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Mandatory Mediation Initiative at the Bankruptcy Court for the District of New Jersey

At a recent meeting of the Dispute Resolution Committee of the ABA Business Law Section, a new mandatory mediation initiative was presented that may be unique in scale in structure.

Judge Michael Kaplan of the US Bankruptcy Court for the District of New Jersey explained the program, along with consultants Suzanne McSorley and Laura Kaster.  Judge Kaplan described certain rule changes for the court, pursuant to which all adversary proceedings or contested matters initiated after May 1, 2014, will presumptively be ordered to mediation.  A panel of about 55 has been assembled as mediators for this purpose – established neutrals who are being trained in the principles of bankruptcy law and bankruptcy specialists who are being trained in the skills of mediation.

Each judge has about 200 such matters on the docket at any one time.  Judge Kaplan explained that, in the past, litigants have been urged to try mediation, but the results of that voluntary program were “dismal.”  In his view, non-mandatory, non-presumptive programs have not been successful.  Ms. Kaster and Ms. McSorley assisted the court in devising a presumptive program that abandoned the old panel and started anew.

Contested matters will be ordered to mediation as soon as answers are filed.  Parties will be free to select a mediator from the panel (or from elsewhere) and an assignment will be made by the court only if the parties cannot agree.  Mediators will charge their normal rates, but be expected to handle at least one pro bono matter each year.  The hope is that the process will assist litigants to “get a sense of their case” before investing substantial resources in it.  The presumption of mediation will not obtain in pro se cases, in cases seeking equitable relief, and in matters initiated by the U.S. Trustee.

Ms. McSorley and Ms. Kaster emphasized that the pool of mediators was purposely limited in order to ensure a very high level of quality and also so that the mediators on the panel would gain experience through many assignments per year.  They noted that mandatory mediation is often a “gateway” experience for attorneys and litigants, and the quality of that experience needs to be high.

The new program may be unprecedented.  Delaware has a mediation program but it is more narrow in scope.  Other state and federal courts have programs but mediators are expected to serve without compensation for some or all of the mediation.  Judge Kaplan saw no need for that – the mediation program, over all, will save litigants money rather than add to expenses.  One Committee member noted that the exception for pro se cases was prudent, inasmuch as unrepresented debtors frequently seek legal advice, placing a mediator in a potentially awkward position.

It will be interesting to learn how the program rolls out.

1 Comment
  1. I applaud what sounds like a fine program, but would like to know why the program excepts cases seeking equitable relief and cases initiated by the US Trustee. Mediations often involve parties agreeing to perform or refrain from some act. Injunction, for example, could involve mediating a performance obligation in exchange for some value, say reducing the size of a claim.

    Pro se parties would benefit from mediation. Indeed, many courts have very active pro se mediation programs. Bankruptcy does not seem so different as to warrant exclusion.

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