Mandatory Arbitration Practice Tips
| Publication year | 1989 |
| Pages | 253 |
1989, February, Pg. 253. Mandatory Arbitration Practice Tips
Under the Mandatory Arbitration Act Pilot Project (C.R.C.P. Rule 109.1), cases filed in the district courts of eight Colorado judicial districts after January 1, 1988, that concern damages of $50,000 or less must be submitted to non-binding arbitration. Although the procedure for bringing the case before the arbitrators is very similar to pretrial procedure under the Colorado Rules of Civil Procedure, significant differences exist in the scope of discovery, required disclosures and other matters. This article discusses specific issues that arise in handling cases which are arbitrated under the Mandatory Arbitration Act ("Act")(fn1) and C.R.C.P. Rule 109.1.
It is important in a case involving mandatory arbitration to adhere strictly to good faith procedures in certification, disclosure and discovery. For example, when determining whether a case is subject to mandatory arbitration, C.R.C.P. Rule 109(b) requires C.R.C.P. Rule 11 certification. Therefore, an attorney who circumvents the mandatory arbitration process (most obviously by less than accurate allegations of damages over $50,000) may be ordered to pay attorney fees to the adversary, if trial on the merits makes it obvious that the claim is for substantially less than the jurisdictional limit for mandatory arbitration.(fn2)
Discovery in mandatory arbitration is limited.(fn3) However, because of the broad scope of mandatory arbitration disclosure statements and the latitude to question witnesses at the arbitration hearing, the mandatory arbitration process can be viewed as a "discovery substitute." In fact, this process may be more cost-effective than conducting discovery under the traditional rules.
In mandatory arbitration, the disclosure statements must reveal "all persons known to have knowledge of relevant facts," whether or not they will be called at the arbitration hearing, and "all relevant documents," whether or not they will be introduced at the hearing. This is much broader disclosure than C.R.C.P. Rule 16 requires for pretrial Disclosure Certificates.
By proceeding in good faith through this process, counsel can learn the most significant facts of the case before petitioning the court for trial de novo. The same facts obtained in arbitration discovery and disclosure statements may be used in the trial de novo.(fn4) Transcribed testimony from the arbitration hearing can also be used at a subsequent trial, introduced in the manner of a deposition. If trial de novo is anticipated, counsel might want to have a court reporter present at the arbitration hearing.
It is important to note that the failure of a party to disclose significant facts in the arbitration disclosure statement or at the arbitration hearing can prejudice his or her right to trial de novo on all issues and evidence. Trial de novo cannot be demanded under C.R.C.P. Rule 109.1(r)(2) unless there has been good faith compliance with the arbitration process. Astute counsel who is "ambushed" by new evidence at trial will bring this to the court's attention.
The power of the court to deny trial de novo entirely under Rule 109.1(r)(2) certainly also allows exclusion from the trial of evidence which was undisclosed in the arbitration process. Arguably, C.R.C.P. Rule 11 sanctions also apply to exclude the evidence at trial which was not introduced at the arbitration hearing. Thus, the failure to specify a claim or endorse a witness or exhibit in the arbitration disclosure statement precludes its use at the hearing.(fn5) Furthermore, such failure may be deemed a failure to participate in good faith in considering whether a right exists to demand trial de novo (or to use that undisclosed evidence at trial de novo).
Some practitioners are confused by motions practice in mandatory arbitration. There is some question as to when filed motions are subject to the jurisdiction of the arbitrators, as well as whether the district court has any jurisdiction over motions during the arbitration process.
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