Friday, March 31, 2017

Nuclear Option: Mediation

A multibillion-dollar fight over who should pay for the San Onofre nuclear plant failure will go to mediation with the mediator from the recent NFL owners and players settlement, according to a joint filing with the Ninth U.S. Circuit Court of Appeals and the California Public Utilities Commission. Lawyers report that Layn Phillips will host an initial conference by telephone and then in-person mediation sessions this summer. Phillips, a former federal prosecutor and judge, will try to resolve the complicated dispute over almost $5 billion in costs stemming from the premature shutdown of the California coastal power plant amid a radiation leak in 2012. Any settlement would have to be approved by the federal appeals court, which took the case last year when consumers sued the commission and Edison over the original terms of a settlement agreement. The commission which ordered the latest round of negotiations, also would have to approve any revised agreement. The 2,200-megawatt nuclear plant along the Pacific failed after newly installed replacement steam generators leaked radiation. Majority plant owner Edison opted to permanently shutter the facility in 2013. The following year, state regulators approved a settlement deal allowing the utility to recover 70 percent of the $4.7 billion in premature closure costs from customers, as opposed to shareholders. Edison later disclosed its executives met privately with utility regulators at a luxury hotel, negotiating a framework for the deal eventually approved in 2014. Those backchannel communications between utility executives and regulators are under criminal investigation by the California Attorney General’s Office. The mediation effort agreed to by Edison and consumers aims to resolve a federal court case filed by the group Citizens Oversight shortly after regulators approved the settlement. As public criticism of the original settlement terms mounted, the Public Utilities Commission ordered the San Onofre record reopened. While the terms from 2014 remain in place, regulators ordered the two sides to begin new settlement talks this year and now the parties will go to mediation. Interestingly, earlier this month, arbitrators at the International Chamber of Commerce resolved an arbitration case between Edison and Mitsubishi Heavy Industries, which manufactured the equipment that led to the plant failure in 2012, awarding Edison a fraction of the damages the utility had sought. The Chamber also ordered Edison to pay $58 million in legal fees to Mitsubishi. The Japanese manufacturer is seeking to keep portions of the evidence submitted in the arbitration case confidential. The federal appeals court has ordered regular updates to the negotiations. See more reported here-- and a statement of mediation from the court here--

Monday, March 27, 2017


Who knew Hamilton was a fan of arbitration? Ron Chernow's best-seller Alexander Hamilton, upon which the new musical is based, chronicles drafting the Constitution, forming the first political parties, and Hamilton's early career as a lawyer achieving amicable settlements through Alternative Dispute Resolution. Apparently, Hamilton was reported to prefer arbitration over litigation. Chernow recounts matters that Hamilton resolved by arbitration, such as shipping disputes. As arbitration figures prominently in the area of consumer agreements, it seems relatively modern, but arbitration has deep roots in our country. Hamilton's busy legal practice made him New York's premier lawyer, with an elite clientele that included the State of New York. Chernow states Hamilton was not alone in his preference for arbitration, as many practitioners of that era preferred it to litigation. In the early years of our nation, arbitration reached a high level of utilization, particularly in commercial disputes, and that continued until a time when the ebb and flow of opinions once again pushed litigation to the forefront and created what was perceived as a judicial hostility toward arbitration-- particularly by allowing the revocation of agreements to arbitrate. The enactment of the Federal Arbitration Act in 1925 established arbitration agreements as valid, irrevocable and enforceable over the last century. Throughout this time, arbitration has been a pivotal part of our dispute resolution mechanisms. While arbitration is by no means a major thread in the overall fabric of Chernow's biography of Hamilton, the references to it are of importance and instructive to all ADR practitioners. The fundamental reasons for its heavy utilization at the time of our nation's formation continue today, particularly in the commercial context. In light of Hamilton's support for arbitration, it's ironic that his final controversy in life was resolved by a duel, a lethal form of dispute resolution says Professor Mazadoorian who analyzes this biography through an ADR lens more here--

Thursday, March 9, 2017

Can Trump U. Settlement Objector Opt Out?

This week, a Florida lawyer and former Trump University student who paid $19,000 in tuition after being upsold to a "Gold Elite" program objected to a proposed $25 million settlement that would end lawsuits against President Trump’s real estate investing education seminars. The proposed settlement is expected to pay around fifty cents on the dollar for what students initially paid to attend the now-defunct program. The class action deal resolved claims that Trump University falsely promised that Donald Trump himself had hand-picked the instructors and that the program was an “accredited university.” Most class action settlements allow individual class members to opt out of the deal just prior to final approval. The facts of this case, in which class members had an opportunity to opt out before the two sides reached a settlement, are particularly unusual. Typically classes are certified at the time of settlement, so class members receive notice of their opt-out rights at the same time they are informed of settlement terms. There’s surprisingly little precedent to guide the court on this issue. Because of the objection filed, San Diego U.S. District Judge Gonzalo Curiel could delay the settlement or even call the entire deal into question. The plaintiff seeking to opt out maintains that by not offering a formal opportunity to opt out, the settlement violates her due process rights and the Federal Rules of Civil Procedure. Plaintiff's counsel even agreed to waive its litigation fees and costs in order to assure the judge overseeing the case that the firm’s only interest was getting the best possible deal for Trump University students. See more here-- and and and