Compulsory Arbitration in New Jersey Federal Court
Thomas W. Hartmann
The Hartmann Law Firm LLC
TheHartmannLawFirm.com; [email protected]; 908 769 6888
Right to Trial. Ordinarily, if you are involved in a lawsuit in court, you cannot be forced to arbitrate it. You have the right to a trial, unless you agree with the opposition on an arbitration, mediation or other form of dispute resolution.
Mandatory Arbitration in New Jersey. But, the Local Rules of the Federal Courts for the District of New Jersey include a provision, Local Rule 201.1(d), that calls for “Compulsory Arbitration” if “the relief sought consists only of money damages not in excess of $150,000.” Violations of constitutional rights, tax refund actions and Social Security actions are not covered.
$150,000 Threshold. Under the provisions of this Local Rule and only for the purpose of applying the compulsory arbitration rule, damages are presumed to be $150,000 or less, unless the plaintiff's counsel, at the time of the filing of the lawsuit, or any counsel, within 30 days of a notice of removal of a case from state to federal court, files an affidavit that certifies that the damages exceed $150,000. The court is free to disregard the lawyer's affidavit.
Even if the court refers the matter to an arbitrator under this provision, the arbitrator may still award damages in excess of $150,000, assuming such proof exists.
Right to Trial Springs Back. Nonetheless, even if the arbitration should occur, you still have your right to trial. Any party can demand a trial by filing a demand for trial within 30 days of the arbitration award, just as if the arbitration had not occurred.
Early Resolution. Courts use this compulsory arbitration device to try to accelerate the resolution of the dispute and to relieve some of the congestion in the court system. Like all forms of alternative dispute resolution, the value of this mandatory arbitration depends on the nature of the case and the attitude of the parties.
The arbitrator can provide an independent view of the case and give the parties a sense of how a judge or jury might think. Early mandatory arbitration can also lead to a rapid resolution, as compared with state and federal court cases that can take years to resolve, while expenses mount.
On the other hand, some parties know their opponent has limited time and resources and may wish to drag out a case as long as possible, while forcing the other side to bear rising costs in the hope of forcing a favorable resolution.
It is important for counsel and the parties to know about this compulsory arbitration tool in the hands of the federal courts in New Jersey in order to properly establish money damages and determine whether an early, mandatory arbitration suits your case.