B-9019-2. ALTERNATIVE DISPUTE RESOLUTION

(a)   Scope of the Rule

The alternative dispute resolution method governed by this rule is mediation.  This rule does not preclude the parties from agreeing to the use of any other reasonable method of alternative dispute resolution.  However, any use of arbitration by the parties will be governed by 28 U.S.C. §§654-647.

(b)   Applicability of the Rule

This rule applies to all contested matters and adversary proceedings pending before a Bankruptcy Judge of this district.  

(c)   Referral to Mediation:  Process

(1)     Motion to Refer to Mediation

Any party may file a motion to refer a matter to mediation (“Motion to Refer to Mediation”).  If a party’s Motion to Refer to Mediation certifies that all parties to the matter consent to mediation and have been served with the motion, and the Court finds the motion to be appropriate under the circumstances, the Court may enter an order referring the matter to mediation without further notice or hearing.  If a motion does not so certify, the motion shall be set for hearing.  The Bankruptcy Judge may decide not to grant a motion to refer a particular matter to mediation if the Court determines that the motion was filed to delay the case or proceeding or if the matter involved is not likely to be resolved by mediation, given the issue or the parties involved.  

(2)     Court’s Referral to Mediation

(A)     Court’s Notice of Status Conference to Discuss Mediation

The Court may refer a matter to mediation on its own by setting a status conference to consider the referral.  At the status conference, the parties can oppose the referral or indicate consent.  After the hearing, the Court may enter an order referring the matter to mediation.  

(B)     Court’s Proposal During Other Scheduled Hearing or Status Conference

The Court may propose referral to mediation at any other hearing or status conference.  The parties can oppose referral, indicate consent, or request a separate status conference on the proposal.  The Court may enter an order referring the matter to mediation or may set a status conference for a later date.

(d)   Jurisdiction and Pendency of Matter:  Deadlines and Discovery

At all times during the course of mediation, the matter remains under the jurisdiction of the Judge to whom the matter is assigned.  Referral to mediation does not abate or suspend the matter.  As to discovery matters, absent Court order or the agreement of the parties, no scheduled dates shall be deferred or delayed.  Whenever possible, parties are encouraged to limit discovery to the development of information needed to facilitate mediation.

(e)   Selection of the Mediator

(1)     Selection by Agreement

Any person may be selected to serve as a mediator.  Parties are encouraged to consider those appearing on the Court’s list of mediators maintained by the Clerk.  If a proposed mediator has been agreed upon by the parties, then within fourteen (14) days after the order referring the matter to mediation, the parties shall file a Notice of Selection of Mediator.  The notice shall designate the name of the proposed mediator.  

(2)     Selection of Candidates by the Court

If the parties cannot agree on a mediator within fourteen (14) days after entry of the order referring the matter to mediation, or if the parties elect to request the Court to name a panel for their consideration before expiration of the fourteen (14)-day period, a party to the mediation shall file a Motion to Select a Panel of Mediator Candidates.  The fourteen (14)-day selection period may be extended upon motion of either party to the matter.  The Court will issue a Notice of Designation of Mediator Candidates which designates three (3) potential mediators.  Each side, alternately, shall strike the name of one (1) mediator.  The side initiating the controversy will strike first, and shall do so no later than three (3) days after the filing of the Notice of Designation of Mediator Candidates.  The parties shall complete the striking process within seven (7) days of the Court's designation and shall file a Notice of Selection of Mediator with the Court.  During the striking process, the parties can agree on a mediator other than one named on the panel of candidates.  If a party fails to strike from the list when required to do so, then the first name on the list that has not previously been stricken is deemed stricken by the party with the duty to strike.  The other party then exercises its right to strike or, if only one name remains, files the Notice of Selection of Mediator.

(3)     Qualification and Immunity

A mediator becomes qualified upon the filing of the affidavit required by subparagraph (e)(5).  To the extent permitted under applicable law, a qualified mediator shall have immunity in the same manner and to the same extent as would a duly appointed Judge.

(4)     Disqualification

Any person selected to serve as a mediator shall disqualify himself or herself from the matter if impartiality might reasonably be questioned.  A mediator is also subject to the disqualification rules found in 28 U.S.C.§455.  A party that reasonably believes the mediator should be disqualified may file a Request for Disqualification of Mediator.

(5)     Affidavit

A person proposed for selection as a mediator shall prepare an affidavit disclosing any connections with the parties or counsel involved with the controversy which in any way could affect the neutrality or partiality of the mediator and setting forth any other reason which could result in disqualification under subparagraph (e)(2) of this rule.  The affidavit shall summarize the anticipated rate of compensation and terms of payment of the proposed mediator.  The affidavit shall be filed no later than seven (7) days after the notice specified in subparagraphs (e)(1) and (2).  The time period for filing the affidavit can be extended upon motion of any party to the matter.  

(6)     Replacement of Mediator

If at any time the mediator is disqualified or opts not to continue to serve, the parties may agree upon another mediator and file the appropriate notice, or they may request that the Court designate a panel of candidates pursuant to subparagraph (e)(2).

(f)   Compensation

Unless otherwise agreed by the parties or ordered by the Court, the compensation and costs of the mediation shall be borne equally by the parties to the mediation.  If one of the parties is a trustee or debtor-in-possession, the amount of compensation to be paid by that party shall be treated as an administrative expense and paid by the estate.

(g)   The Mediation

(1)     Control of the Mediation

The mediator shall control all procedural aspects of the mediation, including but not limited to:  

(A)     setting dates, times, and places for conducting sessions of the mediation;

(B)      requiring the submission of confidential statements;

(C)     requiring the attendance of representatives of each party with sufficient authority to negotiate and settle all disputed issues and amounts;

(D)     designing and conducting the mediation sessions; and

(E)     establishing a deadline for the parties to act upon a settlement proposal.

(2)     Termination of the Mediation by Mediator

The mediator may terminate the mediation whenever the mediator believes that continuation of the process would harm or prejudice one or more of the parties; whenever the ability or willingness of any party to participate meaningfully in the mediation is so lacking that a reasonable agreement is unlikely; or whenever the mediator determines that continuing the mediation process would be futile.

(3)     Termination of the Mediation by a Party

Parties are required to appear for mediation and to participate in good faith.  However, parties are not compelled to reach an agreement.  Either party may withdraw from the mediation if the party determines that continuing the mediation would be futile.   

(4)     Conclusion of the Mediation

(A)     If the mediation results in a full settlement of the contested matter or adversary proceeding, the mediator or the party who requested the mediation shall within seven (7) days of the conclusion of the mediation file a Report of Mediation so advising the Court.  Within a reasonable time thereafter, the parties shall submit to the Court an agreed entry, agreed consent to judgment, or motion for approval of compromise or settlement and provide such notice as is required by the Federal Rules of Bankruptcy Procedure or as the Court may direct.  If mediation results in a partial settlement, such that a motion to compromise and settle is not required, the parties shall file a notice of submission of any appropriate stipulation.

(B)     If the mediation is terminated or does not result in a settlement, and the mediator, after appropriate consultation with the parties and their counsel, is reasonably satisfied that no further mediation effort is feasible at that time, then the mediator or the party who initiated the mediation shall file a Report of Mediation with the Court, serving all parties to the controversy, that states only that the mediation was concluded without a settlement.

(5)    Release of Mediator

Upon the filing of the report under subparagraph (g)(4), the mediation shall be deemed concluded and the mediator shall be relieved of all further duties or responsibilities.

(h)   Confidentiality

(1)     Protection of Information Disclosed at Mediation

Any written or oral communication made during the course of any process or proceeding covered under this rule is confidential unless otherwise agreed by the parties.  The unauthorized disclosure of confidential communication by any person may result in the imposition of sanctions pursuant to subparagraph (i).  In addition, without limiting the foregoing, Rule 408 of the Federal Rules of Evidence and any applicable federal or state statute, rule, common law, or judicial precedent relating to the privileged nature of settlement discussions, mediation, or other alternative dispute resolution procedure shall apply.  Information otherwise discoverable or admissible in evidence, however, does not become exempt from discovery, or inadmissible in evidence, merely by being used by a party in mediation.  

(2)     No Discovery from Mediator

The mediator shall not be compelled to disclose to the Court or to any person outside the mediation conference any of the records, reports, summaries, notes, communications, or other documents received or made by a mediator while serving in such capacity.  The mediator shall not testify or be compelled to testify in regard to the mediation in connection with any arbitral, judicial, or other proceeding.  The mediator shall not be a necessary party in any proceeding relating to the mediation.  

(3)     Protection of Proprietary Information

The parties, the mediator, and all mediation participants shall protect proprietary information during and after the mediation.

(4)     Preservation of Privileges

The disclosure by a party of privileged information to the mediator or to another party during the mediation process does not waive or otherwise adversely affect the privileged nature of the information.

(i)   Sanctions

Upon motion by any party, the Court may impose sanctions against any person who fails to comply with this rule.