New JAMS Arbitration Rules Offer Emergency Relief Procedures

Robert B. Davidson, Esq.

Robert B. Davidson, Esq.

Richard Chernick, Esq.

Richard Chernick, Esq.

By Richard Chernick, Esq. and Bob Davidson

Parties choose arbitration because it provides for a controlled process. Within that process, there is one relatively rare situation when a party requires immediate relief to get a certain aspect of the case resolved quickly and cannot wait until an arbitrator is appointed. Included in the updated JAMS Comprehensive Arbitration Rules that JAMS recently announced, are new emergency relief procedures that provide for such situations.

Under the new Rule 2(c), a party seeking emergency relief may now apply to JAMS for the appointment of an emergency arbitrator to rule on the request. The applicant must notify all parties (or explain the efforts made to notify all parties). Once an emergency request is filed, JAMS will promptly appoint an emergency arbitrator. In most cases this will be within 24 hours of receipt of the request. Disclosures will be made promptly and challenges, if any, heard and decided. JAMS decisions on emergency relief will be final, thus assuring no possibility for procedural delay.

In reviewing the application for relief, the emergency arbitrator will follow Rule2(c) and decide whether the party seeking relief has shown that “immediate and irreparable loss or damage will result in the absence of emergency relief and whether the requesting Party is entitled to such relief.” The emergency arbitrator will then enter an order or award stating his or her reasons for the grant or denial of the relief sought. The entire process should take only a few days unless the parties stipulate to a longer period.

Once a JAMS arbitrator has been appointed, all authority to modify or vacate the emergency relief decision will vest in the appointed arbitrator. A further important provision expressly enables the emergency arbitrator to condition the granting of emergency relief on the provision of adequate security by the requesting party. This will serve to curb any abuse of the procedure.

While the filing of these emergency applications can be expected to be rare occurrences, the availability of such procedures is now assured.

Effects on Settlement of Post-Grant Patent Review Proceedings

James M. Amend, Esq.

James M. Amend, Esq.

By James M. Amend, Esq.

The recent America Invents Act both modified and created procedures for challenging patents in proceedings before the United States Patent and Trademark Office (PTO) after they have been issued, which are called post grant reviews (PGRs).  These include inter partes review (IPR) procedures, typically challenging validity based on prior art, and covered business method (CBM) challenges based on assertions that what is claimed is unpatentable subject matter.  Very frequently, these proceedings are invoked by parties who have been sued for patent infringement, and proceed in parallel with the District Court infringement proceedings.

There are several reasons for the popularity of PGRs with infringement defendants.  First, most challenges pass the initial threshold in the PTO, which is a finding that a sufficient question has been raised (a prima facie case) as to patentability.  It is estimated that more than 80 percent* of the PGRs filed are accepted for review on the merits by the PTO.  Second, the standard for invalidation in the PTO is lower than in courts.  In the former, it is preponderance of the evidence, while in the courts, invalidity must be shown by clear and convincing evidence, as required by 35 USC Sec. 282.  As a result, so far, approximately 81 percent* of the PGRs have resulted in the invalidation of some or all of the challenged patent’s claims, which is considerably higher than as a result of patent infringement litigation.  In addition, if the PGR is filed early enough in the litigation, it may be possible to obtain a stay order from the District Court pending the outcome of the PGR.  PGRs, in addition to the more favorable invalidity standard for the challenger/defendant, are far less expensive for it than typical infringement cases, and still leave it with infringement defenses if the PGR ultimately fails.

A potential downside to the filing of a PGR is that it might work against the settlement of the underlying dispute.  It should be kept in mind that more than 80 percent of patent infringement cases are resolved through settlement, in part because of the very high cost of such litigation and the uncertain outcome of critical issues like claim construction.  Anything that acts as an impediment to settlement threatens to increase the burden on overworked District Courts and provides a barrier to an avenue of resolution that parties frequently use to dispose of otherwise protracted and expensive patent litigation.

To read on about Mr. Amend’s discussion on Post-Grant Patent Review Proceedings, please read the full article from Law.com by clicking here.

Big Mac Attack: Is the Franchisor a Joint Employer?

Joel M. Grossman, Esq.

Joel M. Grossman, Esq.

By Joel M. Grossman

On July 29, 2014, the National Labor Relations Board (“NLRB”) issued a brief statement that could turn labor law in the world of franchising upside down.  The NLRB’s General Counsel stated that it plans to go forward with a number of complaints that allege unfair labor practice claims against a McDonald’s franchisee as well as the franchisor, McDonald’s USA, LLC.  The NLRB’s position appears to be that the franchisor and franchisee may be “joint employers” of the burger flippers and other employees of a franchisee due to the control that a franchisor imposes on its franchisees.

Under past precedent, the franchisor generally has not been held liable for labor or employment practices of its franchisee unless it maintains the right to control the operations of the franchisee, a test analogous to determining whether a worker is deemed an employee or an independent contractor.  Past case law has generally held that in a traditional franchisor-franchisee relationship, the franchisor will not be deemed a joint employer and is not responsible for wage and hour violations or other alleged labor and employment violations committed by the franchisee. See, e.g., Singh v. 7-Eleven Inc., in which a federal district court held that 7-Eleven corporate franchisor did not share employment responsibility with its franchisees.  Similarly, in a Title VII discrimination case, another district court held that the franchisor was not a joint employer for Title VII purposes because the franchisee “exclusively possessed the rights and responsibilities regarding all employment matters and the day-to-day operations in his store, and his relationship with the plaintiff as his employee.”

The cases turn on the degree of control of day-to-day operations exercised by the franchisor.  Sometimes the franchise agreement itself is important evidence of how much control the franchisor will maintain over labor matters, and sometimes it will be the factual evidence of how much control is actually exercised.  While a franchisor often wishes to exert a degree of control to be certain that its name brand is used properly, the franchisor, not unlike an investor in a corporation, seeks to avoid liability for actions of the franchisee, such as failing to pay over-time wages or failing to protect its employees from sexual harassment.  In short, the franchisor walks something of a fine line in retaining enough control to protect the brand name, but not enough control to be liable for the franchisee’s misdeeds.

For the rest of  Mr. Grossman’s discussion on the question of joint employers, please read the full article from Law.com by clicking here.

Tomorrow’s Lawyers: An Introduction to Your Future

Richard Birke

Richard Birke

Written by Richard Susskind
Reviewed  by Richard Birke

In his book Tomorrow’s Lawyers, Richard Susskind writes, “Tomorrow’s legal world, as predicted and described here, bears little resemblance to that of the past.  Legal institutions and lawyers are at a crossroads, I claim, and are poised to change more radically over the next two decades than they have over the last two centuries.”

Susskind sees three major forces driving change in how legal services are provided.  The first is something he calls the “more-for-less challenge.”  As the name suggests, this driver involves clients asking lawyers to deliver more services for less money.  One simple example of this principle is found in large corporate clients who demand that their in-house counsel reduce expenses—sometimes by as much as 30 to 50 percent—at a time when the amount of compliance work and due diligence is increasing.  Susskind sees this as a factor that will “irreversibly change the way lawyers work.”

Tomorrow's Lawyers: An Introduction to Your Future

Tomorrow’s Lawyers: An Introduction to Your Future

The second driver is liberalization, non-lawyers doing work formerly done exclusively by lawyers.  Accountants, real-estate brokers, insurance adjusters and others have long been doing work that was once the exclusive province of members of the bar, and Susskind sees this trend continuing.  Banks will take over work, lawyers’ assistants in Second World and Third World countries will take over work and legal “partnerships” involving many non-lawyers will take over lawyers’ work.

The third driver is information technology.  Computers have already revolutionized the way discovery is handled, and document searches are now more likely to be conducted by electronic means.  Many legal documents are available online, and with the continued growth of computing power, it is likely that pseudo-legal reasoning will soon become part of the future of technology.

However, despite the potentially dire future predicted by these three drivers, Susskind is not entirely pessimistic about the future of lawyers.  He sees a world in which most lawyers will occupy different roles in the future than those they had in the past.  In Susskind’s world, new lawyers will guide clients through form filling more often than form creation.  Lawyers will sell and provide more routine services than they will create novel approaches to the resolution of common and age-old problems (like writing a will or renting an apartment).

In the midst of this rather unexciting world of form filling, Susskind sees some remaining role for lawyers to act as negotiators and researchers.  He describes transactions and litigation as “decomposed.”  Transactions decompose into nine categories:  due diligence, legal research, transaction management, template selection, negotiation, bespoke drafting, document management, legal advice and risk assessment.  Litigation similarly decomposes into nine categories:  document review, legal research, project management, disclosure, strategy, tactics, negotiation and advocacy.  It is notable that only legal research and negotiation appear in both realms.

No one is left untouched.  There are cautions and advice for educators, older lawyers, newer lawyers, managers of law firms, consumers of legal services, paralegals and others.  For the older lawyers, the advice is simple:  Change or die.  For the younger, the advice is stark:  “You will find most senior lawyers to be of little guidance in this quest [to shape the new practice].  They will resist change and will often want to hang on to their traditional ways of working, even if they are well past their sell-by date.”

And then, in the next-to-last line, Susskind reveals the last bit of advice he has for tomorrow’s lawyers.  He says, “In truth, you are on your own.”

The book is short, fewer than 170 pages.  It’s challenging, to existing practices and the future of law.  It’s well-written and entertaining.  But is it accurate?  Certainly, the trends Susskind has identified are real, but there’s no certainty that the future will come as quickly as Susskind suggests.  But one thing is certain, it’s worth the short investment in time that it will take to discover Susskind’s prognostications.  Even if 10 percent of them turn out to be right, that represents a huge change.  Personally, I think the ideas are right on target, but I think the timeline is a bit too short.  Nonetheless, Tomorrow’s Lawyers is well worth reading.

This article was originally published in the JAMS Dispute Resolution Alert Newsletter, Summer 2014 edition.