Mandating Mediation–How It’s Done: (i) Local Rule Examples, and (ii) A Separate Order Guideline

By: Donald L. Swanson

There are many reasons to mandate mediation in certain circumstances.

• One is to improve the quality of justice.
• Another is to manage an expanding docket and burgeoning caseload.
• A third is to create a mediation culture where none currently exists.

There are two ways to mandate mediation:

1. by statutes or court rules that apply to a broad category of cases; or
2. by court order in specific cases.

The following are an attempt to provide, (i) examples of local rules for mandating mediation, and (ii) a guideline for mandating mediation by court order in specific cases.

In other words: here’s how it’s done.

Examples of Local Rule Mandates

Bankruptcy Courts in Delaware and New Jersey have long histories with mediation. Such histories have been positive. So, the trajectory for mediation in both courts is toward more extensive use of mediation and toward mandatory mediation in certain circumstances.

Bankruptcy Courts in both Delaware and New Jersey have provided in local rules for expanded and mandated use of mediation. Here are operative portions of the local rules in each court.

Delaware’s Local Bankruptcy Rule 9019-5(a) provides in part (emphasis added):

“Except as may be otherwise ordered by the Court, all adversary proceedings filed in a chapter 11 case and, in all other cases, all adversaries that include a claim for relief to avoid a preferential transfer (11 U.S.C. § 547 and, if applicable, § 550) shall be referred to mandatory mediation.”

New Jersey Local Bankruptcy Rule 9019-2(a) provides in part (emphasis added):

“(1) . . . Every adversary proceeding will be referred to mediation after the filing of the initial answer to the adversary complaint, except as provided in subdivisions (a)(2) [cases with pro se parties, injunctive relief or U.S. Trustee as party] and (3).”

“(3) A party . . . may file a motion requesting to be excused from mediation participation, or requesting a determination that the mediation should not proceed. “

Reports from these two courts are that mandatory mediation rules are embraced by the practicing bar and are working effectively.

Mandates in Individual Cases

Bankruptcy Courts in both Delaware and New Jersey also authorize, by local rules, a mandatory referral of specific cases to mediation by court order.

Delaware’s Local Rule 9019-5(a) provides (emphasis added): “The Court may assign to mediation any dispute arising in an adversary proceeding, contested matter or otherwise in a bankruptcy case.”

New Jersey’s Local Rule 9019-2(a) provides (emphasis added): “A contested matter under Bankruptcy Rule 9014 may also be referred to mediation . . . by the court.”

A Guideline

In the exercise of discretion, a court ought to refer this type of dispute to mediation:

• a dispute that is significant for the parties and has the preliminary appearance of being a close-call on the merits with the potential for a winner-take-all ruling.

In such a circumstance, a judge’s default action should be to refer the dispute to mediation and to advise the parties of the reason for referral. With such a referral and its rationale, most parties will appreciate the opportunity to mediate the dispute before taking the risk of a ruling on the merits.

Conclusion

The experience of courts with mandatory mediation, including Bankruptcy Courts in Delaware and New Jersey, is that mandated mediation can work well and should be embraced.  They’ve shown us how it is done.

** If you find this article of value, please feel free to share. If you’d like to discuss, let me know.