VOLUME II Chapter 25 Alternative Dispute Resolution

• Jurisdiction: South Carolina

Chapter 25 Alternative Dispute Resolution¹Regina Hollins LewisGaffney Lewis & Edwards, LLC

I. Introduction

In an article entitled, "Isn't There A Simpler Way To Settle Disputes?", former South Carolina Supreme Court Chief Justice Bruce Littlejohn wrote:

There is no function of government more important than that of providing forums for settling disputes without violence. Use of the jury is one way; it is not the only good way.²

Chief Justice Littlejohn pointed out that it is not only important to settle disputes peacefully; they must be settled promptly as well.³ After recounting dispute resolution methods utilized in less civilized times, Littlejohn noted:

Trial by ordeal, combat and dueling are no longer acceptable as methods of settling disputes. We have found a better way.⁴

He then went on to argue that mediation and arbitration are two alternative methods of dispute resolution well worth considering.⁵

Much has occurred to advance the use of alternative dispute resolution (ADR), both in our State and across the nation, since the former Chief Justice wrote that article in 1989. In South Carolina, mediation is now mandated in the majority of civil cases in state circuit court, family court, and federal district court. Hundreds of attorneys across the State have undergone extensive training to serve as mediators in civil disputes. Thousands more have seen the benefits of ADR as advocates in settling cases more promptly, efficiently and relatively peacefully.

Advocates in a wide variety of disputes — including labor and employment litigation — have resorted to arbitration, mediation, expert evaluation, fact finding, mini-trials and other means of ADR to analyze, assess and resolve their cases with an eye toward fairness, efficiency and providing the best possible service to their respective clients.⁶

This chapter will focus on the two most common forms of ADR in use today, arbitration and mediation. With the possible exception of extremely complex and high-dollar cases, these are the forms of ADR that are most often used in the labor and employment arena. Little will be said directly about traditional labor arbitration in the collective bargaining context because it has been utilized, studied and written about extensively for decades.⁷

II. Authority for ADR in the Labor and Employment Context

As with litigation in general, authority for the use of ADR in the labor and employment context comes from a variety of sources, including statutes, rules, regulations and private agreements. The more common sources are noted below.

A. Statutory Authority

There are a number of statutes, both state and federal, that authorize the use of arbitration and mediation as alternatives or prerequisites to traditional litigation.

1. Federal Arbitration Act

In 1925, Congress enacted the Federal Arbitration Act (FAA), which requires federal and state courts to enforce private arbitration agreements.⁸ As the United States Supreme Court has stated, the purpose of the FAA was "to reverse the longstanding judicial hostility to arbitration agreements, and place arbitration agreements upon the same footing as other contracts."⁹ The FAA does not force parties to engage in arbitration, but rather gives force to the parties' own agreement to use arbitration in order to resolve their dispute.

Unless the parties have otherwise contracted, the FAA applies in federal or state court to any arbitration agreement regarding a transaction that involves interstate commerce, regardless of whether or not the parties contemplated an interstate transaction.¹⁰If interstate commerce is involved, the FAA applies and displaces the South Carolina Uniform Arbitration Act (SCUAA).¹¹ The phrase "involving commerce" has been broadly interpreted by the courts.¹² "To ascertain whether a transaction involves commerce within the meaning of the FAA, the court must examine the agreement, the complaint, and the surrounding facts."¹³ Despite application of the FAA, however, South Carolina law applies to the initial determination of whether an arbitration agreement exists.¹⁴

The provisions of the FAA, as they apply to common employment arbitrations, are not terribly comprehensive or complex. Congress left it to the parties, for the most part, to choose the rules that will govern the resolution of their particular dispute. For the employment law practitioner, among the more important general provisions contained in the FAA are: Section 2 regarding the validity, irrevocability, and enforcement of arbitration agreements; Section 3 regarding the staying of court proceedings where issues in controversy are subject to arbitration; Section 4 regarding compulsion of arbitration where one party fails or refuses to abide by an arbitration agreement; Section 5 concerning the method of appointing an arbitrator or arbitrators; Section 7 regarding the appearance of witnesses at arbitration; Section 9 regarding the judicial confirmation of an arbitration award; Section 10 regarding the vacation of an arbitration award; and Section 11 regarding modification or correction of an award.

2. South Carolina Uniform Arbitration Act (SCUAA)

In 1978, the South Carolina General Assembly passed this State's version of the Uniform Arbitration Act.¹⁵ Sounding much like the FAA, the SCUAA recognizes that a written agreement to arbitrate current or future disputes is "valid, enforceable and irrevocable."¹⁶ Any contract that is meant to be subject to arbitration pursuant to the SCUAA must contain a written notice "typed in underlined capital letters, or rubber-stamped prominently, on the first page of the contract . . . ."¹⁷ Absent such prominent notice, the contract will not be subject to arbitration under the SCUAA.

The SCUAA specifically provides that it shall not apply to "arbitration agreements between employers and employees . . . unless the agreement provides that this chapter shall apply . . . ."¹⁸ Of course, any language providing that the chapter will apply must comply with the notice requirements stated above. Even though a contract may not have the language required by the SCUAA, it still may be subject to arbitration pursuant to the FAA or a collective bargaining agreement. The SCUAA goes on to exclude from its application workers' compensation claims, unemployment compensation claims and collective bargaining disputes (the latter of which is controlled by the collective bargaining agreement and federal law rather than by the SCUAA).¹⁹

The SCUAA contains provisions covering most of the same issues addressed by the FAA (e.g., motions to compel or stay arbitrations, the appointment of arbitrators, the treatment of witnesses, confirmation or vacation of an award, etc.), but addresses additional issues and is somewhat more detailed in its treatment than its federal counterpart.

3. Other Sources

There are other legislative and governmental sources of ADR that may apply in the employment context. For instance, the South Carolina General Assembly enacted the County and Municipal Employees Grievance Procedure Act, which allows the governing body of any county or incorporated municipality to adopt a plan for the resolution of employee grievances.²⁰ Grievances under such a procedure may include, but are not limited to, actions regarding dismissal, suspensions, involuntary transfers, promotions and demotions. On the other hand, compensation is not a proper subject of such grievances except as it relates to issues of pay equity within an agency or department.²¹ The statute provides for the establishment of a grievance committee, which has the power to investigate (including calling for the submission of relevant documents), to hold a hearing, and to call witnesses.²² Once the committee has completed its investigation, it reports its findings and decision to the individual or body vested with employment and discharge authority, which may then either accept or reject the decision.²³

There also is a State Employee Grievance Procedure Act, which is much more comprehensive than its local counterpart.²⁴ This statute encourages state agencies to use methods of ADR at the lowest level to avoid a grievance hearing and further litigation.²⁵The statute calls for each agency to establish its own written internal agency employee grievance procedure. Final decisions of the agency are appealable to the State Human Resources Director. The statute even includes an anti-retaliation provision.²⁶ It also calls for the establishment of a State Employee Grievance Committee, which serves as an administrative hearing body for state employee appeals.²⁷ Hearings before the State Employee Grievance Committee include the taking of live testimony, submission of relevant documentary evidence, and the right to legal counsel. Finally, the statute provides that certain limited types of grievances may be submitted to a "mediator-arbitrator" for a final decision.²⁸ These sections of the statute provide for a sort of hybrid version of mediation and arbitration.

B. Judicial Authority

1. South Carolina Court-Annexed ADR

In 1996, the South Carolina Supreme Court implemented a pilot Circuit Court Mediation and Arbitration program in Florence and Richland Counties. Three years later the pilot program was expanded to an additional four counties. At the time, there were separate sets of rules for mediation and for arbitration in the circuit courts, resulting in redundancies and inconsistencies. As a result, in 2000, the state supreme court repealed the old rules and implemented one set of Circuit Court ADR Rules. Yet there were still separate sets of rules for ADR in the circuit courts and in the family courts. Thus, in February 2006, the supreme court adopted the current Court-Annexed ADR Rules (SCADR Rules), to be substituted for the former Circuit Court ADR Rules and the Family Court Mediation Rules.

The current SCADR Rules (with certain exceptions stated in Rule 3) govern all court-annexed ADR processes in South Carolina Circuit Courts in...