Brian Jerome Selected as 2017 Super Lawyer

FOR IMMEDIATE RELEASE:

BRIAN R. JEROME, MDRS Founder and CEO, selected as 2017 Massachusetts Super Lawyer

DR Industry leader Brian R. Jerome brings valuable knowledge and experience of out-of-court Dispute Resolution to those seeking mediation and arbitration solutions as a means to achieve faster, less frustrating, and more effective resolution to business and personal disputes.  

October 18th, 2016 – BRIAN R. JEROME, MDRS founder and CEO, has been selected to the 2017 Massachusetts Super Lawyers list.  Each year, no more than 5% of the lawyers in the state are selected by the research team at Super Lawyers to receive this honor.

Super Lawyers, a Thomson Reuters business, is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement.  The annual selections are made using a patented multiphase process that includes a statewide survey of lawyers, an independent research evaluation of candidates, and peer reviews by practice area.  The result is a credible, comprehensive, and diverse listing of exceptional attorneys.

The Super Lawyers lists are published nationwide in Super Lawyers Magazines and in leading city and regional magazines and newspapers across the country.  For more information about Super Lawyers, visit SuperLawyers.com.

Attorney Jerome, Chair of the Massachusetts Bar Association’s DR Section, is available for questions and interviews.

About MDRS – With offices in Boston and Salem (MA), Massachusetts Dispute Resolution Services (MDRS) provides a full range of out-of-court mediation and arbitration services to private individuals, attorneys, business, labor, and the insurance community.  MDRS, one of the first DR providers in Massachusetts, offers a professional panel of over 35 select neutrals, including retired judges and experienced attorneys.  Including cases handled by the panel, they have resolved more than fifteen thousand cases for their clients.  Massachusetts Dispute Resolution Services provides mediation and arbitration services to parties seeking equitable settlement of their disputes without the time, expense, and frustration which often accompany the more formal trial court system.  MDRS neutrals provide a wide spectrum of experience paired with a wide range of dispute resolution processes designed to meet the parties’ interests in solving disputes equitably and skillfully.

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If you would like more information, please contact Marketing Director Sheri Wilson at (800) 536-5520 or swilson@mdrs.com.

Massachusetts Dispute Resolution Services (MDRS)

60 State Street, Suite 700
Boston, Massachusetts 02109
Phone: (800) 536-5520
Fax:     (978) 741-2368
http://www.mdrs.com

Celebrate Conflict Resolution Week October 16-22

In 2005, the Association for Conflict Resolution [ACR] designated the third Thursday in October as Conflict Resolution Day, and later, the American Bar Association [ABA] designated the third week of October as Mediation Week.  Over the past decade, many states and other organizations have proclaimed days, weeks, and months in this honor, acknowledging the commendable and empowering services provided to all people via the many methods which comprise Dispute Resolution.

The DR Section celebrates this week with you to raise awareness about the availability of proven dispute resolution services to lessen the time, economic, and emotional costs of prolonged litigation, and the settlement of conflicts at every level.  We encourage users and practitioners to
focus this week on promoting fair, equitable, and creative solutions that are acceptable to the needs and interests of all parties involved.

Do you have a favorite Conflict Resolution activity, quote, story, or wisdom that you’d like to share? Visit our Facebook page at https://www.facebook.com/MassDispute/ or email us at caseadmin@mdrs.com

A Giant Leap Forward: Dispute Resolution Drops the ‘A’ and Launches MBA Section

“Over the past decades, no area of practice has grown to have a wider impact on legal operations than dispute resolution.” -Brian Jerome

The numbers don’t lie: 95% of pending personal injury lawsuits end in a pretrial settlement (according to Law Dictionary’s website), while legal news site Above the Law reports that only 1.5% of civil cases in Massachusetts ever make it to a jury. We at MDRS are excited and grateful to have been part of this prodigious evolution in the practice of law during our 25 years of service.

Recently, our role in the DR community has taken an even more specific leadership turn. Our founder and CEO Brian Jerome spearheaded September 1 st ’s official launch of the MBA’s brand new Dispute Resolution (DR) Section. Not only does the MBA finally have a dedicated DR Section, there has been an important terminology advancement as well: previously known as Alternative Dispute Resolution, ‘ADR’ has graduated to a more appropriately-named Dispute Resolution, or ‘DR’, in reflection of its legitimate wide-ranging contributions to law.

A Resource for All

“We’re delighted with the launch of our Section, and are working hard to become the primary resource of collaboration, outreach, and service for the entire DR industry here in Massachusetts,” said Brian Jerome, Chair of the MBA’s DR Section.

The new Section is building off the dedicated efforts of the earlier committee-driven working groups to offer resources to all who wish to access them, well beyond the previously limited membership. Any MBA member can join the DR Section (at no additional charge). Participation offers many rewarding opportunities to collaborate and network with known leaders in all areas of the law, gain new information and practice skills, provide service to the community, and be part of actual industry innovation.

Goals for the 2016-17 Association Year are in development and include outreach to every law school in Massachusetts and the development of live case observation plans, establishment of an appropriate and meaningful CLE program, skills development via best practice events, focus on identifying and meeting specific needs of young lawyers and those in small firms and solo practices, and much more…all of which are being conducted with the promotion of current and future MBA membership and participation in mind.

As Massachusetts Superior Court Associate Justice Dennis Curran has expressed, “Most people don’t want to be in the legal system. [They] don’t want to go to court.” Dispute Resolution offers economical solutions, speed, confidentiality, scheduling ease, immense flexibility, high settlement rates, and in most cases, the ability to settle their case and move on with their work and lives. #DR

Mediate Disputes Between Owners and Trustees

By Jeanne Kempthorne

Life in a condominium can be challenging when neighbors do not see eye to eye—and they very often don’t. And when owners and trustees can’t resolve their disagreements, the condominium community suffers. An efficient and effective means of managing disputes is key to avoiding the “condo hell” that causes owners to sue or sell.

Mediation is an approach that is well-suited to disputes among people who have an ongoing relationship and need to work together to make decisions and solve problems. Facilitated discussion assists people with competing positions to hear each other out, prioritize issues, compromise and invent solutions, and ultimately to sign on to a deal they themselves make. Mediation offers more than a fix to an immediate problem. It can establish a mechanism for raising problems, communicating news and triaging projects. The process itself can reestablish long-broken lines of communication, breaking through stony silences and entrenched patterns of withdrawal or instant escalation.

To read the full article, please click here.

MDRS Settlement Days

What’s better than settling a claim? Settling 4-8 of them – all in a SINGLE DAY. MDRS is a leading provider of Settlement Days: mediation-focused marathons conducted at the insurer’s office where 4-8 cases are lined up for time-concentrated sessions with settlement as the primary goal. Secondary in nature, but perhaps equally as critical, are the avoidance of claims’ personnel travel time and expenses, a beneficial mediation fee schedule, and high settlement rates. MDRS can work with your firm to put together a framework that fits your needs, as well as a cost-benefit analysis. Call (800) 536-5520 for further information.

Dispute Resolution Diffuses Explosive Situations

by Sheri Stevens Wilson

The Islamic Society of Greater Worcester is seeking town approval to develop a Muslim cemetery on 55 acres it plans to purchase in Dudley, Massachusetts. The group seeks a local option where their burial customs could be followed, which sometimes include ‘green’ burial options, direct contact with the dead, very specific positioning of the body according to their religious tradition and beliefs, and dignified behavior at the burial. At a recent public hearing, many residents voiced pointed opposition to the plan. Among the concerns were those of the possible effect on the local water table, traffic, noise, and vandalism. There were additional remarks made, however, which clearly showed emotional reactions and which transcended more straightforward issues.

Most present at the recent Zoning Board of Appeals public hearing might say there’s no hope of ever reaching resolution of this situation.

We hear this all the time.

We are mediators.

What are mediators? Mediators are skilled negotiators who assist those on opposing sides of an issue work toward agreement. Mediation has been a system of resolution for thousands of years and is practiced across the world in different cultures. As objective and unbiased neutrals, Mediators bring reasoning to situations where emotions and complex issues have often taken over productive discussion. Mediators have many different tools they employ, based on the conflicts and the parties involved. In general, they work to determine the genuine, underlying issues. They identify and dismantle false beliefs. They provide support for the parties to form new opinions based on facts. And they guide negotiations to determine the ways in which everyone’s needs can be met. Peacefully.

The beauty of mediation is that the parties retain all of the power, and are never made to accept methods of resolution that that decision-makers are not in agreement with. And the rate of settlement in approaching even the most complex problems in this manner is very, very high.

Attorney Brian R. Jerome, Founder and CEO of Massachusetts Dispute Resolution Services [MDRS] shares, “The controversy in Dudley involves competing interests of many factions and an interpretation of the law which creates uncertainty for all involved. That it is all in the context of an Islamic religious group raises the potential for passions and emotions to be inflamed, in part as a result of fear. In situations such as this, mediation provides a process where all of the competing groups can be heard, and their true needs and interests can be accommodated and satisfied by a carefully sculpted resolution. The parties would benefit from a better understanding of each other, and an attempt to collaborate rather than confront one another. Proceeding to a final arbitrary zoning decision may well be all or nothing, with a winner and a loser, rather than the give and take of mediation and what could be a win-win result. We encourage the parties to consider mediating their dispute, rather than continuing confrontation with the potential for further negative escalation.”

At MDRS, we’ve been helping people resolve disputes for 25 years. As leaders in the law, we find nothing as rewarding as helping our clients attain better end-results than they ever thought possible. If you are involved in a conflict and would like to speak with us further, please call (800) 536-5520 or visit us at www.mdrs.com.

Cross-Examine the Case Before Filing a Lawsuit

by Michael A. Zeytoonian, Esq.

I think it’s a good idea for people who find themselves in a dispute to do some cross-examining before they file a lawsuit.

Sounds odd, right? After all, based on what we know about litigation and how the legal process works from what we see on TV and in the movies, cross-examination is the high point of the lawsuit; it’s what everything builds up to, right?

There’s My Cousin Vinnie Gambini, (Joe Pesci), cross-examining the witness about how long it took him to cook his grits: “Were those magic grits, like the beans Jack bought to grow his beanstalk?”

Or passionate Lt. Calley (Tom Cruise) cross-examining high ranking Colonel Jessup (Jack Nicholson): “I want the truth!” “You can’t handle the truth!”

Matthew McConaughey in A Time to Kill: “Imagine the girl is white.” Atticus Finch in To Kill a Mockingbird. You can probably name ten more great TV scenes and riveting cross-examinations.

Real life court cases are not that way. First, less than 4% of the cases that get filed in court ever get to trial. Yes, you read that right. It happens rarely, and when it does, it is are not the stuff Hollywood is made of.

So back to my opening suggestion: Do some “cross-examining” of the case before deciding to file a lawsuit or hire a scorched earth litigator. Let’s move the spotlight around from just one place where your supposed “smoking gun” evidence is. Let’s examine behind the obvious and the positional statements, and peer into the corners of the other considerations about this case of ours. Test our assumptions, our biases and our maybe overconfidence about our “slam-dunk” case. Let’s ask a few more “why” questions before we start.

“I want to sue the other side,” you tell the lawyer you interview.

“Ok. Can I ask you why? What do you hope to achieve by litigating?”

“I want my day in court. I want the other side to suffer. I was wronged here; I want that wrong fixed and to get some justice.”

Suppose the lawyer stopped the inquiry of the client here and said “OK, let’s get started. We’re going to file a complaint, move things along and get you justice. Let me get some of the facts and then we’ll start wearing down the defendants into submission.”

You feel good hearing that. Pumped up. Yeah, baby; that’s what I’m talking about. You get your emotional high. Unfortunately, that high you’re feeling is very short-lived.

But you really haven’t had your dispute and your situation cross-examined to truly know what is ahead or what your options are. That was barely sufficient questioning to sign you up as a client. But not nearly enough to set you and your case up right. The lawyer didn’t even ask you what your desired goal was, or what you would consider to be a good outcome!

Now here’s what I’m talking about. A reality check. A cross-examination of the client about what she really wants, the interests underneath the position, her emotional bandwidth, pragmatic needs and level of risk aversion.

I’m reading another wonderful book by Dan and Chip Heath called Decisive. It cautions us against “the four villains of decision making”: Narrow framing, confirmation bias, short-term emotion and overconfidence. Essentially, the Heath brothers tell us with a great collection of story-telling and examples that we make poor decisions because one or more of these factors is at play in our decision-making process, and explain how to avoid them. Decisive, like their other books, Made to Stick and Switch, is a must read.

It is up to one’s lawyer, as a trusted advisor, especially if that lawyer is a person’s “Primary Care Lawyer (PCL)”, to cross-examine the client before deciding what course of action to take. Here are some recommended inquiries for you as a client to hear your lawyer ask you, before you sign on with the lawyer and absolutely before you choose a dispute resolution process. If your lawyer is not “cross examining” you with these before you start working together, think hard about getting a second opinion or interviewing more lawyers!

What is your goal here? What would a good outcome for you look like?

What does getting your day in court mean to you? What do you hope to get out of it?

Have you considered other ways of accomplishing your goals besides litigating?

What is your time frame for when you need to have this dispute resolved?

What is the skeleton in your closet that I need to know now so I’m not blind-sided later?

What is your level of risk aversion? Put it this way: A jury could decide this case the other way and you’d get nothing after spending several years and several tens of thousands of dollars on this litigation. How does that sit with you?

Do you want to control the outcome? Or would you prefer to leave the decision-making about your case to a jury of people you don’t know? Or an arbitrator who is probably very knowledgeable in the subject matter and applicable law in this case?

Can you negotiate or collaborate with the other side with some professional assistance from negotiation-style lawyers and/or a mediator?

Are there other parties and other considerations that we can include in our assessment of this dispute that will help us expand the pie of possible options for settlement?

How important is it to maintain a healthy (business, civic, organizational or family) relationship with the other party(ies)?

How important is confidentiality to the parties in this case?

This inquiry lays a solid foundation for going forward in a way that will achieve the best outcome. This cross-examination, done before you start, is likely far more valuable than the Hollywood one that will almost certainly never happen.

Michael Zeytoonian is a member of the MDRS Panel of Neutrals, and is the Founding Member of Dispute Settlement Counsel.

Celebrating 25 Years of Dispute Resolution at MDRS

MDRS 25As MDRS celebrates 25 years of providing Dispute Resolution, we reflect on no less than a quarter of a century in our field — a field which has thrived beyond all expectations: no longer a mere alternative to the courts, but widely recognized as a more direct route to positive outcomes for all kinds of disputes.

It can be argued that in the past 25 years, no area of legal practice has grown to have a wider impact on the practice of law than the cumulative forms of Dispute Resolution. Over 97% of all cases presented now reach settlement without trial, such that Dispute Resolution has moved into its rightful position — and away from being referred to as the ‘alternative’ resource. With fewer constraints than a courtroom, proven convenience and cost savings, and happier clients in the end, ‘DR’ continues to expand with new tools and techniques, and an ever-widening pool of practitioners.

One need only look back to our individual and collective experiences of bringing the practice into the mainstream, to see how much the reception of DR has changed, even as the basic principles have stayed relevant and enduring. We recently dug out a clipping of an article featuring our founder Brian R. Jerome, an early adopter of what was, in those early days, an oft-criticized method of resolving conflicts.

Reference to “the costly and painfully slow court process” seem familiar and timely, but it’s a quote from The Beverly Times article, dated August 8th 1995, when DR was still a revelation for many accustomed to seeing litigation as the only option.

Timeliness and civility? Also present in the enthusiastic testimony of a client who worked with Brian in the early days:

“One session with him and we were completely back on track…It was very civilized, which was a nice way of getting all the feelings and thoughts out. I felt it was very much like having a lawyer and a psychiatrist at the same time.”

And yet, in 1995, the State Supreme Judicial Court had only recently set up a committee to phase in dispute resolution.

As the old saying goes, “In matters of style, swim with the current; in matters of principle, stand firm as a rock.” The hundreds upon hundreds of DR practitioners in Massachusetts, and the continuing increase of DR use in so many areas of the law, demonstrate how comprehensively Dispute Resolution has been accepted as the right option for resolving disputes, after so many years of being the “alternative.”

Of course with this progressive expansion and growth come increased responsibility. Serving this year as the Chair of the Massachusetts Bar Association’s DR Committee has given our founder Brian Jerome an opportunity to bring even more to the field he has dedicated his career to. It’s a pleasure to be able to announce that the Dispute Resolution Committee is moving forward with a new voice and refreshed objectives. We anticipate sharing with you, our clients and friends, many new and exciting opportunities in connection with this dedicated group in the coming months, not to mention many more months and years of exciting developments in our field – not only for MDRS, but for great numbers of our esteemed colleagues who practice Dispute Resolution and continue to advocate for peaceful, efficient, and cost-effective resolutions of conflict.

We at MDRS want to acknowledge that this milestone would not have been possible were it not for you, our treasured clients and friends. We thank you, appreciate you, and look forward to continuing our work with you in the future.

Recent Developments in DR

Notice to Bar Inviting Comment on Proposed Superior Court Initiatives. Comments due on or before March 4, 2016

The Superior Court invites comments on a set of proposed initiatives, as described below, designed to make civil litigation more just, speedy, and inexpensive. These proposals would make significant changes in the conduct of civil litigation in the Superior Court. Comments should be sent by email to maria.pena@jud.state.ma.us or by regular mail to The Superior Court Working Group on Civil Litigation Options, c/o Maria I. Peña, Superior Court Administrative Office, 13th Floor, Three Pemberton Square, Boston, MA, 02108, on or before March 4, 2016.

The three proposed Superior Court initiatives are:

Proposal #1
Menu of Options- Right to Individual Case Management and Tracking.  A “menu” of options that would take the form of an individual case tracking order, at the option of the parties and with the approval of the Court.  The parties would have the opportunity to agree to vary standard procedures in one or more ways, including the procedures that otherwise govern discovery, trial, and post-trial events.  For example, the parties may agree to an early and firm trial date, with or without a jury, and with a variety of limits on the quantity and kind of evidence.  Parties would seek an individual tracking order by filing a Motion for Case-Specific Management, which would be authorized by changes to Superior Court Standing Order 1-88 and a proposed new Superior Court Rule 20.

 

Proposal #2
Pilot Program for Early Case Management Conferences for Qualifying Cases.  A pilot program for early case management conferences in four case categories: real estate, construction, products liability, and employment discrimination.  The proposed pilot program would provide an opportunity to assess the value of early case management conferences and the time required to conduct them.  In each case included in the program, the Court would convene a conference with the judge and counsel within 90 days after service of process.  Prior to the conference, the parties would be required to confer, to exchange written settlement proposals and responses, and to complete a standard form addressing case management.  An amendment to Superior Court Standing Order 1-88 would establish procedures for the conferences, and provide the form for the parties to prepare and submit. In addition, to facilitate conducting the conference early in the life of the case, as provided in the proposed amendment to the standing order, the Superior Court would recommend that the Supreme Judicial Court amend Rule 4(j) of the Massachusetts Rules of Civil Procedure to reduce the time limit for service of process from the present 90 days to 30 days, or to provide for a more expeditious alternative similar to the process now used in federal court, where service is required only when a defendant fails to respond to notice by mail.

 

Proposal #3
New Superior Court Rule on Expert Disclosure.  As is already required by the court’s “Notice to Appear for Final Pre-Trial Conference” in Superior Court Standing Order 1-88, the new rule would require that unless the parties agree, or the court orders otherwise, each party shall set forth certain information in the final pre-trial conference memorandum relating to any expert that a party intends to call at trial.

 

A link for further information concerning these proposals is attached below, please cut and paste:  http://www.mass.gov/courts/court-info/trial-court/sc/notice-to-bar-inviting-comment-on-proposed-superior-court-initiatives.html

 

Litigation conduct – Arbitration Waiver

Where a plaintiff has moved to compel arbitration, the motion should be allowed based on an arbitration clause in the parties’ subcontract. The claims all arise out of allegedly defective exterior sheeting the Defendants installed during the construction of a building, the New Hall, for Mount Ida College (‘Mount Ida’). …

 

Defendants argued that the Plaintiff’s motion should be denied because pre-conditions to arbitration have not been satisfied, which required on-site meetings and mediation before arbitration may be pursued, and that this dispute does not fall within the scope of the arbitration agreement, and Plaintiff has waived its right to arbitration through litigation conduct. …

 

“… [T]he decision as to the effect of Plaintiff’s alleged failure to comply with the preconditions of arbitration is one for the arbitrator. …“Under these circumstances, the Defendants will not be prejudiced by the compulsion of arbitration. Minimal litigation conduct has occurred, and the situation here is patently different from scenarios where delay in moving for compulsion of arbitration has resulted in parties engaging in months or years of unnecessary discovery or litigation conduct. … Additionally, any claims Defendants seek to pursue against other subcontractors, whether in this Court or before an arbitrator, may be subject to statutes of repose regardless of the ruling on this motion. Compulsion of arbitration does not contribute to any prejudice Defendants may experience in this regard. Accordingly, Plaintiff has not waived its arbitration right by litigation conduct. In light of the findings above, Plaintiff’s motion to stay and compel arbitration is granted.”

 

Cutler Associates, Inc. v. Palace Construction, LLC, et al. (13 pages) (Hillman, J.) (USDC) (Civil Action No. 15-40021-TSH) (Sept. 22, 2015).

 

Arbitration – Counsel fees
The issue presented in this case is whether an arbitration panel who applied the commercial arbitration rules of the American Arbitration Association  and who found that the arbitration agreement did not authorize an award of attorney’s fees, nonetheless may award attorney’s fees based on its finding that ‘substantially all of the defenses were wholly insubstantial, frivolous and not advanced in good faith.’  Where the arbitration panel ordered a condominium trust to pay counsel fees to the owner of two units, the SJC ruled that the fee award was correctly vacated in Superior Court because the parties did not authorize any such award. The Court noted that no provision of the parties’ agreement authorized the award of attorney’s fees.

 

Unlike an arbitrator’s authority in Superadio [Ltd. Partnership v. Winstar Radio Prods., LLC, 446 Mass. 330 (2006)] to award monetary sanctions for discovery violations and noncompliance with discovery orders, the key difference, however, lies in the AAA rules concerning the specific sanctions at issue: the version of rule 23 at issue in Superadio, governing discovery, broadly authorized the arbitrator ‘to resolve any disputes concerning the exchange of information,’ whereas rule 47(d)(ii) expressly limits the availability of attorney’s fees in arbitration awards, allowing fees only where they are requested by the parties or authorized by law or agreement. The SJC futher stated that thought G.L.c. 231, §6F, which allows a ‘court’ to award attorney’s fees where ‘substantially all of the defenses … were wholly insubstantial, frivolous and not advanced in good faith ….an arbitrator, however, is not a ‘court’ that may award attorney’s fees under §6F. …”

 

Beacon Towers Condominium Trust v. Alex, SJC-11880

 

Arbitration – Retroactivity
In a case where a plaintiff college alleged that the defendant accounting firm committed malpractice when it failed to detect serious financial irregularities that occurred in the college’s financial aid office during fiscal years 1998 through 2004, the plaintiff’s claims are not subject to an arbitration clause in the parties’ 2005 agreement.

 

None of the annual agreements from 1998 through 2004, referred to by the parties as ‘engagement letters,’ makes any mention of arbitration as an available (much less mandatory) means for the parties to resolve disputes that might arise between them.

 

KPMG is relying on the engagement letter that the parties executed for fiscal year 2005 which for the first time in any of their annual agreements, the 2005 engagement letter included a mandatory dispute resolution provision. …

 

… In our view……the only reasonable interpretation of that language in the context of this forward-looking agreement is in reference to services that KPMG would perform after the new contract was executed……where ‘it would have been a simple matter for’ the contract drafter to include a term it now claims is brought within the sweep of arguably ambiguous contractual language, ‘[w]e see no reason to add th[at] term[] now.’

 

Class Action Arbitration Clause Waiver

In DIRECTV v. Imburgia, decided on Dec. 14, 2015 the U.S. Supreme Court again dealt with a California court’s refusal to enforce a class arbitration waiver contained in a consumer form agreement falling under the Federal Arbitration Act.

 

Plaintiffs were customers of DIRECTV who in 2007 signed a customer service agreement with DIRECTV that included a mandatory arbitration clause and a class arbitration waiver. The plaintiffs subsequently sued DIRECTV alleging that their imposition of early termination fees violated California law. DIRECTV moved to compel arbitration, but the California Court of Appeal denied the motion, and the California Supreme Court denied discretionary review.

The lower court based its decision on its interpretation of language in the 2007 agreement stating that if “the law of your state” invalidated the class arbitration waiver, then the entire arbitration agreement would be unenforceable.

 

In 2011 however when the Supreme Court decided AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) holding that the FAA preempts state laws that invalidate a class arbitration waiver contained in an otherwise valid arbitration agreement.

 

After Concepcion, then, “the law of your state” has no effect on the enforcement of a class action waiver. Therefore, the disputed “law of your state” language in the 2007 agreement is now a meaningless artifact from the pre-Concepcion era.

 

Nevertheless, the California Court of Appeal in DIRECTV interpreted “the law of your state” in the 2007 agreement to include the very California law hostile to class arbitration waivers that Concepcion subsequently declared to be invalid under the FAA.

 

Therefore, the lower court struck the class waiver under invalid, pre-Concepcion California law. The court also applied the contract’s jettison clause and refused to enforce the entire arbitration agreement.

 

In a majority opinion written by Justice Stephen G. Breyer, the court held that the FAA preempts the lower court’s interpretation of the agreement. That means that a reference to “the law of your state” in any pre-Concepcion agreement evolves with the times and reflects any subsequent changes made by a state legislature, a state supreme court, or, as in this case, a decision of the Supreme Court on the supremacy of federal law over state law.

 

In short, the FAA preempts the lower court’s departure from general California contract law when it presumed that “the law of your state” referred to California law that was declared invalid in Concepcion.

 

Under the court’s decision, then, parties would have to refer expressly to invalid or preempted state law in their arbitration agreements (an unlikely but nonetheless enforceable contract clause under the FAA), to override the presumptive meaning of “the law of your state.”

 

$48M Arbitration Award Upheld-Impartiality of Arbitrator Denied

An arbitrator did not exceed his authority when he applied out-of-state law to award treble damages to a husband and wife who claimed they lost millions due to the fraud and gross negligence of their investment advisor, a Superior Court judge has ruled in upholding the $48 million award. The plaintiff argued that the award of treble damages under Pennsylvania unfair trade practices and consumer protection statutes contravened choice of law and limitation of liability clauses in its client agreement.  Judge Edward P. Leibensperger found no reason to disturb the arbitrator’s award.

 

Leibensperger wrote that “the Agreement expressly contemplates the application of federal and state statutes that, in the case of the Pennsylvania Unfair Trade Practice and Consumer Protection Law, according to the arbitrator, allows for treble damages.” Commentaors have expressed that f the limitation language had specifically included a limitation on multiple damages, the case might have come out differently and if one wants to limit the law just to Massachusetts, there are ways to do that as well.”

 

In addition to the arbitration clause, the parties’ agreement provided that it would be governed and construed by the laws of Massachusetts. Yet in his choice of law analysis on the issue of damages, the arbitrator concluded that Pennsylvania law applied because FEP and Weiss were registered as investment advisors in that state.

 

Accordingly, the arbitrator applied the Pennsylvania Securities Act and the Pennsylvania Unfair Trade Practice and Consumer Protection Law to award the Sutows treble damages.

Judge Leibensperger concluded that the arbitrator did not exceed his powers by awarding treble damages under Pennsylvania law, finding that the parties’ arbitration clause was “much broader” than their choice of law provision.

 

As to the claim of arbitrator impartiality…..“The sum and substance of the claim by FEP and Weiss of evident partiality is that [Philip S.] Cottone knew counsel for the Sutows as a fellow professional in the field of securities arbitration. …

 

“I find that the claim of ‘evident partiality’ is completely unsubstantiated. First, the professional interactions between Mr. Cottone and counsel for the Sutows were adequately disclosed. FEP and Weiss had no objection. Moreover, mere professional interaction between two members of a specialized area of the bar, without more, does not begin to suggest evident partiality. …

“… It is hypocritical, at best, for a losing party in a trial to which he fully submitted his defenses and claims in the hope of victory, to claim bias when he loses. …

 

Family Endowment Partners, L.P., et al. v. Sutow, et al. (9 pages) (Leibensperger, J.) (Suffolk Superior Court) (Civil Action No. 2015 CV 1411-BLS1) (Nov. 16, 2015).

 

Arbitration – Employment dispute

Where a defendant employer has moved to compel arbitration of an employee’s claims of wrongful termination and retaliation, the motion must be allowed based on arbitration clauses in the employment application and offer letter signed by the plaintiff.

 

In the Employment Application, the parties agreed ‘to resolve any claims or disputes arising out of or relating to [Hagerty’s] application for employment or, if hired, [his] employment with or termination from Cyberonics exclusively by final and binding arbitration before a neutral arbitrator under the then current rules of the American Arbitration Association.’. In the Offer Letter, the parties agreed that in ‘the event of a dispute concerning this employment offer or [Hagerty’s] employment relationship with Cyberonics, [Hagerty] and Cyberonics agree to submit the matter to binding arbitration under the then current rules of the American Arbitration Association.’ (Magee Decl. Ex. 2) (emphasis added).

 

“The ‘arising out of or relating to’ and ‘concerning’ provisions indicate an intent to arbitrate a broad scope of claims. … The arbitration clauses state that they specifically apply to ‘employment,’ ‘termination,’ and ‘employment relationship. … Therefore, in light of the ‘presumption of arbitrability’ and the federal policy favoring arbitration, Hagerty’s wrongful-termination claims are subject to arbitration, no matter whether the relevant agreement is the Employment Application, the Offer Letter, or both.

 

“Hagerty contends that the anti-retaliation claims do not fall within the scope of the arbitration clause because the clause does not contain ‘clear and unmistakable terms’ evidencing an enforceable agreement to arbitrate the relevant statutory claims. He cites Warfield v. Beth Israel Deaconess Medical Center, Inc., 454 Mass. 390 (2009) in support of that contention. …

“However, the court in Warfield incorrectly ‘appl[ied] general principles of State contract law to determine whether a particular agreement requires arbitration of a claim.’ … As previously stated, the question of ‘whether a particular dispute is within the class of those disputes governed by the arbitration clause .. is a matter of federal law.’ … In determining whether the particular dispute falls within a valid arbitration agreement’s scope, ‘“there is a presumption of arbitrability[:] an order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.”’ … Applying the Warfield ‘clear and unmistakable terms’ test would not ‘place [the arbitration agreement] upon the same footing as other contracts,’ … and would run afoul of the presumption of arbitrability whereby ‘any doubts concerning the scope of an arbitrable issue should be resolved in favor of arbitration.’ … Therefore, the Warfield ‘clear and unmistakable terms’ test does not apply here.

 

“However, and in any event, Warfield is readily distinguishable because the arbitration provision at issue in that case was much narrower than the ones in the present case. …”

 

United States ex rel. Hagerty v. Cyberonics, Inc. (20 pages) (Saylor, J.) (USDC) (Civil Action No. 13-10214-FDS) (Nov. 13, 2015).

Arbitration – Waiver – Litigation conduct
Where defendants have moved to compel arbitration pursuant to an operating agreement, the motion should be allowed despite the plaintiff’s claim that the defendants waived the right to enforce the arbitration provision in the agreement.

 

“Plaintiff opposes sending this matter to arbitration. His only argument is that CRIC Realty has waived its right to enforce the arbitration provision. …

 

“While it is a close call in this case, I find that CRIC Realty has not waived its right to demand arbitration of plaintiff’s claims. Rather than a plaintiff commencing an action in court and later changing his mind to seek arbitration (the scenario in many of the cases), here it is the defendants who are invoking arbitration in their responsive pleading. The length of time between CRIC Realty being served with this lawsuit (December 2014) and when it indicated that it wished to enforce arbitration (August 2015) is not unduly long, as compared to many of the cases addressing undue delay. While plaintiff claims prejudice because discovery, initiated by both sides, has started, such discovery would have occurred in the arbitration process if arbitration had been demanded earlier. There is no unfair prejudice to plaintiff as a result of discovery.

 

“The countervailing consideration is that CRIC Realty invoked the jurisdiction of the court by filing a motion to dismiss plaintiff’s complaint. In fact, defendants filed their initial motion to dismiss in February 2015, and CRIC Realty did not raise the arbitration provision. That motion was not acted upon as plaintiff requested leave to file an amended complaint. CRIC Realty then filed a renewed motion to dismiss in which it argued for dismissal of claims on the merits but also noted the arbitration provision and its position that the claims should be sent to arbitration. Plaintiff arguably suffered some prejudice by having to respond substantively to defendants’ arguments in the motions to dismiss the claims on the merits.

 

“On balance, I find that plaintiff’s slight prejudice (slight, because he will have to confront CRIC Realty’s legal arguments in arbitration just as he did here) is outweighed by the strong policy to enforce a party’s arbitration rights. Moreover, CRIC Realty’s litigation conduct can be explained, in part, by the fact that the other CRIC entities that do not have an arbitration agreement with plaintiff were required to file a responsive pleading along with CRIC Realty. Those defendants were required to raise substantive grounds in defense. In sum, there is insufficient conduct by CRIC Realty to find an implied waiver of CRIC Realty’s arbitration rights.”

 

Harelick v. CRIC, LLC, et al. (Leibensperger, J.) (Superior Court) (Civil Action No. 2014-3930 BLS1) (Sept. 28, 2015).

Arbitration – Trust – Non-signatory
In a case where defendants have moved to compel arbitration under a voting trust agreement (VTA) formed along with the creation of a realty trust, the motion must be allowed despite the fact that the plaintiff never signed the VTA.
“After a careful review of the complaint, its attachments, and the arguments set forth by the parties, this court concludes that Elizabeth’s claims in this action against the Brown Defendants and Adams must be submitted to binding arbitration before the American Arbitration Association under the arbitration provision contained in the VTA. Although Elizabeth is a nonsignatory to the VTA, she is (1) bound by the agreement of her trustee, Adams, to enter into the VTA, and (2) a third-party beneficiary of the VTA. … Adams’ signature, as trustee of [Elizabeth Brown Realty Trust (EBRT)], on the VTA bound Elizabeth as he was her agent or representative. Moreover, Elizabeth was a beneficiary of [Canal Realty Trust (CRT)] and, thus, derived the benefits of the VTA, which was created to ‘insure the continuity and stability of management’ of CRT and ‘to avoid a conflict … with regard to the management’ of CRT. Elizabeth continues to benefit from CRT today in the form of twenty percent of CRT’s income.

Ambeliotis v. Brown, et al. (7 pages) (Leibensperger, J.) (Superior Court) (Civil Action No. 14-00855-BLS1) (Sept. 30, 2015).

Arbitration – Minimum wage
Where a defendant has moved to compel arbitration of a plaintiff’s minimum wage complaint, the motion must be denied because the issue of whether the parties’ dispute involving truck drivers is exempt from the scope of the Federal Arbitration Act is for the court, not an arbitrator, to decide.

 

“This case involves a labor dispute between a trucking corporation and a former truck driver. In March 2015, the plaintiff Dominic Oliveira brought this proposed class action alleging that the defendant New Prime, Inc. violated the Fair Labor Standards Act (FLSA), 29 U.S.C. §§201 et seq., and Missouri and Maine labor laws, by failing to pay its truck drivers minimum wage. … New Prime moved to compel arbitration under §4 of the Federal Arbitration Act (FAA), 9 U.S.C. §4, and two operating agreements signed by Oliveira on behalf of Hallmark Trucking LLC, both of which contain an arbitration clause. … Oliveira argues that the Court must determine whether the operating agreements are exempt from arbitration under §1 of the FAA before it can consider New Prime’s motion to compel arbitration. … New Prime maintains that the exemption’s application is a threshold question of arbitrability that the parties delegated to the arbitrator in the operating agreements. …

 

“… Section 1 … exempts ‘contracts of employment of transportation workers’ from the FAA entirely. … Employment contracts involving truck drivers fall within the transportation worker exception. …

 

“The FAA does not define the term ‘contract of employment.’ See 9 U.S.C. §1. Although neither the Supreme Court nor the First Circuit has directly addressed the issue, courts generally agree that the §1 exemption does not extend to independent contractors. …

 

“Neither the First Circuit nor Supreme Court has answered the central question in this case: does a district court have to determine the applicability of the FAA §1 exemption itself, or is the exemption issue just another gateway question of arbitrability that contracting parties may validly delegate to an arbitrator? …

 

“The Ninth Circuit held that the applicability of the §1 transportation worker exemption is not a question of arbitrability that the parties may delegate to an arbitrator. [In re Van Dusen, 654 F.3d 838, 843-45 (9th Cir. 2011)]. The court explained that because a ‘district court’s authority to compel arbitration arises under Section 4 of the FAA,’ a district court ‘has no authority to compel arbitration under Section 4 where Section 1 exempts the underlying contract from the FAA’s provisions.’ … ‘Section 4 has simply no applicability where Section 1 exempts a contract from the FAA, and private parties cannot, through the insertion of a delegation clause, confer authority upon a district court that Congress chose to withhold.’ … The court emphasized that ‘whatever the contracting parties may or may not have agreed upon is a distinct inquiry from whether the FAA confers authority on the district court to compel arbitration.’ …

 

“As the Ninth Circuit highlighted, its holding is consistent with the Supreme Court’s decision in Bernhardt v. Polygraphic Co. of America, 350 U.S. 198 (1956). …

 

“… Thus, this Court must keep on trucking in the present case to determine whether the two operating agreements Oliveira signed on behalf of Hallmark Trucking LLC are contracts of employment within the §1 exemption.”

 

Oliveira v. New Prime, Inc. (21 pages) (Saris, C.J.) (USDC) (Civil Action No. 15-10603-PBS) (Oct. 26, 2015).

 

Arbitration – Fraud – Fiduciary duty

Where a Superior Court judge confirmed an arbitration award in favor of a defendant and against the plaintiff minority shareholders, the arbitration award was not contrary to the law or public policy of Delaware.

 

“The plaintiffs contend that the arbitrator exceeded his authority when he ‘refused’ to apply a section of Delaware law, namely 8 Del. C. §271, which requires that stockholders be notified and have consented before ‘all or substantially all’ of the assets of a corporation are sold, leased, or exchanged. Basing his decision on Delaware cases, Massachusetts cases, treatises, statutes, and practice guides, the arbitrator was ‘not persuaded that the statutory duties of the Board to notify the shareholders and to obtain their consent … in a sale of all the assets is applicable to a sale pursuant to an assignment for the benefit of creditors,’ as was the case here. This legal conclusion is shielded from our review. …

 

“The plaintiffs next contend that the arbitrator’s award offends public policy, namely, Delaware public policy of providing stockholders with a right to vote on the sale of assets which, they claim, is ‘[e]mbodied in the [s]tatute.’ …

 

“… However, the plaintiffs have not ‘identified “a well defined and dominant public policy, ascertained from laws and legal precedents,” that is offended by the award … in this case.’ … An error of law, even one amounting to a misapplication of a statute, is not, in and of itself, a violation of public policy. …”

 

Paasch, et al. v. Ranoux (5 pages) (Appeals Court – Unpublished) (No. 14-P-1076) (Oct. 20, 2015).

 

Insurance – Arbitration – Uninsured motorist – G.L.c. 93A
Where a plaintiff’s complaint seeking to compel arbitration of an uninsured motorist claim was dismissed, the dismissal order must be reversed despite the defendant insurance company’s claim of non-cooperation on the part of the plaintiff.

 

“… The insurer moved to dismiss the complaint, pursuant to Mass.R.Civ.P. 12(b)(6), 365 Mass. 754 (1974), arguing that the claim for uninsured motorist benefits was barred by the plaintiff’s non-cooperation (specifically his failure to complete an examination under oath and his failure to provide material documents and information in conjunction therewith), and that the claim asserting violations of chapters 176D and 93A is not subject to arbitration. A judge of the Superior Court allowed the motion to dismiss, stating in a marginal note that ‘the plaintiff’s complaint arises from a legal question of insurance coverage, an issue not properly committed to arbitration.’ …

 

“It is well-established that the plaintiff’s claim under chapters 176D and 93A is not within the scope of the policy’s arbitration clause. … The claim, however, may be litigated in court. Accordingly, while it was appropriate to dismiss so much of the complaint that sought to compel arbitration of the alleged violations of chapters 176D and 93A, dismissal should have been without prejudice to the filing of a new complaint, or the amendment of the present complaint, to assert the alleged violations in a civil action for damages.

 

“Insofar as the complaint sought to compel the insurer to arbitrate the plaintiff’s entitlement to uninsured motorist benefits, it should not have been dismissed. Although the representations in the insurer’s motion and accompanying memorandum, if substantiated, may well establish that it has a valid coverage defense to the payment of such benefits,a motion to dismiss must be decided based on the allegations of the complaint. On the face of the complaint, it cannot be determined, as matter of law, that the insurer is excused from liability under its policy.

 

Regis v. Progressive Insurance Company (4 pages) (Appeals Court – Unpublished) (No. 14-P-1848) (Oct. 16, 2015).

 

Arbitration – Counterclaim
Where a plaintiff who obtained a $1.24 million arbitration award against a defendant has moved to dismiss the defendant’s counterclaim seeking to vacate or modify the award, the dismissal request should be denied without prejudice despite the defendant’s error in failing to properly title the counterclaim as a motion.

 

“Section 6 of the Federal Arbitration Act directs that ‘any application to the court hereunder shall be made and heard in the manner provided by law for the making and hearing of motions.’ 9 U.S.C. §6. That means that the Federal Rules of Civil Procedure generally do not apply to actions to confirm, modify, or vacate arbitration awards. … Thus, respondents’ request for the Court to vacate or modify the arbitration award should have been titled as a motion instead of as an answer or counterclaim. …

 

“The court, however, has the power to treat respondents’ ‘counterclaim’ as a motion if, despite its form, its substance is that of a motion. …

 

“In substance, respondents’ filing meets the requirements to constitute a motion. … The filing is 19 pages long and includes both the factual and legal bases for respondents’ request that the award be vacated or modified. Accordingly, the Court will treat the counterclaim as a motion to vacate or modify the arbitration award.

 

“A Rule 12(b)(6) motion to dismiss is not the proper mechanism for contesting a motion to vacate or modify an arbitration award. … Therefore, to the extent that [plaintiff Cindy-Marie] Rogers’s motion to dismiss respondents’ counterclaim attacks the merits of the ‘counterclaim,’ it is itself procedurally improper and will be denied without prejudice.

 

“Although the Court recognizes that the parties have supplied some briefing as to the merits of respondents’ contention that the panel’s award should be vacated, the Court is unable to issue a ruling either confirming or vacating the award without the benefit of a factual record. To that end, respondents should re-file an appropriately titled motion to vacate or modify the arbitration award, along with a memorandum of law and any supporting affidavits or other documents, in accordance with Local Rule 7.1(b).”

 

Rogers v. Ausdal Financial Partners, Inc., et al. (4 pages) (Saylor, J.) (USDC) (Civil Action No. 15-12899-FDS) (Oct. 14, 2015).

 

 

 

 

 

 

 

 

Bracketing Can Break Impasse in Negotiation

by Brian R. Jerome, Esq.

Whether parties are negotiating directly with each other or with the assistance of a mediator, a basic axiom is that a case will not settle until the parties are discussing terms within a reasonable settlement range.  When negotiations reach a critical impasse, the possibility of settlement steadily decreases as the time without demonstrable progress continues to pass.  This is particularly true in situations where the demand (or offer) made may be deemed unreasonable by the other side, resulting in an equally unreasonable counter proposal.  When parties reach impasse, they begin to abandon hope.  In such situations, breaking impasse is perhaps the most essential achievement a mediator can make; finding common ground keeps the interest and attitude of the parties focused on resolution and promises a better likelihood of settlement as an incentive to continue negotiating.  Bracketing, one of the many specialized tools in a skilled mediator’s arsenal, can be a helpful tool to jump-start the process and break an impasse in settlement discussions.  Bracketing can make bridging the divide seem possible again, and encourages the parties to continue negotiating.

For example, consider the case where the parties come to mediation and the plaintiff makes an initial settlement demand of $850,000.  The defendant, though having significant more settlement authority and/or willingness to move upward, may deem this demand unreasonably high and choose to make an in-kind, unreasonably low settlement offer of $50,000.  Hearing this, the plaintiff is immediately upset and frustrated:  “Why did we come to this table?  I have a lien three times that amount to satisfy!”  The plaintiff may then elect not to move, or move minimally, perhaps to $825,000.  Continuing this water torture approach to negotiation or mediation can result in significant frustration, and often emboldens further posturing – none of which lend to the collaboration and momentum parties need and a mediator seeks to resolve a case.

A skilled mediator by this point has likely gone well beyond an initial joint session with the parties and has been engaged in private caucuses with both sides.  S/he has begun to develop a sense of the needs and interests of both sides and by doing so, over time, likely begins to envision a range or window through which it is likely that both sides need to enter into for more fruitful discussions to begin.  In some cases, a party may elect to confidentially divulge to their mediator, hypothetical  lesser amounts or ranges that they may be willing to consider.  Being careful not to disclose these confidences, nor to prematurely provide their own evaluation which could prove counterproductive, an experienced mediator might suggest and begin to sculpt a process of bracketing that could revive the negotiation process, provide some optimism for the participants, and return some momentum to the session.

During private caucus, when the mediator makes a request to more significantly increase their offer, this defendant may indicate that if they were to raise their offer to $200,000 or $250,000 – which they might be willing to do at some point – they feel the plaintiff is likely to only reduce their demand by another $50,000 or so.  The defendant doesn’t want to be left in that negotiation position.  A mediator may ask where the plaintiff would need to be for the defendant to offer $250,000.  If they indicate $650,000, the mediator might ask for the defendant’s authority to propose these numbers as brackets, coming from the defense.

A mediator may inquire to a defendant who may be reluctant to disclose their own parameters, whether if the plaintiff was willing to reduce their demand to $650,000, would the defendant be willing to offer $250,000?  The mediator might stress to the defendant that should these brackets be found unacceptable by the plaintiffs, they often either result in a demand or a counter bracketing proposal that nevertheless will be more productive than making a single low offer.  Further, it could be suggested that if the plaintiff found this bracketing proposal unacceptable, the defendant could return to making a single offer at a level of his choice.

Though a bracketing proposal may often signal, or be perceived to signal, a willingness to reach the middle of these brackets, it does not necessary mean this.  Although such flexibility may be one of its advantages, as long as each party can settle this case at a number within these parameters, they may be inclined to assent to the bracket so as to take advantage of the momentum created by it.

After a bracketing proposal has been agreed to by both sides, the parties can return to negotiating by single offers or demands, or, can consider further bracketing to narrow their differences and reach a reasonable range of settlement.

Consider the use of bracketing to break an impasse in your direct negotiations with the other party – or better yet – have a capable mediator with knowledge and experience in this process help you sculpt your negotiations more effectively.  Remember that the numbers need to be a realistic reflection of the risks and realities of the case, and to give the other side time to gradually accept that their hoped-for, pre-mediation position may not be achieved.  Your mediator can assign rational reasons to the relative bargaining positions of the parties, and with his/her guidance, you can greatly enhance the prospects of resolving your more difficult cases.