California Mediation and Arbitration

Settlements: 9th Circuit Takes Negotiation Strategy Into Account In Case Where Trial Judge Slashed Fees Because Plaintiff Settled for 10% Of Claim

The Majority Opinion Acknowledges That Parties Can Start High When Staking A Claim.

          In today's Daily Journal, I have an article about Vargas v. Howell et al., 2020 DJDAR 905 (9th Cir. Feb. 5, 2020), entitled: 'Mechanical' analysis of attorney fees award in civil rights case results in partial reversal'.  In Vargas, the trial judge slashed a senior litigation attorney's fees 90% in a civil rights case. The Court of Appeals panel majority required further explanation for the severe discount, and District Judge Roger Benitez dissented, believing that the trial judge had provided enough explanation already. While my article focuses on the fee issue, one issue addressed in the case will be of interest for mediators, as well as for attorneys and clients negotiating a settlement.

          The majority opinion argues that punishing a fee applicant in a civil rights case because the settlement amount is a fraction of the claim can create "perverse incentives." Because it is unusual and interesting for a court to speculate or opine about the effect of a fee award on settlement negotiation strategy, I provide the court's comments. Here is the panel's discussion of the potential impact on negotiation strategy of a trial court's discounting fees 90% because the settlement was 10% of the claim:

     The effect of that approach is to punish Vargas’s attorneys for pursuing what might well have been a sensible negotiation strategy. A reasonable attorney representing Vargas could have made the strategic choice to present an initial damages estimate as high as possible. Of course, an unrealistically high estimate could make settlement talks unproductive, and an attorney must also ensure that any estimate presented to the court is “likely [to] have evidentiary support after a reasonable opportunity for further investigation.” Fed. R. Civ. P. 11(b)(3). But within those limits, Vargas’s attorneys could reasonably have decided that by offering a high damages estimate, they would retain “room to later grant concessions, while still reaching a favorable settlement.” Stephen J. Ware, Principles of Alternative Dispute Resolution § 3.15, at 313 (3d ed. 2016). Had they started from a lower number, the settlement might have been lower. Whether or not that is the strategy Vargas’s attorneys had in mind, they should not be faulted for negotiating a settlement.
     The district court’s approach threatens to create perverse incentives for lawyers representing civil rights plaintiffs. If fees are reduced whenever a case settles for less than the initial demand, lawyers will be encouraged to make only modest initial demands, limiting the potential recovery for their clients. And as the litigation proceeds, they will be encouraged to refuse to lower their demands, making settlement more difficult and prolonging the litigation. No one will be well served by that approach.

 

Reviews: The Browns Of California

Your Blogger Has Reviewed Miriam Pawel's Book, The Browns of California, in California Litigation.

    I've reviewed Miriam Pawel's book, The Browns of California: The Family Dynasty That Transformed a State and Shaped a Nation. The review appears in California Litigation, the journal of the California Lawyers Association, Vol. 32, No. 3, p. 46 (2019). With the permission of the California Lawyers Association and its publication California Litigation, I am republishing the article and making it available by clicking here.

Reviews: Trap for the Unwary: Malpractice and the Missed Attorney's Fees Issue

Your Blogger Is Also A Co-Contributor To California Attorney's Fees Blog.

    My colleague Mike Hensley and I are co-contributors to the blog California Attorney's Fees. We blog about attorney's fees issues in California state courts and the Ninth Circuit, and we have been doing so since 2008. I have an article about attorney's fees in the latest issue of Orange County Lawyer. Here's the link to Marc Alexander, Trap for the Unwary: Malpractice and the Missed Attorney's Fees Issue, Orange County Lawyer, December 2019, Vol. 61, No. 12, p. 30.

Reviews: Government Regulation And Citizen Safety - Three Book Reviews By Our Blogger

The Book Reviews Are In The Current Issue Of California Litigation.

            California Litigation, the journal of the California Lawyers Association, has published an article with three of my book reviews in its current issue, Vol. 32, No. 2, 2019. With the permission of California Litigation, I am making the article available if you click here. Any opinions expressed are those of the author alone, and for which the author alone, and not the California Lawyers Association, is responsible. 

            From the article:

    "Our government has been described as an insurance conglomerate and a large army. A core function of government is identifying and managing risk to protect the public from harm. The thread tying together the three books under review is government’s ability to manage risk. Dark Tide, about a horrific industrial accident, has been reissued in time to mark the 100th anniversary of the great molasses flood of 1919 that killed 21 people and devastated the North End of Boston. The Poison Squad, about the efforts to protect the public from dangerous and adulterated food, focuses on a heroic public servant. And, The Fifth Risk is about contemporary neglect, incompetence, and short-sightedness in federal agencies."

Recommended Reading: Article On Participation Waivers In Daily Journal

A "Participation Waiver" Is Not Exactly The Same As A Waiver Of The Right To Sue Or A Bar Against Bringing A Class Action.

        Ari J. Stiller, an attorney with Kinglsey & Kingsley, has an article in the June 26, 2019 issue of the Daily Journal entitled, "Participation waivers test Federal Arbitration Act's limits." 

         As Stiller explains, "So-called 'participation' waivers don't just try to bar employees from bringing a class or collective action in arbitration; they bar participating in such an action that someone else brings, regardless of the forum." Stiller argues that this is a bridge too far, and that once a lawsuit is filed by a party who is not bound by an arbitration agreement, the procedural rules applicable to court should apply. "Courts should not enforce such [participation] waivers outside of arbitration," argues Stiller, "to deny discovery or class certification, and certainly not to prevent workers from participating in a classwide recovery of unpaid wages."

        I asked Stiller whether there are cases specifically addressing "participation waivers" and he replied that he did not know of any, adding: "We have litigated this issue several times recently, in the context of employers trying to block discovery as to individuals who signed participation waivers and an employer trying to strike class allegations from a complaint." So this issue is a live one, even if published opinions have not yet confronted the enforceability of "participation waivers."

Miscellaneous: We've Got Two Recent Articles In The Daily Journal

Justice Bedsworth On Civility; SCOTUS On The Takings Clause.

        I've published two recent articles that have nothing to do with California Mediation and Arbitration.

        The June 18, 2019 Daily Journal published my article, "4th District Court of Appeal Justice William Bedsworth on civility." Justice Bedsworth wrote an opinion worth reading, Lasalle v. Vogel, No. G055381 (4/3  6/11/19)  holding that attorneys have a duty to cooperate during litigation, based on Cal. Code of Civ. Proc. section 583.130. According to Justice Bedsworth, this is more than an ethical duty; it is a policy, and it is law.

        The June 25, 2019 Daily Journal published my article, "Opening the Federal Courthouse door to takings claims." This is about the recent SCOTUS case, Knick v. Township of Scott, holding that a 5th Amendment Takings Clause claim may be brought in federal court under 42 U.S.C. section 1983 at the time of the taking, without having to wait for a denial of just compensation in state court. The case is unusual in two respects. First, it overturns a 35-year old SCOTUS case, Williamson County Regional Planning Comm'n v. Hamilton Bank of Johnson City, 473 U. S. 172 (1985), which had held that a case was not ripe for the federal courts until there had been a denial of a state-law remedy. Second, the case is split along political lines -- and what is interesting here, is that it is the conservative majority opening the courthouse to constitutional claims.

        Regrettably, the Daily Journal has a paywall, but you can read the articles if you have an electronic or paper subscription -- and if the subjects interest you.

 

Reviews: We the Corporations: How American Businesses Won Their Civil Rights

Marc Alexander (This Blogger) Has Reviewed The Book For California Litigation.

        In the latest issue of California Litigation, Vol. 32, No. 1 (2019), p. 25, I've reviewed Adam Winkler's We the Corporations: How American Businesses Won Their Civil Rights. You can read the review, which is republished with the permission of California Litigation, by clicking here.

Book Reviews: Richard L. Hasen's "The Justice Of Contradictions: Antonin Scalia and the Politics of Disruption"

Marc's Review Of Richard L. Hasen's The Justice of Contradictions: Antonin Scalia and the Politics of Disruption, Has Been Published in California Litigation.

    With the permission of California Litigation, the journal of the litigation section of the California Lawyers Association, Marc's review of Prof. Richard L. Hasen's book, The Justice of Contradictions: Antonin Scalia and the  Politics of Disruption, is made available by clicking here.

Miscellaneous Reviews: Books By Sunstein, Tribe And Matz About Impeachment

Two Books Reviewed By Your Blogger In Latest Issue Of California Litigation.

    In the latest issue of California Litigation, Vol. 31, No. 2 (2018), p. 44, I've reviewed Cass R. Sunstein's Impeachment: A Citizen's Guide, and Laurence Tribe and Joshua Matz's To End A Presidency: The Power Of Impeachment. You can read the review, which is republished with the permission of California Litigation, by clicking here.

International Arbitration, Reviews: Article On "Golden Opportunities For The Golden State" Addresses Rise Of International Arbitration In California

Passage Of SB 766 Opens Up Opportunities For Foreign Attorneys To Participate In International Arbitration In California.

    An excellent article by Eric Z. Chang appearing in California Litigation --The Journal of the Litigation  Section of the CLA, Vol. 31,No. 2 (2018), p. 27, explains how an ambiguity in the law as to whether foreign attorneys could participate in international arbitration in California has been cleared up by the passage of SB 766. The problem had been uncertainty as to whether foreign attorneys who participated in international arbitration in California were engaging in the unauthorized practice of law. With the legislative fix now in place, Chang sees a bright new future for expanding the large market for international arbitration in California.