Mediation: Whither or Whether. B. Selected Local Bankruptcy Rules Addressing Mediation/ADR...10

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2 Mediation: Whither or Whether A. Survey Chart...3 B. Selected Local Bankruptcy Rules Addressing Mediation/ADR United States Bankruptcy Court for the Southern District of New York Local Rule Excerpt United States Bankruptcy Court for the Eastern District of New York Local Rule Excerpt United States Bankruptcy Court for the Northern District of Texas Local Rule Excerpt United States Bankruptcy Court for the Southern District of Texas Local Rule Excerpt United States District Court for the Eastern District of Texas Local Rule Excerpt United States Bankruptcy Court for the Western District of Texas Local Rule Excerpt...42 C. Selected Cases and Other Resources: Mediation in Bankruptcy...48 D. In re: Cody Smith; Case No ; Memorandum Opinion of the Chapter 7 Trustee s Attempt to Retain and Pay a Mediator Without First Obtaining This Court s Approval Under 11 U.S.C. 327(a) Federal Rule of Bankruptcy Procedure 2014(a), and the Local Rules Governing Alternative Dispute Resolution, Dated January 27, E. Settlement Talks in Chapter 11 After WaMu: A Plan Mediator s Perspective, Hon. James M. Peck, 22 AM. BANKR. INST. L. REV. 65 (2014)...76 F. Bios of Panel Members The Local Rules for the United States Bankruptcy Court for the Eastern District of Texas do not expressly incorporate the Local Rules pertaining to mediation from the United States District Court for the Eastern District of Texas v.1 PERSONAL/KEG3

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4 BANKRUPTCY COURT MEDIATION PRACTICE SURVEY Northern District of Texas The Honorable: Do you mediate disputes for other judges? Do you require parties to mediate under any circumstances? Do you select the specific mediator under any circumstances? Have you ever refused to order mediation when requested by any one party? Have you ever refused to order mediation when requested by all parties? Cooter Hale Yes No No Not that I recall. No Barbara Houser Yes No Under limited circumstances. 1 Yes No Stacey Jernigan Generally, no (did once; rare that I would). No (sometimes I do, sometimes I do not). Only if parties cannot agree on one and it is requested. Yes No 2 Robert Jones Yes No No Yes No Mike Lynn Yes Yes (rarely) Yes (rarely) Yes No Russ Nelms No No No Yes No 1 For example, if parties are unable to agree on a mediator, but provide the Court with a list of mutually-agreeable candidates, the Court would pick a mediator from the list. 2 However, I have refused to ask a sitting judge in my district and instead I direct parties to select retired judge/private mediator. Page 1 of 6 Page 4 of 93

5 Southern District of Texas The Honorable: Do you mediate disputes for other judges? Do you require parties to mediate under any circumstances? Do you select the specific mediator under any circumstances? Have you ever refused to order mediation when requested by any one party? Have you ever refused to order mediation when requested by all parties? Jeff Bohm No No No Yes Yes Karen Brown Under limited circumstances. No No Yes No Marvin Isgur Yes No No No No David Jones Yes No No Yes No Leticia Paul No No No No No Richard Schmidt Yes Yes No No No Eastern District of Texas The Honorable: Do you mediate disputes for other judges? Do you require parties to mediate under any circumstances? Do you select the specific mediator under any circumstances? Have you ever refused to order mediation when requested by any one party? Have you ever refused to order mediation when requested by all parties? Bill Parker No No Upon request. Yes No Brenda Rhoades Upon request. No No No No Page 2 of 6 Page 5 of 93

6 Western District of Texas The Honorable: Do you mediate disputes for other judges? Do you require parties to mediate under any circumstances? Do you select the specific mediator under any circumstances? Have you ever refused to order mediation when requested by any one party? Have you ever refused to order mediation when requested by all parties? Tony Davis Yes No Only if asked by the parties; would consider doing so if the circumstances suggested. Yes No Craig Gargotta Yes No No Yes No Ronald King Yes, upon request. Occasionally, yes. No Only once. No Chris Mott Yes Yes, if parties believe it might be productive. Only if parties cannot agree on one, and request me to select. Yes No Southern District of New York The Honorable: Do you mediate disputes for other judges? Do you require parties to mediate under any circumstances? Do you select the specific mediator under any circumstances? Have you ever refused to order mediation when requested by any one party? Have you ever refused to order mediation when requested by all parties? Stuart Bernstein No No Only if the parties are unable to agree on the mediator. Yes No Page 3 of 6 Page 6 of 93

7 The Honorable: Do you mediate disputes for other judges? Do you require parties to mediate under any circumstances? Do you select the specific mediator under any circumstances? Have you ever refused to order mediation when requested by any one party? Have you ever refused to order mediation when requested by all parties? Robert Drain Yes Yes, if require means strongly suggesting. Only if the parties are unable to come up with someone; I have also suggested the type of person who I thought would do a good job: i.e., an accountant, someone with transnational experience, etc. I have never suggested to the parties that they choose a judge, but never told them not to choose a judge, either. Yes, where the other party is opposed and I do not see the benefit. Yes James Garrity Judge Garrity supports mediation, but has not developed an approach to the issues. Page 4 of 6 Page 7 of 93

8 The Honorable: Do you mediate disputes for other judges? Do you require parties to mediate under any circumstances? Do you select the specific mediator under any circumstances? Have you ever refused to order mediation when requested by any one party? Have you ever refused to order mediation when requested by all parties? Robert Gerber Not as often as the other judges in my district have done for me, but yes. Not often, but yes, when I think it is desirable. Yes, but only if (1) they have tried and failed to choose their own and (2) they consent. I do not remember doing so, but I may have. As best I can recall, they have always agreed to mediation when suggested, which has been fairly often. But I think it works best when both sides are on board, and if one side were absolutely unwilling, I am not sure whether or not I would still. No, and I cannot imagine that I ever would. Martin Glenn Yes No Only if the parties are unable to agree. This has never happened so far. Yes No Cecilia Morris Chief Judge Morris responses would be substantially the same as Judge Trust s. Sean Lane Yes. I also have mediated disputes for other judges. I have not to date. Upon request. At the request of the parties, I have also served as a tie-breaker in picking a mediator from among a list of names provided by the parties. Yes No Page 5 of 6 Page 8 of 93

9 The Honorable: Do you mediate disputes for other judges? Do you require parties to mediate under any circumstances? Do you select the specific mediator under any circumstances? Have you ever refused to order mediation when requested by any one party? Have you ever refused to order mediation when requested by all parties? Michael Wiles Judge Wiles has not yet developed any mediation practices. Eastern District of New York The Honorable: Do you mediate disputes for other judges? Do you require parties to mediate under any circumstances? Do you select the specific mediator under any circumstances? Have you ever refused to order mediation when requested by any one party? Have you ever refused to order mediation when requested by all parties? Alan Trust Yes, and I have had other judges mediate for me. Yes I will require mediation even if the parties do not consent. Yes, if judge mediation or pro bono mediation; for private, only if parties cannot agree but then I will select from their proposed mediators. Pretty sure I have. Do not think so. Page 6 of v.1 PERSONAL/KEG3 Page 9 of 93

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11 UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK LOCAL RULE EXCERPT Page 11 of 93

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23 UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF NEW YORK LOCAL RULE EXCERPT The Local Rules for the United States Bankruptcy Court for the Eastern District of Texas do not expressly incorporate the Local Rules pertaining to mediation from the United States District Court for the Eastern District of Texas, but may be applied to specific cases by order of the Bankruptcy Court. See EDTX LBR 1001(c)(2) v.1 PERSONAL/KEG3 Page 23 of 93

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29 UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF TEXAS LOCAL RULE EXCERPT Page 29 of 93

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31 UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS LOCAL RULE EXCERPT The United States Bankruptcy Court for the Southern District of Texas adopts the Local Rule regarding mediation/adr from the United States District Court for the Southern District. 2 This is a link to the United States District Court Local Rule for mediation/adr v.1 PERSONAL/KEG3 Page 31 of 93

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38 UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS LOCAL RULE EXCERPT The Local Rules for the United States Bankruptcy Court for the Eastern District of Texas do not expressly incorporate the Local Rules pertaining to mediation from the United States District Court for the Eastern District of Texas, but may be applied to specific cases by order of the Bankruptcy Court. See EDTX LBR 1001(c)(2) v.1 PERSONAL/KEG3 Page 38 of 93

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42 UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF TEXAS LOCAL RULE EXCERPT The Local Rules for the United States Bankruptcy Court for the Eastern District of Texas do not expressly incorporate the Local Rules pertaining to mediation from the United States District Court for the Eastern District of Texas, but may be applied to specific cases by order of the Bankruptcy Court. See EDTX LBR 1001(c)(2) v.1 PERSONAL/KEG3 Page 42 of 93

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49 Current Issues in Bankruptcy Mediation, Abid Qureshi, AM. BANKR. INST., Claims Trading Program, St John s University School of Law, New York, New York, October 30, 2014 ( current membership required) treats issues related to material non-public information in bankruptcy mediation addresses admissibility and discovery issues stemming from bankruptcy mediation Some Reflections from the Bench on Alternative Dispute Resolution in Business Bankruptcy Cases, Hon. Elizabeth S. Stong, 17 AM. BANKR. INST. L. REV. 287 (2009) Judge Elizabeth Stong, Eastern District New York thoughts on mediation as bankruptcy judge states that she mediates matters as a sitting bankruptcy judge comments that ADR can serve several problem-solving goals of business bankruptcies, including (1) preserving parties relationships; (2) keeping costs down; and (3) addressing underlying financial issues notes that the ability of a neutral to evaluate a case is a catalyst for resolution, particularly when the mediator is a judge states that when she mediates, she reads mediation submissions but also looks at the docket in the case and any related proceedings You ve Got Your Mother s Laugh: What Bankruptcy Mediation Can Learn from the Her/History of Divorce and Child Custody Mediation, William Hildbold, 17 AM. BANKR. INST. L. REV. 427 (2009) urging greater user of mediation in bankruptcy proceedings to reduce costs, and as a mechanism to bridge jurisdictional and standing challenges that bankruptcies can pose thesis that repeat players within bankruptcy do not understand how the role of the mediator is supposed to diverge in significant ways from the traditional neutral of a trustee or judge provides history of use of mediation in bankruptcy suggests that a trustee could serve in a mediation role in Chapter 11 bankruptcies A User s Guide to Bankruptcy Meditation and Settlement Conferences, Jarrod B. Martin, 11 TRANSACTIONS TENN. J. BUS. L. 185 ( ) asserts that an expert mediator may add value to a bankruptcy mediation Page 49 of 93

50 states that choosing a mediator who is not knowledgeable may make everyone a loser, particularly in the bankruptcy context asserts that cost-saving is an added benefit to requesting a judge to mediate a bankruptcy dispute (citing Bohm interview) Topwater Exclusive Fund III, LLC v. SageCrest II, LLC (In re Sagecrest II, LLC), 2011 U.S. Dist. LEXIS 3517 (D. Conn. Jan. 14, 2011) concerned an appeal of approval of a settlement agreement in which the debtor s current manager was removed, the manager s administrative claim was resolved, and a new interim manager was appointed objecting parties argued against approval of the settlement agreement on several grounds in affirming the bankruptcy court s ruling approving the settlement agreement, the district court cited to the fact that the settlement, and the settlement payment figure was determined through lengthy mediation that was overseen by a qualified and experienced former bankruptcy judge In re A. T. Reynolds & Sons, Inc., 452 B.R. 374 (S.D.N.Y. 2011) concerned an appeal of parties who were sanctioned pursuant to Fed. R. Civ. P. 16(f) for failure to comply with an order on mediation, and therefore were held in violation of the terms of the order appealing parties were found not to have participated in good faith court-ordered mediation, did not fully participate during the mediation process, failed to send someone with settlement authority, and attempted to control the procedural aspects of mediation in reversing the bankruptcy court s ruling, the district court cited that the sanctions order regarding mediation was an abuse of discretion, and that the determination that the appealing party violated the terms of the mediation order was clearly erroneous In re City of Detroit, 2014 Bankr. LEXIS 4061, at *25 (Bankr. E.D. Mich. Aug. 28, 2014) addressing allegations by parties that the appointed mediators (a U.S. district judge and attorney) were biased in their mediation of issues in the Detroit bankruptcy commenting that allegations of bias overlook the 9019 process as an additional protection for creditors when a settlement occurs in bankruptcy ( all of the settlements that the mediators negotiate among the parties in this case are subject to Court approval under the very carefully crafted and balanced standards for the approval of settlements and plan confirmation. ) Page 50 of 93

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