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New Law Opens Narrow Window For Increased Survivor Damages

We are all aware that COVID restrictions disrupted the ability of civil litigants to get a speedy trial. In some cases, the plaintiff died waiting for trial. Though the action survived, upon the death of the plaintiff, non-economic damages were no longer recoverable. The California legislature addressed this issue by amending California Code of Civil Procedure (CCP) 337.34 to add:

. . . in an action or proceeding by a decedent’s personal representative or successor in interest on the decedent’s cause of action, the damages recoverable may include damages for pain, suffering, or disfigurement if the action or proceeding was granted a preference pursuant to Section 36 before January 1, 2022, or was filed on or after January 1, 2022, and before January 1, 2026.

Preference Cases
CCP 36 allows three groups of litigants with a substantial interest in the case to move the court to try the case within 120 days:
— A party over 70 years whose health is such that a preference is necessary to prevent prejudicing the party’s interest in the litigation
— A party under 14 years of age
— A party in any other case who requests the court to exercise discretion to serve the interests of justiceParties or their representatives who had successfully moved for a preference before 2022 can seek damages for a decedent’s pain, suffering, or disfigurement. Conversely, parties in those pending cases who did not qualify or did not move for a preference will be denied the ability to recover non-economic damages.

For example, if a 69-year-old plaintiff who had filed a case in 2021 dies in 2022 before getting to trial, the representative cannot seek general damages on behalf of the decedent, even if they moved for preference in 2022.

Cases Filed 2022-2025
The new law is temporary. It defines a four-year window. Notably, the law also requires a plaintiff who recovers damages pursuant to the new law between January 1, 2022 and July 31, 2024 to submit a report to the Judicial Council detailing the particulars of the judgment or court-approved settlement. In turn, the Judicial Council will report the results to the legislature on or before January 2025. The legislature can then consider whether to make these provisions permanent.

Settlement Considerations
The value of cases which qualify for this expanded damages rule has increased. In some cases, the added value will dwarf the economic damages. Parties must consider the added exposure to defendants in evaluating cases for settlement. Additionally, in cases where settlement does not require court approval, there may be some value to creating settlements which will not be reported to the Judicial Council.

What is the Truth?

Many lawyers and claims professionals say that the litigation process is a search for truth. They will swear allegiance to a jury’s ability to ferret out the truth from conflicting evidence. And yet, more than 90% of all cases settle. The truth can be more slippery than you think.

Individual Lens
Each of us receives data through our own lens based on our experience and attitudes. Why We’re Wrong About Nearly Everything: A Theory of Human Understanding by Bobby Duffy provides multiple examples of people ignoring the facts in front of them. For example, a study reported in Behavioural Public Policy saw subjects looking at the exact same data about the effectiveness of gun control, but interpreting them to favor their own pre-conceived views.

Lawyers know it is impossible to ferret out every possible micro-experience in a potential juror’s background. They depend on the collective knowledge of the group to arrive at a favorable result.

Socrates Said There is No Absolute Truth
All of us filter the information we receive through our own mental and sometimes physical viewpoint. Several witnesses to an event may tell different stories about what occurred. What is more probably true than not? Are you sure?

This conundrum really breaks down when fact-finders are asked to decide between expert opinions. I often tell mediating parties about a case I was involved in which ended with a large verdict in favor of the plaintiff. The pivotal issue was causation. Did they really think the defendant’s act caused plaintiff’s damages? It didn’t matter. The jurors’ collective response was summarized by one representative statement: “She was just so sick.”

The Search for Truth is an Obstacle to Settlement
More often than not, parties never get to a judgment which establishes the “truth.” They do settle, but not before spending time and money beyond a point when they knew enough to settle.

Mediation helps parties see beyond a search for an absolute truth to evaluate all the relevant factors and settle sooner.

New Restrictions on Confidentiality in Settlement Agreements

Effective January 1, 2022, amended California Code of Civil Procedure §1001 expands restrictions on confidentiality clauses in settlement agreements.

Previous law barred such clauses in agreements settling filed civil or administrative actions alleging sexual assault or sexual harassment. Only the identity of the claimant and the amount of the settlement could be protected.

The new provisions expand the prohibition to include

1) acts of workplace harassment or discrimination not based on sex, and

2) acts of harassment or discrimination not based on sex by the owner of a housing accommodation.

3 REASONS HONEST WITNESSES TELL FALSE STORIES

Many cases turn on the recollection of “percipient” or “occurrence” witnesses. These are people who used their senses to see or hear relevant evidence. Less commonly, they might have smelled, touched,   or tasted something. Percipient witnesses contrast with expert witnesses, who are usually engaged in anticipation of or during litigation. Expert witnesses rely on evidence which has been submitted to them so they can render an opinion based on their education and experience. They need to record what they relied on, but don’t have a recollection of the events of the case as they occurred.
Honesty Isn’t the Issue
In his 2021 book Why The Innocent Plead Guilty And The Guilty Go Free/ And Other Paradoxes Of Our Broken Legal System, federal district judge Jed S. Rakoff explains why eyewitness testimony in criminal cases is unreliable. Those same reasons apply to percipient witnesses in civil cases.

1)The witness’s own level of stress at the time of the incident affects and can impair their recollection.

2)The inherent human tendency over time is to add embellishments to enhance the completeness of the recollection or simply to accord with preexisting biases.

3) There is a wide range among people’s ability to retrieve memories of events that lasted only a short time.

It’s An Old Story
In the celebrated 1950 film Rashomon, multiple percipient witnesses tell wildly different versions of the same event. Today, the well-known unreliability of eyewitnesses is sometimes called the Rashomon Effect.

What to Do?
A witness may really believe the story that witness is telling—and that story could hurt your case a lot. It’s hard to predict how the trier of fact will view conflicting evidence. Witness unreliability is one reason why going to trial is such a gamble. Recognizing this paradigm should prompt you to choose mediation  to settle sooner rather than later.

50 SHADES OF NEGOTIATION GREY

No, this post doesn’t qualify as erotica. It’s about the ability to see nuance. Most cases are not black-and-white, no-doubt-about-it, situations. Rather, there are shades of grey. If this were an open-and-shut case, chances are that claim would not be in dispute.
It’s Part of Empathy
Being able to see all the facets of an issue enhances your ability to negotiate a settlement. You can best meet your opponent’s arguments if you take the time to put yourself in that person’s shoes long enough to figure out what those arguments are. Then you can best meet them.

While it is appropriate to research all the facts and law that help predict an outcome,  when researchers choose to dismiss negative findings, they will not be able to constructively negotiate. Only interpreting findings as favorable, a mindset known as confirmation bias, prolongs conflict.

When initial research reveals negative information, the impulse may be to just keep digging. This attitude manifests itself in the actions of litigators who, for example, keep designating treaters and experts in the hope that somebody will back up their position. An analogy might be to a company which continually engages in research and development, but never actually brings a product to market. That’s not what success looks like.

Grey Is Stressful
Uncertainty generates stress. Parties in mediation sometimes tell me how relieved they are that the dispute is over, even when they got a result they see as unfavorable.

Settlement isn’t about who’s right and who’s wrong. It’s about showing everyone that concluding the dispute is in their own self-interest. Mediation is the place to do that.

SETTLEMENT AND THE BOTTOM LINE

The offer on the table was a good one, but the attorney thought there was hope for something better. Then I took the attorney through the “what if’s.”

Expenses Matter
How much will it cost to bring this case to trial? What about experts’ fees? I asked the attorney to create two financial statements, one that showed the net financial result now versus the likely result after more litigation. Viewed in the most favorable light, more litigation produced the same financial benefit in the end. And if the result was not so favorable, prolonging the stress and financial outlay would have a negative financial result.

Attorney’s Fees
It costs money to run a law office. In a contingent fee practice, there is a lot of outgo before the reward comes in. When an attorney’s resources are at capacity, the choice is to turn away business or expand staff and space, thereby increasing the cost of running the office.

I asked the lawyer what his hourly fee would be if he kept litigating. “I’m on contingency. It’s the same.” “No,” I explained, “when your fee is contingent, the longer you work, the lower your hourly rate.”

For what appeared to be an ego-driven motive, not only was this attorney determined to keep fighting the client’s case for no foreseeable financial benefit, he was undermining his own financial stake in the matter.

Part of my job as mediator is helping parties, adjusters, and their lawyers see the full range of issues and possible results.

SIBLING HATE

A Minnesota appellate case shows how damaging intra-family business disputes can be.

The four Lund siblings had inherited equal shares of a trust holding a chain of grocery stores. The oldest sibling sued to force a buy-out of her shares on the ground that she had a reasonable expectation of financial independence and liquidity. She alleged breach of fiduciary duty, unfairly prejudicial conduct, and civil conspiracy. Defendants, including her CEO/brother, claimed that the requested buy-out elevated one sibling’s interests over the others’ and would force the company to take on debt to finance the buy-out. The court threw out some of the claims, but the case continued on the unfairly prejudicial conduct and equitable relief claims.

The sibs could not agree on a buy-out price, so a trial ensued during which the opposing expert’s valuations were about sixty million dollars apart. In Solomon-like fashion, the court picked a number roughly halfway in between.

But they weren’t done yet. Both sides appealed. The appellate court largely upheld the trial court, except that the trial court had denied the defendant’s claim that they be reimbursed their $800,000 in legal fees from the trust property. Ruling that the lower court had employed an incorrect standard, that issue was remanded for further proceedings. The Minnesota Supreme Court recently declined review.

The Real Cost
After five years of litigation, the plaintiff won her case. If the defense spent $800,000 in legal fees, the plaintiff probably spent a similar amount, perhaps more—a lot more—if the fee agreement included a contingency kicker.

Undoubtedly, the litigation created friction among the siblings, the full extent of which the public is unlikely to learn. This kind of animosity affects younger generations, too, and ravages family gatherings.

The judge ordered and the parties agreed to mediation. Obviously, it didn’t take. During the trial, the judge implored the parties to settle, quoting the New Testament and philosopher Reinhold Niebuhr.

Mediation offered an escape from the costs, animosity and stress of litigation. As these harms escalate, parties who previously rejected settlement may revise their view of what they really need. A benefit of mediation is that parties can agree to solutions, such as family counseling, that a judge is powerless to require.

The Lesson
There is no limit on how often parties can come to mediation. If the first mediation was unsuccessful, a second–or third–one may produce results as parties get new information and adjust their views. Mediation can occur while an appeal is pending. At this point, the parties know the full extent of the evidence and the likely outcome. Cases resolve in appellate mediation more often than not. Mediation can limit the damage to the family and its business.

ONE THING LIARS ARE REALLY GOOD AT

While not every liar is really good at lying, many are. In fact, they are so good, that the trier of fact—be that jury or judge—often find them to be credible, more credible than your evidence.

Humans are actually poor judges of each other’s honesty. While we think we can look someone in the eye or study their body language, statistically these clues are worthless. As mentioned in another post, author Malcolm Gladwell in his book How to Talk to Strangers demonstrates how bad we are at interpreting each other’s thoughts based on observable clues.

Good liars will swear an oath to tell the truth and then brazenly lie. The trier of fact’s ability to judge a witness’ honesty is unreliable. When cases turn on s/he said—s/he said situations, going to trial is a big gamble.

Mediation is the better choice.

WHEN SMALL BUSINESS CO-OWNERS FIGHT

Disputes among co-owners in a closely-held business can arise over a number of issues, such as day-to-day control, compensation, or access to information. Left unresolved, these arguments can fester and eventually destroy the business.

Not only are small business co-owners like a family– they are likely to be members of an actual family. While we know that family-owned small businesses tend to weather management storms better than businesses which lack that link, family dysfunctions can seep into management of the business.

Co-owner mediations can seem more like divorce negotiations than business disputes. A mediator can calm parties’ anger, help resolve the current dispute, and create a plan to manage future disagreements so the business survives.

When you are in the middle of a co-owner dispute maelstrom, call me to discuss whether mediation can help. It’s free and completely private under California’s strict mediation confidentiality laws.

The One Thing You Can Control in Negotiation

Here’s a basic fact of life. People like to feel in control, whether it’s at their workplace, at home, or in a negotiation. But we are seldom in sole control of any of those situations, and that’s how disputes arise and continue. Though the result of a negotiation is not completely under your control, your preparation is.

Start by defining the pivotal issues. There are seldom more than five, usually just one or two. Determine the specific range of results your side needs to bring the matter to conclusion.

Imagine the circumstances from your opponent’s point of view. Be specific. What is the hot button? It’s usually not just money. The emotional or reputational costs as well as the financial drain of drawn-out proceedings may be factors. Many litigants feel they have been disrespected. Sometimes a carefully worded apology goes a long way towards bridging a negotiation gap. What does this person really need?

It Takes More Than Two
Bringing everyone together for mediation shows a serious intent to resolve the dispute. Make sure the real decision-makers are attending. That might be a corporate higher-up like a claims manager, but it might also be a family member.

Using the mediator as a buffer between parties can magnify the effectiveness of your message. Your opponent may have brushed off your arguments before, but will listen to them when they come from the mediator.

You cannot completely control a negotiation. The opposing party could surprise you in a number of ways. Your own client may surprise you. But thorough preparation will help you manage a negotiation. You are the one person you know you can control.