Rules? Rules? We Don’t Need No Stinkin’ Rules!

PLAINTIFF’S COUNSEL: “We offer these 5 affidavits of witnesses whose testimony contained therein support all of the allegations in our complaint."

ARBITRATOR:  “Any response from Defendants?”

DEFENDANT’S COUNSEL: “We object, the affidavits are hearsay.”

ARBITRATOR:  “What is Plaintiff’s response to the objection?”

PLAINTIFF’S COUNSEL: “This is an arbitration proceeding.”

ARBITRATOR: “Objection overruled.  The affidavits are admitted for all purposes."

 Ok, maybe this is an exaggeration but not by much. 

The Alternative
Chapter 151 of the Texas Civil Practices and Remedies Code, (CPRC Sec. 151.001 et seq.), entitled “Trial By Special Judge”, was passed in 1987 and provided a protocol for private trials of civil or family matters pending in a district court, statutory probate court, or statutory county court.[1]  It consists of merely 13 sections but is profound in its selection of issues addressed (all of which will be examined in subsequent writings).  Perhaps the most important appears in Section 151.013:

            “The right to appeal is preserved.  An appeal is from the order of the referring judge’s court as provided by the Texas Rules of Civil Procedure and the Texas Rules of Appellate Procedure.” [2]

            Of course, such a right would have little meaning if there were no particular rules to guide the fact finder in the first place.  Thus, the basis for appeal is the body of law and procedure so familiar to practicing trial lawyers:

            “Rules and statutes relating to procedure and evidence in the referring judge’s court apply to a trial under this chapter.”[3] (emphasis added)

And in our system of jurisprudence, rules matter especially evidence.

Tools of Truth

A common complaint about trial by arbitration is that century-old rules governing the admissibility of evidence have been abandoned.  In their place is a “catch-as-catch-can” protocol that is devoid of consistency or predictability, (such concepts forming the basis of stare decisis, and at the very heart of our system of jurisprudence).  The standard response to an objection of admissibility has become: “Hey, chill-out, its arbitration!”  And, there is support for that response.

            Many arbitration agreements adopt the rules and procedures of the American Arbitration Association and, while there are other organizations that administer arbitration proceedings, the AAA is by far the most favored.  The AAA has reduced the rules of evidence to one, Rule 34,[4] which reads in part:

• (a)“The parties may offer such evidence as is relevant and material to the dispute and shall produce such evidence as the arbitrator may deem necessary to an understanding and determination of the dispute.  Conformity to legal rules of evidence shall not be necessary”…(emphasis added)
• (b)The arbitrator shall determine the admissibility, relevance and materiality of the evidence offered and may exclude evidence deemed by the arbitrator to be cumulative or irrelevant”

            Not a word about hearsay, character, or expert evidence.  And these topics do not just affect the finding of liability but can be particularly relevant to proof of damages, (more on that later in the series).

           Truth is what is believed in a courtroom.  The rules of evidence determine what information may be considered in arriving at that truth. Evidence is not and should not be a dead language, and while Latin has been virtually removed from our legal lexicon, the law of evidence should be sparred a similar fate.

            The law of evidence developed in response to the realities of the human condition when it comes to relating the facts of any event.  Recall the kindergarten game of “Telephone”, where we all sat in a circle with our classmates and whispered a message from ear to ear.  No matter how short or simplistic the message may have been, by the time it reached the last student the message was so distorted that everyone had a good laugh.

            But this is no laughing matter. This was our first introduction to the unreliability of “hearsay”.  Human renditions can also be tainted by bias, jealousy, perception, ignorance and out and out lies.[5].

            Thus, under the Trial By Special Judge provisions, not only are the rules that lawyers have learned and used for years in play, but so are the appellate cases that inform such rules.  Prior rulings by other arbitrators are of little use in arbitration.  Everyday is a new day.  The rule of stare decisis actually settles cases.

            However, if you think such archaic rules and principles inhibit revelation of the truth, stick to arbitration.

Arbitration Horror Story No. 283

Without stating the basis for its decision, an arbitration panel awarded claimant $500,000.00 for mental anguish associated with the fear of someday contracting cancer as a result of chemical exposure occasioned by the defendant’s conduct.  Texas law prohibits the award of such damages.  Temple–Inland Forest Products Corporation v. Carter, 993 S.W.2d 88, 93 (Tex.1999).

            Nevertheless the appellate court refused to vacate the award for at least two reasons:  (1) Such award was a “mere mistake”, (as opposed to “gross mistake”), in applying Texas substantive law. (2) The fact that no court of law or equity in the entire State of Texas could have granted this relief is not a ground for vacating or refusing to confirm the award.  Forest Oil Corp. v. El Rucio Land and Cattle Co. 446 S.W.3d 58 (Tex. App-Houston 1st Dist. 2014)

Have your own horror story you would like to share? 

Send it to [email protected]

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[1] CPRC Sec. 151.001

[2] CPRC Sec. 151.013

[3] CPRC Sec. 151.005

[4] Commercial Arbitration Rules and Mediation Procedure, American Arbitration Association. Effective

     October 1, 2013.

[5] A few ancient examples: In Coles Trial, 1692, a widow was not permitted to give testimony of what her deceased husband told her, even though it was about a plot to murder. The court denied the widow’s statements into “evidence in law”, because there was no way to confirm or contradict it.  Similarly in 1696 the Fenwick’s Trial the court considered whether statements made outside of court should be excluded because such admission would offend the defendant’s right to cross-examination.  Ultimately,  the outside statements about the defendant’s character as a drunk and were admitted and  the defendant was later sentenced to death.