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.
The Chancery Court faces long odds for receiving certiorari. Between June 30, 2011, and July 2, 2012, the most recent available statistics, the U.S. Supreme Court received 7,654 appeals and granted certiorari for 63 cases, or less than 1 percent, according to the high court’s website.
The Supreme Court operates two dockets: the in forma pauperis docket, which oversees criminal appeals for indigent defendants, and the paid docket, which handles noncriminal appeals. A Chancery Court petition would fall under the paid docket, improving its odds slightly. During the same period between June 2011 and July 2012, the court received 1,564 paid petitions and granted oral arguments for 59 cases, or roughly 3.8 percent, according to the Supreme Court’s website.
Laura K. Ray, a law professor at Widener University’s Delaware campus and an expert on the high court, spoke with Delaware Business Court Insider after the en banc appeal deadline passed in November. She said the Supreme Court is very selective and a case where the impact is only limited to Delaware may not appeal to the justices.
“The Supreme Court hears between 70 and 75 cases in a typical year,” Ray said. “In a sense, the court is trying to get the most bang for its buck and will seek cases that have a broader rather than narrower application. An arbitration program specific to Delaware makes a certiorari petition less interesting to the court than if there were multiple states with arbitration procedures in place.”
Another factor that Ray said weighs against the possibility of certiorari is that both the U.S. District Court for the Eastern District of Pennsylvania and the Third Circuit agreed that the Chancery Court’s arbitration program is unconstitutional. She said the Supreme Court typically looks for differing opinions among the federal courts to settle unique issues of law.
“The court also looks for conflict,” Ray said. “If two of the federal courts decide a case in a different way, the Supreme Court has a particular interest in making sure the law is uniform.”
However, if the Chancery Court succeeds at getting certiorari, it does face good odds of winning its appeal, said Thomas E. Carbonneau, who teaches arbitration law at Pennsylvania State University’s Dickinson School of Law. But he cautioned that the Chancery Court faces long odds in order to get its case heard by the nation’s highest court.
“I would like this to go to the U.S. Supreme Court, but I’m not so sure this would get certiorari,” he said.
Carbonneau added that the Supreme Court has a history of supporting arbitration in its recent decisions, including American Express v. Italian Colors Restaurant, a June ruling, and AT&T Mobility v. Concepcion, a 2011 opinion. He also noted that the Third Circuit has issued two recent opinions that he characterized as “spitting in the eye of arbitration.”
Pincus, part of the legal team defending the Chancery Court, won the Concepcion case. He also has argued 23 cases before the Supreme Court, according to his website.
Carbonneau said those decisions highlight the current Supreme Court’s record for supporting arbitration.
“The Supreme Court revealed in both those cases an unflinching commitment to arbitration,” he said. “The court is not enamored with arbitration, but its interest is to make sure that U.S. citizens have access to functional and effective adjudication of their issues.”