Sunday, January 15, 2017

Takata Deal Parties Ask for Special Master

Last week, the U.S. Attorney in Detroit announced Takata Corporation agreed to plead guilty to wire fraud and pay $1 billion in penalties stemming from the company’s fraudulent conduct related to sales of defective air bag inflators. The federal prosecutor said automotive suppliers who sell products that are supposed to protect consumers from injury or death must put safety ahead of profits. Under the terms of the agreement, which is subject to court approval, Takata pleaded guilty for falsifying testing data and reports that were provided to automakers. Takata will pay a criminal fine of $25 million and establish a $125 million restitution fund for individuals who suffered or will suffer personal injury caused by the malfunction of a Takata airbag inflator, and who have not already resolved their claims. In addition, Takata will establish an $850 million restitution fund for the benefit of automakers who received falsified testing data and reports or who have purchased airbag inflators from Takata containing phase-stabilized ammonium nitrate. The deal includes appointment of an independent monitor, who will report to the Justice Department and monitor Takata’s compliance with its legal and ethical obligations. The parties asked the federal judge to appoint mediator Kenneth Feinberg as a special master to distribute restitution payments. He handled restitution funds in the General Motors ignition switch and BP oil spill cases, among others. Payments to individuals must be made soon and automakers must be paid within five days of Takata's anticipated sale or merger. Takata is expected to be sold to another auto supplier or investor sometime this year. See more in stories here-- and and press release--

Monday, January 9, 2017

Post-Trial Mediation Ordered For Water Wars

Attorneys for Florida and Georgia tried the decades-long Water Wars case between them before a U.S. Supreme Court assigned Special Master late last year. A ruling was expected following the filing of post-trial briefs of each state. Florida seeks to limit Georgia’s water consumption from the Apalachicola-Chattahoochee-Flint River Basin, including Lake Lanier, to 1992 levels and to get reparations for alleged economic and environmental harm to Apalachicola's oyster fisheries from drought. The dispute focuses on the river basin which drains almost 20,000 square miles in western Georgia, eastern Alabama and the Florida Panhandle. The Chattahoochee and Flint rivers meet at the Georgia-Florida border to form the Apalachicola, which flows into the bay and the Gulf of Mexico beyond. Maine resident and Special Master, Ralph I. Lancaster, Jr., previously advised the states to settle out of court rather than live with a costly decision he has stressed neither will like. The states already mediated the case with a mediator whose name was strangely kept secret by an order. Except to hear progress reports, Master Lancaster wanted no part of the mediation process, but now has ordered the parties back to a post-trial mediation this month. Florida still seeks a cap on consumption that would alleviate past damage allegedly caused by Georgia. The Special master has encouraged the sides meet in a good faith effort to reach a framework for settlement of this equitable apportionment proceeding. He cites a precedent for controversies between states, quoting a 1942 case for the proposition that "The Supreme Court has 'often expressed' its 'preference' that, where possible, states settle their controversies by ‘mutual accommodation and agreement.’” Counsel for the states are to submit a confidential memorandum to him by January 26, 2017,“setting forth a summary of the parties’ settlement efforts.” See article here-- and docket with case management order here--

Wednesday, January 4, 2017

Nursing Home Arbitration Ban Postponed

Last fall, the Centers for Medicare and Medicaid Services (CMS), an agency under Health and Human Services (HHS), essentially barred any nursing home or assisted living facility that receives federal funding from requiring that its residents resolve any disputes in arbitration, instead of in court. It was the most significant overhaul of the agency’s rules governing federal funding of long-term care facilities in decades. The nursing home industry maintains arbitration offers a less costly alternative to court. Allowing more lawsuits, the industry says, could drive up costs and force some homes to close. This was the case in the early 2000s, when many excess verdicts were recorded in Florida, forcing players out of the state or out of business altogether. Lawyers who work with the elderly say that people are being admitted to nursing homes at one of the most stressful moments of their lives. When CMS essentially barred any requiring residents to resolve any disputes in arbitration, federal courts were quick to issue injunctions in industry suits. Now CMS has issued a memo that it will not attempt to enforce the ban until the injunction is lifted. With the impending Trump Administration, it seems possible that the new CMS rule will die altogether. Congressional Republicans have vowed to roll back many regulations approved in the final months of the Obama Administration, such as this one. I do a fair amount of long-term care arbitrations, usually serving as the chair of a panel. These are difficult cases and are sometimes better suited to be resolved in private before knowledgeable and fair neutrals, rather than presented to juries. Arbitration of health care cases can be streamlined for counsel, saving the parties costs and often providing a quicker result than the courts. See more here-- and

Wednesday, December 28, 2016

Online Dispute Resolution Update

As we head into 2017, I wonder about technology influencing the future of mediation as the prevalence of artificial intelligence in the law grows in areas like Electronic Discovery. Online Dispute Resolution (ODR) has been the subject of much debate and is more popular overseas than in America, though many online merchants have been using systems such as Modria for years on low dollar disputes to resolve customer issues. My colleagues and I have even debated the efficacy of such an impersonal form of Alternative Dispute Resolution in the Executive Council of The Florida Bar's ADR Section. Now, University of Maryland Law Professor Robert Condlin has authored an article entitled,“Online Dispute Resolution: Stinky, Repugnant, or Drab." In it, he provides an overview of currently existing processes and identifies potential consequences related to their use, suggesting refinements. For instance, most ODR programs require parties to describe their claims in fixed, predefined categories that may not capture all claims dimensions or limit the opportunity to argue substantive merits underlying their worth. He raises limits to the ability to resolve differences on the basis of private software algorithms that raise fairness issues not present in dispute resolution systems run principally by humans. Professor Condlin opines there are certain legal, political, and moral concerns yet to be addressed that ODR proponents must answer if online systems are to satisfy the demands of state-sanctioned, public dispute resolution. See more of the abstract here cited as U. of Maryland Legal Studies Research Paper No. 2016-40-- and materials from ADRHub's CyberWeek 2016 on the latest in predictive analytics for negotiation--

Thursday, December 15, 2016

Gawker Settlement Approved in BR

This week, Gawker Media won court approval to repay creditors and settle the $140 million legal judgment awarded to former wrestler Hulk Hogan that drove the online publisher into Chapter 11 Bankruptcy. U.S. Bankruptcy Judge Stuart Bernstein of New York signed off on Gawker’s reorg plan. The settlement pays Hogan $31 million to resolve privacy litigation over Gawker’s publication of a highly publicized sex video. Approval of the plan ends a four-year legal fight between Gawker and Hogan in a case tried before a Florida jury earlier this year. Liability for the resulting verdict in Hogan's favor and Gawker’s failure to stay the judgment for purposes of appeal forced the bankruptcy. Reportedly, lawyers involved in the settlement say this brings the case to a close and extinguishes any possibility of appeal. Gawker sold most of its blogs, excluding its namesake site, to Univision for $135 million. Gawker’s Chapter 11 plan splits the company’s assets and sale proceeds among its creditors. The plan also includes settlements of other defamation lawsuits. Gawker maintained its stories subject to lawsuits were true, arguing First Amendment protection, but the expense of continuing to defend litigation would have been too much. Judge Bernstein said each of the settlements was reasonable for Gawker in light of the circumstances. The deal also shields former writers and editors from future lawsuits. In exchange for receiving that protection, the writers agreed to relinquish their rights to indemnification. The Wall Street Journal writes that the releases raised a novel issue on the intersection of bankruptcy law and the First Amendment and elicited a legal brief from a collection of journalism organizations in support of the legal protections. See more here--

Friday, December 9, 2016

Wells Fargo Arb Clauses Fair Game in Fraud Cases?

The well-publicized Wells Fargo fraudulent account creation cases are being defended with lawyers arguing for application of arbitration clauses signed when customers opened their legitimate accounts. Plaintiffs argue the cases should be in court rather than arbitrated. Now Congress may weigh in with legistlation to carve out the cases. Lawmakers want consumers to be able to sue the bank in court over the fake account scandal rather than go through private arbitration. A bill introduced by Senate Banking Committee Ranking Minority Member Sherrod Brown and Congressman Brad Sherman called the Justice for Victims of Fraud Act of 2016 goes against the mandatory arbitration clauses that prevent customers from suing Wells Fargo. The case is pending in the U.S. District Court in Utah which has been asked in a motion to dismiss to order customers suing the bank to resolve their issues via arbitration. Wells Fargo is reportedly providing mediation services to affected customers for free. According to the bank, if a resolution is not reached, the arbitration clause allows for a forum in which customer disputes are heard and resolved quickly and efficiently with a neutral, third-party. This is the first class action lawsuit filed against Wells since it agreed to pay a $185 million penalty and return $5 million to customers for opening up to two million deposit and credit-card accounts in their names without their permission. The penalty by the Consumer Financial Protection Bureau (CFPB) is the largest fine levied from the government agency over account opening practices. According to an investigation by the CFPB, Wells Fargo employees not only made fake deposit accounts, but also submitted 565,443 unauthorized credit card account applications on behalf of unknowing customers. It’s estimated that 14,000 of those accounts accrued $403,145 in fees. Through its own independent investigation, the bank discovered a total of $2.6 million in unauthorized fees. Obviously, a new Congress and President next month could stymie this effort. See more here--

Thursday, December 1, 2016

Anniversary of E-Discovery Amendments

Today marks one year since significant changes were made in 2015 to the original 2006 federal rules on electronic discovery. Federal Rule of Civil Procedure 26(b)1 now emphasizes proportionality and seems to have influenced determining the expense or burden of proposed discovery in a more realistic way. The advent of technology assisted review has also brought costs down and is being employed more frequently by parties and is accepted and even encouraged by courts. My role remains as E-neutral, mediator or sometimes court-appointed special master to facilitate the electronic discovery process by helping parties to agree on the form in which they want information produced and the extent to which metadata will be produced. Mediation can feature private caucuses with retained experts or information technology liaisons that may help conduct discovery proportionally, minimizing motion practice, and avoiding sanctions and unpredictable judicial outcomes. Cooperation using alternative dispute resolution may also encompass settling procedures to be followed when discovering privileged information that has been inadvertently produced in the course of discovery, including clawbacks or agreed confidentiality orders. Rule 37(e) improved the safe harbor for mistakes in deletion, recognizing the volume of data generated is ever increasing and has made preservation more challenging. Sophistication of the parties is still taken into account in reasonable steps taken to initiate holds, but a lawyer's duty of competence in technology in more important than ever. Our E-Discovery & E-Neutral Services can help in that area, providing assistance by hosting Meet and Confer sessions, facilitating cost effective, mutually cooperative, and relevant ESI programs-- even in state court, with Mediated Case Management or Pretrial Stipulations under Florida Civil Rules 1.200 or 1.201. As Special Magsitrates, we are available to monitor E-discovery compliance or perform complex in-camera reviews for which judges don't have time. See more here--