Nevada Supreme Court Ruling Confuses Mediation and Arbitration
The Nevada Supreme Court recently heard a case regarding a dispute between two business partners. In the case, business partners Weddell and Stewart became immersed in a set of disputes. They agreed to attempt a settlement by presenting their issues to a panel of three attorneys. The panel ruled mostly in favor of Stewart, who sought to enforce their decision by seeking a declaratory judgment of the validity of the part of the decision that was in his favor. Weddell alleged bias from the panel and filed a counterclaim seeking a declaratory judgment upholding the validity of the portion of the decision that was favorable to him.
Weddell gave up mid-trial, conceded judgment in favor of Stewart, and dropped his counterclaim, but two years later brought an action against the panel, alleging a breach of fiduciary duty, bias, and other accusations. The attorneys sought dismissal on the grounds of non-mutual claim preclusion.
The court used its ruling to explain its expansion of Nevada state law’s test for the application of claim preclusion and did so by diluting traditional privity requirements. The written dissent confused mediation and arbitration at least three times. The opinion struck Nevada legal experts as odd because the state has statutory arbitrator immunity, granting arbitrators full judicial immunity. Some also took issue with the difference between mediator immunity and arbitrator immunity in the case. These same legal experts believe the ruling would make a good case study for legal students, but they do not agree with the decision of the court.