ADR Law

U.S. Supreme Court Justices Skeptical of EPA in Sackett v. EPA

2012-01-18T17:54:00.002-05:00

I recently blogged about a case before the Supreme Court testing whether parties can seek pre-enforcement judicial review of EPA orders (ACOs) without being subject to fines of up to $70,000 per day for failure to comply with the order.

My earlier blog described the essential details of the case, in which, to recap briefly, the EPA ACO prohibited the Sacketts, owners of a property near a lake, from filling in a portion of the property because EPA claimed it was a wetland.

Supreme Court commentators seem to agree that the oral arguments do not bode well for the government. Lyle Denniston wrote in SCOTUSblog, “With a federal government lawyer conceding almost every criticism leveled at the way the U.S. Environmental Protection Agency compels landowners to avoid polluting the nation’s waterways, the Supreme Court on Monday seemed well on its way toward finding some way to curb that agency’s enforcement powers.”

The Legal Planet blog stated: “What distinguishes this case from a routine examination of dry administrative law concepts is the overt hostility towards EPA and its regulatory efforts that many of the Justices displayed in their questions from the bench.”

Here is an example of from the transcript of the oral argument:

Justice Breyer: If we agree then, look, for 75 years the courts have interpreted statutes with an eye towards permitting judicial review, not the opposite. And yet -- so here you are saying that this statute that says nothing about it precludes review, and then the second thing you say is that this isn't final. So I read the order. It looks like about as final a thing as I have ever seen. So tell me why I am wrong on those two points. (A copy of the argument transcript can be found here)

The interesting question is likely to be how the Sacketts win, not whether, and the reasoning and basis for the decision is the important issue, not who wins and who loses.

Will the opinion be a narrow ruling, limited to enforcement of the Clean Water Act? Will it include other federal environmental statutes enforced by EPA by Administrative Orders?

And, most significantly, will the Court base its decision on constitutional grounds, as suggested in several friends of the Court briefs, and hold that the lack of judicial review of ACOs is an unconstitutional deprivation of due process?

Supreme Court Case on EPA’s Power to Order Environmental Compliance

2011-12-06T16:07:00.003-05:00

On January 9, 2012, the Supreme Court will hear oral argument on a case that may establish the extent, both under law and the Constitution, of the power of the EPA to order compliance with certain environmental laws – and seek judicial enforcement of those orders.

The two questions presented to the Court are 1) whether parties can seek pre-enforcement review of EPA administrative compliance orders under the Administrative Procedure Act, 5 U.S.C. §704 (“APA”); and 2) whether, if not, the inability to seek pre-enforcement review is a violation of the Due Process Clause of the Constitution.

The Court granted certiorari to hear an appeal of Sackett v. U.S. Environmental Protection Agency (Docket No. 10-1062) http://www.supremecourt.gov/Search.aspx?FileName=/docketfiles/10-1062.htm. This case comes up from the Ninth Circuit Court of Appeals, the Circuit with the most cases, by far, recently reviewed and overturned by the Supreme Court. In the last term, the Supreme Court reversed the Ninth Circuit in 19 out of 26 cases, an extremely high 79% reversal rate.

The facts of the case are about the actions Chantell and Michael Sackett took on their own 0.63-acre -vacant lot near Priest Lake in Idaho. The Sacketts filled in a portion of the lot with dirt and rock to build a house. EPA issued a compliance order alleging that the filled in area of the property is a wetland subject to regulation under the Clean Water Act, 33 U.S.C. §1251 et seq. (“CWA”), and that the Sacketts were unlawfully discharging pollutants into waters of the United States without a permit, in violation of 33 U.S.C. § 1311(a).

The Sacketts, without first seeking a CWA Section 404 permit, a jurisdictional determination or informal guidance from the Army Corps of Engineers or EPA, sought a hearing with EPA to challenge the finding that their property was subject to the CWA; EPA refused to grant the hearing, so the Sacketts filed suit in the US District Court seeking an injunction and declaration from the Court that EPA did not have jurisdiction, alleging that EPA’s compliance order was (1) arbitrary and capricious under the APA; (2) issued without a hearing in violation of the Sackett’s due process rights under the Constitution; and (3) issued on an unconstitutionally vague standard of “any information available.”

The District Court granted EPA’s motion to dismiss based on lack of subject matter jurisdiction, agreeing with the government that the CWA precludes judicial review of EPA compliance orders before EPA initiates an enforcement action in federal court. The Ninth Circuit agreed (622 F.3d 1139), stating that “We join our sister circuits and hold that the Clean Water Act precludes pre-enforcement judicial review of administrative compliance orders, and that such preclusion does not violate due process.” Id. at 1141.

This case has become a big deal for the environmental law cognoscenti. Amicus briefs in support of the Sacketts were filed by many, including the American Farm Bureau Federation, the U.S. Chamber of Commerce, the Competitive Enterprise Institute, the Mountain States Legal Foundation and the American Petroleum Institute, among many others.

Interestingly, the APA Watch, a nonprofit organization which describes itself as devoting “significant effort to combating federal agencies’ exceeding their authority under the Administrative Procedure Act…” filed a brief supporting neither party but expressing its concerns about issues not raised by the parties to this litigation under the APA to protect future litigants.

While not raised by the Sackett’s in their case, APA Watch points out that parties injured by non-final agency action have an independent right of redress under the APA §10(c), even when that action is not made reviewable by the underlying statute.

This case presents equities on both sides of the question. On the one hand, agencies charged with protecting the environment must have the statutory and judicial tools necessary to enforce against parties who take action – even on their own properties – that violate the environmental laws that were enacted to protect all of us; on the other hand, the Constitution sets forth due process principles intended to restrain unfair and inequitable governmental actions.
I look forward to seeing how the Supreme Court balances these equities; my guess is that whatever the decision, the Court will recognize and protect the APA interests articulated by APA Watch.

This is the Kind of Person I’d Hire as My Attorney

2011-11-21T16:27:00.001-05:00

Like many of you, I read a lot of blogs, some of which are even worth reading and fewer of which might even be true.

I recently read a blog that says it all about our modern life, the practice of law, being a parent and human values. Think about this when you are sweating your practice:

“Hey, Dad, you’ve got a pretty good job.” “Why’s that, Jere?” “Because it’s air-conditioned, and you can get a root beer whenever you want one.” [Think about that the next time you're sitting in your office cursing a colleague, opposing counsel, a client or a judge: "It's air-conditioned, and I can get a root beer whenever I want one."]

The blog is written by Mark Herrmann, Vice President and Chief Counsel for Litigation at Aon, a risk management, insurance and reinsurance brokerage and human capital and management consulting firm. Herrmann is the author of The Curmudgeon’s Guide to Practicing Law which, while I haven’t read yet, intend on doing so simply because of the title.

Herrmann’s blog, Inside Straight: Things My Son Said is funny and oh so very true.

I commend it to your attention. Read it here.

Graphic Video Showing Changes in the Surface Temperature of the Earth

2011-11-11T15:30:00.002-05:00

Richard Muller, professor of physics, McArthur Prize winner and principal investigator for the Berkeley Earth Surface Temperature (BEST) project, took a hard look at the actual data regarding changes in surface temperatures on the Earth over the past two centuries.

The BEST project was funded in part by the Charles G. Koch Charitable Foundation, one of the Koch brother entities dedicated to “the advancement of economic freedom” and a conservative climate change skeptic.

Climate change skeptics loved Muller – until he reported on the data.

Muller’s research group has put together a video that shows the changes. Wow.

The video makes the data come alive. It is impossible to miss the huge temperature changes. Look at especially the post-1950 changes.

Watch the whole video; it only takes a couple of minutes. Here's the link.

For more about BEST, see here.

Is Delaware’s Court Arbitration System for Business Disputes Unconstitutional?

2011-11-07T14:17:00.006-05:00

Delaware, the state with laws designed for businesses, has a statute authorizing the Delaware Chancery Court judges – sitting Court judges – to conduct confidential arbitrations of business disputes.

The law, Arbitration Proceedings for Business Disputes provides that the “Court of Chancery shall have the power to arbitrate business disputes when the parties request a member of the Court of Chancery, or such other person as may be authorized under rules of the Court, to arbitrate a dispute.” (77 Del. Laws, c. 8 §1).

The Delaware Supreme Court has adopted rules governing the arbitration program. The rules provide that arbitrators are sitting Court judges or masters. Further, and the subject of controversy and now litigation, the Rules provide that all proceedings of the arbitration are confidential unless the proceedings are appealed.

There are at least two things wrong with this picture. First, why are these Court proceedings (even if labeled arbitration) confidential? Is this not private law? And second, why is an arbitration award appealable? Is this not evidence that the so-called arbitration proceeding is simply litigation in the Chancery Court – before Chancery Court judges and using the Court’s case management system by another name – to allow parties to cloak their dispute with the one of the benefits of private arbitration – confidentiality?

Recently the Delaware Coalition for Open Government as sued the five judges on the Delaware Chancery Court for operating a private arbitration system. The only difference between civil litigation - which is public - and the arbitration is that the "procedures and rulings occur behind closed doors instead of in open court," according to the complaint filed in Delaware's federal district court. The Coalition argues that the arbitration proceedings violate the right of access to judicial proceedings and records in civil and criminal cases guaranteed by 1st Amendment to the Constitution as applied to the states in the 14th Amendment.

The case is Delaware Coalition for Open Government Inc v The Honorable Leo E Strine Jr et al, U.S. District Court, District of Delaware, No. 11-1015.

This case is more fully discussed in the always interesting ADR Prof Blog by Professor Art Hinshaw. Professor Hindshaw points out that many courts manage arbitration programs; most typically occur in open court without confidentiality protection and the loser can appeal or ask the trial court for a trial de-novo.

"If the parties really want to go to arbitration, why not go to the private market?"

Challenges to Environmental Permits in Maryland

2011-10-31T17:45:00.001-04:00

In April, I wrote of a change in the Maryland Code that altered the Maryland environmental permitting appeals procedure to give standing to not only those with a direct financial interest in the results of the permit, but to anyone who participated in a public participation process conducted by the Maryland Department of the Environment (MDE).

Well, the Maryland Court of Appeals, in a September 2011 decision in Patuxent Riverkeeper v. Maryland Department of the Environment, et al. has given effect to this amendment by holding that environmental advocacy groups such as the Plaintiff, Patuxent Riverkeeper, can challenge actions by the MDE to grant permits because “its member…had alleged sufficient harm to his aesthetic, recreational and economic interests in connection with the issuance of the non-tidal wetlands permit in issue.” Id. at p. 3

As I previously suggested, and especially now that the Court has upheld this change in the law regarding standing to challenge permits, applicants should consider how to work with local citizens and other interested groups before requesting a permit. Working things out with affected stakeholders can be more cost-effective than litigation and produce better results.

"The Better Angels of Our Nature" Review

2011-10-12T17:00:00.004-04:00

The lead review in the Sunday Book Review section of the New York Times this past week is of a book by Steven Pinker titled “The Better Angels of Our Nature: Why Violence Has Declined." The review was written by Peter Singer.

I have not yet read the book – although I did purchase and download it based on this review – and will read it soon.

The basic thesis of the book is simple. Our era – the time in which we now live – is less violent and cruel and more peaceful than any other period in human history. Despite World Wars I and II, Vietnam, the Iran/Iraq war, the Holocaust, the Rwandan genocide and all of the other atrocities of the twentieth and early twenty-first centuries. Really?

Mr. Pinker is a professor of psychology at Harvard and author of “The Language Instinct ." Mr. Singer makes a compelling argument that professor Pinker’s new book is substantial, worthwhile and interesting.

To sum up this observation, Mr. Singer states, quite simply, ””The Better Angels of Our Nature” is a supremely important book,” adding that the book addresses many of the age-old questions about human nature: Are human beings essentially good or bad? Has the past century witnessed moral progress or a moral collapse? Do we have grounds for being optimistic about the future?

Obviously Mr. Pinker has to convince a skeptical audience. According to the review he spends a substantial portion of the book successfully documenting his claim.

What do you think? Do we live in a more civilized and more just and peaceful world?

Mediator Testimony

2011-09-22T13:32:00.001-04:00

A recent New Jersey case is yet another example of why parties need to be careful when they pick a mediator.

And why there should be higher standards of mediator training – perhaps especially for judges.

Information about this case comes from the always interesting Business Conflict Management Blog by Peter Phillips in New Jersey.

According to Phillips’ blog, the New Jersey Superior Court Appellate Division recently approved for publication a decision in which a party to a mediation successfully sought to enforce a settlement agreement that was not fully reduced to writing. For purposes of this blog, the issue of whether the agreement was evidenced in writing is not particularly relevant.

What is relevant is that the plaintiff seeking enforcement of an alleged agreement, “supported the motion with a certification of their attorney and the mediator,” who also was deposed and testified at the hearing. A retired (and unnamed) New Jersey Superior Court Judge was the mediator.

As Phillips blogs, “(t)he trial judge on the motion found his former colleague’s testimony “highly credible.” Imagine that!”

The mediator submitted an affidavit and testified in support of a party’s motion. A mediator. Even though, as the court pointed out that both statute and rule, state that a mediator “may not disclose any mediation communication to anyone other than a participant in the mediation session,” and referred to that bar as “an evidentiary privilege.” The court justified the decision to allow the mediator’s affidavit and testimony because the privilege can be waived by the parties.

Even though the plaintiff unilaterally breached the confidentiality rule and statute, the court allowed (and relied on) the mediator’s evidence, perhaps because the defendants deposed the mediator. The trial judge ruled that confidentiality had been waived. But we don’t have any information about why or how.

Phillips succinctly sets out the concerns about this case:

What was the movant doing attaching a certification of the mediator to their opening papers, in open breach of statutory confidentiality obligations? What on earth was the former judge-cum-mediator doing executing a certification for that purpose? What was the trial judge doing putting himself in a position to rule on his former colleague’s credibility? Or the admissibility of his testimony as set forth in his certification? Was the opponent to the motion required not to depose the prospective witness and then argue no waiver?

The judge/mediator by allowing a party unilaterally to attach his certification and opinion about whether there was agreement in this case appears to have breached two of the cardinal rules of ethical mediation to not breach the confidentiality of the mediation and to not breach the duty of neutrality.

As Phillips writes, this case is a reminder a Mediation 101 lesson: Never Never Never Violate Mediation Confidentiality.

Environmental Liability Insurance and Voluntary Cleanups

2011-08-16T17:01:00.000-04:00

Pollution Legal Liability (PLL) policies offer pollution liability protection to industrial, commercial and agricultural property owners for gradual, as well as sudden and accidental, first-party and third-party environmental liabilities. They have become an increasingly common method for property owners of potentially contaminated properties to protect themselves from unexpected liability for the costs of environmental site cleanup as well as against third-party claims for property damage and personal injury.

As is the case in nearly all insurance policies, the details of the specific language and scope of coverage (and exclusions from coverage) matter a lot. For example, in a recent Connecticut Federal District Court case, the plaintiff bought property contaminated with solid waste with the intent to sell and purchased a PLL. The plaintiff agreed to remediate the site and entered into a state-approved voluntary cleanup plan (VCP). Unfortunately (and not uncommonly), the site was more contaminated than originally thought. The plaintiff then sought reimbursement under the insurance policy. When the insurance company denied coverage, the plaintiff sued. The Court decided that voluntary cleanups were not covered by the specific policy at issue in the case and held that since the cleanup was not "required," there was no "claim" under the policy. Fischer and Dab Three LLC v. American Specialty Lines Ins. Co., 2010 WL 2573909 (D. Conn.)

This outcome was entirely dependent on the language of the policy. The policy at issue did not have a discovery trigger (i.e., coverage is “triggered” by the discovery of contamination, not by the assertion of an adverse claim) in the relevant coverage section for cleanup costs based on pre-existing conditions. Therefore, the policy was only triggered by a “claim” for "cleanup costs" as required by "Environmental Law."

The lesson of this case: pay close attention to the specific language of the policy and what triggers coverage. It makes sense to purchase a policy that has a discovery trigger, not just a claim trigger. While coverage under PLL policies can be triggered by the insured's discovery of contamination, policies often limit the scope of cleanup cost coverage to the extent cleanup is "required by Environmental Law." Be sure that the definition of "Environmental Law" includes voluntary cleanup and risk-based corrective action programs.

In this case, the insured plaintiff was just removing debris, so there was no "claim" for "cleanup costs" under "Environmental Law." There were no measured levels of contamination. As the court pointed out, the definition of "claim" is closely linked to the definition of "cleanup" which is closely linked with "environmental laws."

Frontiers of Mediator Confidentiality: Can You Reveal That an Offer Was Made?

2011-08-05T17:08:00.002-04:00

Here is a link to an interesting discussion about the Frontiers of Mediator Confidentiality posted by Peter Phillips in his always interesting Business Conflict Blog.

As Phillips points out, nothing is as simple as it looks. He sets out an interesting hypothetical about mediator confidentiality and posits three questions.

Visit the blog and answer the three questions. My answers are yes to question 1 and no to question 3 (the easy questions) and in response to question 2 the mediator can send a copy of the letter faxed to plaintiff’s counsel. Plaintiff has a right to see that letter.

Read the hypothetical and answer the questions yourself.

Draft Rules Governing ADR Services in the Maryland Courts

2011-07-22T15:20:00.002-04:00

Last week I posted a notice that the Maryland Standing Committee on Rules of Practice had published a draft rewrite of Rule 17 and Rule 9 regarding the provision of ADR services to disputants in the Maryland Courts. A link to both a clean copy of the proposed rules and a red-lined copy of that draft is here.

The ADR Section of the Maryland State Bar Association has submitted comments to the draft Rules.

As a member of the Section Council and chair of the ad hoc committee established to draft these comments for submission by ADR Section Council chair Craig Distelhorst, I have been significantly involved in this issue as I believe that this is an important issue not only for disputants referred to an ADR procedure in the courts, but to all who provide mediation in Maryland. A copy of those comments follows:

I submit this letter as Chair of the ADR Section Council of the Maryland State Bar Association on behalf of the Council and the 400+ members of the Section, all of whom are dedicated to the provision of quality ADR services to litigants in the Maryland courts.

We are grateful to the members of the ADR Rules Subcommittee for their efforts to propose changes to Maryland Rules 17 and 9. We appreciate that the Subcommittee has addressed a concern previously expressed by the Council regarding possible ambiguities in the current Rule as to what cases the confidentiality provisions apply. We commend the Subcommittee for these changes which address a major concern of the Council by drafting Rules that are clear and unambiguous in this regard.

We believe that there are a number of serious questions that need some additional study, input and discussion by the Maryland community of attorneys, ADR practitioners, and ADR practice organizations if mediation, as one of the available ADR procedures, is to be an effective means for dispute resolution in Maryland. We offer the following suggestions and comments, in numerical order for your ease in review, in the hope that they will assist the Subcommittee to ensure that all, including the courts, litigants and their attorneys, and those in the ADR community understand and apply the Rules as intended.

Rules 17-102(b) and 17-202(b)(2) – ADR Organizations and Indirect Designation

The Council does not understand the problem the draft Rule is designed to address when it establishes new provisions that authorize the courts to designate an “ADR organization” who would then select the specific practitioner for the parties. On the contrary, we see problems if this new procedure results in an increase in the number of civil cases referred to various community mediation centers. There is already a considerable amount of consternation about community mediation centers, largely funded by taxpayer dollars and other public funds, providing free services to parties who could otherwise afford to pay. As written, this proposed rule would only exacerbate that concern. ADR services should not be provided free-of-charge to parties who have the ability and means to pay for them.

Analogous to publicly supported pro bono legal services in appropriate civil and criminal legal matters, free mediation should be available for those litigants in the Circuit Courts who cannot afford to pay. The too-frequent delivery of free services to parties in the Circuit Courts is unnecessary and could have unintended consequences on the provision of mediation services throughout Maryland. Additionally, it poses the real risk of significantly devaluing mediation everywhere in Maryland, not just in the Circuit Courts. We are concerned that the draft rule changes enabling the courts to designate community mediation centers will only add to this problem.

Thus, we provide the following draft language for the Subcommittee’s consideration:

Rule 17-102

(b) ADR Organization

“ADR Organization” means an entity, designated by the court for purposes of a non-fee-for-service ADR, which selects individuals who possess the qualifications required by Rule 9-205 or the Rules in this Title to conduct ADR ordered by the court.

Rule 17-202

(b) Tentative Designation of ADR Practitioner

(1) Direct Designation

In an order referring an action or matter to ADR, the court may tentatively designate, from a list of approved ADR practitioners maintained by the court pursuant to Rule 17-206, an ADR practitioner to conduct ADR.

(2) Indirect Designation

Should one or more parties in a case referred to ADR submit an acceptable fee-waiver request, the court may modify its order of referral to require a non-fee-for-service ADR and tentatively delegate to an ADR organization from a list maintained by the court pursuant to Rule 17-206, the authority to select an ADR practitioner qualified under Rules 17-204 or 17-205, as applicable, to conduct ADR. An individual selected by the ADR organization pursuant to the court order shall be deemed to be a court-designated ADR practitioner.

Rule 17-102(f) Definition of Fee for Service

Rule 17-102(f) defines “fee-for-service” as meaning that a party “may or will (emphasis added) be charged by an individual designated by a court to conduct ADR under the Rules in this Title or by the ADR organization that selects the individual.” This definition is confusing as to the meaning and purpose. Is it intended to allow for fees to be waived for some parties? For some services but not others? Does the Committee intend to provide any guidelines about when or under what circumstances fees would or would not be assessed?

Rule 17-103. Role of the Mediator

The Council has learned that there is significant concern in the mediation community of ambiguity regarding the drafting of agreements by Mediators. Therefore the Council requests that the Rule and Committee Note acknowledge current practices and provide guidance on best practices in this regard and provide some clarity. Currently the proposed Committee Note to Rule 17-103 acknowledges that “(m)ediators often will record points of agreement expressed by the parties to provide documentation of the results of the mediation,” however this fairly clear language becomes less clear when in the second sentence the Note states that “(b)ecause a mediator who is not a Maryland lawyer is not authorized to practice law in Maryland, and a mediator who is a Maryland lawyer ordinarily would not be authorized to provide legal advice or services to the parties in conflict, a mediator should not be drafting agreements regarding matters in litigation for the parties to sign."

Without more, these two provisions fail to meaningfully distinguish between “drafting” and “recording points expressed.” This confusion is heightened when Mediators in various jurisdictions are given sample parenting plan templates to modify and rewrite agreements with the parties.  

Toward resolving the perceived confusion, we note that the American Bar Association Section of Dispute Resolution has addressed this issue in a 2002 resolution in which the Dispute Resolution Section has expressly concluded that drafting a “memorandum of understanding or settlement agreement by a mediator, incorporating the terms of settlement specified by the parties, does not constitute the practice of law.” This view was re-enforced by their 2010 opinion which sets forth the circumstances, i.e., "best practices" for mediator drafting. Rather than summarize these documents we have provided copies with this letter.

To ensure that mediators are engaging in appropriate and ethical conduct, the Council requests for the Rules to provide clarity when mediators are at risk of crossing the line into practicing law without a license or violating the Maryland Lawyers' Rules of Professional Conduct. With that objective in mind, the Council suggests that the Committee Note be rewritten as follows:

Mediators often will prepare a document entitled points of agreement reached by the parties. Use and completion of forms provided by the Court with language adopted by the parties is consistent with this rule. A mediator who is not a Maryland lawyer is not authorized to practice law in Maryland and should not be preparing documents outside of the mediation session and without party input. A mediator who is a Maryland lawyer is not authorized to provide legal advice or services to both parties to a conflict unless the conflict of interest is knowingly waived by the parties pursuant to the Maryland Lawyers' Rules of Professional Conduct. Any document prepared by the mediator to be signed by the parties should clearly state in bold above the signature line that the parties should obtain counsel before signing the document. The mediator should advise the parties of the bold statements above the signature lines. Language in a document which is fully discussed and adopted by the parties as their own is consistent with this rule.  

Beyond the drafting quagmire, Rule 17-103 seems to ignore and raise doubts about common Mediator practices. The Rule appears to prohibit mediators from offering their opinions, engaging in other ADR processes and recommending the terms of an agreement. There is a long running debate about whether mediators are purely facilitative or can ever be analytical in style. The use of the analytical mediation style is successfully employed in this State and many other States and responds to those situations when counsel for the parties and the parties themselves want to hear a Mediator’s analysis of certain positions. The Council requests that the Rule acknowledge this practice to provide further clarity and guidance to the ADR community.   

Rule 17-202 – Settlement Conferences

When read in its entirety, Rule 17-202 appears to favor settlement conferences as the preferred and first-in-time ADR procedure. In particular, the first and second sentences of draft Rule 17-202(a) imply that a free settlement conference should be the first method of dispute resolution utilized, with the other ADR methods, including mediation, accomplished subsequently, if at all. Since we do not believe that is the intent of the Subcommittee, it would be helpful if some additional language were added to this subparagraph that clarified when settlement conferences should be generally held. To that end, we propose the following language for your consideration:

17-202 (a) Participation Requirements

The court may refer an action or matter to one fee-for-service ADR process in accordance with sections (b), (c), and (d) of this Rule, but participation in that ADR may not be required if a timely objection to participation is filed. The court may also require the parties and their attorneys to participate in one non-fee-for-service settlement conference, which should generally be conducted, if at all, subsequent to an earlier ADR process. Any objection to participation in the ADR process selected by the court other than a non-fee-for-service settlement conference or to the ADR practitioner tentatively designated by the court shall be made in accordance with section (e) of this Rule.

Rule 17-202 – Fees for Service

Rule 17-202(d) provides that a circuit court’s order of referral “shall specify the hourly rate that the ADR practitioner may charge for ADR services in the action, which may not exceed the maximum stated in the applicable schedule.”^{^[1]} We understand that a maximum rate would apply for the work accomplished by a mediator who was tentatively designated by the court, but we are concerned that the language of Rule 17-202(d) also could be interpreted as setting a maximum rate that would apply even if the parties select their own mediator.

Rule 17-202(e)(3) adds to this confusion. This draft subsection authorizes the courts to revoke or modify their orders of referrals if a party timely objects, including instances in which a party objects and identifies a different ADR practitioner to conduct the mediation. Thus, if the parties select their own mediator, the court could either revoke its order (thereby releasing the parties from any obligation to go forward with it) or modify it with the name of the new mediator. If it’s the latter, is that new mediator also bound by the maximum hourly rate set forth in the order of referral? If so, the effect would be to allow parties to select their own private mediator, request that a court so designate that person in its modified (or new) order, and impose the maximum court rate for the service. The Council believes that this type of situation would be impractical and damage private mediation practice throughout Maryland. We do not believe that is the intent of the Subcommittee in drafting this Rule.

We believe that there is a simple and very effective approach that would address this potential problem directly. Specifically, we request that the well-drafted language currently proposed for the selection of mediators for custody and visitation disputes under Rule 9-205(d)(5) also be used in Rule 17-202. Draft Rule 9-205(d)(5) identifies the procedures parties may use to substitute someone else in place of the court-designated mediator, including a sample Request to Substitute Mediator, and it makes clear that a mediator selected by stipulation of the parties is not subject to the maximum fee schedule.

The Council does not believe the fee rules should be different for custody/visitation mediation and other types of civil mediation. Rather, we believe that there is a great benefit to the courts, the bar, and the public if the fees language is consistent between the two mediation rules.^{^[2]} Thus, we strongly urge the Subcommittee to amend Rule 17-202 so that it mirrors Rule 9-205(d)(5) (or use the same language verbatim)

Rule 17-202 -- Alternatives A and B

In response to the Subcommittee’s request for comments about Alternative A and Alternative B, the Council believes Alternative A, of the two choices, is by far the better option for disputants, their attorneys and ADR professionals. Alternative A mandates that parties participate in one non-fee-for-service settlement conference. Alternative B appears to require the parties to participate in a non-fee-for-service settlement conference and a non-fee for service mediation. While these options are described as free, they are not free – the parties will have to spend the time, money and in cases of represented parties, attorney fees – to participate in two such proceedings. The Council questions the value to anyone of such an approach. Further, it would be useful to have a better understanding about the reasons for contemplating a non-fee-for-service settlement conference as provided in Rule 17-202(a) Alternatives A and B.

Rule 17-204(a) – Qualifications of Court-Designated Mediators

The Council supports policies that give the courts discretion to consider mediator subject matter knowledge and or experience with the type of case when referring cases to mediation. This would allow court mediation programs to emphasize the knowledge, training and experience of mediators when referring civil litigation cases to mediation. Rule 17-204(b) – (e) already provides that in certain types of case mediators should have additional knowledge and experience. This would explicitly allow courts to consider such additional experience in other types of cases where appropriate.

Many members of the Council also question the basis of and reasons for eliminating the requirement of a bachelor’s degree from an accredited college or university as one of the basic qualifications, especially given that the current Rule provides that this requirement can be waived by the courts.

It is not too late to submit comments about the Rule changes, if not to the Standing Committee, then certainly to the Maryland Court of Appeals which will hold a public hearing before the final Rules are approved. If you are interested in participating in this debate - even if you do not practice in Maryland - please feel free to contact me or submit comments below.

[1] “ADR Practitioner” is defined earlier in the draft Rules as an “individual who conducts an ADR under the Rules in this Title.” Rule 17-102(c).

[2] We also note that our proposed change would make Rule 17 more consistent with the proposed Rule 9-205.2 currently before the Court of Appeals for review and adoption. Rule 9-205.2 concerns the appointment of Parent Coordinators and, similar to Rule 9-205(d)(5), makes clear that the court’s maximum fee schedule does not apply to parent coordinators selected by the parties, even if those selections are entered by the courts in a consent order.

Draft Rules Governing ADR Services in the Maryland Courts

2011-07-22T14:42:00.003-04:00

The ADR Section of the Maryland State Bar Association has submitted comments to the draft Rules.

Rules 17-102(b) and 17-202(b)(2) – ADR Organizations and Indirect Designation

Thus, we provide the following draft language for the Subcommittee’s consideration:

Rule 17-102

(b) ADR Organization

Rule 17-202

(b) Tentative Designation of ADR Practitioner

(1) Direct Designation

(2) Indirect Designation

Rule 17-102(f) Definition of Fee for Service

Rule 17-103. Role of the Mediator

Rule 17-202 – Settlement Conferences

17-202 (a) Participation Requirements

Rule 17-202 – Fees for Service

Rule 17-202 -- Alternatives A and B

Rule 17-204(a) – Qualifications of Court-Designated Mediators

[1] “ADR Practitioner” is defined earlier in the draft Rules as an “individual who conducts an ADR under the Rules in this Title.” Rule 17-102(c).

New Rules for Maryland Court ADR Programs

2011-07-13T16:03:00.001-04:00

When the courts establish alternative dispute resolution programs (ADR), one of the most important tasks is to write clear, unambiguous and thorough rules. In Maryland that task is the province of the Standing Committee on Rules of Practice and Procedure of the Maryland Courts (the Maryland Rules Committee). The Maryland Rules Committee has recently undertaken a complete review and rewrite of Rule 17 governing the provision of ADR services in the Maryland Court system.

On June 14, 2011 the Maryland Rules Committee published a draft of a new Rule 17. A link to both a clean copy of the proposed Rules and a red-lined copy (showing changes from the current Rule) of that draft is here.

Many ADR practitioners and attorneys who use ADR services in the Maryland judiciary have serious concerns about the approach the Rules Committee has taken. To address those concerns and to provide a means to express their concerns, the ADR Section Council of the Maryland State Bar Association (MSBA) has established an ad hoc committee to study the rules and to make recommendations to the Council regarding submitting public comments to the Rules Committee.

The Rules Committee has established July 22, 2011 as the deadline for the date written comments must be received by the Rules Committee. This deadline, of less than six weeks, is an extremely short time within which to allow interested parties to submit comments.

Some of the issues the draft Rules cover and the ADR Section is considering submitting comments include:

o Whether ADR Organizations should be designated to pick mediators and the selection process of court-referred ADR providers;

o Whether and the extent to which court mediators can draft settlement agreements;

o Whether Courts should require parties to participate in one or more non-fee-for-service ADR process;

o Fees paid to ADR service providers;

o Quality assurance over the process of mediation;

o Whether and under what circumstances ADR providers can draft settlement agreements; and

o Process confidentiality.

If you have concerns or comments about this draft of Rule 17 please feel free submit your comments here or send them directly to Honorable Alan M. Wilner, Chair Standing Committee on Rules of Practice and Procedure of the Maryland Courts, 2011 – D Commerce Park Drive, Annapolis, MD 21401.

John C. Cruden Named President of Environmental Law Institute

2011-06-24T17:02:00.001-04:00

The Environmental Law Institute Board of Directors recently announced that they have selected John Cruden as President, one of the most respected environmental lawyers in the country. Until his selection by the ELI, John was Deputy Assistant Attorney General for the Environment and Natural Resources Division.

An effective advocate, legal scholar and consensus-builder, John Cruden is the perfect choice to lead the EIL.

In the ELI press release announcing his appointment, Cruden is quoted as saying:

“The nation and the world are at an important crossroads,” said Cruden. “For 40 years, the U.S. has been among the world leaders in developing a legal framework to control pollution and manage our natural resources. Republican and Democratic presidents passed historic laws with broad bi-partisan support from Congress that benefit our nation, our people and our economy. That legacy—the essential framework of an efficient system of governance and level playing field grounded in the rule of law, sound science and public participation—is in jeopardy.

While it is a lot easier to develop consensus when you are holding the stick as the enforcer, John is certain to be an effective leader and consensus builder at the ELI. Congratulations to the ELI for the wisdom to select John and best wishes to John as he moves on to the next phase in his distinguished career.

For more information about John Cruden, please click here. For a video of John discussing his new role as ELI President, click here.

CERCLA Liability in Real Estate Transactional Documents

2011-06-20T16:19:00.004-04:00

Jose R. Allen has recently posted a blog about CERCLA liability in real estate transactions for the American College of Environmental Lawyers . Transactional lawyers are now very aware of the need to address environmental liability issues in the connection with the purchase and sale of commercial and industrial properties.

I’ve mentioned the American College of Environmental Lawyers website before. Allen blogs about a recent federal district court decision, Stimson Lumber Co. v. Int'l Paper Co.,CV 10-79-M-DWM-JCL (D. Mont. 2011), that “illustrates the importance of not only including provisions in purchase and sale agreements for indemnity as to pre-closing conditions, but ensuring that such provisions unambiguously reflect the parties’ intentions regarding CERCLA statutory liability”.

The Stimson Lumber court held that the purchaser of industrial property could sue the seller for CERCLA costs “even though the period of seller's contractual indemnity for environmental claims had expired under the terms of the sale contract.”

All transactional lawyers drafting indemnification provisions allocating liability for hazardous waste contamination should pay close attention to the lessons from this case. The Stimson Lumber decision tells us that words matter and environmental liability and indemnification provisions in real estate contract must be, as Allen writes: “either very broad and quite absolute in the allocation of future liabilities or very specific and complete in reflecting sometimes subtle distinctions between indemnity for and assumption of liability.”

The only way to effectively protect clients in these cases is to first think through and then draft very clearly and carefully.

Let's Not Make a Deal: An Empirical Study of Decision Making in Unsuccessful Settlement Negotiations

2011-06-10T15:45:00.004-04:00

Do lawyers make reasonable judgments regarding settlement of cases? Many experienced mediators suggest they do not. Plaintiffs can overvalue their cases and defendants often fail to see the risks.

But is there evidence that this is true? Do lawyers and their clients really overvalue their cases and reject settlement offers that are better than awards in the subsequent litigation?

Randall L. Kiser of DecisionSet, Martin A. Asher, Director, Research and Scholars Programs, Wharton Undergraduate Division and Adjunct Professor of Finance at The Wharton School, University of Pennsylvania and Blakeley B. McShane, a graduate student in the Department of Statistics, The Wharton School, University of Pennsylvania analyzed 2,054 contested litigation cases in which the plaintiffs and defendants engaged in settlement negotiations, decided to reject the adverse party's settlement proposal, and proceeded to arbitration or trial.

The study defined "decision errors" as either a plaintiff or a defendant rejecting the other side's settlement offer, going to trial, and finding that the result at trial is financially the same as or worse than the rejected settlement offer—the "oops" phenomenon.

According to this quantitative evaluation of errors made by attorneys and their clients about whether to accept settlement offers or proceed to litigation, the answer is clearly yes.

The parties' settlement positions were compared with the verdict. The study demonstrated that non-settling parties had a high incidence of decision-making errors by both plaintiffs and defendants. As the authors write:

[T]he incidence of decision error for plaintiffs is higher than for defendants, but the cost of decision error is higher for defendants than for plaintiffs….Plaintiffs receiving an award less than or equal to the last offer made by the defendant in 61.2 percent of the cases and defendants committed decision error in 24.3 percent of the cases. Table 1

This data, to me at least, is not particularly surprising. What is interesting is that attorney-mediators make fewer such decision errors.

The study identified attorneys with substantial settlement experience and dispute resolution skills and whether the attorney-mediator represented a plaintiff or defendant in a case tried to a verdict. Obviously these are cases in which the attorney-mediator was simply representing a client as counsel, not in cases where the attorney worked as a mediator.

The study concluded that: “The presence of an attorney-mediator generally was associated with a reduced decision error rate....Regardless of which party is represented by an attorney-mediator, the total amount of error is modestly lower.”

Kiser has written a book, Beyond Right and Wrong about legal decision-making based on this and other studies.

According to the publisher:

The book guides attorneys and clients through legal decision making. It analyzes 11,306 attorney-client decisions in actual cases and summarizes decades of research regarding judge, jury, litigant and attorney decision making. To explain why many litigation outcomes are suboptimal, the book describes the psychological and institutional factors that impede sound decision making. The roles of attorneys and clients in legal decision making and the legal malpractice and disciplinary consequences of ineffective legal representation also are discussed. To rapidly promote better financial outcomes in civil litigation and to assist attorneys and clients in becoming expert decision makers, the book presents more than 65 ideas, methods and systems for improving personal and group decision making.

Environmental Lawyers as Problem Solvers

2011-06-03T16:20:00.002-04:00

Charles Tisdale, a highly regarded environmental lawyer, mediator and arbitrator of Superfund cost allocation disputes has posted an insightful blog on the American College of Environmental Lawyers website about why environmental lawyers seem not to have split into litigation factions the way other fields of practice have (i.e., plaintiff personal injury attorneys don’t often represent defendants in PI cases, labor lawyers are generally either union or management and so on).

He suggests it is because we all breathe the same air. We all live in the same boat and we all have a stake in whether, in the end, the boat floats or not. As Chet writes:

We may argue over how clean is clean and what is the best available technology for control of pollution. However, our shared belief that earth must be preserved creates a basis for reasoned debate, which results in reduction of pollution and a successful resolution of conflict.

This, and perhaps other factors (see below), can lead to environmental lawyers focusing much more on negotiating solutions with the other side rather than on litigation as the first option. This is not to say, however, that environmental disputes are never litigated.

Environmental cases often involve complex technical issues, multiple parties and voluminous documents. This leads to very high litigation costs. And often the results of litigation are unsatisfying to many of the litigants; especially in Superfund cost allocation disputes where courts have a great deal of discretion. Often in such litigation no one wins.

These factors lead lawyers and their clients to negotiate. And that means that environmental lawyers especially must understand the other parties’ cases to reach a solution that works.

Successful environmental lawyers must establish reputations for honesty. It is difficult to successfully negotiate if you have been seen as hiding data or otherwise dissembling. This does not mean that environmental lawyers are better people or lawyers than other practitioners, just that, to succeed, when lawyers are forced to negotiate with adversaries they must be thoughtful about how to negotiate and must understand the consequences of their behavior – in the particular case and over time.

Another reason environmental lawyers tend to be problem solvers is they often must explain complex statutes to clients; develop productive relationships with regulators who are not going to disappear; and create successful solutions that avoid the need for litigation.

Mediation Confidentiality Contract Clauses

2011-05-26T11:23:00.003-04:00

I’ve blogged before about issues related to confidentiality in settlement negotiations and in mediation here, and here.

Recently the Maryland State Bar Association ADR Section sponsored a ‘Pizza and Professionalism’ panel discussion about “Confidentiality in Mediation...When YOU Get the Subpoena.” Moderated by Cecelia Paizs, with panelists John Bickerman, Roger Wolf and me, the panel discussed various aspects about mediation confidentiality – especially in Maryland which has no statute that provides clear protection for mediator confidentiality.

Because of the lack of a Maryland confidentiality statute, many practitioners provide for confidentiality by contract; this is good practice even if the state had such a statute.

During the panel discussion I promised to post some contract clauses related to confidentiality.

Here are some sample clauses. Not all of these clauses have come from the same agreement, but together I believe they cover many of the issues and concerns discussed during the panel discussion.

All information presented to the Mediator shall be deemed confidential and shall not be disclosed by the Mediator, his firm or by any party participating in this mediation process, except that evidence otherwise admissible shall not be rendered inadmissible because of its use in mediation. In the event the Parties do reach a settlement agreement through the mediation process, the terms of the settlement will be admissible in any court proceedings required to enforce it, unless the Parties agree otherwise.

The Parties, the Mediator and his firm agree that all proceedings in connection with the mediation process, including statements made and documents prepared by any Party, the Mediator, attorney or other participant for use in the mediation process are confidential and privileged and shall not be disclosed during or after the mediation process to any third party not present during the mediation process or in other judicial or administrative process, pending or subsequent to the mediation process or in any document, unless all Parties and the Mediator agree, and shall not be construed for any purpose as an admission against interest or for any other purpose outside of mediation process.

The Parties understand and agree that, as a result of participation by the City of xxx, laws governing the availability of public records will apply to any documents furnished by the City in the mediation process. The City agrees to assert that all offers, promises, or legal opinions (including proposed findings and conclusions) prepared by or provided to the City as part of the mediation process are exempt from disclosure as a public record as work-product prepared exclusively for adversarial administrative proceedings pursuant to (cite to relevant state statute) or such other exemptions as may apply. However, the Parties acknowledge that any factual documents, including but not limited to technical documents or data, historical records, and consultant reports shall be subject to disclosure by the City in accordance with applicable public records law. The mediation process shall be deemed as compromise negotiations for purposes of the Federal Rules of Evidence, with the exceptions as set out above under the confidentiality provisions.

The Parties agree that the Mediator and Press, Potter & Dozier, LLC are not necessary parties in any arbitral or judicial proceeding relating to this mediation process or to the subject matter of this dispute. The Mediator shall not voluntarily testify on behalf of any Party or participate as a consultant or expert in any federal or state judicial or administrative proceeding regarding this case or issue in or relevant to this case or the mediation and the Mediator shall provide notice to all Parties in the event the Mediator receives a request or subpoena to so consult or testify.

The Parties agree that the Mediator and Press, Potter & Dozier, LLC shall not be called as witnesses or experts in any pending or subsequent litigation or arbitration involving these parties and relating to any matter at issue in the mediation process. Moreover, the Mediator and Press, Potter & Dozier, LLC are disqualified as witnesses or experts in any pending or subsequent litigation or arbitration relating to this matter, or any underlying issue raised during the mediation process. The Parties agree not to subpoena the Mediator and Press, Potter & Dozier, LLC with regard to the Mediator’s notes, or any documents submitted to the Mediator. The Parties further agree that if the Mediator is subpoenaed by any party (whether or not a signatory to this Mediation Agreement) the Parties will pay for the Mediator’s time and his expenses to resist testifying and his time if he is compelled to testify.

Mediation sessions shall not be recorded verbatim, nor shall formal minutes of the proceedings be kept. Upon conclusion of the mediation process, whether or not an agreement has been reached, the Mediator shall, prior to or simultaneous with the final billing sent to the Parties, destroy all notes taken regarding the mediation and shall provide a certification that such destruction has occurred. Such a certification shall be a condition precedent to final payment by the Parties.

Each Party may share information from the mediation process with its insurers and its litigation consultants or experts to assist with the mediation and/or any existing or resulting litigation, and the United States may share information from the mediation process among its various departments, agencies, or instrumentalities for any appropriate purpose (including informing decision makers and making recommendations within the Department of Justice and its client agencies concerning settlement with respect to these matters or the case), providing that each insurer, consultant, expert or federal component is shown a copy of this Agreement, is informed of the confidential nature of the information disclosed in the mediation process, and agrees to comply with this Agreement. The United States also reserves the right to provide public notice of any final settlement achieved by, after, or as a result of the mediation process as may be required by law or established government policy, and to publish a press release concerning any final settlement achieved by or after the mediation process.

The confidentiality provisions of this Mediation Agreement shall remain in full force and effect without regard to whether any legal actions or issues arising out of the case are settled or concluded by final judgment or otherwise, and shall survive termination of the other provisions of this Mediation Agreement.

Another resource for those interested in confidentiality in mediation is the Uniform Mediation Act (the UMA) and the accompanying commentary promulgated by the National Conference of Commissioners on Uniform State Laws. It is a rich resource for those interested in statutes that protect mediation confidentiality.

I welcome any feedback, comments or suggestions about these clauses on the UMA.