Is New Era ADR, Inc. Defendant Friendly?
By Jared Man
One of the faster growing institutional providers of arbitration is New Era ADR, Inc. (“New Era”), who boasts top companies and law firms as clients.[1] New Era is designed as a fully virtual dispute resolution platform that delivers equitable solutions in a more time and cost efficient manner.[2] Their hook is their virtual platform, which allows parties to upload necessary documents, schedule meetings, and have hearings all online.[3] Therefore, the centralization of these features onto one platform eases the burden that procedural hurdles usually pose in ADR proceedings.[4]
While their growth and unique approach to arbitration points to an admirable characterization of their company, the Heckman litigation against their client, Live Nation Entertainment (“Live Nation”), has raised concerns about the structure of their proceedings.[5] Plaintiffs brought antitrust claims against Live Nation, alleging that they suffered damages from paying exorbitant fees on ticket purchases.[6] Live Nation argues that this dispute must be sent to arbitration pursuant to their Terms of Use, while plaintiffs believe that these arbitration proceedings are so biased against consumers that the arbitration agreement is unconscionable.[7]
The substantive unconscionability portion of the case encompasses the problematic procedures New Era implements.[8] “Mass arbitration” is a batched arbitration method which occurs when five or more claims against a common respondent are filed that have the same evidence, witnesses, facts, and/or issues of law.[9] The court in Heckman determined that the mass arbitration procedure was biased in favor of Live Nation as it was ambiguous how the neutral would apply bellwether precedent.[10] A bellwether precedent is an outcome on a common issue that is then applied to future cases with similar characteristics.[11] Therefore, the court asserted that New Era’s application of bellwether precedent constituted substantive unconscionability because the application of precedent was at the sole discretion of the neutral, opening the possibility of thousands of claimants having their dispute virtually decided before voicing their position.[12] Though multidistrict litigations use bellwether precedent, they include safeguards that are not present in New Era’s structure.[13] The court also found substantive unconscionability in the limitation of complaints to ten pages as well as in mandating that the claimant pay a fee and obtain defendant’s approval to have discovery.[14] Furthermore, the court ruled that the arbitrator selection process and limited right to appeal are substantively unconscionable.[15]
Additional arguments that New Era is defendant-friendly can be offered. The Securities Litigation and Consulting Group found that plaintiff win rates and awards were lower during the period that FINRA had postponed in-person hearings than the same period in the past four years, bringing into question the integrity of remote arbitration proceedings.[16] FINRA is a government backed, nonprofit organization that oversees U.S. broker-dealers to protect investors from fraudulent activity by market actors.[17] FINRA also provides a forum for arbitration proceedings and posts FINRA arbitration awards.[18] Additionally, Imre Szalai, law professor and expert on arbitration law, stated that it is difficult to establish complex claims, like antitrust suits, with limitations on proof and discovery.[19]
However, it can be argued New Era’s defendant friendly characterization is a result of their desire to stand apart from competitors by decreasing costs and time. Although ADR is meant to be an alternative to litigation, the realities of ADR do not reflect that notion.[20] New Era’s procedure implements various time limitations on arbitration and mediation proceedings that range from thirty to a hundred days.[21] Therefore, one explanation of imposing limitations on filings is to prevent a barrage of paperwork that may lead to “bicker[ing] over complex rules, processes, and procedures.”[22] Furthermore, Rule (2)(y)(iii) of New Era’s General Rules and Procedures allows for a party to “argue against the Neutral’s application of a lead decision as Precedent.”[23] So while the definition of precedent and how it is applied may be ambiguous, New Era does allow for opposing arguments to be heard.[24] Also, Rule 2(o)(iii)(2) provides the ability for either party to make a “Specific Discovery Request” which, subject to arbitrator approval, would order the opposing side to produce specifically identified information relevant to the dispute.[25] Additionally, Live Nation argued that New Era’s procedures are similar to other arbitral institutions and that plaintiffs proposed mass arbitration rules that mirror New Era’s proceedings.[26]
New Era has approached the ADR market with its own unique approach. Though their policies have come under scrutiny with recent litigation, an appeal has been filed so a final decision must wait. However, what is clear is that arguments supporting and refuting the portrayal of New Era as defendant friendly can be offered.
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[1] Matt Perez, U.S. Olympics to Use New Era ADR for Arbitrations, Law360 (June 28, 2023, 4:23 PM), https://www.law360.com/pulse/articles/1693666 [https://perma.cc/DS6F-QHL6].
[2] About Us, New Era ADR, https://www.neweraadr.com/about/?_gl=1*1o697hs*_up*MQ..*_ga*MTQyOTI0MTExMC4xNjk4NjE0Mzc4*_ga_VM83LPNQXP*MTY5ODYxNDM3Ny4xLjAuMTY5ODYxNDM3Ny4wLjAuMA [https://perma.cc/YZM4-GSRY] (last visited Oct. 29, 2023).
[3] New Era Expedited Arbitration Overview, New Era ADR, https://www.neweraadr.com/new-era-adr-expedited-virtual-arbitration-rulesprocedures/?_gl=1*r94ndg*_up*MQ..*_ga*Mzc1MDM2ODM2LjE2OTg2MTQxMTA.*_ga_VM83LPNQXP*MTY5ODYxNjE5NS4yLjEuMTY5ODYxNjM2Ni4wLjAuMA [https://perma.cc/8LWA-S7XA] (last visited Oct. 29, 2023).
[4] Id.
[5] Heckman v. Live Nation Ent., Inc., 2023 U.S. Dist. LEXIS 145793 (C.D. Cal. Aug. 10, 2023).
[6] Id.
[7] Id.
[8] Id.
[9] New Era ADR Rules and Procedures, New Era ADR (Aug. 21, 2023), https://www.neweraadr.com/wp-content/uploads/2023/08/New-Era-Rules-August-2023-1.pdf?_gl=1*yesi61*_up*MQ..*_ga*MTQyOTI0MTExMC4xNjk4NjE0Mzc4*_ga_VM83LPNQXP*MTY5ODYxNDM3Ny4xLjEuMTY5ODYxNjAyNi4wLjAuMA [https://perma.cc/H8QB-C9UW].
[10] Heckman, 2023 U.S. Dist. LEXIS 145793.
[11] Id.
[12] Id.
[13] California Federal Court Denies Motion to Compel New Era ADR Arbitration; Questions Remain on Unmanageability of Mass Actions, Sidley Austin LLP (Aug. 17, 2023), https://www.sidley.com/en/insights/newsupdates/2023/08/california-federal-court-denies-motion-to-compel-new-era-adr-arbitration [https://perma.cc/WEG3-NSVM].
[14] Heckman, 2023 U.S. Dist. LEXIS 145793.
[15] Id.
[16] David Horton, Forced Remote Arbitration, 108 Cornell L. Rev. Online 137, 147 (2022).
[17] About FINRA, FINRA, https://www.finra.org/about [https://perma.cc/3D83-JSEF] (last visited Nov. 6, 2023).
[18] Arbitration Awards Online, FINRA, https://www.finra.org/arbitration-mediation/arbitration-awards [https://perma.cc/S4JV-2J4P] (last visited Nov. 6, 2023).
[19] Lewis Kamb & Safia Samee Ali, Ticketmaster’s ‘Kafkaesque’ Arbitration Process is Rigged, Lawyers Say, NBC News (Apr. 5, 2023, 11:00 AM), https://www.nbcnews.com/news/us-news/ticketmaster-live-nation-arbitration-process-rigged-lawyers-say-rcna78172 [https://perma.cc/KPJ8-85QY].
[20] Todd B. Carver & Albert A. Vondra, Alternative Dispute Resolution: Why it Doesn’t Work and Why it Does, Harvard Business Review, https://hbr.org/1994/05/alternative-dispute-resolution-why-it-doesnt-work-and-why-it-does [https://perma.cc/BUD7-3HC8] (last visited Oct. 29, 2023).
[21] New Era ADR Rules and Procedures, supra note 9 at 3–6.
[22] About Us, supra note 2.
[23] New Era ADR Rules and Procedures, supra note 9 at 30–31.
[24] Id.
[25] Id. at 23.
[26] Caleb Symons, Live Nation, Ticketmaster Push for Arbitration in Antitrust Suit, Law360 (Apr. 17, 2023, 10:10 PM), https://www.law360.com/articles/1597909/live-nation-ticketmaster-push-for-arbitration-in-antitrust-suit [https://perma.cc/J9UZ-T6BG].
