[The following is a “new and improved” version of the April 2009 edition of Resolution Strategies].
With Clayton Kershaw scheduled to take the mound in just a few hours to face the Giants in the Dodgers’ 2013 season home opener, and many — including me — speculating that Sandy Koufax will precede him there to throw out the ceremonial first pitch, today is the perfect time to once again acknowledge the contributions of Major League Baseball to the dispute resolution process.
As you may know, “baseball arbitration” – which derives its name from its use in resolving certain types of salary disputes between players and owners – is a form of binding arbitration in which each side presents the other, and the arbitrator, with a specific proposal. After considering the evidence, the arbitrator must choose one proposal or the other. The arbitrator has no discretion to issue an award that differs from the proposals presented by the parties, so there are only two possible outcomes.
Another form of “baseball arbitration” – referred to as “night baseball” – differs in that the arbitrator is “kept in the dark” as to the parties’ proposals. After considering the evidence, the arbitrator issues an award. The party whose proposal comes closest to the arbitrator’s award is deemed to be the prevailing party and that party’s proposal becomes the actual award.
The beauty of “baseball arbitration” is that it compels the parties to present their most reasonable proposals to one another, because an unreasonable proposal makes it more likely that the arbitrator’s decision will favor the other side. In other words, both versions of “baseball arbitration” force the parties to close the gap that separates them because doing so will increase their odds of prevailing. Once they close the gap, the parties – who often continue to negotiate until the arbitration award is issued – frequently find a way to resolve their differences.
With a few minor tweaks, the “baseball arbitration” concept can become a useful tool when the parties reach a seeming impasse during mediation. Just last week, for example, it appeared that impasse was imminent as we approached the twelfth hour of a complicated multi-party mediation in which plaintiff and defendants were still $400,000 apart. With plaintiff and his counsel threatening to leave, I suggested that the parties consider disclosing their “bottom lines” to me, with the understanding that I would then be authorized to disclose their respective “bottom lines” if, but only if, the “bottom lines” were within a pre-determined, agreed-upon amount of one another. The hope, of course, was that the process — like “baseball arbitration” — would drive the parties to voluntarily close the gap, increasing the likelihood of settlement.
Once the parties agreed to the concept and had disclosed their numbers to me, I asked each to propose the conditions under which I was authorized to disclose their numbers. One side proposed that I disclose the numbers only if the parties were within $50,000 of one another; the other proposed that I disclose the numbers if the parties were within $125,000 of another. After further negotiations, both sides agreed to the latter proposal.
As it so happened, the parties were exactly $125,000 apart and, pursuant to the agreement, I proceeded to disclose their respective “bottom lines.” Within the next fifteen minutes, that gap was reduced to only $50,000, but neither side was willing to make a further concession. Exhausted, we decided to adjourn for the evening, with both sides agreeing to leave their offers open for at least three days. Two days later, after first closing the gap to $30,000, the parties reached a settlement.
If the parties had not reached a settlement, I was prepared to recommend that they convert the process to a true “baseball mediation” by submitting their “best and final” proposals to me and authorizing me to impose a binding and enforceable agreement by selecting one of the two proposals to be the final settlement.
When it looks like there’s nothing more that can be done to resolve a dispute short of trial, it might just be time to play a little baseball – after all, as Yogi said, “it ain’t over ’til it’s over.”
As always, it would be my pleasure to assist you and your clients in the dispute resolution process. Please don’t hesitate to contact me if I can be of service.
Best regards,
Floyd J. Siegal