When Not to Use Alternative Dispute Resolution (ADR)?
When Jury Trial Desired: When one or both of the parties desire a jury trial, ADR procedures are usually inappropriate.
When Imbalance of Power Exists: Where there is a significant imbalance in the parties’ bargaining power , the stronger party may see an advantage in marshaling its greater recourses and wearing the opposing party out through drawn out judicial proceedings.
When One Party Is Stakeholder: A party who has the use of the money at issue may benefit from a delay in litigation.
When Linkage Exists: When the lawsuit is part of a larger dispute involving other lawsuits and parties, one party may be willing to spend more money litigating the case that the case is worth in order not to avoid setting a precedent that may be applicable in other cases.
Where There Are Substantial Legal Issues: Some suggest that ADR is ill-equipped to deal with significant legal issues.
Where There Are Substantial Credibility Questions: Some critics believe that ADR is not effective when there are substantial questions of credibility.
Where There Are Multiple Parties: It may be more difficult to implement ADR when there are multiple parties involved in the dispute.
Where Legal Precedent Sought: ADR may not be appropriate if one of the parties desires to establish judicial precedent.
When Adversary Is Unreasonable: If the adversary is wholly unreasonable, ADR may not be successful.
When Extensive Discovery Is Desired: ADR may not be appropriate where extensive discovery is needed or desired.
When Need to Bind Non-Parties: If there is a need to bind persons who are not parties to the result of the action (for example, in a mortgage foreclosure or an action to establish title to property, a judicial proceeding is preferable to ADR.
Note: Concern has also been expressed over the broad remedial powers of arbitrators, particularly given the limited judicial review of arbitral decision. (See, e.g., Advanced Micro Devices Inc. v. Intel Corp., 9 Cal.4th 362, Cal. Rptr.2d 581, 885 P.2d 994 (1994)(party ordered to forfeit its defense in separate copyright suit in federal court.)