Two Approaches Top-Down: smj, pj bottom-Up: lawsuit from beginning to end Drafting the Rules

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  1. Negotiation & Settlement: Why & How?

    1. See slide on numbers

    2. Settlement: Ks reached through negotiation

      1. Ex: iR prefers to settle for certain sum rather than go through uncertainty of a trial

      2. Simplest form is a release, whereby parties agree that Π will drop lawsuit in exchange for $ or specific performance by Δ; Δ typically gets stipulation that settlement is not confession of liability

    3. Two Versions of Settlement

      1. Good

        1. Both parties, mostly through counsel, aided by discovery, assess value of claim, risk of trial

        2. Converging estimates save both sides cost, risk, and time of trial.

      2. Bad

        1. Badly counseled Π ground down by Δ with greater resources

        2. Δ, scared by small chance of very big jdmt, pays to settle meritless claim.

    4. Pros

      1. Faster and cheaper than trials

      2. Settlement involves getting something, which may be better than getting nothing

      3. Settlements control risk, e.g. trials are risky b/c they…

        1. Are significantly unpredictable; AND

        2. Tend to be all-or-nothing

    5. Parties do not need approval from judges when they settle their claims.

      1. However, the judge must grant Π’s request to dismiss the case if that is part of the deal.

      2. Exceptions to no approval from judges for settlements arises in class actions and minors.

    6. Ex: Jane v. Grow Co.

      1. Pros of Settling

        1. Jane

          1. Money

          2. May be damaging to her reputation, could cause problems finding new job; if have trial, all comes out

          3. More speedy resolution

          4. May be a weak case, this is way to control risk

        2. Grow Co.

          1. Avoid bad press as new company

          2. Claim may not be strong, but always a risk going to trial

          3. If Jane was doing something illegal, it was under Grow Co’s watch

          4. Public trial could lead to new cases

          5. Discovery is expensive and distracting

          6. Want to keep trade secrets / intellectual property private

      2. Cons of Settling

        1. Jane

          1. May be more important than $ if wants to vindicate rights

          2. Settling may be implicit admission of case’s lack of merit

        2. Grow Co.

          1. She doesn’t have very strong claim; don’t want to set precedent of settling frivolous cases

          2. May still have to disclose settlement to investors

      3. What does settlement do for lawyers?

        1. Π likely operating on contingency fees. Case is all or nothing, so much safer to go ahead and settle.

        2. Δ lawyer being paid by the hour; will likely not want to settle. Also have reputational concern, e.g. will efficiently reach best outcome.

      4. What about courts?

        1. Helps them in that decreases their case load

        2. Court often only knows that case settled, but not necessarily the subject matter of the settlement

      5. Should NOT just shake hands. Need a written doc.

      6. What issues need to be addressed in settlement?

        1. Money

        2. Release

        3. Dismissal of case (if filed)

        4. Confidentiality

      7. What form?

        1. P agrees not to file lawsuit.

        2. P voluntarily dismisses and agrees not to refile.

        3. P agrees to dismiss with prejudice and agrees not to refile.

        4. D agrees to a judgment against him.

  2. 3rd Party Participation in Settlement: Facilitation, Encouragement, & Coercion 35 min

    1. Why do settlement talks sometimes break down?

      1. Parties have wildly divergent views about the value of their case and/or

      2. Parties have problems communicating

    2. Mediation v. Arbitration

      1. Mediation = assisted negotiation

      2. Arbitration = trial by arbitrator

        1. Binding v. non-binding

    3. Mediation

      1. Assisted negotiation with 3rd party trying to reach settlement

        1. Arbitration = trial by arbitrator

      2. Non-binding, confidential, and can’t be used in litigation

        1. Keep in mind that even though it is confidential you may be revealing weaknesses in your case to the opposite side

      3. 28 U.S.C. 651 provides that DCs must adopt local rules that “require litigants in all civil cases to consider” ADR

      4. Parties agree to terms

        1. Non-binding

        2. Confidential

        3. Selection of mediator (increasing number of full-time pros)

        4. Others?

      5. Is there some non-monetary goal, e.g. Jane?

        1. Any good lawyer / mediator thinking a/b settlement thinks beyond dollars.

      6. Should judges serve as mediators? 45 min

      7. Disadvantages

        1. Lacks power to coerce agreement b/t the parties or to rule on the rights and obligations of the parties

        2. Works best where parties have had a long term relationship, e.g. labor or domestic relations

    4. Confidentiality

      1. Businesses particularly interested in keeping not only the details of the settlement but the existence of the lawsuit itself from public disclosure

        1. Being sued is negative advertising

        2. Don’t want seed of litigation planted in minds of other potential Πs

      2. Usually in Πs besti interest to have settlement made part of public record

        1. If ongoing litigation settled, automatically happens

  3. Contracting for Private Adjudication: Arbitration 48 min

    1. Introduction:

      1. Can be binding or non-binding (non-binding is a complete waste of time)

      2. Tried by an arbitrator instead of judge/jury

      3. Parties can design own procedures, control substantive law

      4. May be cheaper than litigation

      5. Arbitrators tend to “split the baby”

      6. Arbitration more private than ordinary adjudication.

        1. The public, including the press, normally has a right to attend judicial proceedings.

        2. Docs filed in court and transcripts of judicial proceedings are normally public records.

        3. Arbitration is normally not open to the public and the parties can agree that the outcome remain private

      7. Arbitration awards are not subject to judicial review except for extreme reasons

      8. See slides

    2. Ferguson v. Countrywide Credit Industries, Inc. (9th Cir. 2002) 58 min

      1. Facts:

        1. Ferguson worked for Countrywide, but b/f here employment, she was required to sign a K stating any claims would go to arbitration.

        2. Subsequently, Ferguson filed a complaint a/g Countrywide and her supervisor, alleging sexual harassment, retaliation, and hostile work environment.

          1. Countrywide, in turn, filed a petition for a court order compelling arbitration.

          2. The court denied Countrywide’s petition based on the doctrine of unconscionability.

      2. Rule:

        1. Sec. 2 of the Federal Arbitration Act provides that arbitration agreements shall be valid, irrevocable, and enforceable, save upon such grounds that exist at law or in equity for the revocation of any K

        2. Generally applicable defenses, such as unconscionability, may be applied to invalidate arbitration agreements w/out contravening the FAA

        3. SCOTUS has held that federal cts determining the validity of an arbitration agreement should apply state law principles that govern the formation of Ks

      3. Holding:

        1. Court finds procedural and substantive unconscionability

        2. Procedural

          1. Manner in which K was negotiated and circum of the parties at the time

          2. Agreement here is prerequisite to employment and thus a take it or leave it K, and procedurally unconscionable

        3. Substantive

          1. Focuses on terms of agreement and whether the terms are one-sided so as to shock the conscience

          2. Countrywide’s agreement compels arbitration in some cases, but allows Countrywide to not bring arbitration for other cases they might not want to have done under arbitration, thus substantively unconscionable

        4. Court also states fees are unconscionable

    3. Carter v. Countrywide Credit Ind. (5th Cir. 2004)

      1. Facts:

        1. Several current and former e’ees brought suit a/g Countrywide alleging compensation due under the provisions of the Fair Labor Standards Act.

        2. Countrywide moved to compel the Πs to submit claims to arbitration, as required in the K signed by all e’ees as a condition of their employment.

        3. Πs asserted that the arbitration agreement was invalid for four reasons.

          1. DC found for Δ on all but one of issues raised, holding that the arbitration’s fee-splitting provision imposed high costs on Πs.

      2. Rule:

        1. SCOTUS has noted that purpose of FAA is to reverse the long-standing judicial hostility to arbitration agreements and to place them upon the same footing as other Ks

        2. Accordingly, there is a strong presumption in favor of arbitration and a party seeking to invalidate an arbitration agreement bears the burden of establishing its invalidity.

      3. Analysis:

        1. In determining K-ual validity of an arbitration agreement, courts apply ordinary state-law principles that govern the formation of Ks

          1. Accordingly, look at TX state law

        2. B/c TX law is different than CA’s (see Ferguson above), the appellants lose. Court finds NOT unconscionable.

Issues with Arbitration:

  • Fees (more to go to arbitration than to go to court)

  • One-sided subject matter of arbitration agreement 

Ferguson v. Writer’s Guild of America

  • What is at stake in this dispute?  Why does Ferguson care?

  • In the absence of an arbitration agreement, what would he have done?

    • He would have filed a complaint in federal court

  • What is the arbitration process?

    • Submits everything that he has to show that he wrote it

    • Its not trial by arbitrations (as is in Carter)…each of the “arbitrators” reviews it separately and then gives their opinion. Don’t know who other arbs are, and parties don’t know either

    • What if parties think there has been a deviation of policy? Review board convenes to detect any substantial deviation from the policy of the Writers Guild…this is not an appeal. They do not review the script or any other evidence. All of this is just in writing.

  • What does the court say?

    • Once you become a member of the Guild, you submit yourself to this process


Ferguson v. Writer’s Guild of America

  • What’s best reason for enforcing the arbitration agreement here?

    • Defer to the Guild’s expertise…one reason in favor of arbitration (expert can decide instead of a judge who may not be very well versed)

    • This is a union--collective bargaining representative of the writers

  • Is there an argument it shouldn’t be enforced?

    • People who decide these cases are veteran writers, not newcomers like Ferguson

    • Pool of arbitrators is skewed

  • What if the clause had specified that in case of a dispute over credit between two writers, the president of the Guild would flip a coin?

  • If you think this is unlawful, what is the smallest change that would make it lawful?

  • More hostile to plaintiff’s rights…more protection for arbitration


Challenges to Arbitration Process

Two basic routes of attack:

  • Contractual —

    • Fundamentally unfair (unconscionability) (Carter.)

      • E.g. Fees, one-sided provisions concerning discovery, arbitrability of claims.

      • BUT Ferguson v. Writers Guild suggests almost anything goes where there is real bargaining and durable relationships

    • Fraud, duress, and other contract defenses

  • Or (less likely) — one can resist arbitration on the basis of special nature of claims in question: should some claims not be arbitrable, or only under some conditions?

      • CA (Armendariz): civil rights claims arbitrable only if arb. procedures as favorable to Π as litigation would be.

      • Proposed Arbitration Fairness Act would render pre-dispute agreements requiring arbitration of employment, consumer, franchise, and civil rights disputes unenforceable.

4/4: Summary Judgment

The Basics:

  • Who? Either party may move for summary judgment (though usually a tool for defendants). See 56(a).

  • Timing: At “any time until 30 days after the close of discovery” (56(b)), though typically at end of (or after significant) discovery.

    • Under 56(d), nonmoving party can argue motion is premature…will say there has not been enough discovery (usually at the close of discovery)

  • Standard: “The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” 56(a).

  • Format: Motion, brief, statement of undisputed facts, supporting materials (affidavits, deposition excerpts, etc.), proposed order.

(c) Procedures.

(1) Supporting Factual Positions. A party asserting that a fact cannot be or is genuinely disputed must support the assertion by:

(A) citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials; or

(B) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.
Summary judgment: What it is--& What it isn’t

  • Four related stages of procedure: 12(b)(6) motion; motion for judgment on pleadings; motion for summary judgment; motion for directed verdict.

  • What’s the difference?

    • Partly a matter of timing

    • Mostly a matter of different functions

    • First two motions test only legal framework; latter two test facts as well as law

12(b)(6) v. Summary Judgment

  • 12(b)(6)

    • Would facts, if true, state a claim?

    • Does not test truth of allegations or whether there is evidence behind them.

  • Summary Judgment

    • Are material facts disputed?

      • No genuine dispute as to any material fact

    • And

    • Do undisputed facts state a claim?

      • Entitled to judgment as a matter of law

  • Example: Defendant’s affidavit: “I didn’t shoot P with ray gun or otherwise injure him.” Un-opposed

    • What ruling on 12(b)(6)?

      • Denied because accept as true facts alleged in complaint. Judgment on the law.

    • What ruling on motion for summary judgment?

      • Granted. Because there is a factual record.

Example from Plaintiff’s Perspective: Complaint: Defendant signed promissory note and did not pay when due.

  1. D files a 12(b)(6) motion. What result?

    1. Court will deny the motion. Must take plaintiff’s allegation as true.

  2. D answers and denies. What are D’s possible bases for denying liability?

    1. I already paid it; someone else is supposed to pay it; duress; forgery; etc.

  3. Assume discovery yields the note itself, and the defendant’s answer to an interrogatory in which he does not claim to have repaid the note. What should P do? File a motion for SJ because there is no factual dispute.

  • What does this motion look like? What supporting evidence?

    • Attaches the interrogatory; the signed note, etc.

    • But Defendant’s lawyer will submit an affidavit saying that he didn’t sign the note

  • What if P’s lawyer submits affidavit that says: “Plaintiff told me he watched the defendant personally sign the promissory note?”

  • What if P submits affidavit that says: “I know that defendant signed the promissory note.”

    • P’s Objection: hearsay; lack of foundation

  • What must D now do to defeat motion?

    • Submit an affidavit saying that he didn’t sign the note

    •  Court must deny the motion because now there is a genuine issue of material fact

    • Jury will then decide who is lying

Celotex Corp. v. Catrett

  • What was plaintiff’s claim?

    • Alleged that her husband died of exposure to asbestos produced by Celotex

  • What is Celotex’s defense?

  • What did pleadings look like?

    • Complaint

      • 1. P manufactured asbestos

      • 2. P’s asbestos dangerous

      • 3. Mr. C. exposed to D’s asbestos

      • 4. D’s asbestos caused his death

      • 5. Damages

    • Answer

      • 1. Admit ¶ 1

      • 2. Deny ¶ 2

      • 3. Deny ¶ 3

      • 4. Deny.

      • 5. Affirmative defense: S/L has run.

  • How can Celotex establish its defense at trial?

  • Celotex challenged plaintiff’s ability to show exposure to its asbestos.

    • On motion for summary judgment, how did Celotex attempt to show no exposure?

    • How did plaintiff respond?

  • What is the legal dispute in this case???

    • Who has the burden of proof at SJ stage? Plaintiff

    • Because plaintiff has not brought forth any evidence of exposure

Celotex: The Alignment of Burdens

  • Adickes v. S.H. Kress

    • At trial, plaintiff has burden of production on critical issue.

    • On summary judgment, defendant has burden of production on that issue.

    • Defendant: “I can show I didn’t do it.”

  • Celotex v. Catrett

    • At trial, plaintiff has burden of production on critical issue.

    • *On summary judgment, plaintiff has burden of production on that issue.

    • Defendant: “Plaintiff can’t show I did it.”

  • Under the regime preceding Celotex the party bringing the motion for summary judgment had the burden of production.

  • Celotex changed that rule and aligns the burdens:

    • “In our view, the plain language of Rule 56(c) mandates the entry of summary judgment, after adequate discovery. . . against a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial.”

    • What are the consequences of this change?

      • More defendants bring SJ motions

4/6: SJ & Judicial Management of Litigation

Summary Judgment So Far

  • Comparison to 12(b)(6) motion

    • 12(b)(6): Would allegations, if true, state a claim?

    • 56(a): Looking at discovery record, is there a “genuine dispute as to any material fact?”

  • Mechanics

    • Motion, brief, statement of undisputed facts, and supporting materials (discovery excerpts, affidavits)

      • Citation to “particular parts of materials in the record” 56(c).

      • Only materials that “would be admissible in evidence” 56(c).

  • Celotex

    • From “I can prove it wasn’t me” to “Plaintiff can’t show it was me.”

Bias v. Advantage International, Inc.

  • What does the plaintiff have to do to survive a motion for summary judgment?

  • Complaint:

    • 1.Δ told Πs he would insure Bias’s life. (Admit)

    • 2. Δ failed to secure insurance. (Admit)

    • 3. Bias died. (Admit)

    • 4. Δ’s statements--

      • Constituted a K, which Δ breached. (Admit? Deny?)

      • Were a fraudulent representation, on which Πs relied. (Deny)

    • 5. Πs therefore suffered loss. (Deny)

  • What was the defense?

    • Conceded failure to obtain policy but- - - -

    • No damages from breach because no insurer would have written a policy

      • All would have inquired about or detected cocaine use

      • Δ: insurance company would either have refused to issue policy (if B were truthful or if drug test were administered) or would have issued but refused to pay on grounds that B had made fraudulent misrepresentations on application.

  • What will each side say? See slide 8.

    • Agent: facts

      • Cocaine, habitual user

        • Teammates’ testimony

        • Died of cocaine overdose

        • Tests were announced

      • Inference: can’t obtain insurance policy

      • Death

      • Supplied cocaine to teammates, friends

      • Inference: maybe insurance company would have given the policy, but it wouldn’t have been paid out when he died of a drug overdose

    • Bias: facts

      • Used drugs one time

      • Inference: multi-factor test for insurability

      • Passed numerous drug tests

        • Random?

      • Inference: credibility of teammates (also drug users?)

      • Testimony of parents and coach

  • Defense in support of their motion provide specific instances of testimonyplaintiff only rebuts with generalized testimony (this is why court grants SJ motion)

  • What should plaintiff’s lawyer have done?

    • Found one teammate who had not seen Len do drugs

    • Depose the teammates Gregg & Long

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