Court Seeks Upset of Ruling on Its Arbitration Program

, Delaware Business Court Insider


The Delaware Court of Chancery has asked the U.S. Supreme Court to overturn a federal appellate court decision declaring its confidential arbitration program unconstitutional.

The petition for a writ of certiorari was filed Tuesday, two days before the final deadline for a Supreme Court appeal was set to pass.

The 116-page petition was filed in response to an opinion by U.S. Court of Appeals for the Third Circuit declaring that the statute creating the program was unconstitutional. Attorneys representing the Chancery Court made several arguments in support of the program, including alleging that the public's right to access civil trials under the First Amendment does not apply to the Chancery Court program because it's arbitration.

"The majority's erroneous decision does not just invalidate Delaware's statute," the Chancery Court attorneys said. "Numerous state and federal laws provide for confidential government-sponsored arbitration, some of which closely resemble the program Delaware implemented here."

"The broad reasoning employed by the court of appeals would invalidate the latter and cast significant doubt on the constitutionality of all such measures. The decision thus creates significant uncertainty regarding the ability of state and federal courts to utilize innovative ADR techniques, which are critical to addressing the overcrowding that plagues the judiciary," the attorneys continued.

Andrew J. Pincus of Mayer Brown is representing the Chancery Court. He said in a statement that the appeal was important because it helped Delaware compete with other jurisdictions with business resolution programs.

"Because of the importance of this issue, and the job-creating potential for Delaware and the nation of finding innovative solutions to temper the growing costs and delays of resolving business disputes, a definitive answer is being sought from the Supreme Court concerning the constitutionality of the Delaware statute," Pincus wrote.

David L. Finger, an attorney with Finger & Slanina, is representing the Delaware Coalition for Open Government, a government transparency advocacy group. The organization, known as DelCOG, filed the initial lawsuit challenging the Chancery Court's arbitration program on the grounds that it violated the constitution. He said it was unlikely that the Supreme Court would grant certiorari.

"This is not surprising," Finger said. "However, the Supreme Court receives thousands of petitions every year and accepts only a handful. I question whether the Supreme Court will consider a state statute unique to Delaware with no national implication, analyzed under well-established First Amendment law, sufficiently important to take up."

In an October 2013 decision, Delaware Coalition for Open Government v. Strine, 12-3857, the Third Circuit affirmed a 2012 ruling by U.S. District Judge Mary A. McLaughlin of the Eastern District of Pennsylvania. The Third Circuit, in a 2-1 opinion, ruled that the program is ultimately a civil trial and, therefore, violates the public's right to access civil trials under the First Amendment.

What's being said

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    The problem with the program was not the arbitration process itself, but rather the confidentiality feature. Even a pro-arbitration Supreme Court might find that this feature of the program is not necessary and in fact harmful, especially if the arbitration process is mandatory -- I am not sure if it is in this case.

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