• An Interesting Way to Resolve a Case: mediation/binding baseball arbitration

    I previously discussed some of my concerns regarding binding arbitration agreements.  Arbitration has its place, and it can be a very useful tool in resolving cases.  As much of my practice involves employment disputes, drafting an enforceable arbitration agreement can be difficult, and I believe arbitration oftentimes does not meet the objectives that it is intended to achieve (i.e., lower costs, quicker resolution, lower awards, etc.).  There are many variants to the typical arbitration or mediation options, and a recent case caught my eye because it presented one of the more unique variants.

    In Bowers v. Raymond J. Lucia Companies, Inc. (No. D059333), the parties were in the middle of binding arbitration, when they decided to dismiss the arbitration and the accompanying state court action, and participate in “mediation/binding baseball arbitration.”  According to the record, the plan was to:

    participate in a full day mediation. If, at the end of that mediation, the Parties have failed to reach an agreement, the Plaintiffs (Bowers, Seward, and LaBerge) shall provide to the mediator their last and final demand, which demand shall be some amount between $100,000 and $5,000,000, and the Defendants (Companies, Wealth Management, and Enterprises) shall provide to the mediator their last and final offer which offer shall be some amount between $100,000 and $5,000,000. The mediator shall then be empowered to set the amount of the judgment in favor of Plaintiffs against Raymond J. Lucia Companies, Inc. by choosing either Plaintiffs’ demand or Defendants’ offer, such binding mediator judgment to then be entered as a legally enforceable judgment

    At the end of the mediation, the mediator decided to award the plaintiffs the full $5,000,000.00.  That’s right, the “mediator” awarded the money.  This is unusual because typically mediators do not have the power or authority to “award” anything.  The mediator typically helps the parties reach a resolution, but if the parties are unable to reach an amicable (or unamicable?) resolution, the mediator’s job is done.  Because the parties in Bowers agreed the mediator could make a binding award if the mediation failed, the trial court and the appellate court upheld the award. Parties can agree to allow a third party to decide what the parties will pay, even if the evidence is not presented in a typical trial or arbitration setting.

    It’s easy to armchair quarterback this one and second-guess the thinking behind agreeing to such an unusual form of dispute resolution.  Going into the process the parties had to know that the plaintiff’s “last and final demand” was going to be $500,000.00, just like the defendant’s “last and final offer” was going to be $100,000.00.  The case does not provide a lot of facts regarding the underlying claims or liabilities (we only know that it was some kind of defamation claim), but I presume liability was not much of a question, and that the real issue was the amount of damages.  The big risk for each side is that, knowing the other side’s “last and final” number is likely going to be the highest or lowest allowed by the parties’ agreement, the resulting mediator’s “award” was essentially going to be an all or nothing deal.  I suppose there was the possibility that had the parties stuck with the original arbitration the arbitrators could have awarded significantly more than the $5,000,000.00 ceiling to which the parties agreed, but it seems like a pretty high risk given the fact that the mediator receives information differently than an arbitrator, a judge or a jury.

    I am a big proponent of mediation.  Given the costs and risks involved in litigation, mediation offers the parties the opportunity to have a say in the outcome of the resolution.  I’m not so sure I would be willing to hand that control over to the mediator.  The process of presenting my case in mediation differs significantly to how I present my case to the trier of fact.  I’m not sure how my presentation would have to change if I knew that at the end of the day the mediator was going to “decide” the case.

    If you want to read the case, you can find it here.

    The Law Office of Phillip J. Griego
    95 South Market Street, Suite 520
    San Jose, CA 95113
    Tel. 408-293-6341
     
    Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.
     
    Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.
     
    Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

  • Recent Article Reveals Long Delays at State Labor Commissioner’s Office

    A recent article from the Los Angeles Daily Journal (Vol. 125 No. 057, March 23, 2012) reports “Wage claims get uneven treatment, records show.”  According to the article, data obtained through a Public Records Act request and interviews with lawyers representing business and workers reveals significant delays.

    State law requires the Labor Commissioner to conduct its hearings within 120 days after filing.  The Daily Journal’s analysis shows that 11 of the 16 regional offices did not meet that obligation in 2011.  Different offices report different average waiting periods, with Oakland showing the worst results: over 400 days to get to a hearing.  Santa Rosa, on the other hand, gets its cases to hearing within 85 days.  San Francisco heard its cases within 301 days on average.  San Jose averaged approximately 275 days to get to a hearing.

    The study did not discuss how long it takes for a decision to get mailed after the hearing.  By law, the decision is supposed to be written within 15 days after the hearing.  In my experience, however, it often takes several months to receive the actual decision.  This sometimes means a case can take between one to two years to resolve if filed with the Labor Commissioner.  Cases take even longer if they are then appealed to superior court for a trial de novo.

    Budget cutbacks and state-mandated furloughs as well as an increase in claims filed are main causes of the long delays.  In some cases, the state assigns hearing officers from other jurisdictions to help carry some of the load, and I’ve seen an improvement in the speed with which cases proceed in the last few months, but there are still significant delays.  In many instances, a case can move more quickly through court than through the Labor Commissioner.

    The Daily Journal article also discusses perceived inconsistent rulings reported by several practitioners.

    When deciding whether to proceed with a Labor Commissioner claim, claimants should consider the length of time it will take to receive a decision.  Employers should realize that they may need to maintain records for a longer period than required by law so they can ensure they have appropriate evidence and witnesses by the time a hearing comes around.

    If you are contemplating filing a claim with the Labor Commissioner, or if you’ve recently been notified that a claim has been filed, I highly recommend speaking with competent counsel familiar with the Labor Commissioner and wage and hour issues.

    The Law Office of Phillip J. Griego
    95 South Market Street, Suite 520
    San Jose, CA 95113
    Tel. 408-293-6341
     
    Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.
     
    Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.
     
    Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

    , San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

  • Are the DOL Numbers Correct? Recent Study Questions Accuracy of Economic Impact on Home Care Industry

    A recent article written by Hoffman Miller Advertising on behalf of Private Care Association questions the validity of the economic impact analysis published by the Department of Labor regarding the proposed modification of FLSA regulations on the home care industry.  When the DOL initially proposed amending FLSA regulations eliminating the companion exemption for workers employed by third-party employers, the government produced an economic impact analysis indicating the revised regulations would have little effect.  I’m not an economist, but even I questioned the data and conclusions as contrary to common sense. Given the increased number of home care providers and the expected increased need for home care services, it is unlikely that requiring overtime premium for companions would have little impact.

    The home care industry including Private Care Associates “engaged a private Research Company, Navigant Economics, to conduct an independent study on the effects of these proposed changes.”  The report can be viewed at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2017109#

    According to the research company, “the deadweight losses from the proposal would far exceed the PRIA’s estimate, and that the costs of the proposal would likely exceed the benefits.”

    The proposed repeal Companion Care Exemption and the Live-in Exemption to the FLSA would likely create substantial disruptions in the market for home health care, increasing the costs of companion care and reducing its availability. The Department of Labor’s PRIA understates the costs of the rule in important ways, including minimizing or ignoring a variety of compliance costs, underestimating the elasticity of demand for labor, and assuming incorrectly that demand for companion care is completely inelastic. As a result, its finding that the costs of the proposed rule would be de minimis is both unsupported and incorrect. We conclude that the costs of the rule would be substantial, including reduced availability of companion care services, lower quality of care, and increased fiscal pressure on both state governments and the Federal government, and that net costs would almost certainly exceed the net benefits.

    As mentioned by Hoffman Miller Advertising:

    While the comment period for the proposed rule already closed on March 21, the home care industry continues to encourage individuals to express their concerns to their elected representatives in Congress and to the DOL’s Secretary of Labor, Hilda Solis.

    U.S. Department of Labor

    200 Constitution Ave., NW

    Washington, DC 20210

    (202) 693-6000

    Email talktosolis@dol.gov

    The Law Office of Phillip J. Griego
    95 South Market Street, Suite 520
    San Jose, CA 95113
    Tel. 408-293-6341
     
    Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.
     
    Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.
     
    Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.