[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3528 Reported in Senate (RS)]




                                                       Calendar No. 514
105th CONGRESS
  2d Session
                                H. R. 3528


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 22, 1998

  Received; read twice and referred to the Committee on the Judiciary

                             July 30, 1998

                 Reported by Mr. Hatch, with amendments
  [Omit the part struck through and insert the part printed in italic]

_______________________________________________________________________

                                 AN ACT


 
   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.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Alternative Dispute Resolution Act 
of 1998''.

SEC. 2. FINDINGS AND DECLARATION OF POLICY.

    Congress finds that--
            (1) alternative dispute resolution, when supported by the 
        bench and bar, and utilizing properly trained neutrals in a 
        program adequately administered by the court, 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;
            (2) certain forms of alternative dispute resolution, 
        including mediation, early neutral evaluation, minitrials, and 
        voluntary arbitration, may have potential to reduce the large 
        backlog of cases now pending in some federal courts throughout 
        the United States, thereby allowing the courts to process their 
        remaining cases more efficiently; and
            (3) the continued growth of Federal appellate court-annexed 
        mediation programs suggests that this form of alternative 
        dispute resolution can be equally effective in resolving 
        disputes in the federal trial courts; therefore, the district 
        courts should consider including mediation in their local 
        alternative dispute resolution programs.

<DELETED>SEC. 2. </DELETED>SEC. 3. 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 adopted under section <DELETED>2071(b) 
</DELETED>2071(a), 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 adopted under section <DELETED>2071(b) 
</DELETED>2071(a), 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 designate an employee, or a 
judicial officer, who is 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, 
United States Code.
    ``(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.''.

<DELETED>SEC. 3. </DELETED>SEC. 4. 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 adopted under section 
<DELETED>2071(b) </DELETED>2071(a), 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 at least one alternative 
dispute resolution process, 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 under chapter 131 of this title providing for the 
confidentiality of alternative dispute resolution processes under this 
chapter, each district court shall, by local rule adopted under section 
2071(b), provide for the confidentiality of the alternative dispute 
resolution processes and to prohibit disclosure of confidential dispute 
resolution communications.''.

<DELETED>SEC. 4. </DELETED>SEC. 5. 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 adopt appropriate 
processes for making 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 under chapter 131 of 
this title relating to the disqualification of neutrals, each district 
court shall issue rules under section <DELETED>2071(b) 
</DELETED>2071(a) 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 
<DELETED>subsections (b) and (c) </DELETED>subsections (a), (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 when the 
parties consent, 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 under chapter 131 of this title relating to procedures 
described in this subsection, the district court shall, by local rule 
adopted under section <DELETED>2071(b) </DELETED>2071(a), 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 <DELETED>section 
</DELETED>chapter 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.''.

<DELETED>SEC. 6. </DELETED>SEC. 7. 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.''.

<DELETED>SEC. 7. </DELETED>SEC. 8. 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.''.

<DELETED>SEC. 8. </DELETED>SEC. 9. 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 adopted under section <DELETED>2071(b) 
</DELETED>2071(a), 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.''.

<DELETED>SEC. 9. </DELETED>SEC. 10. 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 
regulations approved by the Judicial Conference of the United States, 
establish 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.''.

<DELETED>SEC. 10. </DELETED>SEC. 11. 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.

<DELETED>SEC. 11. </DELETED>SEC. 12. 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''.
                                     





                                                       Calendar No. 514

105th CONGRESS

  2d Session

                               H. R. 3528

_______________________________________________________________________

                                 AN ACT

   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.

_______________________________________________________________________

                             July 30, 1998

                        Reported with amendments