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Legal Mediation News – November 2013

This is another in a series of updates on legal mediation news by News Editor, Keith Seat. See our related Newsletter Service for your clients and referral sources.

Eighth Circuit Rejects NFL Retirees’ Objections to Mediated Settlement Due to Exclusion from Mediation
Litigation by retired players against the National Football League was consolidated with the active players’ case and sent to mediation, but the retirees were not involved in the mediation to the extent they would have liked, despite the efforts of the mediator to include them.  When the active players reached a settlement with the NFL, the retired players were dissatisfied with only receiving $900 million in additional benefits (over ten years), asserting they could have done better negotiating directly, and sued the National Football League Players Association and active players.  A federal district court dismissing the retirees’ litigation and the U.S. Court of Appeals for the Eighth Circuit affirmed.  The appellate court explained that the active players could negotiate on behalf of retirees even without their consent, because it is established industrial practice for unions to bargain over pensioners’ rights.  Further, notwithstanding suggestions by two NFL owners that an NFL offer would have provided $1.5 billion for retirees, the court noted that retirees do not have the negotiating leverage of active players with the NFL and could not be part of a collective bargaining agreement, so they likely would not have done better.
Eller v. National Football League Players Assoc., No. 12-2487 (U.S.C.A. 8th Cir., September 23, 2013)

Settlement Agreements Rarely Against Public Policy
A party who signed a detailed settlement agreement after a lengthy mediation between competing factions of a homeowners association sought to have the court strike certain provisions relating to the board and bylaws, asserting they violated specific statutes and public policy generally.  A California appellate court affirmed the trial court’s conclusion that no specific violation of statutes covering common interest developments was shown.  Moreover, the challenged settlement provisions did not violate public policy, as public policy favors settlement agreements and seeks to uphold settling parties’ justified expectations.
Lee v. Castelluccio, No. C068987 (Cal. App. 3d Dist., October 2, 2013)

Court Order Requiring Further Mediation Not Appealable
The Nevada Supreme Court concluded that a trial court’s determination that a mediation agreement had been violated and requirement that the parties return to mediation under Nevada’s foreclosure mediation program was not a final order that could be appealed.  The Court explained that the lower court’s decision was not final because the mediation would again address the merits of the dispute.  Further, the mediation might resolve all outstanding issues between the parties so that no appeal would be necessary, and if not, the parties could appeal after further mediation. 
Wells Fargo Bank, NA v. O’Brien, 129 Nev. Adv. Op. 71 (Nev., October 3, 2013)

Mediated Settlement Term Sheet Upheld Against Claims of Uncertainty and Mistake
Mediation between two accountants resulted in a signed term sheet dividing the work and compensation from clients of a third accountant in their office who unexpectedly died.  The term sheet expressly stated it was “binding and enforceable,” but also required a “complete” settlement agreement to be prepared and signed two weeks later.  The day before the deadline, counsel for one party stated that his client had made an error and wished to return to mediation.  Litigation followed in which the mediation term sheet was upheld; the appellate court rejected assertions that the term sheet was uncertain or based on a mistake.  The court concluded that the mere fact that a more formal agreement was to be prepared did not invalidate the term sheet, if it was otherwise enforceable.  Nor did the absence of a list that was to be attached cause problems, as there was no dispute over the subject matter of the list.  The appellate court also rejected unilateral mistake as grounds for overturning the term sheet where a party merely had second thoughts after signing the agreement.
Newman v. Jerome Leventhal Accountancy Corp., No. B237166 (Cal. App. 2d Dist., September 12, 2013)

Oregon’s Medical Malpractice Mediation Program Raises Concerns
Oregon has enacted reforms permitting medical malpractice claims to be settled in mediation prior to litigation without reporting the settlements to national databases.  Consumer advocacy group Public Citizen is raising concerns that the new law will hurt public safety by helping bad doctors cover up their mistakes.  Public Citizen is particularly concerned about other states following Oregon and is seeking federal action to require mediation settlements to be included in the National Practitioner Data Bank.  Supporters of the legislation, which include the Oregon Medical Association and the Oregon Trial Lawyers Association, assert that medical care is enhanced by requiring malpractice claims to be confidentially shared with the Oregon Public Safety Commission.  However, Oregon’s governor and other states interested in the mediation program will work with the federal government on whether and how to report payments reached in mediation.
OregonLive (September 10, 2013); SB 483

Connecticut Authorizes Insurance Mediation Program for Catastrophes
Legislation took effect on October 1 giving Connecticut’s insurance department authority to establish a program for consumers to mediate with their insurance carriers over real and personal property claims (other than motor vehicle and condo association policies) following any catastrophe in which the governor declares a state of emergency.  Mediation is mandatory for insurers if the amount in controversy is at least $5,000, and optional below that level.  The insurance commissioner may adopt regulations and must designate an entity to implement the mediation program. 
Claims Journal (October 8, 2013)

Ohio May Expand Mediation Program to Resolve Property Value Disputes
The Franklin County, Ohio, mediation program, begun in June 2013 to streamline the complaint process over changes in property values, is having very positive results.  Sixteen hundred people have gone to mediation since June 4, and only 25 have not reached agreement and gone on to the Board of Revision for a formal hearing.  These numbers are better than expected, so the program may be expanded state-wide and other states may want to adopt the program as well.  The mediation program may also be expanded beyond disputes involving residential properties to include commercial properties as well.
Columbus Dispatch (October 22, 2013)

Massachusetts Finalizes Mediation Program for Tax Disputes
Following a year-long mediation pilot program for resolving tax disputes, the Massachusetts Department of Revenue has made mediation permanent and reduced the required minimum amount in dispute from $1 million to $250,000.  Three of four test cases during the pilot settled their tax assessment disputes, which ranged from $2.6 million to $9.7 million, during the first mediation session.  The longest test case took five months, compared with a year or more through the regular appeals process.
MassLive (October 20, 2013)

Updating the Multi-Door Courthouse
The classic notion of a “multi-door” courthouse needs to be significantly reformed based on experience and current needs in order to develop efficient court screening processes for determining which cases will benefit from mediation and which will not, according to Barry Edwards in “Renovating the Multi-Door Courthouse: Designing Trial Court Dispute Resolution Systems to Improve Results and Control Costs” (Harvard Negotiation Law Review, Spring 2013).  The lengthy article examines the elements that result in settlement and encourages system design to build on them.  Using empirical data from real world observations rather than relying on pilot projects as common in the past, the article contains many points of interest, including:

  • Settlement rates are no higher even if the mediator charges more per hour or is more frequently selected by the parties.
  • Female mediators have a significantly higher settlement rate than male mediators, even after controlling for other variables. 
  • Subsequent mediation sessions have settlement rates similar to initial sessions, despite the pessimism of counsel that further mediation would be helpful.
  • Mediations ending in settlement take significantly longer than those ending in impasse.
  • Cases sent to mediation very often are negotiated and resolved prior to mediation; many more settlements occur outside mediation than in mediation.
  • New dispute resolution products are not needed, just better arrangement of offerings and greater self-service, like the first Wal-Mart.
  • Courts are ill-equipped to make decisions for parties and should empower litigants to make their own strategic choices.

A key conclusion of the article is that resolving routine cases through mediation will reduce the great personal hardships of those involved, as well as reducing court congestion and permitting courts to focus on the novel cases requiring judicial attention.
Court ADR Connection (September 2013); Full Article


Keith Seat

Keith L. Seat is a full-time mediator and arbitrator who can effectively assist parties in resolving a wide range of telecommunications, antitrust and other commercial disputes. With over twenty years of legal experience as a mediator, arbitrator, litigator, advocate before executive branch agencies, and key staffer in the legislative and… MORE >

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