With their fans back in the stands and a full 162 game schedule awaiting them, all 30 MLB franchises begin their quest today for the 2021 World Series championship! Opening Day ceremonies take place in 15 cities across the country, with the defending champion L.A. Dodgers, who named Clayton Kershaw to be the Opening Day starting pitcher for the 9th time in his career (and possibly the last time in a Dodger uniform, given that he is in the final year of his contract), traveling to Denver to take on the Rockies, while my Chicago Cubs — with 2015 Cy Young Award winner Jake Arrieta back in a Cubs uniform after three years away — hosting the Pirates at Wrigley.
That makes today the perfect day to again acknowledge the contributions of Major League Baseball to the dispute resolution profession generally and to my own mediation practice more specifically.
As you may know, “baseball arbitration” derives its name from its use resolving salary disputes between a team and one of its players when: (1) the team wants to retain that player, (2) the team and player are not able to reach an agreement upon the player’s salary for the upcoming season; (3) the player doesn’t yet qualify for free agency; and (4) the player otherwise satisfies the eligibility requirements for salary arbitration.
In “baseball arbitration,” each side submits their final proposal to the arbitrator and to one another. After considering the evidence and arguments presented by the parties, the arbitrator must choose one proposal or the other. In other words, the arbitrator may not issue an award that differs from the proposals submitted by the parties. Consequently, there are only two possible outcomes.
Another form of “baseball arbitration” — known as “night baseball arbitration” — differs as follows: the parties do not reveal their proposals to the arbitrator. Instead, the arbitrator considers the evidence and arguments and then issues a merits-based award without knowing which side the award will favor. In that sense, the arbitrator’s award is neutral in application without being random (as opposed to, for example, flipping a coin, which is also neutral in application but entirely random). The party whose proposal is closest to the arbitrator’s award is deemed the prevailing party and that party’s proposal becomes the actual award. Again, there are only two possible outcomes.
The brilliance of both forms of “baseball arbitration” is threefold: (1) the parties are incentivized to present their most reasonable proposals, because an unreasonable proposal increases the likelihood that the arbitrators’ decision will favor the other side; (2) the process enables the parties to effectively manage risk, because each side knows their precise risk once proposals are exchanged; and (3) the process often results in a negotiated resolution, because the parties usually continue to negotiate after they exchange proposals.
Five years ago, I turned to “baseball arbitration” and “night baseball arbitration” for inspiration when I received a call from counsel asking me to conduct what he referred to as a “binding mediation.” Confused, I asked him to explain exactly what he meant by “binding mediation” because the term seemed like an oxymoron to me. He said that the parties wanted to retain me to serve as mediator, but wanted me to determine the final outcome if settlement negotiations resulted in an impasse.
I declined to do so, because I felt that would turn the mediation process into a de facto arbitration. To me, the guiding principle of mediation is party self-determination. A process that delegates final decision-making responsibility to the mediator is quite literally the antithesis of self-determination. He persisted, however, insisting that the parties wanted me to serve as mediator, but also insisting that whatever process I chose to use had to guarantee resolution and closure.
To satisfy the parties’ needs while remaining true to my own convictions, I realized I would have to design a “different” mediation process — one that included a mechanism to resolve a final impasse, while still respecting, to the greatest extent possible, the principle of self-determination.
Borrowing concepts from both “baseball arbitration” and “night baseball arbitration,” I designed what can best be described as a hybrid mediation process that I now refer to as “Baseball Mediation™.” In most respects, Baseball Mediation is a conventional mediation process in which the mediator facilitates settlement negotiations following discussions about liability, damages, and risk analysis. However, the process also incorporates a unique impasse-breaking mechanism, triggered only if the parties agree they’ve reached an impasse, that automatically and immediately resolves the dispute.
As designed, Baseball Mediation — like both versions of “baseball arbitration” — incentivizes the parties to present their most reasonable demands and offers because an unreasonable demand or offer increases the likelihood that the impasse-breaking mechanism will favor the other side. Similarly, Baseball Mediation — like both versions of “baseball arbitration” — enables the parties to effectively manage risk because each side knows their precise risk before declaring a final impasse.
Most importantly, Baseball Mediation respects the principle of self-determination because the impasse-breaking mechanism — much like the arbitrator’s award in “night baseball arbitration” — has been carefully designed to be neutral in application without being random.
To date, Baseball Mediation has been even more effective than I had hoped. In all but four matters, the parties have either reached a negotiated settlement or were less than $17,500 apart when they declared an impasse and triggered the impasse-breaking mechanism. In the remaining four matters, which all happened to be higher-value claims, the parties were less than $50,000 apart when they declared a final impasse. Put another way, the parties — at least thus far — have either reached a negotiated settlement or closed the gap to less than $50,000 in 100% of the cases.
Baseball Mediation has proven to be particularly popular as an alternative to binding arbitration in UM and UIM cases. The process provides the same assurance of closure, but is more efficient and cost-effective because there’s no need to present testimony from parties and witnesses, nor is there any need to retain experts to testify. Moreover, the outcome is known immediately.
But the true beauty of Baseball Mediation lies in the fact that it assures a mutually acceptable outcome every time, because neither side will declare a final impasse unless that party is prepared to accept the risk that the impasse-breaking mechanism might favor the other side.
In other words, Baseball Mediation provides a unique way to manage risk, guarantee same-day resolution and assure a mutually acceptable outcome because the parties themselves always know, determine and control the possible outcomes as a result of their actual settlement negotiations.
Yogi Berra is believed to have once said “It’s tough to make predictions, especially about the future.” If you find that it’s tough to predict the future, and/or your client simply prefers certainty and closure, it might be time to “Play Ball!”
Happy Opening Day!
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.
Floyd J. Siegal