[Congressional Record Volume 143, Number 95 (Tuesday, July 8, 1997)]
[Senate]
[Pages S7011-S7013]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRASSLEY (for himself and Mr. Specter):
  S. 996. A bill to provide for the authorization of appropriations in 
each fiscal year for arbitration in U.S. district courts; to the 
Committee on the Judiciary.
       By Mr. GRASSLEY:
  S. 997. A bill to amend chapter 44 of title 28, United States Code, 
to authorize the use of certain arbitration procedures in all district 
courts, to modify the damage limitation applicable to cases referred to 
arbitration, and for other purposes; to the Committee on the Judiciary.


                        Arbitration Legislation

  Mr. GRASSLEY. Mr. President, I rise at this time to introduce two 
bills. Both bills are designed to encourage what is known in the legal 
world as arbitration, which is a type of alternative dispute resolution 
and a means of settling differences instead of litigating them in the 
costly environment and adversarial environment of the courts.
  Our great American leader, Abraham Lincoln, wrote over 140 years ago, 
in 1840: ``Discourage litigation. Persuade your neighbors to compromise 
whenever you can.'' That is exactly what these two bills are designed 
to do.
  For over 20 years now, all three branches have looked for ways to 
alleviate the courts' crowded docket and to enable a civil litigant to 
have his complaint heard in a more expedient fashion. In 1976, in 
search of alternatives, Chief Justice Burger convened the Pound 
Conference on the Causes of Popular Dissatisfaction with the 
Administration of Justice and asked its members: ``Isn't there a better 
way?''
  There is, and that way is called alternative dispute resolution. Most 
State and Federal bar associations now have alternative dispute 
resolution committees. Some have even elevated consideration of ADR 
approaches to a matter of professional ethics or its equivalent. Almost 
all law schools across the country now offer their students classes in 
ADR. Many graduate programs, especially business schools, have added 
ADR courses to their curriculum. And numerous legal and business 
publications are committed exclusively to the topic of alternative 
dispute resolution.
  Contracts, be they between nations, major corporations, or even 
private individuals, now more often than not include arbitration 
clauses. There are numerous professional and trade associations under 
the umbrella of alternative dispute resolution. ADR is not a legal 
vogue, nor is it second-class justice. ADR is an intelligent and 
efficient alternative to litigation, and it is a way to ensure that 
civil matters can be handled as quickly as possible with low cost to 
the parties and with an outstanding settlement and satisfaction rate 
among all entities involved. Arbitration in particular combines 
procedural protections with the informality necessary for parties to 
discuss their positions in a manner that promotes settlement and allows 
for a detailed exploration of the issues.
  In 1990, Congress enacted bills to authorize implementation of ADR 
programs throughout the administrative agency apparatus and to ask 
Federal courts to consider ADR as a means to reduce cost. For example, 
on November 15, 1990, President Bush signed into law a bill which I 
introduced called the Administrative Dispute Resolutions Act. This act 
authorized and promoted the use of alternative dispute resolution by 
Federal Government agencies.
  Almost immediately, the success of the bill became evident. In 1992, 
for example, agencies reported that over 70 percent of the disputes 
submitted to ADR reached settlement. Often mere discussion of what ADR 
techniques to apply led to agreement between the parties. Last year, in 
a unified showing of support for the idea of ADR, including 
arbitration, we permanently reauthorized that 1990 act. 1990 also saw 
the passage of the Negotiated Rulemaking Act, which authorized the use 
of negotiated rulemaking as an alternative to

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adversarial rulemaking in Federal agencies, and the Civil Justice 
Reform Act, which required every Federal district court to develop a 
civil justice expense and delay reduction plan.
  To test the ADR waters in the article III courts, in 1988, Congress 
amended the Judiciary and Judicial Procedure Act and authorized pilot 
programs in 20 Federal district courts. The amendment made court-
annexed, nonbinding arbitration mandatory in 10 districts and voluntary 
in the other 10. The results are in, and they are more than 
encouraging. Therefore, the first bill I am introducing today will 
permanently extend authorization of these pilot programs so that these 
courts can continue to provide litigants with efficient and successful 
alternatives to trial. Senator Specter, whose own home State of 
Pennsylvania has participated in this program, is joining me in this 
effort.
  Over half of the Nation's 94 districts currently offer some type of 
alternative dispute resolution. This number seems low, and the reason 
for that is because many districts are not sure whether courts other 
than those authorized by statute may offer ADR. Therefore, to eliminate 
this uncertainty, the second bill I am introducing not only authorizes 
district courts across the Nation to implement arbitration programs and 
procedures, it demands such implementation. It will then be left to the 
discretion of each judge, however, whether to make use of the 
implemented programs and procedures.
  The major goal of arbitration is to encourage litigants to settle 
their disputes without going through the lengthy and costly process of 
a full-blown trial. This will not only lessen the burden on the 
judicial branch, but also enable people who feel they have been wronged 
to get a decision without waiting months for the usual verdict and 
without spending tons of money on attorney's fees.
  Let me just give an example, and this is according to the National 
Law Journal. It was an article that was published last year. It has 
been determined that out of every dollar spent in asbestos litigation, 
only 39 cents goes to victims, with approximately 33 to 50 percent of 
the awards collected allocated as attorney's fees.

  My arbitration bills are designed to curb exactly this type of 
``plaintiff-milking.'' In the pilot program districts, the majority of 
arbitration cases closed before even reaching the arbitration hearing 
level and over two-thirds did not return to the court's regular 
calendar, thus saving not only the litigants, but also the courts and, 
therefore, the public both time and money. In the New Jersey program, 
about 20 percent of the civil case filings qualified for mandatory 
arbitration over the 8-year period which the program operated. Less 
than 2 percent of those cases required trial; in other words, 98 
percent of those cases could be settled via arbitration.
  A majority of the attorneys involved in arbitration cases agreed that 
referring the case to the program directly resulted in earlier 
settlement discussions and, most important, in avoiding litigation. For 
the parties involved, that means their issues were resolved from 2 to 
18 months sooner than if the case had gone to trial. In the Eastern 
District of Pennsylvania, as an example, the median time until a 
dispute is resolved through ADR is 5 months. Only 7 percent of the 
district's arbitration cases lasted beyond 9 months and the percentage 
of cases tried de novo is less than 10 percent.
  Litigants, attorneys, and judges all are more than laudatory of the 
program's results. As a matter of fact, positive reaction could be 
documented almost as soon as the program was implemented. A 1990 report 
by the Federal Judicial Center illustrates this point. Over 80 percent 
of the litigants surveyed praised the fairness of the ADR process; 84 
percent of attorneys surveyed said that they approved of arbitration 
both as a concept and, more important, as implemented in their specific 
districts.
  Also, an overwhelming 97 percent of the judges involved in the 
program agreed that their civil caseload was reduced since less than a 
third of the arbitration caseload returns to the regular trial 
calendar. The resounding consensus was that other districts should also 
adopt this outstanding program as a result of this experiment.
  Let me give you another example of the success of ADR. A November 
1996 study of the Judicial Council of California, on California's Civil 
Action Mediation Act, showed that litigant satisfaction for arbitration 
in the Los Angeles County Superior Court was 84 percent and that 94 
percent of the overall respondents would use arbitration again.
  Incidentally, that same study showed that the program's mediation 
process within 2 years produced savings five times higher than what the 
California Legislature had targeted for 5 years. In other words, 
California had targeted $250,000 after 5 years to consider the 
mediation program a success. ADR saved the courts a total of $1.3 
million in just 2 years. Whether it is mediation, arbitration, or any 
other of the ADR techniques, alternative dispute resolution undoubtedly 
is successful in creating huge savings for both the public and the 
litigants.
  The benefits of arbitration, not only to the judicial branch, but, 
more important, to the litigants, are impossible to ignore. Skeptics 
argue that the litigant will feel he is being subjected to second-class 
justice, but, quite frankly, the opposite is the case. Litigants feel 
that they are much more closely involved in the process than would be 
the case if there was formal adjudication. Litigants can participate 
much more actively and have much more control over what is decided and 
how it is decided. Negotiation, rather than adjudication, is the goal. 
And when all is said and done, unlike after a trial, the parties on 
opposite sides of the table often still have some type of positive 
relationship.
  On top of that, the process is private, unlike the public trial. In 
such a private, somewhat informal setting, the parties involved have 
much more flexibility, not only regarding procedure but also remedies. 
Generally, as we know, an article III court in a civil matter will 
limit remedies to a dollar figure. Arbitration can go beyond that. 
Often all a plaintiff wants might be an apology, or the injured worker 
who can't perform his job any more just wants another job. Arbitration 
can give a party those results.
  Arbitration is a legal concept that makes sense, saves time, and 
saves money. As a matter of fact, the Eastern District of Pennsylvania, 
one of the pilot programs, estimates that arbitration has produced a 5-
to-1 savings in private and public costs.
  So the two bills that I am introducing today will, therefore, help 
give the public efficient and expedient access to the Federal courts 
and will help alleviate the caseload burden on the judicial branch.
  I ask unanimous consent, Mr. President, that my two bills be printed 
in the Record.
  There being no objection, the bills were ordered to be printed in the 
Record, as follows:

                                 S. 996

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

     SECTION 1. ARBITRATION IN DISTRICT COURTS.

       Section 905 of the Judicial Improvements and Access to 
     Justice Act (28 U.S.C. 651 note) is amended in the first 
     sentence by striking ``for each of the fiscal years 1994 
     through 1997'' and inserting ``for each fiscal year''.
                                  ____


                                 S. 997

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

     SECTION 1. ARBITRATION IN DISTRICT COURTS.

       (a) Authorization of Arbitration.--Section 651(a) of title 
     28, United States Code, is amended to read as follows:
       ``(a) Authority.--Each United States district court shall 
     authorize by local rule the use of arbitration in any civil 
     action, including adversary proceedings in bankruptcy, in 
     accordance with this chapter.''.
       (b) Actions Referred to Arbitration.--Section 652(a) of 
     title 28, United States Code, is amended--
       (1) in paragraph (1)--
       (A) in the matter preceding subparagraph (A) by striking 
     ``and section 901(c)'' and all that follows through ``651'' 
     and inserting ``a district court''; and
       (B) in subparagraph (B) by striking ``$100,000'' and 
     inserting ``$150,000''; and
       (2) in paragraph (2) by striking ``$100,000'' and inserting 
     ``$150,000''.
       (c) Certification of Arbitrators.--Section 656(a) of title 
     28, United States Code, is amended by striking ``listed in 
     section 658''.
       (d) Removal of Limitation.--Section 658 of title 28, United 
     States Code, and the item relating to such section in the 
     table of sections at the beginning of chapter 44 of title 28, 
     United States Code, are repealed.

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