Jurist tough on settling parties in mortgage crisis litigation

Last month, the Securities and Exchange Commission had to defend their proposed settlements to U.S. District Judge Jed S. Rakoff, who according to the Wall St. Journal is "No Mr. Nice Guy." The SEC apparently considers factors including losses suffered by investors as a result of the alleged wrongdoing in weighing how much the company benefited from the behavior and whether they will be hurt by a penalty. Judge Rakoff was skeptical why Citigroup's penalty is less than one-fifth the penalty paid by Goldman Sachs Group Inc. in its $550 million settlement with the SEC last year over a different mortgage-bond deal. Likewise, Judge Rakoff forced Bank of America and the SEC to come back with a 50-page statement and a higher penalty. He reluctantly approved the revised deal, quoting "the great American philosopher Yogi Berra" in a ruling. The judge says he saw in private practice how delays and gamesmanship made the American legal system too slow and expensive for the average person. See related stories at: http://on.wsj.com/sBSoL0 and http://on.wsj.com/u7f9FE

With all troubles in EU, Germany backs mediation

German parliament, the Bundestag, voted unanimously this week in favor of a new mediation law to implement a 2008 European Union guideline for the use of mediation in civil and commercial conflict. The move gives new legal weight to mediation by creating a more defined role for mediators acting in tangent to a court proceeding. Just as in the U.S., there is apparently a long wait to get a day in court and, of course, the outcome is unsure, while the risk remains high. Mediators reportedly earn an average 250 euros an hour, but parties to disputes still save substantial court costs. See more on this international development that sounds an awful lot like what we have going on in our own backyard: http://bit.ly/tJTjMz

More sports mediation: Dodgers/FOX

Today begins a mediation between MLB's Los Angeles Dodgers and Fox Sports who have agreed to meet at the direction of U.S. Bankruptcy Judge Kevin Gross. As with many other recent entries on my blog, the mediation is judge-directed and early in the proceedings. Apparently, Joe Farnan, the mediator who previously negotiated a truce between the League and McCourt to sell the Dodgers, will conduct the mediation. It seems a November 30th hearing will proceed as scheduled under the current court order if a deal is not reached. The bankruptcy judge expressed interest in resolving the Dodgers case as soon as possible, so the team can prepare for the season. The Dodgers asked for permission to market their television rights as part of the team sale-- a move opposed by Fox as a contractual violation. Fox has asked the judge to dismiss the Dodgers from bankruptcy. In a pending collateral action, the Dodgers have sued Fox and Fox has sued the Dodgers. Judge Gross ordered both suits put on hold "pending the conclusion of the mediation." See posting by Bill Shaikin here: http://latimesblogs.latimes.com/dodgers/2011/11/dodgers-fox-head-to-mediation.html

NBA looking for NFL-type resolution in same Court

In apparent forum shopping, the NBA players refiled their federal antitrust lawsuit in Minnesota, seeking a settlement conference following the very same pattern of the NFL lockout. In the judge-directed mediation conducted by Magistrate Judge Arthur Boylan over several sessions with the NFL, full litigation was avoided and football season was saved. Billy Hunter is now telling NBA fans not to give up and to put pressure on the players and owners, though there has been no contact between the parties since talks broke off upon the NBA players' union dissolving. My earlier entry reported on the impasse that resulted from mediator George Cohen's efforts. See story here: http://nyp.st/tyOiK2

Assessment Workgroup for the Managed Mediation Program for Residential Mortgage Foreclosure Cases Recommends Changes

Though Florida’s mandatory mortgage mediation programs have likely fared better in achieving work-outs than statistics indicate, an Assessment Workgroup for the Managed Mediation Program for Residential Mortgage Foreclosure Cases warns that a new wave of foreclosures will languish if additional resources are not provided to the courts. The group, created by Supreme Court Chief Justice studied results indicating that only 3.6 percent of eligible cases were actually settled in foreclosure mediation since December 2009 for homesteaded properties. Therefore, it is probable under the group's recommendations, that the mandate for a statewide managed mediation program will end, while allowing for circuits to opt in, under a potentially revised administrative order, to resolving cases in their own local programs. However, the group did say it was probably too early to conclude the mortgage mediation program was a failure and noted many difficulties were because lenders were reluctant to participate. “The public comments received provided evidence that servicers on a broad scale resisted providing representatives at mediation with full authority to settle and refused to consider more than a narrow range of settlement options, most of which were of little value to borrowers,” the report said. “Servicers had economic incentives not to settle and to keep foreclosure cases in limbo to avoid the expenses that accompany home ownership.” Apparently, a substantial number of cases apparently settled after an impasse was declared at mediation, probably because of the document exchange and counseling that occurred at mediation. This was evident in the Orange County program-- at least anecdotally-- and some permanent modifications were made after temporary agreements were reached at mediation, which is no longer an option, now that "no agreement" style orders are required. Pre-suit resolutions are also hard to develop data on to show success in lender - homeowner negotiations. Florida Bar News story: http://bit.ly/rUTgII Read full report here: http://www.floridasupremecourt.org/pub_info/documents/Foreclosure/10-21-2011_Workgroup_Final_Report.pdf

Supreme Court of Florida Amends Mediation Appearance Rule

New language from the Committee on Alternative Dispute Resolution Rules and Policy filed by petition to amend rule 1.720 of the Florida Rules of Civil Procedure becomes effective on January 1, 2012. The revisions pertain to the requirements for the appearance of a party or a party’s representative at a mediation conference. The proposals were in response to the charge to monitor court rules governing alternative dispute resolution procedures and to make recommendations as necessary to improve the use of mediation. This opinion linked below sets forth the changes and requires physical presence of a party unless otherwise stipulated in writing or excused by court order. A representative of an insurance carrier for any insured party who is not such carrier’s outside counsel is deemed to appear if that person has full authority to settle in an amount up to the amount of the plaintiff’s last demand or policy limits, whichever is less, without further consultation. Additionally, 10 days prior to appearing at a mediation conference, a notice shall be filed with the court and served, identifying the person or persons who will be attending the mediation conference as a party representative or as an insurance carrier representative. Given the nature of the way things transpire today, a rude awakening could be in store for some litigants. See more in the decision and comments: http://www.floridasupremecourt.org/decisions/2011/sc10-2329.pdf

Mandatory Federal ADR Program Reduces Case Pendency and Encourages Early Settlement

The U.S. District Court for the Western District of Pennsylvania was once in the bottom of district courts for length of time to resolve civil cases and the amount of time to decide motions. However, that court now places in the top five percent due to the implementation of mandatory alternative dispute resolution (ADR). While the number of civil trials in the has not significantly decreased since mandatory ADR was initiated, what has decreased is time between filing and trial-- now less than a year. The program is judge directed, as opposed to being run out of the clerk's office or a separate staff. Under the procedure, lawyers have a duty to "meet and confer" prior to the initial case-management conference and to choose the form of ADR and a neutral. Litigants and lawyers are encouraged to reasonable, thoughtful and analytical in assessing cases rather than just digging into positions. According to the article below by Karen Engro, designer of the ADR program that was implemented there, cases are settling much earlier, before the deluge of discovery and motion practice. By requiring litigants to enter ADR prior to substantial discovery and the filing of summary judgments motions, the court has shifted the settlement time line substantially earlier in the litigation process. Engro reports mandatory ADR program is changing the settlement culture from settling on the courthouse steps to early resolution. More here, including statistics: http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202524627002&A_changing_paradigm&slreturn=1