Professional Jeweler Archive: The Mediation Solution

April 2005

The Store | Managing: Legal Disputes


The Mediation Solution

Using mediation instead of litigation to resolve conflicts is a growing alternative at all levels of the jewelry industry

By William H. Donahue Jr.


Mediation is changing the way jewelers resolve disputes with their customers, suppliers and each other. The Jewelers Vigilance Committee, which runs a nationally recognized mediation program, says the number of cases it handles has grown to over 400 a year.

“We handle complaints that come directly from consumers and that are referred by the U.S. Department of Consumer Affairs, Better Business Bureaus and state attorneys general,” says Jo-Ann Sperano, JVC’s mediation expert. Industry groups such as Jewelers of America and its affiliates, the Jewelers Board of Trade and Manufacturing Jewelers & Suppliers of America also refer intra-industry complaints and disputes to Sperano for mediation.

What’s a Mediator?

A mediator doesn’t render a decision. He or she works with the feuding sides as a neutral party and guides them to resolve the dispute themselves. The underlying principle is that most disputes have a solution that’s beneficial to both sides, though it’s usually not exactly what either party wanted at the start.

Finding that mutually beneficial solution can be difficult to impossible for the parties on their own because of anger or a lack of information or ideas. A mediator helps them set aside their emotions, gather the necessary information and search for creative solutions. Sometimes mediators use experts or other third parties to help.

Mediation is effective for a wide range of disputes. Hundreds of towns and cities have instituted community dispute resolution programs in an attempt to keep feuding neighbors out of police stations and municipal courts that are already backlogged with other time-consuming cases. Divorce mediation has become so accepted that some states require all divorcing couples to try some degree of mediation before resorting to litigation. Even school children are being trained in “peer mediation” as a way to resolve classroom and schoolyard disputes. The Equal Employment Opportunity Commission and the U.S. Postal Service also have formal mediation processes.

Why Now?

Mediation is growing more popular in the jewelry industry for several reasons:

Mediation costs far less than litigation. The largest expense in litigation is attorney fees. If you litigate a case over a single piece of jewelry, the costs could easily exceed the amount in dispute. In employment cases such as wrongful termination or sexual harassment, it’s common for attorney fees to exceed the settlement or award. In many cases, you might have to pay fees for both sides. Legal fees for lawsuits can range from a few thousand dollars to millions of dollars. By contrast, JVC charges $50 per case to offset administrative expenses. If expert witnesses are needed, the parties involved in the dispute are responsible for these costs. If either party feels there’s a conflict of interest with JVC and the case is referred to private alternative dispute resolution, the parties are responsible for the costs. Private mediators usually charge $250 to $400 per hour, and most mediations require five to 20 hours.

Mediation is private and confidential. For retail jewelers, this may be the most important reason to use it. A reputation you have spent years (or generations) building can be wiped away with a single lawsuit that finds its way into the local media. Allegations of fraud, deception, switching stones or failing to disclose information about a gem make juicy stories for reporters. The same is true for allegations of sexual harassment, discrimination and other illegal treatment of employees. In mediation, the parties agree in advance the allegations and the process will remain confidential.

Mediation is the best way to preserve a business relationship. As a jeweler, you have two important groups of business relationships: with your customers and with your suppliers. If you sue a supplier and the case drags through the courts until one of you wins and the other loses, there’s little chance you’ll continue doing business with each other. The relationship may have been a profitable one for both of you, so, in a sense, you both lose. Your industry colleagues could be drawn into taking sides also, and that’s not good in a small community such as the jewelry industry. Losing a customer is even more damaging. Suppose a customer believes you’ve wronged him and sues. You lose a customer and risk negative publicity and very nasty word of mouth. But with mediation, the goal is to reach a resolution that both parties are comfortable with. JVC’s Sperano notes that when she’s successful with mediation between a jeweler and customer, the customer usually still buys from the jeweler.

How the JVC Mediation Program Works

The Jewelers Vigilance Committee’s mediation program is designed to be inexpensive, fair and efficient. JVC mediates the following disputes:

Violating industry codes or ethics and standards.

Misrepresenting metal karatage and gemstone caratage.

Misrepresenting gemstones’ color, clarity, weight or synthetic origin.

Not disclosing facts as required by the FTC Guides for the Jewelry Industry.

Deceptive advertising and pricing.

Disputes must be submitted to JVC in writing and include supporting documentation. JVC notifies all parties that the complainant wants to mediate the dispute. The complained-against party or parties are asked to reply within 10 days and can submit relevant documents. JVC may ask for additional documents, as may other parties. The intent is to advance the process quickly and efficiently. Settlements are in writing, are signed by the parties and are confidential, but the parties may disclose them for the purpose of enforcement.

  • Jewelers Vigilance Committee, New York City; (212) 997-2002, www.jvclegal.org.

– W.H.D.

William H. Donahue Jr. is the legal editor for Professional Jeweler and an attorney and mediator.

Copyright © 2005 by Bond Communications