Tales from the Arbitration Crypt

Nov 2021

This article first appeared on the Securities Arbitration Alert Blog, here.

With Halloween behind us, I thought it might be an interesting break from our usual serious scholarly fare for your author to share some humorous horror stories drawn from decades in the alternative dispute resolution field. Some names have been changed or eliminated  not mine  to protect the guilty.

Babe in the Woods

I entered the alternative dispute resolution field more than four decades ago, fresh out of college. It was April 1976, I was getting married in November, and my parents and future in-laws were in “for Heaven’s sake, go get a job already” mode. This and a new bachelor’s degree brought me to the American Arbitration Association (“AAA”), which hired this young, inexperienced guy with vague plans to go to law school at night at some point in the future, to be a Tribunal Administrator[1] for $8,300 a year. Even adjusted for inflation, it was not very much.[2]

“Didn’t You Say You Were Going to Law School?”

After I had been employed at the Association for about a year, I ran into then-President Bob Coulson on my way back from the pantry. Out of the blue, he said, “Didn’t you say during your job interview that you would be going to law school some day? How’s that going?” I stammered through a response built around being a newlywed and the demands of being a full time Tribunal Administrator at the AAA. Bob would have none of it. “You’re a bright guy. You should go to law school at night like you said you would. You don’t want to be an Administrator the rest of your life. That would be a waste.”

My Inspirations for Becoming a Lawyer

One of my mentors used to say “serendipity is sometimes better than planning, but don’t count on it.” The very next day, I had a hearing to clerk (in those days, Tribunal Administrators had to sit in for the entire hearing). This was an ex parte case, meaning if one party shows up (usually the claimant) and the other party doesn’t (usually the respondent), the party that’s there presents its case unopposed.[3] This is not exactly a default proceeding, but it’s hard to lose in that situation. Off I went to the hearing. The claimant and his lawyer showed up and the respondent, who had sent several “go to hell” communications, didn’t. As counsel for the claimant presented the case, it slowly dawned on me that he was going to lose to the empty chair. And he did! At dinner that night I announced to my wife Ellen[4] that I was going to apply to attend law school. She asked why? My response: “If that guy can be a lawyer, so can I.”[5]

Then I had second thoughts:

ME: On the other hand, I’ll be so old when I graduate – 27!

ELLEN: If you live that long, sooner or later you’ll hit 27. You might as well be a lawyer when you get there.

Thus inspired, four years later I had a J.D., bar admissions in New York and New Jersey, and was the only night student to make Law ReviewAll while working full time at the Association.[6]

“Beam Me Up, Scotty!”

At one point in my career, I worked in the AAA’s Legal Department while still attending law school at night. One day we got an order to show cause to appear the next day before federal Judge Milton Pollack of the Southern District, where a party was challenging a ruling we had made interpreting a rule. There were a few problems: 1) our General Counsel was in France on a business trip; 2) our in-house litigators were all out with the flu; and 3) although I had already passed the NY and NJ bars, I was awaiting admission. I tracked down our GC, who told me to show up, explain my bar status, and make just three simple points: 1) this is what the rule says; 2) a different rule allows the AAA to interpret the rules; and 3) our interpretation is reasonable.

I practiced that night for hours, because Judge Pollack had a reputation for being really tough. Sure enough, the next day he tore apart counsel for both parties, reducing senior partners from big firms to quivering messes. Roared the Judge: “Pettifoggery, Mr. Smith [not his real name]!! What else could the rule possibly mean??” Then, it was suddenly my turn, as the Judge turned to me: “What do you have to say about all this, Mr. Arbitration?” I wanted to take out my Star Trek teleporter and call for Scotty to beam me up. Or just make a run for it. Spectators heard a faint knocking from my shaking knees as I rose to my feet. I then repeated my well-rehearsed three points: “Your honor. This is what the rule in question says [read the rule]. Moreover, Rule 54 allows the AAA to reasonably interpret the rules. We contend our interpretation is reasonable.” Bellowed Judge Pollack: “Precisely!!” I stood there unable to move or speak. Added the Judge: “Sit down, counselor. You won.” Turned out I didn’t need to be beamed up to the mother ship to avoid this near-death experience.

Not the Genuine Article I – The Potemkin Award

As NASD/FINRA Director of Arbitration, I sometimes fielded calls from disappointed parties who had lost their case. One day, a customer called to voice displeasure at losing his arbitration. I could not find the case based on any of the info he gave me (party names, counsel, case number, etc.). Finally, I asked that he fax me the award. When it arrived, it was clear immediately that it was a fake – the format was completely wrong, as was the case numbering regime (not even close).[7]

What the hell was going on? Turns out that counsel had been retained to represent the customer in this “paper case.” For reasons that even today I cannot fathom, the lawyer did not file the arbitration. After months had elapsed, and several inquiries from the client, the attorney advised that the documents had been presented to the arbitrator, who denied the customer’s claim. The fake award was presented as proof. Needless to say, we blew the whistle and things didn’t work out well for this lawyer.[8]

Not the Genuine Article II – I Said What??

During my time as Director of the AAA’s New York Regional Office, a pro se party walked into my office midday on Friday, February 11, 1983. He had just finished an expedited arbitration. We had this conversation:

PARTY: I think I made a mistake not hiring a lawyer. Maybe I want to hire a lawyer.

ME: I can’t give you legal advice on whether to hire an attorney, but I have to tell you this: the hearings have been declared closed. The arbitrator can issue an award at any time in the next fourteen days.[9]  If you want to request that the hearings be reopened so you can hire a lawyer – or even think about whether to retain one – you should do this right away.

PARTY: I’ll think about it.

ME: I would urge you to act right now. I can give you a pad to write a letter. I’ll mark it received and make you a copy. Again, an award may be issued at any moment.

PARTY: Thanks, but I’ll think about it over the weekend.

No letter was submitted and the party lost. Weeks later, he retained counsel who moved to vacate on the ground that I had told his client that he could request a new hearing if he didn’t like the result. I was subpoenaed to testify. Here are excerpts from my examination:

ME: I said no such thing.

COUNSEL: How can you be so sure?

ME: Because I would never say that. Ever.

COUNSEL: But what makes you so sure, after all these months?

ME: Well, it was the Friday that the Blizzard of 1983 was about to strike the New York City area. We were contemplating when to close the office. I remember everything about that day.

COUNSEL: But are you absolutely certain that you didn’t say this to my client?

ME: Yes.

COUNSEL: How so?

ME: Well, two other things stand out in my memory. First, even though I am color blind, I remember your client was wearing a garish shirt with a plaid jacket and striped tie … just like today. Also, if he thought I told him he could demand a new hearing by writing a letter, where is it? He never made the request.

JUDGE TO COUNSEL: Do you want to keep asking him questions? He’s burying your client.

Needless to say, it didn’t end well for the claimant.

Not the Genuine Article III – The Traffic Ticket Excuse

During my tenure as the AAA Senior VP – Midwest & South, I got a call from a North Carolina judge’s clerk, asking me to confirm a letter I had supposedly written. What letter? A witness had been cited for speeding on the way to an AAA arbitration hearing at which he was testifying. The witness, now a defendant in a speeding prosecution, produced a copy of a letter from me asking the court to excuse him for speeding because he was late for the performance of a valuable public service.

This all made sense, except that it was totally untrue! The clerk offered to fax me the letter, but I already knew it was a forgery because I would never, ever, send such a letter. Sure enough, the fax revealed a decent but obvious fake. AAA’s Website had been launched by that point, and the enterprising witness had captured letterhead and my signature from documents that had been posted on the Website. But the immediate giveaway was that I had misspelled my own surname. I’m sure George Freedmans existed, but I wasn’t one of them. I later sent a real letter to the court, and I’m pretty sure the judge wasn’t happy about it.

Speaking of Judges from the South …

Richard Cameron Freeman was judge of the United States District Court for the Northern District of Georgia from 1971-1999.[10] Why would I know this? Because my poor enunciation made “George Friedman” sound like “Judge Freeman” over the phone. I found this out when I called a law office in Georgia one day, and the person answering responded: “Right away, Judge.” Thereafter, every time I would place a call down South, I wouldn’t try so hard to speak clearly. Just a little. Because I always got through right away. By the way, I still have this problem at Starbucks.

Bartleby the Arbitrator

Many of us have read the Melville classic, Bartleby the Scrivener: A Story of Wall StreetFor those who haven’t, the story in a nutshell is as follows: Old-time scrivener[11] Bartleby gets fired, but refuses to leave the office. Each time he is asked to depart, he responds: “I prefer not to.” It doesn’t end well for him. My real-life experience along these lines took place when I was NASD Director of Arbitration. One day, I get a call from a hearing room, and this conversation transpires:[12]

ATTORNEYS FOR BOTH PARTIES: “What’s the rule if we both agree to remove the arbitrator?

ME: Then the arbitrator is off the case.

ATTORNEYS: Well, come to Hearing Room 3. We just stipulated to remove Arbitrator Bartleby (not his real name) and he refuses to leave.

I hightailed it to the hearing room and met privately with the arbitrator, who confirmed what I had been told. This conversation ensued:

ME: Based on the parties’ stipulation, you are relieved as arbitrator.

BARTLEBY: But I think counsel for the claimant is naive and shouldn’t have consented. Under the Code of Ethics, I have to maintain the integrity of the process.

ME: True, but the Code of Ethics does not override the rules under which you are serving. Even if it did, Canon II(G) says, if an arbitrator is requested by all parties to withdraw, the arbitrator must do so.[13] Also, the Code of Arbitration Procedure says you must quit the case where all parties agree.

BARTLEBY: I prefer not to.

ME: Suppose we go on the record with your concerns. You know — a noisy withdrawal. Will you then leave?

BARTLEBY: I prefer not to.

ME: It’s going to be embarrassing if I go on the record to declare your office vacant.[14] How about you just accept the parties’ agreement that you leave?

BARTLEBY: I prefer not to.

I finally convinced him to go, when the parties decided to leave the premises and reconvene at an undisclosed location with a different arbitrator. Still, it was a weird case!

Another Meteorological Adventure

In early 1996, I had another weather-related adventure. Around Thanksgiving 1995, a colleague from the AAA’s Legal Department announced she was retiring from the Association and moving to another country at year’s end. She was also an adjunct professor at Fordham Law School, and she told me they were scrambling to fill her slot on the adjunct faculty teaching commercial arbitration for the Spring semester, starting in a few weeks. “Are you interested?” I offered a bunch of excuses, not the least of which was, I had absolutely no experience teaching law students. “Nonsense,” she replied. “You’re a great speaker, teacher, and writer. Should I tell John you are interested?”

John was John Feerick, the AAA’s Chairman of the Board at the time, but of more importance, the Dean of Fordham Law School. So, I said “Yes,” and a week later, a contract arrived in the mail. No job application and no interviews for a very competitive post. Just a phone call to Dean Feerick from my colleague. The weather aspect? Being really insecure about my new career move, I prepped for weeks for the first class on Monday, January 8, 1996, aided by my colleague Mary Bedikian, Esq., who was already an adjunct law prof in Michigan and shared generously of her time and wisdom — and class materials. I needn’t have fretted, though, as the Blizzard of 1996 wiped out classes for days. The extra week of prep time was perfect, and more than a quarter of a century years later, I am still teaching commercial arbitration at Fordham — and still obsessing about prep.

I’m from the Future. Go with Cloud-based ADR

There’s a scene in the movie, Looper where Joe, a character from the present time, announces that he is studying French for use later in life. Another character, Abe, who has traveled back in time from the future, suggests that Joe go to China instead. The following debate takes place:​

ABE: Why the %$?$$! French?​

JOE: I’m going to France​

ABE: You should go to China​

JOE: I’m going to France​

ABE: I’m from the future. You should go to China.

Like the fictional Abe, I think I just sometimes know where things are headed. I’ve for decades been pushing what we now call cloud-based ADR – like online filing, case administration, hearings, and awards. Heck, I am Chairman of the Board of  cloud-based ADR provider Arbitration Resolution Services. Want more proof?  See below (emphasis added):

The future seems destined to bring dramatic changes to the way disputes are resolved, and ultimately affect the way arbitrations and mediations are administered for a wide range of disputes beyond the online realm. For parties and their representativesthe near future will bring about the development of virtual alternative dispute resolution, with all communications and information related to the case available through their computer at any time from any place.

Check out the date and author.[15]

Like Abe, I’ve often met resistance because the present wasn’t yet ready for my futuristic proposals. After one particularly frustrating, nightmarish turndown of a mandatory online filing proposal, an advisory committee member consoled me: “I know you’re probably from the future, but sometimes you have to wait for the present to catch up with the future.” It took a worldwide pandemic to serve as an accelerant, but she was right (about patience; if I were really from the future I probably would have invented Google or Amazon).

Conclusion

Back in 1976, when I entered the field as an AAA Tribunal Administrator, I viewed a training film,[16] in black & white. It closed with a serious gray-haired judge right out of Central Casting, who said:

“…and remember, young man, arbitration is the wave of the future… wave of the future…wave of the future… [fade to silence]

(c) 1936 Columbia Pictures, “Disorder in the Court”

Well, the future has arrived, and it’s not just arbitration, and it’s not just men!

There you have it. A career influenced by random, weird, other-worldly events. Scary, but I wouldn’t have had it any other way.

———————

*George H. Friedman, Publisher and Editor-in-Chief of the online Securities Arbitration Alert and an ADR consultant, retired in 2013 as FINRA’s Executive Vice President and Director of Arbitration, a position he held from 1998. He also serves as non-executive Chairman of the Board of Directors of Arbitration Resolution Services. In his extensive career, he previously held a variety of positions of responsibility at the American Arbitration Association, most recently as Senior Vice President.He isan Adjunct Professor of Law at Fordham Law School, and is also a member of the AAA’s national roster of arbitrators. He holds a B.A. from Queens College, a J.D. from Rutgers Law School, and is a Certified Regulatory and Compliance Professional. He is admitted to practice in New Jersey and New York, several U.S. District Courts, and the United States Supreme Court.

ENDNOTES:

[1] That’s what Case Administrators were called back in those days.

[2] A bit over $40,000 today, according to the CPI Calculator.

[3] See, for example, the AAA Commercial Arbitration rules, Rule R-31 (Arbitration in the Absence of a Party or Representative): “Unless the law provides to the contrary, the arbitration may proceed in the absence of any party or representative who, after due notice, fails to be present or fails to obtain a postponement. An award shall not be made solely on the default of a party. The arbitrator shall require the party who is present to submit such evidence as the arbitrator may require for the making of an award.”

[4] We’re still married. Ellen has the patience of a saint.

[5] I invited that lawyer to the farewell reception marking my departure from AAA in late 1998. Why not? An inspiration is an inspiration, even a negative one. I didn’t tell the entire story, though.

[6] I was New York Regional Director by the time I graduated. I’m still not sure how that happened. This was the flagship AAA office and I was just 26 when I got the job during my last year of law school.

[7] Awards are — and were at that time — available publicly. I was offended by the lackluster effort: at least get an award to use as a template for the forgery.

[8] I forget whether he was suspended or disbarred.

[9] The Rules now provide 14 days to render an expedited award. It may have been shorter back then, but I don’t recall.

[10] Senior judge from 1991.

[11] These folks made official copies of legal documents before the advent of carbon paper or photocopiers.

[12] Some literary license has been invoked.

[13] Literally. That’s precisely what it says.

[14] See Code Rule 12402(g) (Replacement of Arbitrators): “(1) If an arbitrator is removed, or becomes otherwise unable or unwilling to serve, the Director will appoint a replacement arbitrator in accordance with this rule.” My thinking was that an arbitrator discharged by the parties was unable to serve or was “removed.”

[15] Friedman, George, Alternative Dispute Resolution and Emerging Online Technologies: Challenges and Opportunities, 19 Hastings Comm. & Ent. L.J. 695, 716 (1996-1997), available at http://heinonline.org/HOL/LandingPage?collection=journals&handle=hein.journals/hascom19&div=30&id=&page= (fee).

[16] Video? What’s that?

author

George Friedman

George H. Friedman is the publisher and Editor-in-Chief of the Securities Arbitration Alert, a weekly online publication covering the latest developments in financial services arbitration and mediation. He is also the principal of George H. Friedman Consulting, LLC, providing expert advice on arbitration and mediation in general and the FINRA…

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