Takata Settlement Impacted by Bankruptcy

This week, 44 states and the District of Columbia agreed not to collect a $650-million deal to settle consumer protection claims so victims of Japanese airbag maker Takata Corp.'s faulty inflators can get a bigger piece of the company's remaining money. Takata was forced into bankruptcy last year amid lawsuits, multimillion-dollar fines and recall costs involving inflators that use explosive ammonium nitrate. The chemical propellant deteriorates over time when exposed to high heat and humidity and can then burn too fast, blowing apart its metal canister. Attorneys General for the states alleged that Takata concealed air bag issues and failed to disclose safety defects. Under this deal and a reorganization plan just approved by a federal bankruptcy judge in Delaware, Takata agreed not to represent its air bags as safe unless supported by scientific evidence, not to falsify any testing data, and to keep cooperating with automakers to make sure replacement inflators are available. It also agreed not to sell any airbags that use ammonium nitrate, unless for recall replacement parts. Some of the provisions already were included in an agreement with the National Highway Traffic Safety Administration. Takata had agreed under a DOJ plea to pay victims $125 million and to pay $850 million in restitution to automakers that bought its inflators and are stuck with recall and litigation costs. Under the restructuring plan, Takata will sell most of its non-air bag assets to a Chinese-owned rival for $1.6 billion. Reportedly, the airbag inflator problem touched off the largest automotive recall in U.S. history. Some 69 million inflators in the U.S. and another 60 million worldwide are being recalled, according to court documents and the National Highway Traffic Safety Administration. See more here-- http://lat.ms/2EO0McD

Biblical Origins of Mediation

Today, I attended a Cardozo Legal Society lunch featuring Rabbi David Kay of Congregation Ohev Shalom which just celebrated its 100th anniversary in Orlando. The topic focused on secrecy in Jewish Law or Halaka. Keeping secrets is the stuff of modern common law and is specifically directed in our own oath of attorney in Florida as keeping the secrets of clients inviolate. Given the tendency of human nature to engage in conflict, it is not surprising that mediation is rooted in the history and tradition of many lands and cultures. We find in the Old Testament that Aaron, the first priest of ancient Israel, was the older brother of Moses. While Moses was mediator between God and Aaron, Aaron served as mediator between Moses and the people. Aaron believed in keeping shalom and caused peace to reign between man and his fellow man. While the details of Aaron’s approach are not revealed in Torah or Talmud, there is reference to Aaron which appears to signal biblical legitimacy for an alternative approach to the resolution of disputes outside of the judicial system. Law today still reflects Rabbinic and Talmudic views on dispute resolution. An aggrieved individual has access to the courts and a right to application of the law by a trier of fact. There is also the ability to have a professional neutral facilitate the resolution of those disputes through private caucuses that often reveal things the other side will never learn due to confidentiality which can be crucial to self-determined outcomes at mediation. We take solace in knowing questions we face every day in the field of dispute resolution were also faced by Rabbis and Hebrew sages thousands of years ago. See more here-- http://bit.ly/2CfGiYd

Blockchain Dispute Resolution?

In all the craze surrounding blockchain technology, it seems a means of automating dispute resolution processes so that parties could benefit from a platform using smart contracts has emerged. Reportedly, Kleros, a decentralized organization powered by the foundation of Ethereum blockchain could manage a decision protocol supporting a multipurpose system custom deployed into smart contract code to arbitrate disputes. Smart contracts built to integrate with Kleros would give parties with conflicts over terms of off-chain contract fulfillment an opportunity to have impartial jurors from across the globe weigh evidence, vote, and select a resolution to be carried out by the contract. Supposedly, evidence is kept private via a hash and asymmetrical encryption in order to protect the sensitive information of the users and provide a proof to the blockchain without revealing the data. Deciders must stake a native token to the platform, pinakion, which makes them eligible to vote on active disputes. Staking more pinakion increases the chances that a juror might be selected. Pinakions act as a metric of reputation and are a key to the Schelling game theoretical model driving the voting mechanism for jurors. The voting system works by having the jurors analyze the evidence of the case and commit their votes by submitting a hash of their vote and a secret value. The Kleros smart contract verifies values revealed and votes committed are unchangeable nor revealed in the application layer to other jurors or parties to prevent influencing the votes of other jurors. Under the system, jurors are to be compensated by fee schedules relative to the various parameters to be hammered into the smart contracts governing, so that both parties will be responsible for making a deposit which will cover the fee. In the case of appeals, the party who covers the fee will be decided by the arbitrable smart contract. The system is not designed to limit appeals, however each appeal increases the number of jurors necessary to conclude the case and thus causes the fee schedule to rise with each additional juror. In theory, although it would become expensive, someone could continue to appeal a case indefinitely, although the costs would ostensively outweigh the benefits. Kleros CEO, Federico Ast, gave an example at a recent TedX talk involving an airline passenger filing a complaint against an airline and two days later being emailed that a jury has ruled for issuing a free ticket. While this looks like another example of automation, he says the human element in this smart-contract resolution protocol is the key to the future of the justice system because it leverages the dynamics of the ancient Greek legal system, which used regular citizens instead of professional court officials. See more here-- http://bit.ly/2nmN8GP and http://bit.ly/2EtxmBo