The Supreme Court of Texas has held that participation in a non-binding mediation rendered a debtor a “settling person” under Chapter 33 of the Texas Civil Practice and Remedies Code for purposes of determining proportionate liability. In MCI Sales & Serv. v. Hinton, No. 09-0048, (Tex. December 17, 2010), the owner and operator of a motorcoach rental service, Central Texas, filed for Chapter 11 bankruptcy protection after an accident in which five passengers were killed and several others were injured. Central Texas maintained a $5 million liability policy, the proceeds of which were paid into a liability fund maintained by the bankruptcy court. The crash victims filed creditor claims against Central Texas in bankruptcy court and participated in a non-binding mediation intended to apportion the proceeds of the liability fund. During mediation, each claimant was assigned a percentage of the fund. These percentages were incorporated into a plan submitted to and approved by the bankruptcy court in October 2003. Under the “Apportionment Plan,” a claimant could accept the mediator’s percentage and immediately receive that portion of the liability fund. If the claimant chose not to accept the mediator’s allocation, the claimant participated in a “Litigation Plan.” Under this plan, the claimants tried their claims to a special judge agreed to by the participants, and their recovery under this plan was capped at 110% of the mediator’s allocation. Further, the parties could agree at any time to approve a full or partial distribution to any or all participants. Central Texas’s tort liability in excess of the liability fund was discharged upon approval of its reorganization plan the following year. In June 2003, the claimants filed a lawsuit against the manufacturer of the motorcoach, Motor Coach Industries Mexico, S.A., (MCI) alleging the manufacturer of the bus should have installed seatbelts and glazed the windows of the coach with a different material. After the trial court denied MCI’s motion to join Central Texas and refused to submit a question to the jury regarding proportionate liability, a jury awarded the claimants more than $17 million. Following the lawsuit against MCI, each claimant participated in the bankruptcy court Litigation Plan and appeared before a special judge. The special judge held that the bus driver’s negligence was the proximate cause of the claimants’ injuries and awarded all but one claimant 110% of the mediator’s award. The awards were prorated due to limited funds, however, and each claimant received a sum within 2% of that awarded by the mediator. The trial court next entered a judgment which adjusted the damage awards to account for funds each claimant received under the Litigation Plan. MCI appealed and an appellate court reversed and remanded the case, but rejected MCI’s preemption argument. MCI then petitioned the Supreme Court of Texas for review of its preemption argument and the claimants cross-petitioned for a “review of the proportionate responsibility issue.” MCI argued that the jury’s award was preempted by the Federal Motor Vehicle Safety Standards 205 and 208. Federal safety regulations governing at the time the motorcoach was manufactured allowed bus manufacturers to choose between several particular types of window glaze and were silent as to whether seatbelts were required. After a lengthy review of the regulations at issue, the Supreme Court of Texas held, Because we conclude that the jury’s verdict which is grounded in this state’s common law does not present any obstacle to the accomplishment of the federal regulatory scheme’s purpose, we hold that the federal safety standards at issue do not preempt state law. Next, the Supreme Court determined whether Central Texas was a “setting person” under Chapter 33 of the Texas Civil Practice and Remedies Code. At the time of the accident, “section 33.003 required a trier of fact to determine the percentage of responsibility for each claimant, each defendant, each settling person, and each responsible third party who had been properly joined.” If a defendant’s percentage of responsibility exceeded 50%, that defendant was jointly and severally responsible for all of the damages a claimant could recover. The Supreme Court held that Central Texas was a “settling person” under the statute “and the trial court should have submitted a question to the jury concerning Central Texas’s proportionate responsibility as such.” According to the Court, We also apply Chapter 33 of the Texas Civil Practice and Remedies Code to a plan adopted by a bankruptcy court to apportion a debtor’s insurance proceeds among a group of creditors who filed claims against the bankruptcy estate. The unique plan allowed the claimants to either accept a mediated percentage of the proceeds or to litigate their claims before a special judge. Even if the claimants chose the latter course, their recovery was capped at 110% of the mediator’s award, and the claimants could agree at any time to full or partial distributions to any or all of the claimants. We must decide if this plan renders the debtor—who purchased the insurance policy funding the plan and whose further liability was discharged in bankruptcy—a settling person under Chapter 33 for purposes of determining proportionate liability. We conclude that it does. Accordingly, we affirm the court of appeals’ judgment and remand to the trial court for further proceedings consistent with this opinion. The Supreme Court of Texas held that the jury’s verdict was not preempted because it was grounded in state common law and did not present any obstacle to the accomplishment of the federal regulatory scheme’s purpose. The Court further held that Central Texas was a “settling person” for purposes of determining proportionate liability under Chapter 33 of the Texas Civil Practice and Remedies Code and remanded the case. In his dissent, Chief Justice Jefferson’s stated, I would hold that the court of appeals erred in reversing the trial court’s refusal to submit Central Texas as a “settling person.” Because the Court’s holding regarding Chapter 33 neither complies with the statute (“at the time of submission”), nor properly construes the circumstances under which [claimant] pursued his claims within the bankruptcy proceedings, I respectfully […]

Disputing would like to thank Paul Lurie for alerting us to an interesting article published in Lexology on December 10th entitled IBA revises rules on the taking of evidence in international arbitration by Stephen Anway and George Von Mehren of the Cleveland, OH office of Squire, Sanders & Dempsey, LLP. Here is a summary: While the revised IBA Rules maintain important aspects of the 1999 version, they introduced several changes intended to update and modernize practice in international arbitration. Key changes include: Early consultation. Article 2.1 requires that the arbitral tribunal consult with the parties at the earliest appropriate time in the proceedings and invite them to consult with each other with a view to agreeing on an efficient, economical and fair process for the taking of evidence. Identifying key issues. Article 2.3 encourages the arbitral tribunal to identify to the parties, as soon as it considers it to be appropriate, any issues that it may regard as relevant to the case and material to its outcome and/or for which a preliminary determination may be appropriate. E-discovery. Article 3.3(a) permits a party requesting documents maintained in electronic form to identify specific files, search terms, individuals or other means of searching for such documents in an efficient and economical manner. E-production. Article 3.12(b) provides that documents a party maintains in electronic form shall be submitted or produced in the form most convenient or economical to it that is reasonably usable by the recipients. Confidentiality. Article 3.13 expands confidentiality protections in relation to produced documents, documents submitted into evidence and documents introduced by third parties. Scheduling production. Article 3.14 allows an arbitral tribunal, after consultation with the parties, to schedule document production at different phases of the arbitration (interim relief, jurisdiction, liability, quantum, etc.). Expert reports. Article 5(2) gives greater clarity concerning the contents of expert reports including the requirement to describe the instructions given to the expert and a statement of his or her independence. Oral testimony. Article 8(1) provides for witnesses to appear to give oral testimony only if their appearance has been requested by a party or the tribunal. The use of modern technology, such as video conferencing, is also permitted. Privilege. Article 9.3 lists criteria that the arbitral tribunal may consider when deciding issues of legal privilege. Good faith. Article 9.7 allows the arbitral tribunal, when assigning the costs of the arbitration (including costs in connection with the taking of evidence), to take into account the failure of a party to act in good faith in the taking of evidence. The entire article may be read here (free login required). Technorati Tags: ADR, law, arbitration

A team of University of Texas at Dallas (UT Dallas) students placed first in the advocate/client division and won the Dan Stamatelos National Trophy for Advocacy at the National Mediation Tournament held November 4-6 at the Drake University Law School in Des Moines, Iowa. 32 teams from 19 schools located across the nation participated in the tournament. An additional UT Dallas team placed second in the advocate/client division, making UT Dallas the only school in attendance to have two teams make it to the final rounds. Last year, a UT Dallas team also took home top honors. The tournament is sponsored annually by The International Academy of Dispute Resolution “to emphasize alternative dispute resolution (ADR) techniques and to provide a counterbalance to Moot Court and Mock Trial, which emphasize the adversarial side of the law.” A mediation round consists of advocate/client pairs from two schools, and mediators from two other schools. The competitors are given a simulated dispute to settle. Advocacy teams are judged on their ability to state their positions but show flexibility in working toward a solution. Mediators are judged on their ability to react to the demands of the advocates and clients and to facilitate a possible settlement. The students who made up the teams that represent the University this year consisted of: Taylor Brigance, senior international political economy major. Dionna Budd, junior political science major. Shannon Bumpas, senior accounting major. Ryan Campbell, senior interdisciplinary studies major. Dina Shahrokhi, senior political science major. Richard Stees, senior business administration major. Last year the UT Dallas team of Shahrokhi, Bumpas and Megan Newman (BA ’10) won the national championship in the advocate/client division. Disputing would like extend our to congratulations to the UT Dallas teams. You may read more about the award here. Technorati Tags: ADR, law, mediation

by Holly Hayes This week, a Wall Street Journal Health Blog headline stated, “Big Challenge for Mediation in Medical Malpractice: Doctor Participation.” The post discussed a study published in the Journal of Health Politics, Policy and Law which reviewed 31 cases from New York City non-profit hospitals. The study found that although mediation in a medical malpractice context has potential benefits, no physicians participated in the cases. The authors of the study said the lack of physician participation, misses some opportunities — first, to ‘repair the relationship between human beings,’ that is, the physician and the patient (or family of the patient), Carol Liebman, co-author of the study, a professor of law at Columbia Law School and director of the school’s mediation clinic, tells the Health Blog. It also misses the chance to collect information from patients, families and physicians to fill in the blanks of what actually happened, and if there was an error, to figure out how to prevent it from happening again, she says. The mediation approach used in the study holds that any information important to someone at the table, not just what is legally relevant, can be discussed. (Information disclosed during mediation is confidential.) When you don’t have the involvement of “the person who is involved in these decisions, day in and day out, you don’t get valuable information,” Liebman says. “A lawyer’s job is to defend the case, not to reshape policy.” Mediation, she says, offers the opportunity to improve patient safety in a way litigation cannot. Of the 31 cases reviewed, 16 settled at mediation, five settled after mediation and 10 were not settled. The lawyers involved stated a busy schedule prevented physicians from participating in the mediations. Liebman, however, wonders if physicians were discouraged from attending by lawyers and administrators who might be looking ahead to the possibility of a trial. What do you think? Holly Hayes is a mediator at Karl Bayer, Dispute Resolution Expert where she focuses on mediation of health care disputes. Holly holds a B.A. from Southern Methodist University and a Masters in Health Administration from Duke University. She can be reached at holly@karlbayer.com. Technorati Tags: ADR, law, mediation