TENTH ANNUAL YEAR-END REVIEW
This year’s ten Mediation Messages and two Arbitration Insights covered a wide variety of subjects involving mediation, arbitration, settlement procedure, “one can never be too careful in the practice of law,” general procedures, evidence and professionalism/civility. Please refer to my website (www.marcusmediation.com) for the Mediation Messages and Arbitration Insights summarized below for a complete discussion of the subject matter.
MEDIATION
Mediation Message no. 151 (“Recovering Mediation Fees after Trial”) discussed Berkeley Cement, Inc. v. Regents of the Univ. of California (2019) 30 Cal.App.5th 1153, which provides that a trial court may award mediation fees as costs, whether the mediation is court ordered or privately agreed to. In affirming the award of mediation fees as costs, Berkeley Cement noted that although mediation costs are not expressly allowable in the Code of Civil Procedure, such costs “fall within the category of costs that may be awarded in the trial court’s discretion.” (Id. at p. 1140.)
Mediation Message no. 152 (“Financial Status of a Party At Mediation”) advised that a party, who shall claim financial hardship at a mediation, should bring support for that situation to the mediation. That documentation may include, for example, profit and loss statements, tax liens, business and personal tax filings, loans and checking account records. Whatever records are to be produced should be given to the clients’ attorneys in advance of the mediations so that they may be reviewed for their effectiveness or problems. If financial records are to be provided, the attorney for the producing party should receive confirmation from the receiving party that such production is covered by mediation confidentiality.
Mediation Message no. 154 (“Appearance at Mediation of Persons with Authority to Settle”) observed that if a civil case has been ordered to mediation, in which the amount in controversy is under $50,000 (Code Civ. Proc. Sec. 1775.5), all parties, including insurance representatives with authority to settle or recommend settlement and attorneys of record, must attend all mediation sessions in person unless excused by the mediator or permitted by the mediator to attend by telephone. (California Rule of Court 3.894; L.A. Superior Court Rule 12.15.) Although this rule does not apply to cases which have not been ordered into mediation or where the matters have not yet been filed in Superior Court, the requirement that a person with authority to settle the dispute be personally present at mediation, unless previously excused by the mediator, should be the standard for all mediations. Telephonic participation is often not satisfactory because the designated person may not be reachable and the mediator’s ability to talk directly to that person is minimized by the impersonal nature of the call.
Mediation Message no. 155 (“Preparation Checklist for Mediation”) discussed the several stages for mediation preparation: (1) evaluate the case for the factual and legal strengths and weaknesses of both your own case as well as the opponent’s; (2) Assess the legal knowledge, experience and tactics of opposing counsel; (3) Prepare the client about the purpose of mediation, its processes including confidentiality, the facts and theories of your and the opponent’s cases and discuss the possible demands and offers that may be made to resolve the matter; (4) Prepare a timely and interesting mediation brief; (5) Share the mediation brief with opposing counsel; (6) Make certain that essential parties are at the mediation; (7) Determine whether any persons, other than the client, should attend the mediation; (8) Bring all necessary files and documents to the mediation; (9) Objectively evaluate the chances of achieving the client’s’ goals at trial and (10) Attend the mediation in good faith.
ARBITRATION
Arbitration Insight no. 28 (“Arbitration of Nonsignatories – Updated”) noted that a 2018 Arbitration Insight discussed the application of Garcia v. Pexco, LLC (2017) 11 Cal.App.5th 782 to the issue whether nonsignatories are bound by an arbitration agreement. Garcia holds that equitable estoppel and agency are exceptions to the general rule that “one must be a party to an arbitration agreement to be bound by it or invoke it.” (Id. at pp. 785-786, 788.) Arbitration Insight no. 28 analyzed four post- Garcia decisions and concluded that Garcia is still good law.
Arbitration Insight no 29 (“Unconscionability Analysis and the Arbitration of Unpaid Wage Claims”) discussed OTO, LLC v. Kho (2019) 8 Cal.5th 111 which, while not changing the standards for determining unconscionability in an arbitration agreement, is nonetheless an important decision because of how it applies the existing standards to the facts at hand, particularly if an employee’s claim involves unpaid wages. OTO expresses the clear intent that cases involving wage claims subject to arbitration agreements should be more “closely scrutinized” than those involving other employment claims. “For (other employment claims) claims, it may well be that an arbitration process closely resembling civil litigation can be as advantageous for the employee as for the employer. (Citation.) … Our cases have taken a different approach in evaluating the compelled arbitration of wage claims, as compared to the arbitration of other types of disputes. Employees who agree to arbitrate claims for unpaid wages forgo not just their right to litigate in court, but also their resort to an expedient, largely cost-free administrative procedure.” (Id. at pp. 29-30.)
SETTLEMENT PROCEDURE
Mediation Message no. 153 (“Section 664.6 Remedy”) revisited Mediation Message no. 141 (“Creating an Enforceable Section 664.6 Remedy”) because of Mesa RHF Partners, L.P. v. City of Los Angeles (2019) 33 Cal.App.5th 913. In two separate matters in Mesa, the parties agreed in the settlements that “The Court shall retain jurisdiction pursuant to Code of Civil Procedure section 664.6 to enforce the terms of the Settlement Agreement.” Thereafter, counsel for the plaintiffs filed requests for dismissal and inserted in the dismissals that the “Court shall retain jurisdiction to enforce settlement per C.C.P. § 664.6.” The clerk then entered the dismissals, as requested. Mesa holds that the court lost jurisdiction to enforce the settlements because the parties, as required by section 664.4, did not sign the requests for continuing jurisdiction, and the requests to maintain jurisdiction were not made during the pendency of the two cases since the clerk had already dismissed the cases. The lessons of Mesa are that section 664.6 is strictly interpreted; if a settlement includes conditions to be performed over time, the parties should adopt the second sentence of section 664.6 which states “If requested by the parties, the court may retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement”; the parties, and not their attorneys, must request that the court retain jurisdiction and the parties must request that the court retain jurisdiction before dismissing the case.
Mediation Message no. 159 (“The ‘Approved as to Form and Content’ Clause”) explained that the “Approved as to form and content” clause, as analyzed in Monster Energy Co. v. Schechter (2019) 7 Cal.5th 781, can be both innocuous or material. In Monster Energy, parties to a products liability and wrongful death action settled their lawsuit and, in a settlement, which included confidentiality obligations, lawyers for the parties signed a notation that they approved the written agreement as to form and content. Plaintiff’s counsel allegedly violated the agreement by making public statements about the settlement and were then sued, inter alia, for breach of contract. The Court of Appeal concluded that the “approved as to form and content” notation meant only that counsel recommended that their clients sign the document. The Supreme Court reversed, holding that the clause “does not preclude a factual finding that counsel both recommended their clients sign the document and intended to be bound by its provisions.” (Id., at p. 787; emphasis in the original.) The Supreme Court reasoned that the import of the “approved as to form and content” clause depends on the totality of the circumstances in the applicable document. “If … the agreement contains no provision purporting to bind counsel or otherwise impose any obligation on him, the question is easily answered. (Citation.) In that circumstance, counsel’s signature that he approved the agreement as to form and content could only mean he is approving it for his client’s signature.” (Id., at p. 792; emphasis in the original.) However, in the instant matter, the Court found that a fact finder could conclude that “all the circumstances could reasonably conclude (plaintiff’s counsel) agreed to be bound. The confidentiality provisions are not only extensive but repeatedly refer both to the parties and their counsel.” (Id., at pp. 792-793.)
“ONE CAN NEVER BE TOO CAREFUL IN THE PRACTICE OF LAW”
The above discussion about Monster Energy Co. v. Schechter (2019) 7 Cal.5th 781 regarding the “approved as to form and content” clause, and the concerned responses that I received after issuing that particular Mediation Message, motivated me to discuss the issue a second time under the proposition that “one can never be too careful in the practice of law.” As I observed in Mediation Message no. 159 regarding the aforementioned clause, Monster Energy does not hold that an attorney who signs an “approved as to form and content” clause is automatically bound by the terms of the underlying agreement. What it does find is that the attorney’s intent (the critical issue) in signing that clause is controlled by the totality of the circumstances in the agreement. Accordingly, if attorneys do not want to be bound by an agreement but feel compelled nonetheless to execute an “approved as to form and content” clause, they should include an accompanying phrase that their signing the clause is not intended as an express or implied acceptance of the agreement’s terms. More appropriately, out of an abundance of caution, attorneys should not sign this troublesome language. Michael Conrad, the watch commander in “Hillstreet Blues,” advised “Let’s be careful out there” before sending the officers and detectives out to their shifts and assignments; that warning is as appropriate today for the legal practitioner as it was for the fictional police over thirty-five years ago.
GENERAL PROCEDURES
Mediation Message no. 156 (“Default Motions – Abuse of Discretion”) was motivated by LaSalle v. Vogel (2019) 36 Cal.App.5th 127 which holds that “The quiet speed of plaintiffs’ attorney in seeking a default judgment without the knowledge of defendants’ counsel is not to be commended.” (Id. at p. 135.) “Accordingly, it is now well acknowledged that an attorney has an ethical obligation to warn opposing counsel that the attorney is about to take an adversary’s default.” (Id. at p. 135; emphasis in the original.) In conclusion, and in reversing the trial court’s judgment, LaSalle reminded that “it is the policy of this state that ‘all parties shall cooperate in bringing the action to trial or other disposition.’ Attorneys who do not do so are practicing in contravention of the policy of the state and menacing the future of the profession.” (Id. at p. 141.)
Mediation Message no. 158 (“998 Offer Invalid for Being Too Early and ‘“Gaming The System’”) looked at Licudine v. Cedars-Sinai Medical Center (2019) 30 Cal.App.5th 918, which provides a tutorial on early C.C.P. sec. 998 offers and, to a lesser degree, about such offers when they “game the system.” Plaintiff’s 998 offer of $249,999.99 in that case was served nineteen days after service of her three-page complaint for medical malpractice. Cedars objected to the 998 offer sixteen days later because it was “too soon for it to make any determination as to whether plaintiff’s [998 offer] was reasonable.” A jury awarded plaintiff $5,344,557 in economic damages and $2,274,900 for noneconomic damages. Plaintiff filed a memorandum of costs seeking, among other things, $2,335,929.20 in prejudgment interest from the date of her 998 offer to the date of judgment. The trial court struck plaintiff’s request for prejudgment interest because it was “premature” since Cedars had not “ha[d] an adequate opportunity to evaluate the damages … at the time of the 998 offer.” The appellate court affirmed the trial court’s order because the section 998 offer was not valid. “A 998 offer is valid only if it is made in ‘good faith.’ (Citations.) A 998 offer is made in good faith only if the offer is ‘realistically reasonable under the circumstances of the particular case’ (citation) – that is, if the offer ‘carr[ies] with it some reasonable prospect of acceptance’ (Citation).” (Id. at p. 924.) Licudine explained that “(T)hree factors are especially pertinent (in deciding whether the offeree had enough facts to evaluate the offer): (1) how far into the litigation the 998 offer was made; (2) the information available to the offeree prior to the 998 offer’s expiration; and (3) whether the offeree let the offeror know it lacked sufficient information to evaluate the offer, and how the offeror responded.” (Id. at p. 924.) Licudine also observes that offerors “game the system” “by making … offers they can reasonably expect the [offeree] will refuse, allowing them ‘to benefit from a no-risk offer made for the sole purpose of later recovering large expert witness fees” and, if they are plaintiffs, prejudgment interest. (Citations.) The good faith requirement prevents this perversion of section 998.” (Id. at p. 925.) Licudine concluded that a $249,999.99 section 998 offer in the facts before it “raises more than a specter of gamesmanship, which … is antithetical to the legitimate operation of section 998.” (Id. at p. 928.)
EVIDENCE
Mediation Message no. 157 (“Sanchez’s Hearsay Decision Three Years Later”) discussed People v. Sanchez (2016) 63 Cal.4th 665 because, in the three years since it was decided, there are no published California appellate decisions involving the application of Sanchez in civil proceedings. As a reminder, Sanchez, which is applicable to both criminal and civil cases, holds that the hearsay rule applies to case-specific out-of-court statements considered by experts as true and accurate and relied upon to support their opinions, because such statements are being admitted for the truth. (Id. at p. 686.) “Case-specific facts are those relating to the particular events and participants alleged to have been involved in the case being tried.” (Id. at p. 676.)
PROFESSIONALISM/CIVILITY
Mediation Message no. 156 (“LaSalle v. Vogel (2019) 36 Cal.App.5th 127”) talked about the big picture issue of declining civility and professionalism in the practice of law besides the more immediate problem that attorneys are rushing to file default motions without first talking to opposing counsel, which issue was discussed in the “General Procedure” section, above. Justice Bedsworth, writing for the majority, first reviewed several examples of egregious attorney conduct in published decisions to show that the courts have been trying, with little success, to remind counsel “that zealous advocacy does not equate with ‘attack dog’ or ‘scorched earth’; nor does it mean lack of civility.” (Id. at pp. 133-134.) Perhaps, he mused, the continuing lack of civility was a reflection of the fact that “practitioners have become inured to this kind of practice. They have heard the mantra so often unthinkingly repeated that, ‘This is a business,’ that they have lost sight of the fact the practice of law is not a business. It is a profession. And those who practice it carry a concomitantly greater responsibility than businesspeople.” (Id. at p. 134; emphasis in the original.) In conclusion, Justice Bedsworth reminded that “it is the policy of this state that ‘all parties shall cooperate in bringing the action to trial or other disposition.’ Attorneys who do not do so are practicing in contravention of the policy of the state and menacing the future of the profession.” (Id. at p. 141.)
Judge Michael D. Marcus (Ret.)
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