So, You Have Been Compelled to Mediation in SDNY and EDNY: What Next?

Like many—if not most—federal district courts, both the U.S. District Courts for the Southern and Eastern Districts of New York (SDNY and EDNY, respectively) local court rules authorize any judge of the court, district court or magistrate judge to order the parties in any civil matter to explore resolution by mediation at any stage of the litigation without their consent. See SDNY Loc.Civ.R. 83.9(e)(3); EDNY Loc.Civ.R 83.8(b)(1).

Although the power to compel mediation is not expressly found in the Federal Rules of Civil Procedure (Fed.R.Civ.P.), such orders are consistent with Fed.R.Civ.P. 16(a)(5) (court may order parties to pretrial conference for, among other things, “facilitating settlement”) and the inherent power of a court to control its docket and manage cases efficiently. Fed.R.Civ.P. 1.

Why Did This Happen?
The entry of such an order begs a question: Why? There is no one answer to that question, and the full truth may remain opaque. Yes, judges are human and on a rare occasion the motivation might be a judge’s frustration with a lawyer or particular case. Think of it as a “judicial time-out.” Most of the time the decision is not personal, however, but inspired by equity, fairness and docket management. The case may involve bad facts and therefore the risk of bad law, a novel legal issue lacking clear precedent, the interpretation of a new statute or the prospective of attorney’s fees dwarfing a plaintiff’s recovery.

One example is collective actions under the Fair Labor Standards Act. Or perhaps in even the mine-run case, having survived dispositive motions, a trial date remains far in the future because of crowded court calendars post-pandemic. Whatever the motivation, the smart litigator will know—and explain to a sometimes skeptical client—that mediation has several advantages even when compelled.

Compelled Mediation: Not an Oxymoron
At the outset it should be clear that parties do not need a court order in either EDNY or SDNY to mediate. Nor, when an order is entered should compelled mediation be perceived as compelled settlement. Although all parties have an ethical duty to participate in good faith in the discussions, including offering reasonable concessions to help bridge gaps between demand and offer, every litigant has the option of abandoning even court-mandated mediation when, after a concerted and serious effort, no acceptable compromise can be reached.

Moreover, no judicial officer who takes their oath seriously will deny a party their constitutional right to a jury trial in qualifying cases. In that way, compelled mediation is no different than mediation undertaken independent of judicial fiat. What the parties do commit to is a process, one that can substantially advance the interests of your client whether the matter settles in mediation or not.

First, hardnosed litigators can sometimes dig in their heels missing the forest for the trees. The right subject matter neutral can be an objective sounding board helping assess the relative strengths and weaknesses of your case. And while no ethical neutral will reveal things shared by your adversary in confidence, the mediator will share at least their perception of where you might win, or lose, in dispositive motion practice or at trial.

Second, while not a full substitute for the presiding judge, mediation can also be an opportunity for a client to “tell their story” short of the courtroom. And it’s not just the individual who may need a catharsis. Even a general counsel facing a skeptical board of directors may need a confidential place to vent.

Third, mediation can provide a chance to explore creative solutions to a conflict that differ from traditional remedies like injunctions and damages.

Fourth, even if unsuccessful initially, mediation often lays the groundwork for a later settlement. You can rest assured that the presiding judge will not let a failed mediation deter later efforts to resolve the matter by settlement, even on the proverbial courthouse steps, and those prior efforts may provide a substantive framework for those later discussions.

So how does the process work once you receive the judge’s order mandating mediation? The first step is the selection of a mediator, and it is here that SDNY and EDNY share the admirable trait of allowing the parties full authority to choose a mediator of their liking from the private market. As long as they are willing and able to pay the freight, the parties may choose a mediator from private practice or from one of several well-regarded companies providing neutrals such as AAA or JAMS.

The private market grants the freedom to choose a neutral by subject matter expertise; their knowledge of the judge, courthouse preferences, and the likely jury venire; and to fully vet their reputation. The lawyers may also have prior experience with the neutral in other matters. This freedom of choice can ensure the right fit for the particular dispute and is far superior to mandated mediation at market rates before a mediator selected by the judge without input from the parties, a selection process eschewed by the judges in both EDNY and SDNY for many good reasons.

Not every case lends itself to the cost of private mediation, of course, and both SDNY and EDNY temper judge-mandated mediation by providing well-designed and thoughtful court-sponsored programs that have many of the same qualities of private mediation but at a sharply reduced rate or no cost at all.

EDNY Local Mediation Rule 83.8: A Model of Clarity
The first thing one notices about the local “Court-Annexed Mediation Rule” in EDNY is how concise it is, spelling out clearly the mediation process. Leaving no doubt, the rule makes plain the parties’ three options: a mediator from the court’s panel, a private mediator, or a neutral ADR organization. For those who select the court’s panel, there is much to commend.

EDNY’s catchphrase for its court-sponsored program, “Pick and Pay,” captures its essence. To select a mediator, the parties choose from an array of seasoned mediators who have completed the court’s required training and demonstrate superior knowledge in defined subject matters. Using a searchable database, litigants may choose a mediator acceptable to the all parties. Absent consensus, the parties may instead rank their preferences on a scale of 1 to 5 and the court’s ADR administrator will select a mediator based on those preferences.

The ability to have a say in the assigned mediator does come at a cost, albeit a modest one. By rule, EDNY’s experienced and pre-selected mediators may charge $600 for the first four hours and $250 per hour thereafter, rates far below ADR organizations and private mediators. Notably, time preparing for the mediation is not compensable.

All in all, the EDNY program blends nicely the advantages of having input into the selection of a knowledgeable, seasoned neutral at a very competitive hourly rate.

Court-Annexed Mediation in SDNY: Worth Every Penny!
Those litigants who choose SDNY’s court-annexed program will also find a well-laid out, thoughtful, and comprehensive program with provisions for mediator qualification and training, pre-mediation preparation and disqualification protections to ensure neutrality.

However, SDNY’s program differs from EDNY in one meaningful way: While SDNY categorizes its more than 200 mediators by subject matter expertise, the parties have no role in the selection of the mediator, which is left by rule exclusively to the Mediation Office, including assigment of a mediator in a “related” area of expertise. The selection process operates much like the “wheel” used to assigned cases to judges of the district court. This uniform procedure ensures that each mediator has an equal opportunity to do mediation work within their respective areas of expertise, which assists a busy court in attracting well-qualified mediators.

What the parties gain by ceding control of the selection to the mediator coordinator is a substantial reduction in cost. The SDNY program provides mediators for free. Yes, you read that right: free. Thus, SDNY strikes a different compromise than that struck in EDNY. While the parties in SDNY may not choose their mediator as they can in EDNY, there is no out of pocket expense for quality mediation services. Given the decided advantages of mediation set out above and SDNY’s extensive mediation resources, it’s hard to argue with the price.

Conclusion
Whether one chooses the flexibility and expertise of a private mediator from outside the court system or takes advantage of the well-designed, court-sponsored programs like those available in SDNY and EDNY, every litigator has an obligation to their client to at least consider mediation at each major decision point in litigation. This is especially so when the risks of an adverse outcome, collateral consequences, and attendant costs are high.

When that decision to mediate is made for you by a judge in SDNY or EDNY, view it as an opportunity to assess your case and that of your adversary, potentially eliminate those risks, explore creative remedies and achieve an acceptable outcome at a substantially reduced cost.

Litigants seeking more information about the SDNY mediation program may contact Rebecca Price at Rebecca_Price@nysd.uscourts.gov. For more information about the EDNY program, contact Danielle Shalov at Danielle_Shalov@nyed.uscourts.gov. 

Judge Noel L. Hillman (Ret.), an American Bar Foundation Fellow and elected member of the American Law Institute, has been a member of the New York bar since 1990. After 18 years as a federal district court judge, Judge Hillman now leads the Alternative Dispute Resolution (ADR) Team at Gibbons, providing a full array of ADR services including mediation, arbitration, monitorship, corporate compliance, and special master appointments from offices in Manhattan; Newark, New Jersey; and Philadelphia, Pennsylvania. He can be reached at nhillman@gibbonslaw.com.

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Reprinted with permission from the March 15, 2024 issue of the New York Law Journal. © 2024 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved. For information, contact 877-257-3382 or reprints@alm.com or visit www.almreprints.com.