Understanding the benefits of a private judge in California

Hon. Patrick J. Mahoney (Ret.)

Hon. Patrick J. Mahoney (Ret.)

Civil litigants, how would you like to have a process that allows the parties to determine the decision-maker, preserves all civil remedies and appellate rights and ensures effective case management and hearing and trial dates that proceed as scheduled? This process has all of the perceived benefits of arbitration while ensuring the result is subject to appellate review.

California has just such a procedure. The California Constitution, Article VI and the Code of Civil Procedure section 638(a) authorize the parties to stipulate to a private judge and to fashion the authority granted to the person selected. Stipulations vary in scope from a narrow discovery issue to all aspects of civil litigation including the right to act as the settlement judge as well as the trial judge. This affords the parties the opportunity to control the litigation process that does not exist in the court system, and ensures that the decision-maker has the time to consider the issues and to provide the parties with hearing and trial dates that proceed as scheduled.

Given these benefits, it is surprising that this process is neither widely known nor utilized except in family law cases involving substantial wealth. One reason is the right in most civil cases to have the case decided by a jury. Neither the California Constitution nor the Code of Civil Procedure address the jury trial right, and it is unlikely that the state courts are prepared to use their strapped resources to summon jurors for parties’ utilizing private judges.

Recently at JAMS, this issue was addressed by the parties stipulating to the use of jurors located by a jury consultant firm. The lawyers conducted voir dire and the jurors were paid for their services. The parties used the jurors to decide test cases to provide markers for settlement of a large class of cases. In the recent ABA Litigation magazine (Volume 41, No. 4, Summer 2015), there is a description of a private trial of a business case using jurors where the lawyers agreed that the verdict would be treated as an arbitration award.

Both of these approaches involved giving up substantive appellate rights. A viable alternative is for the parties to give up appellate rights only related to jury selection, while preserving all other substantive and procedural grounds for appeal. In reality, little is given up by waiving this right for it is extremely rare for a civil case to be reversed based on jury selection. As a consequence, in a case that warrants use of a private judge, the obvious benefits of a private judge trial out-weigh the right to challenge jury selection.

If you believe your case would benefit by using a private judge to manage and decide the case, do not be put off by your opponent’s insistence on a jury trial. There is more than one way to secure the benefits of a private judge and the insight provided by a jury verdict.

Whistleblower Cases are Custom Tailored for ADR

By Jeffrey Grubman, Esq.

Jeffrey Grubman, Esq.

Jeffrey Grubman, Esq.

Various state and federal statutes exist to protect and compensate employees whose employers retaliate against them after they disclose certain fraudulent practices to the employers or government agencies.  These are known as Whistleblower statutes.  Employment claims under Whistleblower statutes are a complex and growing area of the law.  The number of federal statutes authorizing Whistleblower claims has increased in recent years, and Congress, federal courts and the Department of Labor have all recently enhanced the ability of employees to collect damages under these statutes.

In 2002, Congress included a provision in the Sarbanes-Oxley Act (“SOX”), section 806 of the Act.  This whistleblower provision responded to various corporate accounting scandals by enacting protections for employees of publicly-traded companies who were retaliated against after disclosing or complaining about certain frauds by their employers.  In the case of Lawson v FMR (2014), the United States Supreme Court substantially broadened the number of claims that can be brought under SOX by finding that contractors, subcontractors and agents of public companies can be held liable.  Consequently, accountants, auditors and attorneys (among other service providers) are now targets of SOX whistleblower actions.  In addition, several recent court decisions have held that protected activity under SOX includes complaints of fraud by an employer’s clients or contractors.  See, for example, Sharkey v J.P. Morgan Chase & Co. (S.D.N.Y. 2010)(action against JP Morgan relating to internal complaint of bank fraud, mail fraud and money laundering by JP Morgan client).

In 2010, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act in response to the role played by the financial industry in the economic crisis of 2008-2009.  The Whistleblower provisions within Dodd-Frank strengthened and broadened the rights of employees to seek relief for retaliation by their employers in the following ways:  1) it expressly provides that employees of wholly-owned subsidiaries of public companies are covered employees under section 806 of SOX, an issue on which the Courts had been split before Dodd-Frank; 2) it established new, anti-retaliation provisions for employees who provide information to the SEC about securities law violations, whose claims are not limited to public companies; 3) it established new, anti-retaliation provisions for employees of companies that provide financial services to consumers, whose claims likewise are not limited to public companies; 4) it established Whistleblower protections and a bounty incentive program under the Commodity Exchange Act; 5) it expanded the class of individuals protected from retaliation under the False Claims (qui tam) Act, which prohibits fraud on the government and retaliation against individuals who make internal and external complaints about false claims; and 6) it amended SOX to include a right to a trial by jury in federal court cases, an issue on which the courts had been split.

Whistleblower actions typically involve highly sensitive information and serious allegations that companies would prefer to keep out of the public view.  Therefore, ADR is ideally designed to address Whistleblower actions.  First, a pre-suit mediation can resolve a Whistleblower action before it becomes public in the form of a lawsuit.  A recent pre-suit mediation involved a potential Whistleblower action under SOX, Dodd-Frank and a state statute by a still employed executive of a joint venture between two Fortune 500 companies.  Although the company strongly rejected both the factual and legal claims asserted by the employee, the company wanted to avoid publicity associated with a Whistleblower lawsuit.  The company also wanted to terminate the employee and receive a release in exchange.  After more than 12 hours in mediation, the parties reached a completely confidential resolution and avoided a publicly filed lawsuit.

In certain circumstances, it makes sense for the parties to a potential Whistleblower action to resolve the action by binding arbitration.  Unlike a lawsuit, an arbitration proceeding is private and confidential.  An experienced and fair minded arbitrator or panel of arbitrators with knowledge of employment law and Whistleblower law in particular, can provide all parties concerned with a worthwhile forum to resolve their dispute.  In the case of Van Asdale v International Game Technology, (9th Cir. 2009), a former in-house attorney filed a SOX Whistleblower action, which the court refused to dismiss on the grounds that attorney-client privileged information could be disclosed.  The Court reasoned that the district court could supervise the proceedings to minimize any prejudice to the employer’s privileged information.  Regardless of the tools utilized by a federal court judge, the likelihood of maintaining the confidentiality of the attorney-client privileged information (and similar confidential information) is greater in a private arbitration proceeding than a lawsuit.

In conclusion, employment attorneys participating in Whistleblower actions should consider the use of ADR processes from the inception of the claim.  Retaining a neutral with knowledge and experience with Whistleblower claims can significantly limit the potential negative impact of an already challenging and potentially disruptive situation.

Jeffrey Grubman is a mediator and arbitrator with JAMS. He is based out of the Miami office but mediates cases nationally. His practice focuses on employment, intellectual property, securities/ financial services and commercial/business matters. The author would like to thank Jonathan Ben-Asher of the law firm Ritz Clark & Ben-Asher LLP for his excellent article, “Developments in Whistleblower Cases under Sarbanes-Oxley and Dodd-Frank.” The information contained in this article does not constitute legal advice and are his opinions and not the opinions of JAMS.

Mediation – Is the Joint Session Still Alive?

By Kim Taylor

Kimberly TaylorMost lawyers are familiar with the ordinary sequence of a mediation. Typically, the mediator conducts a pre-mediation call with the lawyers and sometimes the parties, introducing everyone to the mediation process and inviting the participants to discuss any issues that may affect settlement which are important for the mediator to know in advance, and discuss any concerns a party might have about the process.

On the day of the hearing, the long-held practice has been to commence the mediation with a joint conference among all of the parties and their counsel before breaking into individual caucuses. Proponents of the joint session believe it provides an opportunity for each participant—either directly or through counsel—to express their view of the case to the other participants, and talk about how they would like to approach settlement. For some, the goal is to begin the settlement process among all of the participants together before the mediator begins working privately with each side.

Recently, however, there has been resistance to the joint session. A recent survey of JAMS neutrals conducted in April 2015 revealed a decline in the use of the joint sessions. 80 percent of the neutrals surveyed reported that they used joint sessions when they first started mediating—ranging from four to 20 years ago.  In 2015, only 45 percent regularly use joint sessions.  There are regional differences.  On the East Coast (where mediation was not embraced as quickly as on the West Coast), almost 70 percent continue to use joint sessions, but in Southern California that figure is just 23 percent.

What is driving this change? Many litigators and mediators believe that the joint session has lost its value because that step of the process has become more confrontational and—particularly in commercial matters—the lawyers have prepared detailed mediation briefs, both sides understand the other sides’ position, and everyone wants to get down to the business of negotiating without any distractions. Some feel so strongly about this they believe the joint session is completely counter-productive and can make it harder to settle the case. If parties approach the session as an opportunity to lash out at their opponents, the resulting alienation pushes the parties farther apart.  Also, there are certain types of cases where it is not appropriate or useful for the litigants to meet in person, including some employment discrimination claims, claims for retaliatory termination and claims for abuse where bringing the alleged victim and alleged perpetrator together would be detrimental to the process.

One of the central tenets of mediation is the principle of self-determination of the participants, which means that the process should be voluntary and controlled by the parties. Most mediators will not insist on a joint session if the parties do not want one.  But it is important to keep in mind that the decision to forgo an initial joint meeting will impact the kind of process that follows.  If counsel and their clients decline to participate in a joint session, the mediator retains many options for bringing the parties together toward settlement through the use of caucuses, playing “devil’s advocate” to explore the strengths and weaknesses of the parties’ positions, helping the parties to prioritize their interests and options for settlement, occasionally convening meetings of the participants if the mediator believes it is essential to break impasse or to hear from an expert, and evaluating next steps if no settlement is reached.

However, the benefits of a joint session should not be overlooked.  If the parties use the joint session as an opportunity to explain their position and try to understand the other side’s and engage in a productive dialogue, the joint session can pave the way to finding common ground and a path to a deal.  In some matters, the joint session may be the only opportunity for an injured party to air their grievances and feel “heard,” a step that might be important to achieving closure for that person.  And it may be essential for a litigant who is entrenched in his or her view of the matter to hear the other side’s point of view, and what a jury or a judge will hear if the matter proceeds to trial—a useful “reality check” in many instances.

Mediation practice will undoubtedly continue to evolve, and perhaps the use of joint sessions will decline across the U.S. as it has in Southern California.  Whether or not the parties choose to have a joint session, mediation has many benefits over traditional litigation.  It is faster, less expensive, confidential and the parties retain control over the process and the outcome.

12 Steps to an Effective Mock Trial

By Lex Brainerd, Esq.

While the mock trial has become standard operating procedure in the preparation of a high-stakes jury trial, it is rarely used in the preparation of a bench trial or arbitration.  As bench trials and arbitrations often involve extremely complex, high-exposure disputes, it is surprising that a mock trial or similar exercise is not utilized more often in these types of cases.

As with jury trials, a mock trial can be extremely useful in establishing themes, strategies and organization for a bench trial or arbitration.  All of the same benefits pertain, including the evaluation and refinement of opening statements and closing arguments, graphics and animations, and witness presentation.

While a bench trial or arbitration may require a somewhat different approach to organization and presentation than a jury trial, the principles of persuasion remain the same.  Therefore, the mock trial should be considered as a useful, if not essential, tool to be utilized in the preparation of a complex, high-stakes bench trial or arbitration.

How the mock exercise is structured and who is selected to act as the mock judge or arbitrator(s) will depend on the type of case and the needs and creativity of the lawyers and the client.  Of course, the amount of available resources may also impact the structure and duration of the exercise.  However, the following rules and suggestions will enhance the exercise no matter how it is structured and what the particular needs of the client may be.

  1. Take appropriate steps to ensure that the mock trial itself and all communications, documents, and other materials relating to it are confidential and protected from discovery under the attorney-client privilege and the work product doctrine.
  2. Be creative and keep an open mind.
  3. Be sure your opponent’s side is well represented.
  4. Consider having your lead lawyer put on the opponent’s case.
  5. Prepare for the mock exercise with the same intensity and thoroughness as you would for the actual trial or arbitration.
  6. Don’t be concerned with winning, but rather with learning.
  7. Select a mock panel that is representative of your trier of fact.
  8. Test your organization, trial themes and strategy.
  9. Test all critical elements of your presentation, including briefs, graphics, opening statements and closing arguments.
  10. Have your critical and troublesome witnesses testify, either live (preferable) or through deposition.
  11. Include a procedure and sufficient time for a complete debriefing and analysis.
  12. Based upon what you learn, don’t be reluctant to dramatically alter some or all of the organization and presentation of your case.

Alexander (“Lex”) Brainerd is a neutral with JAMS and focuses his ADR practice on complex commercial litigation, intellectual property litigation and professional malpractice matters. You can reach him at abrainerd@jamsadr.com.