The California Supreme Court issued an interesting opinion in January 2010 on attorneys’ fees. Although it has far reaching implications, it did not get much publicity.

       In Chavez v. City of Los Angeles (2010) 47 Cal 4th 970, (Chavez v. L.A. ) Plaintiff Robert Chavez, a police officer with the Los Angeles Police Department (“LAPD”), sued the City of Los Angeles and his supervisors; (1) first, in Los Angeles County Superior Court for defamation, intentional infliction of emotional distress, invasion of privacy and civil rights violations, (2) then, in federal court for unlawful employment discrimination under California’s Fair Employment and Housing Act (“FEHA”) (Government Code §12900 et seq.), and (3) then again, in Los Angeles County Superior Court alleging employment discrimination, harassment and retaliation in violation of California’s FEHA, trespass and loss of consortium. Plaintiff requested the federal court to take jurisdiction of the state court actions which it did.

       When the dust settled from all of this litigation, the federal court dismissed the lawsuit. The next month, plaintiff filed yet a third action in  Los Angeles County Superior Court alleging various claims in violation of California’s FEHA. He filed it as an “unlimited civil” case meaning that the amount in dispute was $25,000 or more. Eventually, the  matter was heard by a jury during a five day trial. The jury awarded plaintiff $1,500 in economic damages and $10,000 in non-economic damages for a total of $11,500.
 

      As the prevailing party, plaintiff filed a motion for costs in the amount of $13,144.26 and a motion for attorneys’ fees in the amount of $436,602.75 (pursuant to the FEHA statute [Government Code §12965(b)] awarding attorneys’ fees to the prevailing party) encompassing the over 1800 hours of time spent by counsel on all of the different litigation from the very inception.

       The trial court denied the motion for attorneys’ fees as an item of costs under Code of Civil Procedure §1033.5(a)(10), noting that under Code of Civil Procedure §1033(a), it has discretion to do so in those instances where plaintiff filed her action within the unlimited civil jurisdiction (cases valued at $25,000 or more) but “. . .recovers a judgment that could have been rendered in a limited civil case” (cases valued at less than $25,000). (CCP §1033(a)).
   

      The appellate court reversed, agreeing with plaintiff’s counsel that due to the complexity of the case, the case could not have been filed as a limited civil case in light of the very limited discovery allowed in such cases. Because the rules of court greatly limit the number of depositions that can be taken and the other types of discovery that can be conducted in limited civil cases, the appellate court determined it was not practical to file such a complex action in the lower court.

       The Supreme Court disagreed with the appellate court, and sided with the trial court. It noted that the purpose of section 1033(a) “. . .is to encourage plaintiffs to bring their actions as limited civil actions whenever it is reasonably practicable to do so.” (Id. at 988):

      “. . .what it requires is a realistic appraisal of the amount of damages at issue and whether the action might fairly have been litigated using the streamlined procedures of limited civil actions.” (Id.)

      The court further noted that complexity of the case does not change its holding:

      “Although extensive discovery may be conducted in many or even most FEHA actions, this does not mean that elaborate discovery proceedings are invariably necessary to effectively litigate a FEHA claim. Moreover, although in limited civil cases, the discovery permitted as of right is restricted (see, Code of Civil Procedure §94), the trial court may authorize additional discovery. . . or the parties may stipulate to additional discovery . . . .” (Id. at 988-989).

       Consequently, the Supreme Court held that in a FEHA case, a trial court does have discretion to deny costs – i.e., attorneys’ fees – to a plaintiff who recovers damages that fall within the jurisdiction of a limited civil case.
 

      The obvious implication is that an award of attorneys’ fees – whether allowed by contract or statute – is no longer a mandate. The plaintiff’s attorney is at risk of being denied her fees if she wins the case but the award is one that falls within the jurisdiction of the lower court. In sum, if she files the matter in the wrong court, she may end up receiving far less if any, in fees, than she originally assumed.
 

      This issue resonates with me in light of  my mediation practice as I conduct a lot of ‘lemon law” mediations in which plaintiff’s counsel seeks her fees pursuant to one or more applicable state statutes. Often, counsel has filed the action in the unlimited civil jurisdiction of the court (i.e. over $25,000) but settles the matter for less than $25,000 or within the jurisdiction of the limited civil courts. Should counsel now be denied her fees? Should defense counsel seek to severely limit the fees urging that the action was filed in the wrong court? Suppose, the principal case (which was filed in the unlimited civil jurisdiction of the court) settles for less than $25,000, and the parties agree to settle the issue by filing a motion for fees in the unlimited civil jurisdiction of the court. What should the judge do – go along or use her discretion to deny fees because the matter settled for less than $25,000?

      No doubt, there are a myriad of  hypotheticals to which the court’s holding could apply. . .  and none of us has the crystal ball to foresee how they should be or will be resolved. But, the court’s ruling does provide much to ruminate on!  

       . . .Just a lot to think about!

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      The Sunday magazine of the February 28, 2010 New York Times contains an interesting article entitled “Depression’s Upside” by Jonah Lehrer. Mr. Lehrer is the author of How We Decide  which is a great book and is the subject of my  January 15, 2010 blog.
 

      As Mr. Lehrer explains, it seems that depression may be a good thing, after all. While granted, depression has been classified as a mental illness which causes its victim either to stop eating or to start eating too much, lose his/her inclination for sex, have difficulty sleeping and in general be very tired even though he/she is doing less and less, its “rumination” feature is actually beneficial. 
 

      According to evolutionary psychiatrist, Andy Thompson (at the University of Virginia) and Paul Andrews, an evolutionary psychologist at Virginia Commonwealth University, the “thought process” of rumination defines this order. Those who are depressed “fixate on their flaws and problems, thus extending their negative moods” or “chew over” (i.e. ruminate) their thoughts continuously. (Id. at 2). Because rumination takes control of a person’s stream of consciousness, that person will perform poorly on “tests for memory and executive function, especially when the task involves lots of information.” (Id. at 3).
 

      But, perhaps there is a purpose to this rumination. This is what Thompson and Andrews wanted to determine. As evolutionary psychiatrists and psychologists, they believed that the mind is actually “a fine-tuned machine that is not prone to pointless programming bugs.” Thus, while rumination is a response to a specific psychological blow, such as a death, a job layoff or a divorce, they thought that perhaps some good comes out of rumination or that there is, indeed, a net mental benefit from rumination. (Id.) What they found is that it “leads to an extremely analytical style of thinking.” (Id. at 4):
         

        “. . .rumination is largely rooted in working memory, a kind of mental scratchpad that allows us to “work” with all the information stuck in consciousness. When people rely on working memory. . . – they tend to think in a more deliberate fashion, breaking down their complex problems into their simpler parts.” (Id.)

       Because the deliberative thought process is “slow, tiresome and prone to distraction,” our brains grow tired very quickly, and we give up. But the state of depression with its rumination feature allows us to discard all distractions – like eating, sex and sleep – and focus on solving a difficult, if not mind boggling, problems. In short, “wisdom isn’t cheap, and we pay for it with pain.” (Id.)
     

      As Mr. Lehrer points out, obviously, there are many who disagree with this theory that, from an evolutionary perspective, depression is a good thing because it causes us to avoid distractions and focus on solving complex problems.

      But, this theory led me to “ruminate” whether depression is a good or bad thing in the context of resolving disputes. In many of my mediations, I have witnessed parties go through the five stages of grief: denial, bargaining, anger, depression and acceptance (On Death & Dying by Elizabeth Kubler-Ross) and soon realized that the parties will not reach a resolution until they reach “acceptance.” But to arrive at that stage, they must pass through the “depression” stage. 
 

      This article on depression or the fourth-stage – explains that there is a lot more to “depression” than the “I don’t care anymore about anything” attitude that is its hallmark. It actually allows a person to focus on the issue, analyze it and come up with a solution that leads her to the next and final stage: acceptance.
 

      So, while superficially, depression seems to militate against resolving disputes, its rumination feature actually enhances the process, if not the outcome. I guess it is somewhat of an oxymoron.
 

       . . .Just something to think about.

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      Recently, LiveScience.com published an article entitled “Why ‘Sleeping On It’ Helps” by John M. Grohol, PSYD. The thesis of the article is that “the brain makes good unconscious decisions when we let it” (p. 2).

      According to Dr. Grohol:

      “Previous research suggests that sometimes the more consciously we think about a decision, the worse the decision made. Sometimes what’s needed is a period of unconscious thought – equivalent to “sleeping on it” . . . in order to make better decisions” (p. 1).

        To study this phenomenon, researchers conducted experiments. The results led them to believe that unconscious thought is actually an “active, goal-directed thought process.” But unlike conscious thought, the usual biases are absent, so that we weigh the different components more equally; our preconceptions are not considered by our unconscious. That is, “unconscious thinkers seem to be better at using appropriate information to arrive at” (p.2) their decision:

      “The researcher hypothesize that conscious thought can lead to poor weighting in decision-making - the more you think about something, the more your biases interfere with good decision-making” (p. 2).

       A moment’s reflection will reveal how this relates to mediation. “Sleeping on it” is actually counter-intuitive to the mediation process. Typically, the parties attend mediation with the goal of settling or resolving the dispute at the mediation so that the final part of the session is spent drafting and signing the settlement agreement.

      Many parties and mediators are uncomfortable with the prospect of a party walking out of a mediation and taking the final offer home “to sleep on it”. They fear that if a party walks out of a mediation to “mull” it over, the matter will not settle.

      This research though  indicates that “sleeping on it” is not such a bad idea: to the contrary, it may be rather productive. A person’s unconscious is the better decision maker and thus a person will make a good decision, unconsciously. That decision most likely will be one that is much more rational,  much less biased and  much less dependent on preconceived notions than one made consciously at a mediation.

      So, counter-intuitively, perhaps it is not a bad thing to let someone walk out of a mediation with an offer in hand “to sleep on it”. Chances are, the matter will settle once the unconscious decision-maker takes over!

      . . .Just something to think about.

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       On Thursday, November 12, 2009, the California Court of Appeal, Second Appellate District issued its opinion in Michael Cassel v. The Superior Court of Los Angeles County (Wasserman, Comden, Casselman & Pearson, LLP - Real Parties in Interest) Case No. B215215 (“Cassel”).
 

      The plaintiff, Michael Cassel, sued his attorneys, Wasserman, Comden, Casselman & Pearson, LLP, for legal malpractice alleging that the firm forced him to sign a settlement agreement for $1.25 million, an amount less than what he was willing to accept. 

       The issue on appeal was whether certain communications solely between Cassel and attorneys in the Wasserman firm, made outside the presence of the opposing party, or the mediator near or at the time the mediation was scheduled should have been excluded from use at trial. The trial court ruled that the communications were protected by mediation confidentiality (California Evidence Code §§1115 et seq.) and so excluded them from use at trial by Cassel. Accordingly, Cassel sought a preemptory writ of mandate directing the trial court to vacate its order and instead admit the communications as evidence against the Wasserman firm.
 

      The appellate court agreed with plaintiff: the communications were not covered by mediation confidentiality and so should be admitted as evidence at trial.
 

      The appellate court’s rationale was that Evidence Code §1119 limits admissibility of communications made “for the purpose of, in the course of, or pursuant to a mediation or a mediation consultation” with such communications being “. . .by and between participants in the course of a mediation or mediation consultation. . .” (Evid. Code §1119(a),(b) and (c)).
(Id. at p. 6).   
 

      Here, the communications were strictly between attorney and client: neither the opposing party,  its counsel nor the mediator was present. Further, the communications were not even made known to the mediator. As importantly, some of the communications occurred in the two days prior to the actual mediation session.

       In the appellate court’s view, the communications at issue simply did not occur within the confines of a “mediation” which it noted Evid. Code §1115 defines as “a process in which a neutral person or persons facilitate communication between the disputants to assist them in reaching a mutually acceptable agreement” (Italics added). (Id. at p.7). Thus, as the communications really had nothing to do with an actual mediation, the protective umbrella of “mediation confidentiality” could not be used to exclude their use at trial.
 

      As one might expect, there was a dissent to this opinion. Justice Perluss disagreed with the majority believing it to have interpreted Section 1119 too literally or too narrowly. The dissent noted that Evidence Code §1119 also covers statements or admissions made “for the purpose of” a mediation, and not   just in the course of “a mediation” ( Dissent at p. 2). Thus, in the dissent’s view, “private unilateral statements that are materially related to the mediation” would be covered by mediation confidentiality “even if they are not communicated to another party or the mediator and do not otherwise reveal anything said or done in the course of the mediation, itself.” (Dissent at p. 2 ).

       So. . .  once again the courts confronted the issue of disclosure versus mediation confidentiality but, this one time disclosure won. According to Professor Forrest S. Mosten, Adjunct Professor of Law, UCLA, the  score is now: Mediation Confidentiality-7; Disclosure-1.(See, california-confidentality-cases.)  Don’t be surprised to see this case appealed to the California Supreme Court.

       . . . Just  something to think about.

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       As some of you know, I am the incoming president of the Southern California Mediation Association (“SCMA”). Before I take my oath of office, I must go through a rite of passage which is chairing the SCMA’s Annual Fall Conference. This year it will be held on Saturday, November 7, 2009 at Pepperdine University, Malibu, California.

       The title of the Conference is “M3 – The Next Generation” and will explore the future of mediation, especially all of the new and varied venues in which it can and will be used. The presenters are from throughout the United States and Ireland and so will be discussing quite diverse views on mediation and its future. I expect it all to be quite fascinating. (See, 2009 SCMA Fall Conference .)    

      Of special interest will be the keynote presentation by Dr. Daniel Druckman from George Mason University who is the Randolph Lowry Lecturer Award Recipient. While he will be speaking on “Intuition or Counter-Intuition?: The Science Behind the Art of Negotiation and Mediation,” Dr. Druckman has also conducted studies on e-mediation or the use of a software program to assist in mediating disputes.

       Along with James E. Druckman from the University of Minnesota and Tatsusi Arai from George Mason University, Dr. Druckman published a study entitled “e-Mediation: Evaluating the Impacts of an Electronic Mediator on Negotiating Behavior” in 13 Group Decision and Negotiation 481-511 (2004).
 

      In the study, Dr. Druckman and his co-researchers conducted three experiments to determine the impact of an electronic negotiation support system (“NSS”) or, in essence, a software program, on negotiating behavior. The NSS system designed by Dr. Druckman several years earlier,

      “. . . consists of suites of forced – choice questions grouped into five categories, parties, issues, delegation activities, situation and process. Some questions prompt branching to new steps of questions. . . . Other questions, referred to as flipper questions, take into account case – specific contingencies. . . .” (Id. at 484). (Emphasis original)

       Based on the answers received, algorithms are used to “generate a diagnostic grid” which will then lead to “projections of possible outcomes.” (Id. at 484-5). In short, a negotiator inputs the answers to certain questions, and the NSS provides diagnosis (e.g. impasse) and solutions:

      “Specifically, when the diagnosis and projections shown on the grid indicate an impasse in any category, the program provides an analysis of the source of the impasse and a link to advice on how to resolve it.” (Id. at 485-6).

       Overall, the results of the three different experiments revealed that while the negotiators were able to reach agreement more often using e-mediation than simply negotiating on their own and reflecting on what should be the next strategy or move, the negotiators still preferred to use a “live” mediator. ((Id. at 507). The negotiators “. . .had more positive perceptions of the process and outcome” when using a “live” mediator than the NSS software program although they obtained agreement more often and on more issues using the latter. (Id. at 506). Simply put, “perception” was more important than “reality.” (But, isn’t this true in any dispute?)

       Needless to say, after reading this study, I began wondering whether all of my mediation training and skill is for naught: am I going to be replaced by a software program that will have no difficulties in settling cases? I certainly hope not. There has to be something about human interaction that the best robot on earth (e.g. R2-D2 or its companion C-3PO) will never be able to replicate.

       I am keen to learn more from Dr. Druckman at our SCMA Conference! I hope you can join me.

       . . .Just something to think about.

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