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What Happens If You Fail to Participate in Alternative Dispute Resolution?

In general, the interested parties in litigation engage in some sort of “alternative dispute resolution,” or ADR, in order to resolve disputes. In fact, ADR may be used to settle cases that are still pending in court. Both the judicial and legislative branches of government have established new programs in order to promote judicial economy. There are both general and specific applications of the alternative dispute resolution. For example, the United States District Court for the Central District of California offers three options. First, a settlement conference with the district judge or magistrate who is assigned to the case. Second, a mediation with a neutral selected from the Court Mediation Panel. Third, a private mediation.

The courts can use various sanctions to urge the interested parties to engage in ADR. For example, sanctions may include imposing court costs, awarding legal fees, contempt, denial of trial de novo (amounting to confirmation of an arbitrator’s award), and dismissal of the pending litigation. However, they can only use these methods in limited circumstances and pursuant to applicable guidelines.

The trial courts have been allowed to use sanctions to force participation in alternative dispute resolution (e.g., arbitration or mediation). The sanctions that were used, included, contempt, denial of trial de novo, striking of pleadings, and dismissal. Yet, sanctions for failure to attend mediation cannot be imposed without notice and hearing. For example, in Rizk v Millard, 810 S.W. 2d 318 (Tex. App. Houston, 14th Dist., 1991), the Court of Appeals held that a trial court judge’s order striking the pleadings of a defendant, after a hearing in which it was determined that defendant violated a compromise agreement, when there was no pending motion to strike, no notice to defendant, and no hearing, violated due process. Although, it is rare, but in some case, the court may consider the argument that opposing counsel should be sanctioned for the failure to attend mediation or arbitration.  The dismissal of a case is rare as the court has the option to impose additional costs and attorney’s fees on the recalcitrant party or his/her attorney for their failure to participate in such proceedings.

In the past, the following actions have resulted in the court’s consideration of imposing sanctions: (i) nonattendance by a party’s attorney; (ii) failure to attend an arbitration proceeding which was a prerequisite to the filing of a suit under state law; (iii) failure of parties to participate actively; (iv) active circumvention of dispute resolution proceedings; or (v) failure to present evidence.

In fact, California Code Civil Procedure § 128.5 provides the trial courts authority to impose reasonable expenses (e.g., attorney’s fees) incurred by another party as a result of bad-faith actions. So, if the other side is acting in a frivolous manner, then it can face the possibility of incurring additional fees.

It is beneficial to agree to engage in alternative dispute resolution either before or during litigation.  In some situations, the contract that the parties signed requires them to make a good-faith effort to resolve their disputes by way of mediation, and thereafter, by and through arbitration. However, the other side may not always be cooperative as they may make every effort to prolong the case.   This type of conduct may force the claimant to file a complaint in state or federal court and compel arbitration.

At our law firm, we assist clients in resolving their disputes, whether through ADR or otherwise. You may contact us in order to setup a free consultation.