Monday, October 24, 2011

Charlie Sheen v CBS, Warner Bros: Probably No Trial. Why? Sheen Agreed to an Arbitration Clause and Why You Should Know About Arbitration, Miami

Charlie Sheen's lawyers wrote to CBS and Warner Brothers about his claims regarding the TV series Two and a Half Men and this week the letter Charlie Sheen got in response was published online.

You can read it here on TMZ.com. Of particular note, the following language on page 10:
...Warner Bros. has submitted this dispute to arbitration before JAMS, as
required by the Agreement....

What is Arbitration?
Arbitration is a very popular form of "alternative dispute resolution." Which means it's one of the most popular ways of avoiding a trial down at the courthouse. Others are mediation and informal settlements between the parties.

Sometimes, alternative dispute resolution is a good idea. One example that is rising in popularity across the country are collaborative divorces, where courtrooms are avoided as the spouses work out their custody and support and property issues. Another example, two conglomerates are fighting over fees - it's cheaper and faster for their representatives to set down at a table and hammer out a deal that works for both sides than for all that time and money to be spent on a boring money dispute presented to a jury.

However, arbitration is different than other forms of alternative dispute resolution. It's scary because when it's created in a deal made within a contract (like Sheen's employment deal) it means "fair trial" goes out the window.

Why? Where it's part of a contract, a provision that provides that the parties agree that if there is a dispute it's understood in advance that there will be no lawsuits filed down at the courthouse, in the public record -- instead, they all agree at the outset to opt for arbitration to settle the dispute.

This means there won't be the usual rules of evidence used in standard litigation, and there will be a different kind of decision maker. He or she won't be an elected or appointed judge. He or she will be an independent third party arbitrator, and maybe there will be more than one. A panel who decides your fate.

What if you don't like the decision? You may be out of luck. Appeals of arbitration decisions are limited in scope to things like bias. Hard to prove. And to try, you have to do something like move to vacate the arbitrator with the Arbitration Board. Anyone pondering how often they find bias to exist?

How Arbitration Can Impact You Here in Miami
In Florida, the Florida Arbitration Code, Florida Chapter 682, Florida Statutes Sec. 44.104 and Rule 1.830 of the Florida Rules of Civil Procedure work together to control the type of contractually imposed arbitration that the Charlie Sheen - CBS and Warner Brothers situation exemplifies.

Here, it is considered a voluntary and binding arbitration by Florida law and to some extent, the parties are free to arbitrate as they see fit. For example, Florida voluntary binding arbitrations can have one arbitrator or an arbitration panel, as the parties decide. They can adhere to the procedure set out by the American Arbitration Association or they can improvise, creating their own procedure for the arbitration. They can even agree on the evidence: they can limit the evidence to documents and no testimony, or documents and depositions only, etc.

(Court-ordered arbitrations exist in Florida, see Florida Statute 44.104, but they are different than the Sheen scenario: the judge orders them, usually when mediation fails, as a last ditch effort to avoid an expensive trial, and the parties aren't bound by the result.)

Most Floridians have entered into arbitration agreements - waiving their right to a jury trial and the protections of state or federal evidence law - without even being aware of it. Seeing the advantages of arbitration over courtroom trials, companies have adopted consumer arbitration agreements in all sorts of sales agreements. Read your contract with your bank; the deal you made for your phone; the purchase contract for your car or HDTV.

Don't be surprised to see that there's an arbitration agreement in there. Can you get around that clause if you need to do so? That all depends. The power of these big companies to force arbitration down the consumer's throat is an issue that is still being litigated in Florida and across the country.

By Bryant Esquenazi on March 8, 2011 3:59 PM

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