Proposed New Exception To Mediation Confidentiality Statutes Would Utilize In Camera Screening Process.
On August 7, 2015, the California Law Revision Commission directed staff “to begin the process of preparing a draft of a tentative recommendation that would propose an exception to the mediation confidentiality statutes (Evid. Code sections 1115-1128) to address ‘attorney malpractice and other misconduct.’” For minutes of the meeting, follow the link. The excerpt of the minutes concerning this topic is found at pages 4 to 6.
COMMENT: I blogged on April 8, 2012, about legislative efforts to “fix” the mediation confidentiality statutes to allow the introduction of evidence from a mediation in cases involving attorney malpractice or breach of fiduciary duty.
A Failed Mediation: Report from The Times of India
In what is described as “a scene straight out of a curry western,” in the October 13, 2014 edition of The Times of India, rival gang members met at a gym in South-east Bangalore for a “mediation,” but “soon things started falling apart.” One group drew its weapons, and the other, seriously outnumbered, “suffered serious injuries, while Nakhra was hacked repeatedly till he died on the spot.” The gym owner absconded, “raising suspicion that he set up” the victim for his rivals. A senior police officer opined that “[t]he mediation was just a pretext” providing an opportunity to “strike with precision.”
Apparently the participants failed to follow JAMS or AAA rules for choosing a neutral mediator.
Mark D. Gough Of The Cornell University School Of Industrial & Labor Relations Has Studied The Outcomes
Mark D. Gough has published in the Berkeley Journal of Employment and Labor Law the results of a study of some 700 employment discrimination cases – and the results are striking, whether looked at from the perspective of management or labor.
Matthew M. Sonne, an attorney with an employer-based practice, draws the following conclusion from Dr. Gough’s study: “Should the Company Utitilize Arbitration Agreements? A Recent Empirical Study Says, ‘Yes.’” The Pros and Cons of Employment Arbitration Agreements, Orange County Business Journal, August 18, 2014, p. B-53.
Hunter Pyle, an attorney with an employee-based practice, surely agrees that arbitration agreements benefit employers, but has a different slant, as represented by his blog post entitled, “The Profoundly Negative Impact of Arbitration on Workers’ Rights.” Workers’ Rights Blog, March 2, 2014, published by Sundeen Salinas & Pyle.
While I have not found Dr. Gough’s article on line, Mssrs. Sonne and Pyle have summarized some of the key findings:
Employees pursuing employment discrimination litigation in courts were nearly 40% more likely to win. (Sonne).
Employee discrimination awards in court were nearly twice as large as in arbitration. (Sonne).
The average award to a successful discrimination plaintiff in court was $802,487, versus $412,052 in arbitration.
“Arbitration decreases the odds of an employee win by 59%.” (Pyle).
“Award amounts decrease by 35% in arbitration.” (Pyle).
Take a look at my earlier August 15, 2014 post entitled, “Executive Order Limits Pre-Dispute Arbitration Clauses For Federal Contracts Exceeding $1 Million In Title VII And Sexual Assault/Harassment Cases” – and draw your own conclusions.
Fair Play and Safe Workplaces Executive Order Is Announced July 31, 2014
One of the impactful judicial trends in recent years has been the expanded use of arbitration in employment disputes. Counter to that judicial trend is the recent Executive Order announced July 31, 2014 by the White House.
Section 6 of the Executive Order provides:
“Complaint and Dispute Transparency. (a) Agencies shall ensure that for all contracts where the estimated value of the supplies acquired and services required exceeds $1 million, provisions in solicitations and clauses in contracts shall provide that contractors agree that the decision to arbitrate claims arising under title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment may only be made with the voluntary consent of employees or independent contracts after such disputes arise. Agencies shall also require that contractors incorporate this same requirement into subcontracts where the estimated value of the supplies acquired and services required exceeds $1 million.”
There are particular exclusions from this requirement for contracts or subcontracts for the acquisition of commercial items or commercially available off-the-shelf items; for employees covered by collective bargaining agreements; and, for valid contracts to arbitrate entered into prior to the bidding covered by this Executive Order.
Pointing to conclusions of the preliminary report that “larger institutions are more likely to use arbitration clauses, arbitration clauses in account agreements can often be complex, and the agreements often contain class-action waivers,” Mr. Zeisel comments that the CFPB’s preliminary report may leave a misleading impression that arbitration clauses disadvantage consumers.
He concludes, “we are pleased the CFPB now says it will compare the costs and benefits to consumers from arbitration with those derived from individual and class action litigation.” Indeed, such a result would be an excellent outcome, because it is devilishly difficult to compare litigation and arbitration costs and benefits, and such a comparison would be of great benefit to consumers, corporations, and legislators.
However, some of Mr. Zeisel’s comments deserve scrutiny:
He says that for nearly 90 years, arbitration has been a valuable means for consumers to quickly and easily resolve disputes in an efficient and affordable manner. Ninety years – that’s almost the exact age of the Federal Arbitration Act of 1925. But as Prof. Imre Szalai convincingly shows in his historical study of arbitration in the United States, the Federal Arbitration Act was created with an intent to provide an efficient and affordable dispute mechanism for merchants of equal bargaining power. See my February 19, 2014 review of Outsourcing Justice. Whether consumer arbitration is cost efficient is precisely the subject that deserves further study by the CFPB.
Mr. Zeisel comments, “Congress recognized the importance of arbitration as a means of resolving consumer disputes when it enacted the Federal Arbitration Act in 1925.” But “resolving consumer disputes” played a very minor part, if any, in the enactment of the Federal Arbitration Act. And that is precisely why the fairness and efficiency of consumer arbitration deserve further attention by Congress.
In support of the argument that consumer arbitration is cost efficient, Mr. Zeisel states that studies show: “the upfront cost to the consumer was far less than the fee required to file a complaint in the federal courts.” But that’s not a simple comparison. The fee for filing a complaint in federal court is $350. Given the restrictive requirements of federal jurisdiction, the cases filed in federal court are not going to be small claims cases. If the matter is a consumer class action, a $350 filing fee is not an excessive entry cost. Consumer advocates argue that class actions provide economies of scale. On the other hand, most consumer disputes are much smaller than class action disputes, and the litigation alternative is not federal court, but small claims court, where filing fees will be less than $350. (And in fact, many consumer arbitration clauses have a “carve-out” provision allowing for the filing of small claims.).
Now if the CFPB is able to methodically compare costs and benefits to consumers of arbitration versus litigation, that may help to answer the question we started with: whether consumer arbitration is really fair and efficient.
A DDOS attack is intended to make a network resource unavailable to intended users. A coordinated effort is made to overwhelm the webservers – as if everyone sitting around the dinner table conspired to reach with their forks for the steak at the same moment.
As bloggers, we find the resulting chaos here and under these circumstances to be enormously frustrating and unfair. A DDOS attack allows a small number of persons to disrupt the free speech of thousands, perhaps millions, of writers and readers.
DDOS attacks have sometimes been compared to “virtual sit-ins” or “Internet Street Protests” – especially when they invade a politicized target, be it the New York Stock Exchange, or a despised bank.
But why attack Typepad, of all targets? Attacking Typepad, which is a vehicle for free speech that reaches millions, is impossible for us to see as any legitimate political protest. Do the attackers simply want to shakedown SAY Media for ransom?
Individual bloggers are powerless to do anything about such an attack, because a DDOS attack reveals a systemic problem with the use and abuse of internet resources – a problem that simply cannot be solved at the individual level.
We hope that SAY Media will invest significant resources to develop security measures that make such attacks less disruptive in the future. Such an investment is essential to preserve the extraordinary value that Typepad provides to its owners, to its customers, and to the readers of blogs hosted by Typepad.
BLOG BONUS: Wikipedia defines a DOS or DDOS attack as follows:
“In computing, a denial-of-service (DoS) or distributed denial-of-service (DDoS) attack is an attempt to make a machine or network resource unavailable to its intended users. Although the means to carry out, motives for, and targets of a DoS attack may vary, it generally consists of efforts to temporarily or indefinitely interrupt or suspend services of a host connected to the Internet. As clarification, DDoS (Distributed Denial of Service) attacks are sent by two or more persons, or bots. (See botnet) DoS (Denial of Service) attacks are sent by one person or system.”
Alleged Juvenile Taxidermy Thieves Are Spared A Criminal Record, Thanks To Mediation
Occupational portrait of taxidermist Martha A. Maxwell with animal specimens, palette, and rifle. October 27, 1876. Library of Congress.
When I saw the following headline from the March 12, 2014 edition of the Spokesman-Review in Spokane, Washington, I knew I had to pass it on to our readers: “Teen taxidermy thieves finish mediation.”
Here is the dastardly actus reus: “The teenagers were accused of breaking into Drury’s taxidermy shop and making off with more than $27,000 worth of mounted animals to mimic a YouTube video.” As the result of a successful mediation between the teenagers and the owner of the taxidermy shop, the teenagers ended up having to make restitution and do community service – but they were spared a criminal record.
Better than being skinned, hung out to dry, and stuffed, wouldn’t you say?
“Mama and Papa Snay won the case against Gulliver. Gulliver is now officially paying for my vacation to Europe this summer. SUCK IT.”
That bit about the vacation was a joke.
Gulliver Preparatory School, however, was not amused, claiming that Papa Snay had violated a confidentiality clause in a settlement agreement, and refusing to pay the $80K settlement. Note: Dana, who must be a popular teenager, has 1200 Facebook friends. Papa Snay successfully moved to enforce the settlement agreement, but the trial court was reversed by the appeals court. An appeal to the Florida Supreme Court is still a possibility.
Moral: don’t spill the beans about a confidential settlement, lest your teenager spread the news on Facebook.
Dispute Resolution Terms Incorporate Provisions Popularized By AT&T v. Concepcion
Dropbox, that marvelous tool allowing you to share folders with your other computers, as well as with third parties, has notified its users that it is updating its terms of service, effective March 24, 2014. One change will be the addition of arbitration clauses to Terms of Service and to the Dropbox for Business online agreement.
Here are features of the dispute resolution mechanism:
Begin with informal dispute resolution before bringing a formal proceeding.
Both sides agree to arbitrate to resolve any claims relating to the Terms or the Services through final and binding arbitration – except as set forth under Exceptions to Agreement to arbitrate.
Parties may opt-out of the agreement to arbitrate by submitting an opt-out form.
Arbitration will be administered by the AAA under the Commercial Arbitration Rules and the Supplementary Procedures for Consumer Related Disputes.
Arbitration will be held in the US in the county where you live or work, San Francisco (where Dropbox is headquartered) or any other location the parties agree to.
Dropbox will pay arbitration fees for claims less than $75,000. If you receive a more favorable award than what Dropbox offers to pay, you get a bonus of $1,000, in addition to the award. Dropbox won’t seek fees and costs in arbitration – unless the arbitrator determines your claim is frivolous.
Exceptions to the arbitration requirement include small claims, or injunctive relief for certain claims.
There is a class action waiver: “You may only resolve disputes with us on an individual basis, and may not bring a claim as a plaintiff or a class member in a class, consolidated, or representative action.”
Additionally: “Class arbitrations, class actions, private attorney general actions, and consolidation with other arbitration aren’t allowed.”
The judicial forum for disputes to which the agreement to arbitrate is found not to apply, other than for small claims actions, will be in federal or state courts in San Francisco.
The Terms are governed by California law except for conflicts of law principles.
As I read through the terms, I wondered what clauses were covered by the opt-out form. The opt-out form provides: “[Y]ou are opting out of the agreement to arbitrate Dropbox’s Terms of services (“Terms”). This opt-out doesn’t affect any other parts of the Terms, including, for example, the controlling law provision or the requirements about in which courts legal disputes may be brought.” The “no class actions” waiver, read literally, applies to more than arbitration, and the opt-out form, read literally, seems to say that even if you opt out of arbitration, you can’t file a class action.
Additionally, if you opt out, and bring a claim in court for greater than $75,000, you (or at least, your attorney) is going to get to see San Francisco – a great city to visit.
Obviously, Dropbox’s attorneys have read AT&T v. Concepcion, and they have drafted the arbitration provisions with the intention that they pass judicial muster. For now, I am going to suspend judgment as to whether every one of the provisions will be enforceable. If you use Dropbox, I urge you to also read the new provisions that will go into effect concerning permissions the user gives to Dropbox, and concerning privacy.
As readers of this website will know, arbitration provisions are often located in boilerplate, found in take-it-or-leave-it contracts, raising procedural unconscionability issues in California. Our next case does not involve arbitration – though it does involve arbitration’s beloved mate, boilerplate.
So what happens when a bank fails to read doctored boilerplate?
Cory Doctorow posts on BoingBoing about a “wily Russian fellow” who “crossed out the fine-print on an unsolicited credit-card application . . . and wrote in his own terms, giving himself unlimited, interest-free credit and exemption from all fees, with a 3MM ruble fee [$91,000] should the bank change the terms and a 1MM ruble fee should they cancel his card.” He even crossed out the URL giving the terms and conditions, and wrote in his own URL !
Tinkoff Credit Systems, which provided the wily Russian with an unsolicited credit-card application, sued the customer. “However, the court held that his amendments were binding since the bank accepted them, whether it looked at them or not.”
We can only guess that, if Tinkoff Credit Systems, Russia’s largest on-line bank, had sued in California, it would have had an uphill battle arguing it was the feckless victim of procedural unconscionability.
On August 14, 2013, RT [previously Russia Today] reported that both parties had agreed to call off legal action:
“The conflict is unconstructive, this is why we decided to resolve it in a gentlemanly way, by lifting the mutual claims,” Tinkoff Credit Systems cites its President Oliver Hughes as saying.
“In 2008 it was just a joke, when I tailored my own form and produced that to the bank instead of the official form. But the joke has gone too far,” RIA Novosti cites the small print scribe Dmitry Agarkov as saying.
HAT TIP to attorney Colin Alexander, an avid reader of BoingBoing, who brought this story to my attention.