"*** Although the Arbitration Act authorizes the several courts of common pleas to establish by rules of court compulsory arbitration of the sort involved instantly, such rules must be consistent with the provisions of the Act and the legislative intent found therein that the system of compulsory arbitration there permitted be relatively uniform throughout the Commonwealth ** 375 A. 2d 1281.

It is recognized in both the Smith and Weber cases that the compulsory arbitration system in the Commonwealth of Pennsylvania is valid only because of the statutory authority given by the enabling legislation. It is also made clear by these cases that any local rules promulgated by the Courts of Common Pleas throughout the Commonwealth of Pennsylvania must be consistent with the enabling Act.

III. AUTHORITY FOR THE FEDERAL DISTRICT COURTS TO ESTABLISH COMPULSORY ARBITRATION SYSTEM

There is no specific Congressional statute which I could find which permits federal district courts to establish compulsory arbitration systems. In fact, Bill H.R. 9778 was introduced into the House of Representatives on October 27, 1977, by Congressman Rodino, entitled "A Bill to amend title 28 of the United States Code to encourage prompt, informal and inexpensive resolution of civil cases by use of arbitration in United States district courts and for other purposes" for that specific purpose. Said bill was referred to the Committee on the Judiciary. It is important to note that the bill in question is almost identical to the proposed local rule entitled "Local District Court RuleArbitration" which is the authority upon which the pilot program is to be instituted in the Eastern District of Pennsylvania. Therefore, a very significant argument can be made against the institution of the arbitration system as a pilot program in the Eastern District of Pennsylvania at this time, in that Congress itself realizes that current statutes and rules do not empower the federal courts to initiate a compulsory arbitration system through their local rulemaking procedures, absent appropriate enabling legislation.

Rule 83 of the Federal Rules of Civil Procedure seems to be the only arguable source of authority for the federal courts to institute a compulsory arbitration system. However, Rule 83 must be considered in juxtaposition with 28 U.S.C. §2072 and Federal Rule of Civil Procedure #38. Professors Wright and Miller make it clear in XII, Federal Practice and Procedure, Civil, §§31513155, Wright and Miller, that Rule #83 was not intended to give the federal courts the power to institute local rules such as the one in question. Professors Wright and Miller state:

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"The exception of the draftsmen of Rule 83 was that the power to make local rules would be used only on rare occasions when the Civil Rules deliberately had left gaps to be filled in the light of recognized local needs. Their statements at the institutes that were held at the time the Civil Rules went into effect are very clear to this effect, and it is well established that these statements are entitled to weight on construction of the rules. . (Wright and Miller, Federal Practice and Procedure, volume XII, Civil, §3152, p. 218). Professors Wright and Miller indicated that the draftsmen of Rule #83 considered things such as procedure for admission of attorneys, the day on which motions will be heard and whether to have the Clerk's office open on Saturday morning as the type of matters that would be regulated by local rules. XII, Federal Practice and Procedure, Civil, §3152, p. 220, Wright and Miller. Professors Wright and Miller quote one of the members of the advisory committee on the Federal Rules as to the meaning of the last sentence of Rule 83 that states that "in all cases not provided for by rule, District Courts may regulate their practice in any manner not inconsistent with these rules". The advisory committee member, when referring to this last sentence of Rule 83, stated that it was:

"One of the most important and salutary in the entire set of rules. It closes all gaps in the rules. It puts an end to the whole of the Conformity Act, and it permits judges to decide the unusual or minor procedural problems that arise in any system of jurisprudence in the light of the circumstances that surround them and of the justice of the case without the complications and injustice that must attend attempts to forecast the situations and to regulate them in advance either by general or by local rule . . . I am interested in this subject because

I have heard a rumor-yes, more than a rumor-that some district courts are making too many rules. I hope that the district judges will realize the significance of this last sentence of Rule #83 and understand that local district court rules on other than purely local matters of detail may impair the useful power intended to be vested in them by that sentence." (Wright and Miller, Federal Practice and Procedure, volume XII, Civil, 83155, p. 242-243, quoting statement of Edgar Tolman, Proceedings, Washington Institute on the Federal Rules, 1938, p. 129).

One notable decision is Miner v. Atlass, 363 U.S. 641, 80 S. Ct. 1300, 4 L.Ed. 1462 (1960). In Miner, the United States Supreme Court was considering whether a local rule which authorized the taking of depositions for discovery purposes in admiralty proceedings was valid under the admiralty law in effect at the time. The significance of the Miner decision on the issue presented herein becomes abundantly clear upon a closer examination of admiralty Rule 44:

"Right of trial courts to make rules of practice-in suits in admiralty in all cases not provided for by these rules or by statute, district courts are to regulate their practice in such a manner as they deem most expedient for the due administration of justice, provided the same are not inconsistent with these rules."

Rule 44 is very similar to Rule 83. The United States Supreme Court in invalidating a local rule which permitted depositions for discovery purposes stated:

***Rather, the matter is one which, though concededly 'procedural', may be of as great importance to litigants as many a 'substantive' doctrine, and which arises in a field of federal jurisdiction where nationwide uniformity has. traditionally been highly esteemed.

"The problem then is one which peculiarly calls for exacting observance of the statutory procedures surrounding the rule-making power of the Court, * * * designed to insure that basic procedural innovations shall be introduced only after mature consideration of informed opinion from all relevant quarters, with all the opportunities for comprehensive and integrated treatment which such consideration affords. Having already concluded that the discovery-deposition procedure is not authorized by the General Admiralty Rules themselves, we should hesitate to construe General Rule #44 as permitting a change so basic as this to be effectuated through the local rule making power, especially when that course was never reported to Congress, as is now required under 28 U.S.C. $2070," (363 U.S. 649-650-Emphasis Added).

It would seem that the reasoning in Miner would preclude such a basic procedural innovation in the federal courts as compulsory arbitration, by use of the local rule making function of the United States District Courts under Rule 83. Rather, such an innovation would require either a specific statute or the detailed procedure required for the promulgation of a Federal Rule of Civil Procedure.

We would be amiss, however, if the case of Colgrove v. Battin, 413 U.S. 149, 93 S.Ct. 2448, 37 L.Ed. 522 (1973) were not considered in this discussion. In Colgrove, the United States Supreme Court upheld a local rule which provided that a jury for the trial of civil cases shall consist of six persons. The Supreme Court held that the local rule was valid under Rule 83 and was not inconsistent with 28 U.S.C. §2071, 28 U.S.C. §2072 or Federal Rule of Civil Procedure #38. The Court held that a twelve man jury is not absolutely required under the Constitution. All that is required is that a jury of whatever size be impaneled to decide the issues of fact. What the Court's decision in Colgrove does to the reasoning in Miner is unclear. However, it would seem that the reasoning of Miner would still be persuasive, and that such an innovative procedure as compulsory arbitration should not be "experimented with" on the bases of Rule 83 and the local rule-making process of the District Courts, but should be bottomed either upon an Act of Congress or a new Federal Rule of Civil Procedure promulgated by the United States Supreme Court, with all of the built in safeguards that Congressional hearings, testimony, committee study, input from various lawyers' organizations and general informed public reaction afford under such circumstances.

Senator DECONCINI. Let me address a couple of questions to you. In the arbitration that I have been involved in through the Amer

ican Arbitration Association, certainly the rules of evidence and the rules of procedure are not strictly followed. Do you think that is any handicap for the nontrial lawyer to then be an arbitrator when he is geared up and educated to go by certain rules?

Mr. GORDON. I have found that to be such; yes. The American type of arbitration cases that I have tried mostly have been uninsured motorists' claims under an arbitration provision in the insurance policy. In these cases, only attorneys, and usually trial attorneys, are listed. The arbitration association provides a list of plaintiffs' attorneys, defendants' attorneys, and neutrals. Each side has a right to strike a certain amount of attorneys. This system is far superior, I think, than just appointing arbitrators because you have some choice in your selection. Whether administratively it could be built into this system is questionable. We have considered this in Philadelphia and find that the cost of administering this type of system would be prohibitive.

The amount of cases you will have in Federal court would not be as extensive as what we have in Philadelphia, and such a system could be provided. This basically gets your litigators in as arbitrators. Senator DECONCINI. That is a very specialized area you are talking about.

Mr. GORDON. It involves, basically, personal injury claims. Those are the great majority of the cases that are going to be heard.

In fact, I think the opinion of most members of the bar is that they strike mostly the neutrals off. They don't have the experience. And even if they are the plaintiff, they prefer three defense men there who understand the problems.

Senator DECONCINI. I don't know if you were here when Judge Bell gave his testimony.

Mr. GORDON. Yes; I was.

Senator DECONCINI. He made some reference to the obligation and duty of the bar to come forward. Do you care to comment on that, all in relation to the $50 figure?

Mr. GORDON. I agree that it is the duty of the bar to come forward. I know that I serve, and a number of other people serve, gratis with the American Arbitration Association. Once you do set up a fee, I think members of the bar expect that it should not be a nominal fee. They would rather have either gratis or a regular fee for the service. Of course, even if you set up a higher fee than the $50, you are certainly not going to be paying them fully for their time. The general billing out of attorneys' fees right now in the city of Philadelphia is somewhere between $60 and $100 an hour. Obviously, you are not going to pay a fee somewhere in that range.

But certainly we are getting a problem now in Philadelphia with busy attorneys serving. Not that the fee is going to make a difference, but it might make some difference. That is, not getting your busy attorneys, but your second-line trial litigants in.

Senator DECONCINI. You would opt for a fee rather than no fee? Mr. GORDON. Yes. What we have in Philadelphia now in the average case is an hour to 2 hours. We have a rule where all medical bills, reports, wage loss information, et cetera are submitted ahead of

time. They are looked at by the attorneys and we don't have to have testimony in that regard. There is nothing in this act that would provide specifically for this.

Senator DECONCINI. But the arbitrator would still have to read all that. You are talking about the average time that he actually sits in the hearing.

Mr. GORDON. Yes; 11⁄2 hours or 2 hours just sitting there.

I can't foresee any case under this act up to $50,000 taking less than a day and possibly 2 days or more. To expect him to take time out from a busy schedule, especially when the Federal courts are pushing so tremendously on the attorneys to complete their discovery and get their cases up, it is an additional burden. This is why I say that people are not going into the Federal courts any more. Senator DECONCINI. Mr. Gordon, do you think there is any need for rules of arbitration?

Mr. GORDON. We do have a specific set of rules in Philadelphia. They are attached to my statement and are quite detailed.

Senator DECONCINI. Are those rules subject to appeal if one of the parties before you objects to admitting something that is in opposition to their interpretation of the rules? Just how binding are those rules?

Mr. GORDON. They are basically administrative rules. There are certain rules in regard to the acceptance of evidence as well as rules with regard to appeals.

Senator DECONCINI. What about the procedural aspect?

Mr. GORDON. The procedure is that the arbitrators are the supreme judge of the case as it appears before them.

Senator DECONCINI. Do you see any reason to change that?

Mr. GORDON. No. There is a judge supervising arbitration who is always available. If a specific problem comes up and people feel they need an immediate ruling, he is available. I have never seen it happen in the course of a hearing.

Senator DECONCINI. Do you think there should be, if we move into this area, the Federal area, that there should be any Federal rule for arbitration?

Mr. GORDON. I think there should be a general set of rules. You cannot limit the panel too greatly since you want to alleviate the formality in order to speed up the process. As long as there is a supervising judge who is available, I think this would be adequate. Senator DECONCINI. Thank you.

Mr. Altier has several questions.

Mr. Altier?

Mr. ALTIER. In your statement, you said that you agree with Judge Cavanaugh about the thought of extending or going beyond the 120-day discovery provision in the bill. Do you also agree with Judge Cavanaugh about his comments about providing some sort of certification upon completion of discovery before moving toward arbitration?

Mr. GORDON. Yes, I do. I find this system in Philadelphia has been very successful. No attorney wants to delay a case from trial. He wants to get it up as soon as possible, especially a plaintiff's attorney

who is usually on a contingent fee. In this regard, as soon as discovery is finished, he immediately files a certificate of readiness indicating that discovery is finished. If the other side has an objection, the supervising judge will rule on this.

If it takes longer, there is no reason why we should have any set time that the discovery has to be completed.

Mr. ALTIER. Thank you.

In your prepared statement you indicated that if hearings under the current compulsory arbitration program in Philadelphia consume more than a certain amount of time that the rules should permit additional compensation.

How often is such a request made and what is the court's general reponse to this request?

Mr. GORDON. Such a request in Philadelphia is filed with the supervising judge. It is rare that a case goes much more than 3 hours and up to 3 hours the standard compensation would apply. I would say possibly one out of 50 to 60 cases would go longer, in which case usually additional compensation is awarded at the discretion of the supervising judge in an amount subject to his discretion.

Mr. ALTIER. Is it an hourly rate?

Mr. GORDON. No, it is something that is very informal and usually about 50 percent to 100 percent more than the normal fee.

Mr. ALTIER. In your prepared statement you indicated that there is a bill that is being introduced in Pennsylvania that would authorize an increase of the jurisdictional amount to $20,000. Do you believe that there should be some sort of relationship between the increasing jurisdictional amount and the need for arbitrators to be designated as experts in certain areas to arbitrate types of matters?

Mr. GORDON. Our committee in the bar association is exploring that right now. We hope to have such a system shortly. But, meanwhile, we are at least providing for the amount of years or qualification which is already written into the bill. The question is whether we can do it administratively for a specific qualification.

Mr. ALTIER. Thank you.

Senator DECONCINI. Mr. Gordon, we thank you very much.

We have two further witnesses, Mr. Spangenberg and Mr. Tatelbaum. We are going to have to recess at this time for the full Judiciary Committee to use this room for the Civiletti hearings. If the quorum is gathered, we will be recessed for approximately 1 hour. If a quorum is not gathered, we may be able to reconvene within 20 or 30 minutes. I might ask you two gentlemen if you could stay close by.

Thank you very much.

[Recess taken.]

Senator DECONCINI. The Subcommittee on Improvements in Judicial Machinery will reconvene at this time. We will hear from Mr. Craig Spangenberg, chairman, congressional liaison, Association of Trial Lawyers of America.

Mr. Spangenberg, I am sorry to put you through that delay. I realize your time is valuable and I appreciate your coming to testify before us.