WILMER, CUTLER &
PICKERING ERIC J. MOGILNICKI March 7, 2000 Senator Charles E. Grassley Dear Senator Grassley: Thank you for the opportunity to testify on March 1, 2000, before the Senate Judiciary Subcommittee on Administrative Oversight and the Courts, and for the opportunity to supplement my testimony with this additional submission. I appreciated your question at the hearing regarding the fairness of the arbitration forums used to resolve consumer disputes. As I indicated in my response at that time, all of the major forums have detailed rules that insulate arbitration from bias. Examples of the relevant rules include Rule R-19 of the American Arbitration Association's Comprehensive Dispute Resolution Procedures; Rule 12 of the JAMS Financial Services Arbitration Rules and Procedures; and Rules 21 and 23 of the National Arbitration Forum's Code of Procedures. The full text of these rules, and other helpful information, may be found at the web sites for each of these forums: www.adr.org (AAA); jamsadr.org (JAMS); and www.arbitration-forum.com (National Arbitration Forum). As you know, my statement before the Subcommittee included a reference to a paper by Gary Tidwell, et al., entitled "Party Evaluation of Arbitrators: An Analysis of Data Collected from NASD Regulation Arbitrations" (August 5, 1999) (presented to the National Meeting, Academy of Legal Studies in Business). That paper describes a study that demonstrated the high level of consumer satisfaction with arbitration in the securities context. For your convenience, I have attached the title page and Executive Summary of the Tidwell paper, and would be happy to provide the full paper if you or any member of the Subcommittee or its Staff would find it helpful. Similarly, I have attached the Executive Summary of a 1999 study by the Rand Institute for Civil Justice, entitled "Class Action Dilemmas: Pursuing Public Goals for Private Gain." This report describes some of the difficulties and expenses that arise when class actions, rather than arbitration, are used to identify and resolve consumer disputes. Thank you again for the opportunity to appear before the Subcommittee on this important issue. The American Bankers Association, Consumer Bankers Association, American Financial Services Association and National Retail Federation would all appreciate the opportunity to work with you, the Subcommittee, and its Staff in identifying ways in which arbitration can be improved, to the benefit of financial institutions and consumers alike. Sincerely yours, Eric Mogilnicki |