Sanns Mediation World of ADR

Filings for arbitration at the Financial Industry Regulatory Authority (FINRA), the self-regulation body of Wall Street, are up 43% in 2009 over the previous year.  Nearly all brokerage agreement specify FINRA arbitration as the only way to resolve a dispute between a client and broker or an employee and broker.  In years where the stock markets are down, arbitration filings tend to increase as investors seek redress for their losses.  The average time from filing to award decreased from 13.0 months in 2008 to 11.5 months in 2009 — a 12% decrease. Investors received a monetary or non-monetary award in 45% of the cases in 2009, up from 37% in 2008.

FINRA also has an mediation program.  Filings in their mediation program were also up (23%) and average turnaround time dropped 33% from 135 days in 2008 to 91 days in 2009.

I arbitrate cases for FINRA, among other bodies.

Tags: Arbitration // Add Comment »

Analogies between a finder of fact (a judge or jury) and referees or umpires (the arbiter of a game’s rules) are often made.  It is open to debate whether the analogy firmly holds.  However, it is often interesting to discuss whether any “neutral” decider of an outcome (game rules or rules of law) have biases.

When a party enters the courthouse or arbitration room, each party expects (and hopes) that the person(s) making the decision as to who is “right” is being impartial and fair. It is certainly open to debate how to define fair, which is usually in the eye of the beholder.  Each time I went through arbitration training (to be a private judge), the class is asked to perform an exercise.  The class is broken up into groups of three people.  One person plays the arbitrator, one person the complainant and the other the respondent.  Each group is given the same exact fact pattern and the parties make their cases.  After a specified period of time, the arbitrator makes their ruling which is turned into the person running the training.  Every single time I’ve done the exercise, the distribution of rulings in the room fall out from one  end of the possible spectrum to the other with everything in between.

Why?  Everyone had the same exact case to argue.  Shouldn’t “justice” be consistent?  In reality, several things happen.  First, not every party presents the case the same exact way.  Some people are more effective than others, just as some lawyers are better skilled than others. In a real case, anyone who speaks (lawyers, witnesses) can have good and bad days.  Trials are performances.  Second, every single human being has biases.  We grow up with things we like or don’t like.  We have all had good and bad experiences with things, people and scenarios.  These create the filters through which we see the world.  There is also a theory many attorneys ascribe to which states that whomever the jury or arbitrators likes better in terms of attorneys and litigants will win the case. Likability trumps “rightness”.

Getting back to the sports (referee) analogy, there have been some recent studies showing bias in referees.  And I am not referring to the Tim Donaghys of the world who seek personal gain from their on-the-court rulings.  In the Netherlands, two professors discovered that soccer (the other football) referees are more likely to call ambiguous fouls on taller players.  A study out of England showed that referees favored home teams in their calls, especially in disciplinary sanctions (yellow and red cards).  From the world of Tae Kwon Do, referees tend to award more points to competitors wearing red uniforms.

In the U.S., college basketball referees tend to also favor the home team by calling fewer fouls.  The college refs also try to level the playing field for the teams by issuing “make up” calls, calling more fouls on the team in the lead, and trying to even up the number of fouls between the teams regardless of the aggressiveness of the level of play of each team.  A 2007 study also found that white NBA referees tend to call more fouls on black players than white players.

Even just looking at the games you watch, do you agree with each decision the referee or umpire makes regarding your team?  How about instant replay, the analogy of an appeal in court?  Does the referee get it right even when they have a TV with 20 angles and slow motion to look at each play?  Sometimes not.

So what does all of this tell you?  Try to resolve the case without having someone else decide it for you.  That’s what mediation helps the parties accomplish.  The outcome is on your terms and is unaffected by the biases of others.

Please contact me if you would like to further discuss how mediation can help facilitate a resolution to your lawsuit, divorce or family dispute.

Tags: Arbitration, Commercial Mediation, Divorce Mediation and Law, Elder Mediation and Elder Law and Issues // Add Comment »

On January 18, 2010 departing NJ Governor Jon Corzine signed into law bill S2091, which mandates that any palimony agreement must be in writing and with the advice of independent counsel for both parties.  Palimony is the common term for a promise of support by one person to another in a relationship where the parties are not married to each other. This law aims to overturn several court cases which established even implied oral support promises could be enforceable.

Previously, the NJ Supreme Court had established the concept of palimony.  In Devaney v. L’Esperance, 195 N.J. 247 (2008) and in re Estate of Roccamonte, 174 N.J. 381 (2002), the New Jersey Supreme Court upheld the concept of palimony agreements between two unmarried cohabitants.  In Devaney, the court held that “cohabitation is not an essential requirement for a cause of action for palimony, but a marital-type relationship is required.”  In Roccamonte, the court held that an implied promise of support for life is enforceable against the promisor’s (cohabitant’s) estate.  Those decisions are consistent with the court’s prior decision in Kozlowski v. Kozlowski, 80 N.J. 378 (1979), which said a promise of lifetime support by one cohabitant to another in a marital-like relationship would be enforced, if one of the partners was induced to cohabit by the promise.  The court stated the right to such support is found in contract principles and that the contract may be either express or implied.

The takeaway:  if you want palimony in NJ, get it in writing and have it reviewed by your attorney.

Tags: Divorce Mediation and Law // 1 Comment »

I have written previously about how homeowners and lenders can use the court’s foreclosure mediation program to help resolve a foreclosure matter.  Here are a few tips on how homeowners can use the mediation process more effectively:

• Get into the process as early as possible.  Waiting until the morning of the sheriff’s sale is probably too late.  Since the bank will not accept payments while the loan is in arrears, the amount in arrears can drastically increase.  If the homeowner is not saving this money, they will be unable to address the arrears, making a modification impossible.
• Be prepared.  Have all of the documents which have been requested by the bank.  You are trying to prove you are eligible for a loan modification of some sort.  Not having the proper documentation will not help your case.
• Show the lender you can be responsible in trial payments.  Banks will often set up a trial payment plan so that the homeowner can prove financial responsibility to the bank.  Make sure you can make the payments as agreed to.  If you don’t, you will be unlikely to ever be given another chance.  Send any payments by a service which can be tracked (i.e. certified mail, priority mail, Fedex, etc.).
• Be aware that not all homeowners will be able to save their homes.  There are other alternatives for those homeowners rather than going through foreclosure.  The lender may allow you to stay in the home through the end of the school year.  They may be willing to offer cash for the keys.

Remember, the mediation is your one chance to get the bank to discuss solutions for you.  Take advantage of that moment.

Tags: Commercial Mediation // Add Comment »

The plaintiff and defendant in a New York medical malpractice lawsuit has come to a putative settlement agreement just before the jury rendered a verdict.  The parties failed to get the settlement on the record prior to the jury verdict and the settlement was invalidated and the verdict upheld.

In 1996, plaintiff Mahmoud Diarassouba underwent surgery to repair a chronic condition in his left knee.  Shortly thereafter, he experienced pain and discomfort in his right knee which he blamed on the surgeon and anesthesiologist for improperly repositioning the right leg during the long operation.  The condition became chronic.  In 2003, a jury found in his favor for $1.5 million.  The verdict was thrown out due to improper admission of some testimony and a retrial ordered.  The case was tried again in 2007 and while the jury deliberated, plaintiff’s counsel advised the defense counsel his client would accept a $150,000 settlement.  Defense counsel agreed.

Moments later, the judge informed the parties that they jury had a verdict awaiting them.  Plaintiff’s counsel asked the judge if the settlement could be read into the record prior to the jury verdict being read.  The judge replied in the negative.  “Once I have a verdict, I take the verdict, and then the parties are free to do what they agreed to,” the judge said. “An agreement is an agreement, counsel.”  Defense counsel remained silent. The verdict rendered by the jury was for $1.45 million.  The defense then moved to enforce the settlement which the judge granted.  Plaintiff appealed.

Last week, the appellate court ruled that the settlement was invalid.  They found that there was no written, agreed to settlement as required by the court rules.  Neither was it placed on the record in open court.  Further appeals are expected.

I have frequently advocated for my clients to settle early in litigation.  Many cases settle on the courthouse steps.  Waiting until the last possible moments to settle is not a wise course of action, as this case illustrates.  Thirteen years later, the parties in this case do not have any resolution.

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Part of being an effective mediator is having a good understanding about how people make decisions.  After all, a mediator is assisting people in making decisions.  We all like to think we are making rational decisions.  However, that is not always the case (despite our best efforts to the contrary).

Professor Daniel Ariely (Duke University and MIT) conducts extensive research on human behavior and has written a fabulous book on this topic, Predictably Irrational.  He looks at how free! really isn’t free and how morality disappears when we’re emotionally (or sexually) aroused.

In game theory, there is a game called the Ultimatum Game.  One person is given an allotment of money, say $1000, and is told to offer a certain portion of it to another person.  If the other person accepts, they both get that amount of money.  If the second person declines, neither party gets the money.  Rationally, the second person should accept anything offered to them as any dollar they receive is more than they had previously. Studies done by Professor Ariely and his collegues have shown that most people will not accept less than 30% of the total pot.

There are a number of theories as to why the second player would act seemingly irrationally.  One is that the second player is making a “fairness” judgment:  it’s not fair that the first player is getting more than 70% of the money thus they should get nothing (while the first player gets nothing either).  Another is that the second player is setting themselves up for a better payout just in case there is a second round of the game (while there is no guarantee that there will be).

To test this further, the experimenters went to a bar where they were likely to find drunken (and hence “more rational” people who focus more on short term goals, versus the longer term goal of a better second round).  They found that most drunks would turn down deals for less than 50% of the money.

There is an interesting parallel to negotiations (and mediation discussions).  Parties to a negotiation often will get lost in the emotions of the conflict and instead of seeing their own best interests are taken care of, they become more interested in “hurting” the other party even though it hurts them as well.  If fighting over a fixed pot of money, anchoring (the first offer made by each side) becomes that much more important.

Tags: Commercial Mediation, Divorce Mediation and Law, Elder Mediation and Elder Law and Issues // Add Comment »

Arbitration is an alternative to a court making a decision on an issue in dispute by having an arbitrator, or private judge, make a decision on a matter. The benefits of arbitration include a quicker and less expensive trail to a decision. The disadvantage is that the ruling of the arbitrator cannot be appealed, except on very narrow grounds. Those grounds include an award procured by fraud, corruption, or undue means; evidence of partiality or corruption among the arbitrators; the arbitrator(s) were guilty of misconduct that prejudiced the rights of a party; or the arbitrators exceeded their powers. Some parties try to argue “manifest disregard of the law” as a way to vacate an arbitration award, but this ground is not specifically mentioned in the Federal Arbitration Act (FAA), which governs arbitration award vacature by courts.

The US Supreme Court recently ruled in Hall Street Associates LLC v. Mattel Inc. that manifest disregard is not among the grounds for vacature and thus cannot be used to vacate an award of an arbitrator — even if the parties agree to allow this ground for vacature by a court in their private arbitration agreement.

In November 2009, the 10th Circuit handed down an opinion which not only upheld Hall Street, but also awarded counsel fees as a sanction to the respondent of the appeal. The case is DMA International Inc. v. QWest Communications International, Inc. The court said, in part, “[U]njustified, protracted attempts to vacate arbitration awards destroy the ‘promise of arbitration’ and will not be tolerated….Thus, one who ‘assumes a never-say-die attitude and drags the dispute through the court system without an objectively reasonable belief that it will prevail’ does so at the risk of being sanctioned.”

The take-away: understand that an arbitrator’s award is likely final and has limited grounds for appealing a decision you do not agree with. If you want to limit your risk, build in a high-low scenario which limits awards in both directions or an upside-downside.

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Much of what happens in a lawsuit is gamesmanship, especially during the discovery phase.  Discovery comprises much of the pre-trial phase of litigation where each party seeks to understand what the other side(s) know, what documents they have pertaining to the litigation, what they will say under oath, etc.  Discovery can be expensive.  A Rand Corporation study found that 80% of litigation costs are incurred in the discovery phase.  Since less than 2% of cases filed actually go to trial, discovery ends up being THE cost of litigation for the vast majority of cases. As a result, gamesmanship during discovery can be used as strategic or tactical tool — or abused — depending on how one views it.  Some examples:

• Asking for voluminous or tangentially relevant documents
• Taking depositions from an excessive number of people
• Repeated last minute canceling of depositions
• Asking inappropriate questions in an interrogatory
• Refusing to provide requested documents
• Refusing to answer interrogatories
• Filing a lot of motions with the court (motions to dismiss, for summary judgment, to compel, etc.)

The goal of the gamesmanship is to create addition expense or agita for the other side, causing them to want to abandon their case or to settle on more favorable terms.  Unfortunately, the usual result is a lose-lose scenario where it creates the same problems for both sides.

In a recent case in California, the court in Clement v. Alegre , 09 C.D.O.S. 12126 imposed a monetary sanction of more than $6600 on one side for abusing the discovery process.  In this case, the plaintiff had objected to answering 20 of 23 interrogatories.  A retired judge acting as discovery referee noted that plaintiff’s objections were “unreasonable, evasive, lacking in legal merit and without justification” and he imposed the monetary sanctions.  Justice J. Anthony Kline for a unanimous appeals panel wrote in salient parts:

We have no difficulty in affirming the trial court’s determination that in this case plaintiffs forced to court a dispute that was not ‘genuine’.

Indeed the record here strongly indicates that the purpose of plaintiffs’ objections was to delay discovery, to require defendants to incur potentially significant costs in redrafting interrogatories that were clear and that did not exceed numerical limits, and to generally obstruct the self-executing process of discovery.

Ample evidence supports the referee’s determination that plaintiffs deliberately misconstrued the question.

Clearly this was ‘game-playing’ and supports the referee’s findings and the sanctions award.

Kline further chastised both sides for failing to mount any “serious effort at negotiation and informal resolution” and used the ruling to remind all lawyers to avoid a similar outcome.

Mediation can help avoid all of these discovery problems.  Discovery is a means to an end — not the end.  The end is resolving your dispute.  Mediation helps get resolutions on your terms.  Mediation seeks to find win-win solutions. If you’re looking for a resolution to your dispute, call me at 732-963-2299 or contact me online.

Tags: Commercial Mediation, Lawsuits // 1 Comment »

It was reported last week that there may be a error generated by the software family court uses to calculate child support payments.  As a default (i.e. if there is no other agreement in place), NJ uses a formula known as the child support guidelines.  The court uses software to to the calculations on each case where it is required.  It seems that one litigant found an error in the software’s calculations.  The court is investigating the source of the problem.

So, if the court performed the calculations for you, you may want to manually verify the math.

Here is another reason to mediate your divorce and periodic changes.  Mediating keeps the results on your terms.  For more information, contact NJ divorce mediator Marvin Schuldiner at 732-963-2299 or using this form.

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In a previous posting, I discussed the American College of Trial Lawyers task force interim report on trials in America.  The final report is out and here are the highlights as it pertains to mediation and getting your lawsuit settled:

• “Courts are encouraged to raise the possibility of mediation or other form of alternative dispute resolution early in appropriate cases. Courts should have the power to order it in appropriate cases at the appropriate time, unless all parties agree otherwise. Mediation of issues (as opposed to the entire case) may also be appropriate.”
• The task force recognized that this is a controversial conclusion, but one represented in reality.
• “82 percent said that court ordered alternative dispute resolution was a positive development and 72 percent said that it led to settlements without trial.”
• “52 percent said that alternative dispute resolution decreased the expense for their clients and 66 percent said that it shortened the time to disposition.”

In New Jersey, we have a presumptive mediation program in state court.  Most cases are referred to mediation and most settle before trial.  Parties will be even better served by mediating their dispute prior to the expense and hassle of filing suit.  If you are looking to save money in resolving your disputes, please feel free to contact me to discuss your case further and how mediation can help.

Tags: Commercial Mediation // Add Comment »