In the past several years, businesses have been affected by constant and often unpredictable changes stemming from the global economy, new ways of working, closures due to public health crises, and social and political upheavals around the globe. These factors have also affected business litigation, whose traditional avenues of dispute resolution—courts, arbitration, and mediation—have been drastically affected.
Trends in the Courts
Closures due to the COVID-19 pandemic resulted in court adjustments that have changed the way cases are litigated.
For instance, judges and lawyers now regularly hold video and telephonic conferences and hearings. Remote conferences and hearings save the time and cost required for counsel and litigants to be in a physical location at a given time. This is particularly true when parties or their counsel have to travel long distances to the courthouse. Remote hearings also create efficiencies for judges and magistrates, who can dispense of certain matters, like scheduling and resolving minor disputes, without holding in-person hearings. Because of these conveniences, we predict that remote hearings are here to stay.
However, there is no substitute for examining witnesses or advocating before the court in person, particularly on substantive matters that are important to the case’s resolution. Fortunately, as the risk of severe illness decreases with vaccines and increased immunity, courts are increasingly scheduling in-person hearings and trials. The resulting litigation process will likely be a hybrid, using remote hearings for efficiency but holding in-person hearings for substantive matters when necessary.
Unfortunately, efficiencies have not caught up with pandemic-related backlogs. Courts at both the state and federal level currently face logjams of civil cases that were delayed due to pandemic-related closures. As previously delayed cases proceed to trial or are otherwise resolved, litigants continue to file lawsuits. The result is longer waiting times to take a case to trial. Pre-pandemic, we could conservatively predict that state and federal cases could get to trial within a year or so. Now, courts are scheduling trials 18 months from the date of filing, or sometimes later. This backlog will be addressed in time, and litigation schedules will normalize. In the meantime, litigants should be mindful of these delays in deciding whether to resolve cases in court or seek alternative dispute resolution options, like mediation or arbitration.
Arbitration is a dispute resolution mechanism that resolves legal claims outside of the court system. An arbitration is conducted in a similar manner to court proceedings: parties can present evidence and witnesses, and the arbitrator or arbitrators issue a decision that is binding on the parties. Because of its efficiency and flexibility, it is often the preferred dispute resolution tool for businesses. Arbitration clauses are common in employment, consumer, entity formation agreements, and other business contracts.
Arbitration does have some downsides as compared to litigating in court. Most notably, there is no jury, so the parties are beholden to the decision of the arbitrator or arbitrators. There is also no right to appeal an arbitrator’s decision. Whether to submit to arbitration, in the absence of an agreement compelling arbitration, will be informed by these considerations.
With few exceptions, Colorado law and the courts enforce arbitration clauses in contracts. However, recent laws and cases have impacted and somewhat limited businesses’ ability to compel arbitration. For instance, in March 2022, President Biden signed into law the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, which limits mandatory arbitration clauses that preclude a party from filing a lawsuit in court involving sexual assault or sexual harassment. In May, the Ninth Circuit Court of Appeals held in Berman v. Freedom Financial Network, LLC that consumers using a website with hyperlinked “terms and conditions” with an arbitration provision were not bound by the provision. In June 2022, the Supreme Court of the United States held in Southwest Airlines v. Saxon that because airline employees who handle cargo are “engaged in foreign or interstate commerce,” arbitration clauses in their employment agreements are not enforceable. The Saxon decision impacts arbitration clauses in employment contracts for workers engaged in activities that might involve interstate commerce, such as trucking, rail, air travel, and commercial cargo.
While courts and legislatures continue to refine the types of arbitration clauses and agreements that will be enforced moving forward, businesses and organizations should consult with their counsel regarding their existing and future contracts and discuss the types of contracts involved (employment, consumer, etc.), the claims they would like to arbitrate, and the nature of their business, all of which impact whether the arbitration clauses in their contracts will be enforceable should disputes arise.
When parties engage in mediation, they meet with a mutually selected, impartial person who assists them in negotiating their dispute and potentially reaching a resolution. This can be done through a private mediation service, or through the judicial department’s Office of Dispute Resolution. A successful mediation results in an agreement or settlement signed by the parties. Mediation can be an efficient and cost-effective dispute resolution method if the parties are willing to discuss their differences through a neutral facilitator.
Colorado courts can refer cases for mediation, and judges often include in their practice standards a requirement that parties engage in mediation at least once before trial. The cost of mediation, and the possibility of resolving a dispute via mediation, should always be discussed when considering bringing or defending an action in court.
In the past few years, parties to a dispute have been more likely to consider resolution through mediation, especially when they learn that litigating before a court may be delayed due to closures and delays. Given that both sides bear the cost and administrative toll of protracted litigation, parties may go into mediation more willing to come to a resolution. However, parties who have no particular interest in the speedy resolution of a case may nevertheless eschew mediation and wait for the case to go to trial.
What Doesn’t Change
When an individual, business, or organization faces a dispute, they have many options for resolution. What makes most sense will depend on many factors, including the nature of the dispute, any contracts governing the dispute, cost, timing, publicity, and the parties’ willingness to settle or mediate. Regardless of trends in dispute resolution, ultimately the best practice is to have a detailed conversation with counsel to explore all options and design an optimal strategy.
Kelley B. Duke is an experienced commercial litigator and trial attorney representing national and international clients in complex commercial litigation matters. She chairs the Firm’s Litigation Practice Group. Lidiana Rios is complex commercial litigation and regulatory attorney handling a wide range of business matters, including contract disputes, government relations, trade secrets, unfair competition, and fraud.
What is written here is for general information only and should not be taken as legal advice. If legal advice is needed, please consult an attorney.