LA Alternative Dispute Resolution Law Blog

I conducted a mediation recently that had all of the ingredients for failure (as discussed in last week's blog) from the very start. It was a wage and hour case in which the plaintiff claimed, among other things, that she worked long hours for which she was not adequately paid, was not allowed to take meal breaks or rest breaks, and did not receive a pay stub each week itemizing her wages.

While I received a mediation brief from the plaintiff's attorney, I did not receive one from the employer's counsel. Thus, going into the mediation, I had only one side of the story which appeared to be a straight forward question of an employee working long hours and not getting paid the amounts required by the statutes.

The first thing that happened is that I noticed when the plaintiff came in, her attorney who was already here, introduced herself implying that this was the first time they were meeting. To me, this indicated the absence of any sort of relationship upon which to build trust. The plaintiff had no reason to trust her attorney whom she had never met before.

The second thing is that I spoke with the defense attorney who gave me a completely different story; plaintiff was an occasional day laborer who worked every so often for defendant and nowhere near the long hours or days she claimed. In fact, defendant's hours of operation totaled less than the hours plaintiff claimed she worked each week. This completely different story caused me to rethink my approach and strategy very quickly.

The third thing that happened is that when I walked into the room occupied by plaintiff and her attorney, I learned that plaintiff spoke no English and her attorney spoke no Spanish. There was no interpreter present and the only way that either counsel or I could speak with plaintiff was for counsel to call her office on her mobile phone and have one of her staff interpret. (At this moment, I knew this was going nowhere fast but being a persistent soul I hoped for the best and marshaled on.)

Since I could not converse with the plaintiff, I decided to speak to the attorneys to have a discussion of the issues. At that point, I realized that the plaintiff's attorney was a young attorney appearing with pre-ordained marching orders, having no control over her client or the matter. In response to the version of the facts as laid out by defense counsel, plaintiff's counsel remained resolute in her position, even when told that plaintiff was claiming to work more hours than the business was open during the week.

Plaintiff's first demand was scripted; it was the amount demanded in the complaint, as though no frank discussion of the issues or facts had been held. While counsel indicated that she previously spoke with her client about the version proffered by defense counsel, that conversation could not have been meaningful due to the language barrier and the lack of any relationship between them.

Defendant responded with a minimal amount to which plaintiff responded with a still quite high demand, advising that her client denied everything the defendant was saying. It was clear that plaintiff's counsel, being a young attorney, did not have the healthy skepticism that comes with experience to listen to her client critically and judge for herself whether what plaintiff was saying was credible. Rather, to her thinking, plaintiff was her client and she had to accept what she said without question.

In an effort to try to break the impasse, I suggested a joint session. While defendant and its counsel agreed, plaintiff's counsel agreed but plaintiff refused. Again, plaintiff's counsel took the "no" at face value, not seeking to talk to plaintiff privately to find out why and/or try to persuade her to meet jointly.

Rather, plaintiff counsel met with defendant and counsel, and we discussed the issues. Without plaintiff present, there could be no candid discussion. At the conclusion, plaintiff's counsel realized she had more discovery to do and perhaps the case was not really positioned to settle; the mediation ended.

There are several morals here. First, communicate with your client prior to the mediation so that a relationship of trust can be created. Prepare your client for mediation by discussing the strengths and weaknesses of the case and the various alternatives available. Second, communicate with opposing counsel prior to the mediation and have a frank discussion of the issues so that the mediation is not full of surprises for which there is no time to verify or conduct due diligence. While plaintiff's counsel indicated that she had been told of the employer's position beforehand, it appeared that she did not do any investigation other than ask her client who denied it. Third, if there is a language issue, be sure to bring an interpreter to the mediation so that communication in its simplest form can occur. To depend on whoever is available back in the office to interpret is "winging it" which spells disaster.

Fourth, do not simply be a warm body showing up at the mediation. Be prepared to negotiate and have frank discussions with the other party and the mediator as well as with your client. While an attorney is supposed to be a zealous advocate for her client, she is not required to believe everything her client tells her; she must use a critical eye and ear and judge her client's credibility as that is what a judge and/or jury will be doing. If what her client is saying is not credible, it is better for the client to hear it at mediation within the confines of confidentiality than at a public trial from a judge or jury.

Fifth, be sure the case is ready for mediation. While mediating early is recommended to save time and the expense of litigation, if the parties have not conducted the necessary fact investigation and/or discovery, then it is meaningless as parties will not settle cases when there are too many unknowns existing. In this mediation, the plaintiff's version of the truth was quite divergent from the defendant's and nothing had been done to try to corroborate one or the other. Thus, the case could not be settled, because if one believed plaintiff, she was owed quite a lot of money, but if one believed defendant, plaintiff was trying to take advantage of a generous, kind-hearted employer (aka "no good deed goes unpunished").

I do not know what will happen here... discovery no doubt will indicate which party has the "truth" on its side.....

.... Just something to think about.

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While my alternative dispute resolution focus is generally on mediation, a recent event in the arbitration field caught my attention. On May 7, 2013, Senator Al Franken (MN) introduced S. 878 (http://www.gpo.gov/fdsys/pkg/BILLS-113s878is/pdf/BILLS-113s878is.pdf ) in the Senate while his counterpart Rep. Henry C. "Hank" Johnson, Jr. (Ga-4) introduced H. R. 1844 in the House.(http://thomas.loc.gov/cgi-bin/query/C?c113:./temp/~c1130E0u38) (These identical bills are entitled, The Arbitration Fairness Act of 2013 and are aimed at eliminating mandatory pre-dispute arbitration clauses in employment, consumer, antitrust and civil rights matters so that such individuals are truly free to decide to engage in arbitration if they so desire and only once an actual dispute arises.

Why is this important? On April 27, 2011, the U.S. Supreme Court issued its opinion in AT & T Mobility, LLC vs. Concepcion, 131 S. Ct. 1740 (2011)(http://www.supremecourt.gov/opinions/10pdf/09-893.pdf)  in which Plaintiffs Vincent and Liz Concepcion purchased cellular telephone service from AT & T Mobility, LLC. The contract provided that all disputes were to be decided by arbitration on an individual basis; class wide arbitrations were prohibited.

Naturally, a dispute arose over a $30.22 charge; AT &T advertised a free telephone with the purchase of its service but did not state that it would have to charge the sales tax of $30.22 based on the retail value of the "free" telephone. So, plaintiffs objected to the charge and sued AT &T in federal court. Their lawsuit was later converted into a putative class action, alleging false advertising and fraud. AT &T moved to compel arbitration pursuant to its contract with the plaintiffs. The US District Court denied the motion, and the Ninth Circuit affirmed.

The U. S. Supreme Court reversed, holding that under the Federal Arbitration Act, 9U.S.C.§ 1(http://www.ilr.cornell.edu/alliance/resources/Legal/federal_arbitration_act.html) such contract provisions were valid and that such provisions could prohibit class actions meaning potential plaintiffs must pursue arbitration in their individual capacities only.

One can imagine the impact this ruling has had since its issuance two years ago. All large companies can now compel consumers to file individual arbitration claims to pursue their rights. But, if the claim is like that of the Concepcions'- $30.22- who is going to pursue it and as importantly, what attorney will even handle it?

To change this state of affairs, Sen. Franken and Rep. Johnson have re introduced their respective bills (Earlier versions were introduced in 2012). The Findings in each bill are the same:

SEC. 2. FINDINGS.

The Congress finds the following:

(1) The Federal Arbitration Act (now enacted as chapter 1 of title 9 of the United States Code) was intended to apply to disputes between commercial entities of generally similar sophistication and bargaining power.

(2) A series of decisions by the Supreme Court of the United States have interpreted the Act so that it now extends to consumer disputes and employment disputes, contrary to the intent of Congress.

(3) Most consumers and employees have little or no meaningful choice whether to submit their claims to arbitration. Often, consumers and employees are not even aware that they have given up their rights.

(4) Mandatory arbitration undermines the development of public law because there is inadequate transparency and inadequate judicial review of arbitrators' decisions.

(5) Arbitration can be an acceptable alternative when consent to the arbitration is truly voluntary, and occurs after the dispute arises.

Thus, the purpose of these bills is to prohibit mandatory arbitration in consumer, civil rights, anti-trust and employment matters before the dispute arises. As proposed Section 402 states:'(a) - Notwithstanding any other provision of this title, no predispute arbitration agreement shall be valid or enforceable if it requires arbitration of an employment dispute, consumer dispute, antitrust dispute, or civil rights dispute.... "Thus, no longer could AT &T in its cellular telephone service contracts require a consumer to agree to arbitration should a dispute arise, long before the dispute even arises.

These two bills have been referred to the respective Senate and House Committee on the Judiciary. Whether they will get out of committee or remain there as did their predecessors is anyone's guess. But, I think it is an important development of which we should all be aware.

..... Just something to think about.

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In its April 5, 2013 edition, The Economist had an interesting article in its Science and Technology section about how we judge time. Entitled "Yesterday Came Suddenly", it discusses a study to be published in Psychological Science indicating that we view the future as being closer than the past. Calling it the "Temporal Doppler Effect", the researchers, Eugene M. Caruso of the University of Chicago, Leaf Van Boven of the University of Colorado at Boulder, and Mark Chin and Andrew Ward of Swarthmore College conducted a series of experiments showing that we have different temporal views of time. Their four different studies showed "....a systematic asymmetry whereby future events are psychologically closer than past events of equivalent objective distance." (Id. at 2.)

Specifically, in one experiment, the researchers asked participants to report the psychological distance to the same specific time, (e.g. one month, 1 year) at objectively equal distances in either the past or the future. In short, they were asked whether one month in the future from today seemed closer or further in time than one month in the past from today. The participants reported that "... a month in the future was closer than a month in the past". Similarly, the participants reported that one year in the future was closer than one year in the past. (Id. at 7.) That is, subjectively, people view future events as being closer in time than past events even though the two points in time may be objectively equidistant.

The researchers found this to be true with events as well. Three hundred and twenty three participants were asked to determine the relative closeness of Valentine's time; some were asked 8 days before Valentine's Day while others were asked 7 days after it occurred. Again, the participants reported "...that Valentine's Day was psychologically closer one week before it happened than one week after it happened." (Id. at 7-8).

Finally, the researchers wanted to find out if a person's physical movement - backward or forward- affected their psychological view of the future versus the past. Using virtual reality headgear, some of the participants were made to feel as though they were physically moving backward while others were made to feel as though they were physically moving forward. They were then asked questions about how far in the past or in the future were certain events.

The researchers found that the physical sensation of moving forward or backward did have some effect on the participants' perception of time. "When moving forward, participants reported the future closer than the past.... When moving backward, in contrast, participants reported that the future was somewhat more psychologically distant than the past...." (Id. at 9-10.)

Indeed, other studies have found that "...[p]eople tend to lean their bodies backward when thinking about the past whereas they lean their bodies forward when thinking about the future. " (Id. at 4).

In sum, the researchers concluded:

"We believe that the temporal Doppler effect in psychological distance reflects a broad "bias toward the future" whereby people are psychologically oriented toward the future more than the past.... This future orientation is highly functional, as future events can typically be acted upon more successfully than past events... Thus, representing future events as psychologically close may better prepare individuals to approach, avoid, or otherwise cope with future events. For example, psychologically close events tend to arouse more concrete action plans than distant events... People who feel close to an upcoming test are more motivated to prepare and perform well...." (Id. at 14.)

As the researchers conclude, since we are more emotionally oriented to the future than to the past, we tend to place higher value on the future than the past and to "... judge moral transgressions more harshly in prospect than in retrospect." (Id.)

So, if the future is emotionally and psychologically closer to us than the past, how does this effect negotiations and mediation? Impliedly, it appears to be more beneficial to focus on the future and not on the past or on the events leading to the dispute. As people are more tied to the future, invoke their imaginations about what the future will look like if the matter is resolved, if not resolved, what it will take to prepare for trial, what depositions and other work much be done before trial et. cetera. As this study indicates that the past events and history of the dispute are psychologically and emotionally very distant to most people, focusing the parties on the past will not lead to resolution. Focusing them on the future and the work to be done to prepare adequately for future events will more likely lead to resolution! Or, as The Economist, concludes: "Talking of future plans may be more effective than boasting about past successes."

... Just something to think about!

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A friend of mine is in a business partnership. I will call her "Jane". Over the past few months, Jane has continuously expressed to me her frustration and dissatisfaction with her partners, as it seems that they do not care much for the business aspect of running a partnership. They are slow to bill the clients and even slower to collect the money. The fact that monthly expenses exist and must be paid do not seem of much concern to them.

After hearing this same story more than once, I suggested to Jane that she get a "divorce"; she ends the partnership. She responds that she hesitates to do so due to other factors. So, the story continues to be retold many more times until finally, the other partners do things that equate to the "straw that breaks the camel's back."

So, Jane decided then and there to end the partnership, announcing to the partners that the partnership was dissolved, effective immediately. Only afterwards, did Jane start thinking about what comes next and what exactly are the consequences of what she just told her partners. UGH!

I relay this tale because it exemplifies how not to negotiate. Only after she announced the dissolution to her partners but not before- did Jane bother to pull out the partnership agreement to determine what she could and could not do pursuant to the agreement. Even then, she barely read it. While she has agreed to meet with her now former partners to discuss the future, she has done no homework, and no research on her options. Rather, she plans to simply "wing it", using her gut and intuition to figure out how to reach her not so clearly defined goals.

In an April 16, 2013 blog post on the Program on Negotiation at Harvard Law School website, the blogger discusses that each of us uses two different systems of thought: System 1 is our "intuition: quick, automatic, effortless and influenced by emotion" whereas System 2 thought "... is slower, more conscious, effortful and logical." (http://www.pon.harvard.edu/daily/negotiation-skills-daily/strategies-for-negotiating-more-rationally/print/). So, when one acts purely on intuition, one is using System 1 thought whereas if one carefully evaluates a situation and makes a decision based on thinking it through, one is using System 2 thought. So, while one may use System 1 to decide where to go for lunch, one should be using System 2 to decide whether to take a job offer, or in Jane's case, whether to dissolve a partnership.

The blog points out that Jane is typical; most people use System 1 rather than System 2 thought during negotiations because they feel cognitively overloaded, and to think slowly and carefully takes time which is precious these days. However, they make a big mistake by using intuition rather than logical thought. People like Jane, negotiating important issues, must make the time to think through the issues and allow for sufficient time to negotiate all of the issues. If the negotiations must be in multiple sessions over a number of days or weeks, then so be it. By rushing into negotiations and rushing through the negotiations, much will be missed, mistakes will be made and much will be "left on the table".

Only with adequate preparation and giving sufficient time to negotiate, can one negotiate rationally. Further, the blogger suggests that in preparing for such negotiations, one looks at the issues with both "an insider lens" and "an outsider lens":

•o A negotiator typically uses an insider lens for making judgments when deeply immersed in a particular context or situation; the insider lens relies on intuitive System 1 thinking.

•o By contrast, the typical negotiator adopts an outsider lens when removed or detached from a particular situation; the outsider lens uses rational System 2 thinking.(Id.)

Finally, the blogger notes that most of us have an "overconfidence bias" in that we are overly confident about our "... odds of success despite being proven wrong in the past. In other words, most of us fail to learn from experience." (Id.)

So-the moral of my tale: when facing serious negotiations (i.e., something more than where to have lunch) - don't wing it and depend on your System 1 intuition; rather make the time to prepare, reflect, think about the consequences of your actions and your alternatives. Only by using System 2 thinking will you be fully prepared!

.... Just something to think about!

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