Alternative Dispute Resolutions (ADR) - A Case Study
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Let’s say we are a big multinational company. Everybody around the globe has heard about us, we have great marketing and best-selling products. Let’s say someone has an accident using our product and sues us to make us at fault. We as a big and reputable company do not want to be publicly going on a trial for a possibly faulty product, even though we follow very carefully created standards when designing and building those products. Fortunately, there are ways to avoid long and expensive court trials. Alternative dispute resolutions (ADR) are resolutions involving a neutral third party in a non-juridical setting. These resolutions are often used to privately settle a case in a faster and cheaper way than a litigation. Cases settled this way do not set a precedent, do not have to follow a precedent, and they remain confidential.
There are several types of ADRs to choose from, depending on the case. Let’s start with Negotiation, which is an informal way of discussion between the parties to try to settle the case. This form of ADR is used in less serious cases. Mediation is a more formal discussion led by a neutral third party in order to try to reach a resolution. Same as Arbitration, there the neutral third party being someone outside of the judicial setting. Med-Arb is a combination of Mediation followed by Arbitration in case the Mediation wasn’t successful. A Summary Jury Trial is a small trial with a jury verdict that is nonbinding, more informative. Minitrials are reserved for corporations with executives, where a neutral third party gives a verdict that they would most likely get in a real trial. Early Neutral Case Evaluation is helpful in evaluating the strengths and weaknesses of each party by a neutral third party in order to negotiate successfully. And finally, Private Trials are private dispute processes led by a retired judge, these usually being faster and cheaper as well (Kubasek 2016).
This Case Study considers the scenario of Pete seriously injuring himself by rolling over with an ATV, causing him to miss considerable amount of work and to accumulate a balance of $75,000 in medical bills. Pete sues the ATV manufacturer for a defective design making the vehicle roll over easily, the ATV manufacturer states that the accident was Pete’s fault, because he was turning at high speed.
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Now, there are several ways this case could go down. The ATV manufacturer is a big company that could possibly afford great attorneys and long trials, but does not want negative publicity because of negligent customers. Pete, in turn, is now in debt and cannot work due to his injuries. If I was Pete’s lawyer, I would advise him to negotiate with the manufacturer to cover his bills and the time off work. This will most probably work, because, let’s say $200,000 is worth it for both parties to privately settle the case and avoid long and expensive trials with an uncertain jury verdict. If Pete wants a higher amount of compensation, but the ATV manufacturer does not agree, they can turn to a Mediator to try to solve the case.
The ADRs do not have to follow precedents, the neutral third party being allowed to give verdicts as they see fit in any certain case. But for reference it is still a good idea to study previous, similar cases. I bring as an example the case of Boland vs. Kawasaki Motors Manufacturing Corp. from January 2000. In this case, Eric Vandiver suffered an accident with a Kawasaki ATV, leaving him paralyzed and later on killing him. Vandiver’s uncle sued Kawasaki Motors for manufacturing unstable ATVs and failing to warn drivers of the dangers of driving an ATV. Kawasaki Motors ended up winning the case by having really good attorneys who managed to impeach the Plaintiff’s expert, making his testimony about unstable ATVs invalid by finding an earlier testimony of his in a former case, where he said the opposite about ATVs. The jury also found that there is a clear and bold warning about the dangers of driving a Kawasaki ATV, and that Vandiver’s co-worker also warned him to “take it easy” (McCullough & Myerscough 2000).
As it can be seen above, big corporations do have the assets and a higher chance to win a court trial, but do they want to spend possibly millions on a trial and also face publicity about it? Probably not. In the case of needing smaller amounts of money as a settlement, it is advised to go for a negotiation or a private mediation.
References
Kubasek, N. (2016). Dynamic business law: The essentials 4th edition. https://www.vitalsource.com/products/dynamic-business-law-the-essentials-nancy-kubasek-v9781260159264
Boland v. Kawasaki Motors Manufacturing Corp., No. 4-98-0911, N.d. http://www.illinoiscourts.gov/opinions/appellatecourt/2000/4thdistrict/january/html/4980911.htm (Circuit Court of Vermilion County January 7, 2000).