My first mediation of 2015 settled based on pragmatism. It was a lemon law matter filed under California’s Song Beverly Consumer Warranty Act – Civil Code Section 1792 et seq. Plaintiff purchased the vehicle from a neighbor somewhat on a whim, thinking she would use it for commuting. Unfortunately, Plaintiff found herself taking the vehicle in for repairs quite frequently- too frequently for her liking. While Plaintiff thought the vehicle to be a “lemon”, the defendant manufacturer took a hard look at the repair orders and found that many of the concerns were repaired after one attempt. That is, pursuant to the statute, the manufacturer repaired the vehicle “within a reasonable number of attempts” (Civil Code Section 1973.2(d) (1)) thereby complying with its obligations. There was one concern that did take a bit of doing to repair and while the repair was covered by the warranty, the manufacturer believed that based on this bit of the vehicle’s history, the matter should be settled by paying the plaintiff some cash for her inconvenience.

As one might imagine, plaintiff saw the matter quite differently, believing that not only the one concern that took some time to repair but all of the repairs based on their frequency entitled her to a repurchase. However, after being so frustrated with continually taking the vehicle in for repairs, Plaintiff actually sold the vehicle several months ago so that a “repurchase” could not be accomplished. Instead, Plaintiff wanted the cash equivalent to a repurchase less credit for what she received in the sale of the vehicle.

Needless to say, while the manufacturer believed some sort of cash settlement was appropriate, it did not view it to be a cash equivalent to a repurchase. It evaluated the case as worth far less than did the plaintiff.

Because of this, the manufacturer was hesitant to make a counter offer as it did not want to insult the plaintiff and, in reality, wanted to adjourn the mediation, to do a bit more investigation and evaluation. When I explained this to plaintiff and her counsel, they were adamant about continuing the mediation; they wanted to resolve the matter then and there and not have it drag on.

So, after advising the manufacturer and its counsel that plaintiff and counsel wanted to conclude this matter now, they put their heads together, came up with a game plan and began negotiating. After a few rounds of the “negotiation dance”, the matter settled but for far less than what plaintiff had wanted.

Why? Plaintiff looked at the matter in term of “benefit vs. purpose”. The case had been ongoing for quite a while, she had sold the car and so to continue would only bring “diminishing returns.” Plaintiff had made her point that the vehicle was a lemon and so accomplished her “purpose”; to continue forward would provide little benefit.

Later that day, I read a blog on the Program on Negotiation Harvard Law School’s website entitled “Dealing with Difficult People and Negotiation: When Should You Give up the Fight” It notes that in every dispute lies the danger of irrational escalation. The parties simply to do not know when to “give up the ghost.” The blog then notes three reasons why such irrational escalation occurs;

1. “Fixating on Fairness”. A party wants a “fair” outcome (however the party defines “fairness”). What a plaintiff may view as “fair” may not jive with objective reality (or what a third party – a judge or jury- may view as “fair”) and so seeking the Holy Grail- plaintiff trudges on with the dispute.

2. “Focusing on sunk costs”. Often parties in a dispute think about the time and money that they have “sunk” into the controversy and because of it are hesitant to walk away; rather, they use those “sunk costs” as justification to spend even more money and time on the matter, hoping against hope that they will recoup it at the end. More times than not, all that they accomplished was to “throw good money after bad.”

3.”Let go psychologically.” As a controversy drags on, the parties tend to “demonize each other”, fixating on punishing the other party. As the blog notes, “The passion you invest in a dispute can become a sunk cost in its own right.” (Id.). Thus, it is paramount “… to recognize when the pursuit of a goal becomes a destructive obsession.” (Id.)

In my lemon law mediation, the plaintiff, though phrasing it in terms of “benefit vs. purpose” recognized these traps and avoided them. She avoided defining “fairness” unrealistically, did not fixate on the “sunk costs” and did not demonize the manufacturer. Rather, she took a very pragmatic view and knew it was time “to let go and move on” as to continue forward would neither provide further benefit nor further her purpose.

… Just something to think about.


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