Thursday, March 28, 2013
Manhattan Federal District Judge Victor Marrero today questioned a hedge fund paying the government $600 million in penalties to settle insider trading accusations while not having to admit doing anything illegal. Reserving judgment on approving the settlement during a hearing on the landmark deal between the Securities and Exchange Commission and SAC Capital Advisors, the judge found it incongruous when told the client merely made a business decision in agreeing to pay such a large fine. Allegations included illegally trading pharmaceutical stocks after a former portfolio manager obtained secret information from a doctor about clinical drug trials. The hearing focused heavily on “neither admit nor deny wrongdoing” language in the agreement. Reportedly, federal judges across the country have expressed concerns over whether government agencies are letting defendants off too easy by not forcing them to admit liability. Last year, District Judge Jed S. Rakoff rejected the settlement in a fraud case brought against Citigroup by the SEC that let the bank avoid acknowledgment that it did anything wrong. That decision and whether he exceeded his authority in rejecting the settlement is now under review by a Federal Appeals Court. As such, Judge Marerro hinted that he might condition any approval of the SAC settlement on the outcome of the Citigroup appeal. Though the United States Court of Appeals for the Second Circuit is likely limited to Judge Rakoff’s ruling within the context of the specific facts of the Citigroup case relating to the bank’s sale of a complex $1 billion mortgage bond deal, it could impact other cases. Judge Marerro noted that other federal judges across the country had recently followed Judge Rakoff’s lead and cast skepticism on the “neither admit nor deny language,” in some cases demanding greater accountability before approving settlements. SEC counsel urged Judge Marerro to approve the settlement with SAC, despite the pending appeals court decision, acknowledging risk of a shifting legal landscape. “But the ground is shaking,” said Judge Marerro,“there are tremors.” See full story here-- http://nyti.ms/11TD9G0
Thursday, March 21, 2013
As it's the season of NCAA basketball brackets, I thought I'd take a moment during March Madness and explore bracketing-- in mediation, that is. Bracketing can be a useful tool in breaking through a stale negotiation. Mediation usually begins with offers intended to send messages to each side, but which are frequently unrealistic in a given dispute. Offers in the early rounds typically remain outside the range of numbers likely to lead to ultimate resolution. Parties can then fall into a pattern of mirroring small incremental movements, until the dance stalls in frustration. While not appropriate for every session, Mediators may effectively pull brackets from their toolbox at this juncture. Because bracketed numbers re-frame the bargaining, parties begin to see the negotiation anew. Settlement becomes a Cinderella team in the tourney. During this process, even exploring potential agreement encourages the parties that the other side still intends to make a good faith effort to strike a deal. Resolution can sometimes remain out of reach until the parties find their way to bargaining bracketed by what each perceives as reasonable numbers. Plaintiffs and defendants might similarly argue just how far each has moved from its initial, often pie in the sky position. However, movement toward a number that is realistic has a better chance to settle the matter. Mediators try to keep conversations with the parties and their counsel going, pushing nuances and nuggets of the case, while identifying underlying interests. As a result, information about the respective risks then drives a numerical range within which settlement can most likely occur. Though parties may propose this strategy, it is better if the mediator introduces the concept of bracketing as a neutral and then caucuses to a conditional range, eventually finding common ground. With a win-win, you get a result superior to 63 of the teams in the tournament!
Tuesday, March 19, 2013
At NFL meetings this week, settlement of a class action lawsuit against the league by retired players was announced along with the creation of a league fund to help former players in need. Jim Brown, who lobbied hard for the deal, was asked incidentally about his opinion of the proposal to ban backs from using their head to smash into defenders. “I didn’t use my head,” Brown said. “I wasn’t putting my head into too much of anything. I don’t think that’s a good idea." The NFL agreed to pay $42 million as part of a settlement with a group of retired players who challenged the league over using their names and images without consent. The league will use the money to fund a trust to help retired players with an array of issues including medical expenses, housing and career transition. The settlement also establishes a licensing agency for retired players to ensure they are compensated for the use of their identities in promotional materials."We look forward to building an unprecedented new relationship with retired players that will benefit everybody, especially those who need extra medical or financial assistance," Commissioner Roger Goodell said in a statement issued by the league. The federal class action lawsuit accused the NFL of blatantly exploiting retired players' identities in films, highlight reels and memorabilia to market the league's "glory days." The so-called Common Good fund will be administered by a group of retired players approved by the court. A licensing agency will for the first time market retired players' publicity rights in conjunction with the NFL, making it easier for retired players to work with potential sponsors and advertisers. A new licensing agency, to be overseen by a board of retired players, will streamline that process for one-stop shopping. The league will also pay another $8 million in assorted costs associated with the settlement, including money needed to help set up the trust and pay attorneys. The settlement still needs court approval. Retired players will have the chance to review the settlement throughout the summer, when final approval is scheduled. See items at http://bit.ly/ZYSmUF and http://on.nfl.com/ZtAHW8
Saturday, March 16, 2013
Last fall, the Supreme Court of Florida approved proposed E-discovery rules for state cases. The court adopted amendments to case management to include ESI. The new rules will affect the state’s diverse legal community of trial attorneys. They aim to streamline case management, but they will also impose unfamiliar burdens on practitioners who are new to E-discovery. Neutral third parties, such as special magistrates (formerly masters in FL) and mediators, may be able to assist in these instances. I will be speaking in conjunction with the Orange County Bar Association's Intellectual Property and Technology Committees who are presenting an afternoon CLE called "Florida's New E-Discovery Rules and Best Practices for All Cases: Taming the ESI Beast," on May 14, 2013 in Orlando. My topic before joining a panel on best practices is entitled, "Using E-Neutrals to Limit the Cost of E-Discovery." For the uninitiated, “E-neutrals” can help shape discovery plans, allocate costs and suggest and create efficiencies that may not have existed in litigation. Our services are not limited to grappling with old or new rules, or to discovery disputes. The course description states, "Lawrence Kolin, an Orlando lawyer and full-time mediator, chaired the Florida Bar subcommittee that drafted these rules. In his CLE, he will present how neutrals can help litigants navigate e-discovery pitfalls and resolve expensive battles before they arise. The course material quotes me: “In resolving these issues, I focus parties on the merits, rather than using E-discovery as a sword or shield,” states Kolin. “Mediation of ESI disputes is an avenue that can present parties with significant cost-savings through self-determination, if performed early enough in the litigation.” I hope you will join me! Contact Marie West-- firstname.lastname@example.org for registration or see http://orangecountybar.org/calendar.asp for more information.
Friday, March 8, 2013
After weeks of testimony, in an unusual move, the judge presiding over trial in lawsuits that Macy’s brought against J. C. Penney and Martha Stewart Living Omnimedia sent the parties to mediation. If the companies do not reach an agreement before April 8, Justice Jeffrey K. Oing of New York State Supreme Court will continue hearing the case. Representatives for the companies said they would participate in the mediation process. Macy’s had a contract with Martha Stewart for exclusive rights to bedding, bath and kitchen ware. However, in 2011, Penney's made a multimillion dollar investment in Stewart's company and announced it would be selling those products, as well. Penney's and Stewart’s company claim they have not violated the Macy’s contract because the Penney products would be sold in a store within a store. Interestingly, this will be the first mediation for the companies. Before the trial, a preliminary injunction was won by Macy's and it remains to be seen if the court will broaden the injunction, which would stop Penney's from selling Stewart's products in contested categories until the case is decided. Penney's said it won't sell any products that are deemed exclusive by Macy's before mediation concludes. Stewart reportedly said that in advance of the mediation order she and Macy’s chief executive had a productive conversation regarding the ongoing contract dispute and that she views mediation as a positive step forward and welcomes a prompt and fair resolution. See stories here: http://nyti.ms/ZxE6lx and http://nbcnews.to/WaDAep
Wednesday, March 6, 2013
Microsoft was fined over $700 million by the European Commission for failing to offer a choice of browsers in its computer operating system used by some fifteen million people in the EU. This agreement was the result of Microsoft's legal fight over competitive practices with the European Union that was settled in 2009, making a dozen internet browsers available for use in Windows. Apparently, Microsoft dropped the ability for choice during a recent service pack update. "Legally binding commitments reached in antitrust decisions play a very important role in our enforcement policy because they allow for rapid solutions to competition problems," said Joaquín Almunia, Commission Vice President in charge of competition policy. "Of course, such decisions require strict compliance. A failure to comply is a very serious infringement that must be sanctioned accordingly." Microsoft retained outside counsel last year to conduct the investigation and offered to extend the compliance period while cooperating with the EU. The fine comes when Microsoft Internet Explorer's influence is waning globally as competitors like Google Chrome and Mozilla Firefox have become increasingly popular. The European Commission has also been formally investigating Google. VP Almunia reportedly offered Google a settlement last year after finding that it might have abused its dominance in internet search and advertising by giving its own products an advantage over those of others, even while maintaining that it offered neutral results. Google and the EU have been negotiating since then, and a final agreement may not come until later this year, suggesting that the strategy of seeking quick results in antitrust technology cases through settlements instead of lengthy legal battles could be coming undone. See news items here http://usat.ly/15xeZDf and http://nyti.ms/XSAoEP