.C.§ 657(b), such award shall be treated as confidential and not be made known to any judge who might be assigned to the case until the district court has entered final judgment in the case or the case is otherwise terminated. The Arbitrator shall not file the award with the Clerk. That is the responsibility of the prevailing party or plaintiff. See paragraph (n)(1).

(n) Trial De Novo or Entry of Judgment

(1) An Arbitration award made by an Arbitrator, or a panel of Arbitrators selected under section (o)(6) of this rule, along with proof of service of such award on the party or parties by the prevailing party or by the plaintiff, shall be filed with the Clerk by the prevailing party or plaintiff within 7 days of service of the Arbitration award on the prevailing party or plaintiff. To make certain that the Arbitrator's award is not considered by the Court or jury either before, during or after the trial de novo, the Clerk shall, upon the filing of the Arbitration award, enter onto the docket only the words "Arbitration award filed" and the date and nothing more, and shall retain the Arbitrator's award in a separate file in the Clerk's Office.

(2) Within 30 days of the filing of an Arbitration award with the Clerk, any party may file a written demand for a trial de novo in the district court.

(3) Upon demand for a trial de novo, the action shall be restored to the docket of the presiding judge and treated for all purposes as if it had not been referred to Arbitration.

(4) In the event no demand for trial de novo is filed within the designated time period, the Clerk shall file the award in the Court record, notify the presiding judge, and enter it as the judgment of the Court. 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 a court in a civil action, except that the judgment shall not be subject to review in any other court by appeal or otherwise.

(o) Miscellaneous Provisions

(1) Consent to Arbitration shall be freely and knowingly obtained. No party or attorney shall be prejudiced in any way for refusing to participate in Arbitration. The district judges and magistrate judges may advise the attorneys and parties of the availability of the Arbitration program, but, in doing so, shall also advise the attorneys or parties that they are free to withhold consent without adverse consequences.

(2) There shall be no ex parte communication between an Arbitrator and any counsel or party.

(3) The Court will presume that damages are not in excess of $150,000 unless counsel or a party proceeding pro se certifies that damages exceed such amount.

(4) The Administrator of the Court's Arbitration program may, from time to time, amend Appendices I, II, and III to this Rule in order to conform to the needs of the program and may do so without amendment to the body of this Rule.

(5) Nothing in this Rule shall prevent the parties, upon their own initiative and by mutual consent, from Arbitrating a pending matter pursuant to the provisions of 9 U.S.C. §§ 2 et seq., Tenn. Code Ann. §§ 29-5-301 et seq., or other state Arbitration statutes. An agreement to so Arbitrate, without an order of reference or authorization by the Court, shall not be subject to this Rule or to the Alternative Dispute Resolution Act of 1998. 28 U.S.C. §§ 651 et seq. Arbitrators who are approved pursuant to this Rule are not restricted from participating in these non-court-annexed Arbitrations.

(6) Nothing in this Rule shall prevent the parties from stipulating to a panel of three Arbitrators and proceeding under the provisions of this Rule. One of the Arbitrators shall be selected by the parties as chairperson of the panel. In order for a valid Arbitration award to be made, a majority of the Arbitrators in such cases must agree to the award and sign it. A separate dissent may be filed with the Arbitration award.

(7) At any time before the Arbitration hearing, the parties may stipulate in writing to waive their rights to request a trial de novo. Such stipulation shall be submitted to the presiding district judge or magistrate judge for approval and shall be filed. In the event of such stipulation, judgment shall be entered on the Arbitration award in accordance with paragraph (n)(4), above.

(p) Standing Orders.

Each Division of the Court may prescribe by Standing Order procedures that are specific to that particular Division and which are necessary to the implementation of this Local Rule. Such Standing Orders shall not conflict, however, with the provisions of 28 U.S.C. §§ 654-658 or this Rule, however.

(q) Administration of the Arbitration Program.

Pursuant to 28 U.S.C. § 651(d), the Court shall appoint a judicial officer or employee by separate order to serve as Administrator of the Federal Arbitration Program. The Clerk shall designate the Division Managers in each of the four divisions of the Court to assist the Administrator by serving as Arbitration coordinators in each of the respective divisions of the Court. The Administrator shall promulgate, and update from time to time, standard operating procedures and any necessary forms for the Court's Arbitration program. The standard operating procedures shall conform to the requirements of the Act and the local rules of this Court.

The Administrator shall be responsible for communications between the approved Arbitrators and the Court and vice versa.