Alternative Dispute Resolution: Summary Jury Trial

Disclaimer: The following case background and solution are meant for educational purposes only. I am not a lawyer and this is not legal advice.

In re NLO, Inc.
United States Court of Appeals, Sixth Circuit
5 F.3d 154 (1993)

Case Background

“NLO ran a uranium­ facility. It was sued by former employees who they suffered injuries because ‘NLO had intentionally or negligently exposed them to hazardous levels of radioactive materials, increasing their risk of cancer and subjecting them to emotional distress.’ The trial court ordered that a summary jury trial be held and that it would be open to the public. NLO petitioned the appeals court to vacate the district court order to participate in the summary jury trial before the matter could be tried in regular court. (Meiners, Ringleb, and Edwards, 2000, p. 115-116).”

Summary Jury Trial

A summary jury trial is a form of mini-trial that employs a jury and is held after discovery in the event that a case is not settled before trial. Summary jury trials save time and expense for the plaintiff and the defendant, yet they are not mandatory. Summary jury trials are not technically due process per se but are a form of arbitration–that is, they are not adjudication but an effort to help the parties to case settle the dispute outside formal court proceedings at a substantial cost savings to the tax paying public. Alternative Dispute Resolution (ADR), by its very nature, requires voluntary consent to begin the process or agreement in a contract that specifies ADR will be the means of resolving any disputes. Consider a summary judgment trial between two publicly-traded companies: the confidentiality of the proceedings of a summary jury trial could be very important in terms of publicity, effect on public stock price, protecting trade secrets and the potential for biasing the pool of potential jurors, assuming that local courts would have jurisdiction over the case.

The primary reason that NLO did not want to have a summary jury trial in the case above may have been that they were not legally required to participate in one, as the judge in the trial court had so ordered, and that going to a public summary jury trial, regardless of the outcome, would substantially remove the benefits of settling the case out of court. Perhaps they did not want the limited evidence associated with information exchange made available to the public, which would not be enough to defend them in the court of public opinion and would just cause negative publicity. An open summary jury trial might provide confidential information to the public that could increase business risks and open the company up to future class action lawsuits by the community nearby the uranium processing facility. Until a dispute goes to trial, no such risk exists, and so a public summary jury trial is substantially less attractive as a means of ADR.


Reference

Meiners, R.E., Ringleb, A.H., & Edwards, F.L. (2000). The legal environment of business (7th Ed.). New York: West Legal Studies in Business.

Collecting a Writ of Execution

Disclaimer: The following case background and solution are meant for educational purposes only. I am not a lawyer and this is not legal advice.

New Maine National Bank v. Nemon, Supreme Judicial Course of Main 588 A.2d 1191 (1991).

Case Background

“Nemon borrowed $125,000 from New Main National Bank. He signed a promissory note that stated that, in case he did not pay, he (Nemon) would pay all costs associated with collecting this debt, including attorneys' fees. Nemon defaulted on his loan. The bank demanded that Nemon pay the balance due. Nemon did not pay, and the bank sued for breach of con­tract. The bank moved for a summary judgment against Nemon. The trial court granted the motion, stating that the bank was entitled to the balance due on the loan, accu­mulated interest, and attorneys' fees, plus $3,000 extra to cover the anticipated costs of collecting the money from Nemon. After the court entered its judgment, the bank sought and obtained a writ of execution against Nemon.

Nemon did not comply with the writ and repeatedly failed to produce documents that the court ordered him to produce concerning his debt to the bank. Nemon also repeat­edly failed to appear at scheduled court dates. The court charged Nemon with contempt and authorized a civil order of arrest but stayed the sentence so that Nemon could absolve himself of the contempt charge. Nemon failed to appear at court to absolve himself. Thereafter, the court issued an arrest warrant. The next day, Nemon paid the outstanding balance due on his judgment. Four months later, the bank moved to collect additional sums from Nemon to cover the costs of its numerous post-writ-of execution expenses. The court granted the motion. Nemon appealed" (Meiners, Ringleb, and Edwards, 2000, p. 91-92).

Writ of Execution

Collecting a monetary damage award from a defendant is the responsibility of the plaintiff. When the defendant is unable or unwilling to pay, the plaintiff can seek a writ of execution, which instructs a local official, such as the sheriff to seize and sell property to satisfy the judgment. Alternatively, the courts may order garnishment of the defendant’s property, which could involve an order for regular deductions from the defendant’s property until the judgment is satisfied (e.g., child support).

The bank was unable to collect the judgment based on the writ of execution, but there are ways to prevent this situation. In this instance, the writ of execution is an order to pay. Preventing this type of collection problem with an unsecured promissory note can be difficult, because the plaintiff had virtually no tangible leverage over Nemon, which would have helped them collect the amounts awarded. Ultimately, Nemon had to be threatened with arrest to comply with the judgment of the court. Borrowers like Nemon are exactly why banks typically do not lend money via unsecured promissory notes. Furthermore, other than the loan transaction, it seems that Nemon was not a customer of the New Maine National Bank, so there was no way to restrict any other account balances to recover the funds awarded. Either New Maine’s legal counsel did not specify property that could be seized or perhaps the sheriff did not seize bank accounts, real estate or attach Nemon’s wages, if possible. Clearly, Nemon had an account at some institution with which to pay the $125,000 plus the judgment. Alternatively, perhaps he had other assets that could be sold. Why other property was not pursued in the writ of execution is not clear. The bank could have required some collateral on the loan to use as leverage to collect the loan balance.

The Supreme Court’s rationale for awarding treble damages (i.e., $24,000 instead of $8,000) may be understood from the fact that the Superior court held Nemon in contempt and that the Supreme Court issued a unanimous (i.e., per curiam) opinion in favor of the damage award. By ignoring the repeated actions of the court, some of which were intended to assist him, Nemon behaved like a scofflaw and the Supreme Court sought to make an impression on him. The message is that if you ignore the court you will not only pay what you should but you must pay part of the damages that you have caused.

Reference

Meiners, R.E., Ringleb, A.H., & Edwards, F.L. (2000). The legal environment of business (7th Ed.). New York: West Legal Studies in Business.

Conflict-of-Law Rules Outside Business Contracts

Disclaimer: The following case background and solution are meant for educational purposes only. I am not a lawyer and this is not legal advice.

Beattey v. College Centre of Finger Lakes, District Court of Appeal of Florida, Fourth District, 613 So. 2d 52 (1992).


Case Background

“Richard Beattey, Jr. was driving in the Bahamas when he collided head-on with a truck owned by College Centre of Finger lakes and driven by its employee, Zeakes. College Centre was a New York corporation with an office in the Bahamas. Two passengers in Beattey’s vehicle, both Indiana residents, died at the scene. Beattey was flown to Fort Lauderdale, Florida, but died en route from his injuries. Beattey’s parents, Indiana residents at the time of the accident and representatives of their son’s estate, filed this action for wrongful death in a Florida state court against College Centre. College Centre conceded that it was liable for the negligence of its driver, Zeakes. If Bahamian law applied, the Fatal Accidents Act of the Bahamas would control this case. The act limits recovery in wrongful death action to funeral expenses. Under the law of any U.S. state, plaintiffs could sue for much more. The trial court applied a ‘significant relations’ conflict-of-law test and found that the Bahamas had the most significant interest in the case and that Bahamian law should thus be applied. The Beatteys appealed the decision, arguing that the court did not apply the conflict-of-law test appropriately” (Meiners, Ringleb, and Edwards, 2000, p. 54-55).

Conflict-of-Law

The majority of business contracts specify the state whose law will be applied to interpretation of the contract. The nature of the dispute and the absence of explicit law rule in the civil wrongful death action open the case for interpretation by the court based on enacted statutes specifying conflict-of-law rules in that jurisdiction. The case demonstrates how understanding of significant interest of the state affects which state’s laws are applied by the court.

The first issue would be for the plaintiff’s legal representation to determine what court(s) have subject-matter jurisdiction. Once subject-matter jurisdiction is established and the plaintiff (i.e., Richard Beattey’s parents) files a lawsuit, then the court must decide whether it has territorial jurisdiction. In the case of Beattey v. College Centre of Finger Lakes, we can surmise that a Florida state court concluded that it would hear the case, because the Richard Beattey, Jr., the decedent, actually died in Florida.

The second issue to be resolved would be to determine the nature of the dispute. If the dispute had been over a contract, then the law of the state in which the contract was made would determine the interpretation. For example, in the case of an insurance contract with regard to Florida, the state in which the contract was completed (i.e., the decedent passed away) determines the interpretation. However, the Florida state court determined that this dispute involved a tort, which due to its application of the significant relations conflict-of-law test would call for application of the substantive law of the territory in which the tort was committed (i.e., The Bahamas).

In the absence of a clear interpretation of the above, some courts apply the law from the jurisdiction that has the most significant interests at stake in a resolution of the dispute. Regardless, the courts attempt to arrive at a balanced position, “They [the courts] try to account for the interests of the parties in the fair resolution of the dispute, for the interest of the governments in the effective application of their laws and the policy rationales upon which they are based, and for the benefits that result from the ability of citizens to predict the legal consequences of their actions” (Meiners, Ringleb, and Edwards, 2000, p. 54). The District Court of Appeal of Florida, Fourth District on appeal chose to apply Restatement (Second) of Conflict of Laws in determining the state with the most significant of the competing interests.

With regard to the result under the traditional rule, the action of Zeakes, the driver of the truck, in colliding head on with Richard Beattey, Jr., et al was a tort that occurred in the Bahamas. Under the traditional application of the conflict-of-law rules, the result of this case would have been that the substantive law applied would be Bahamian law. In addition, under Bahamian law remedies for wrongful death would be limited to recovery of funeral expenses alone from the defendant.

West Germany, the then current place of residence of Beattey’s parents, had the weakest link to the parties this case. Indiana had no strong link due to the fact that decedent and his parents were no longer residents and that the other passengers were not a part of the lawsuit. Florida had a relationship with the case because the loss of life, possible consummation of any life insurance policy, and police investigation occurred within its jurisdiction. The Bahamas had an interest in the resolution of the case, because the tort and resulting property damage actually occurred within its jurisdiction. However, New York had the most significant relationship because the College Centre Corporation, the corporation’s underwriter, and the decedent were residents. Furthermore, all three parties could reasonably expect to be protected by both U.S. and New York State law.

Of all the jurisdictions New York had the most significant relationships with the parties to the dispute: (1) The decedent was a resident of New York and therefore his estate was going to probate in New York; (2) The defendant was a corporation organized in the State of New York; (3) The insurance company that was indemnifying the defendant issued the policy in the State of New York based on New York actuarial data. What is fascinating about this case is that the Florida state court failed to see the significance of the relationships with the state of New York. One wonders what the outcome would have been if the Florida state court refused to hear the dispute or if Beattey’s parents would have filed the lawsuit in New York in the first place.

Reference

Meiners, R.E., Ringleb, A.H., & Edwards, F.L. (2000). The legal environment of business (7th Ed.). New York: West Legal Studies in Business.

Moral Obligation at the Place of Business

Disclaimer: The following case background and solution are meant for educational purposes only. I am not a lawyer and this is not legal advice.

Soldano v. O’Daniels, California Court of Appeal, 141, Cal. App. 3d 443, 190 Cal.Rptr. 310 (1983).

Case Background

“Villanueva entered Happy Jack’s Saloon, pulled a gun, and threatened to kill Soldano. A patron of Happy Jack’s ran across the street to a bar called the Circle Inn, told the bartender (the defendant) about the incident at Happy Jack’s and asked the bartender to call the police or allow him to make the call. The bartender refused. Soldano was killed by Villanueva. Soldano’s child (the plaintiff) brought a wrongful death action against the bartender. On the grounds that a person cannot be liable for non-actions, the trial court dismissed the plaintiff’s action. The plaintiff appealed to the court of appeal, arguing that the case should have been allowed to go to trial” (Meiners, Ringleb, and Edwards, 2000, p. 20).

Established Rule

Under the established rule one who has not created a peril ordinarily does not have a duty to take affirmative action to assist an imperiled person, so under past interpretations of established rule the bartender, O’Daniels, was not legally obligated to provide assistance in contacting the police. Certainly, few people would argue that he was not morally obligated to help with contacting the police or at the very least not prevent the good samaritan from contacting the police. Failure to execute this moral obligation may border on negligence, because it was not nonaction; denying use of the telephone was action to the contrary of Soldano’s safety.

The established rule could be interpreted widely beyond its original meaning. Perhaps the original intent was to provide a means for separating liability for perilous circumstances from the place or time of an event’s occurrence. For example, if someone is placed in jeopardy after a few months of time elapses due to actions by another party months ago or in a distant location, then the established rule might prevent that person from being held accountable. If the peril is separated by time and space, then the actor could not have reasonably known that his/her actions would place someone in jeopardy.

A number of factors may have had bearing on this case, which could have resulted in a potential modification to the interpretation of established rule. First, the bartender, O’Daniels, did not act to try to verify the claim of the good samaritan that Soldano was in jeopardy. Second, the bartender did not place the call to the police himself. Third, the bartender did not allow, possibly prevented, the good samaritan to contact the police using the telephone. Finally, the bartender did not attempt to help Soldano himself. O’Daniels might have argued that the warning by the good samaritan did not seem credible or that these threats occur all the time in the context of serving alcoholic beverages, but no set of circumstances explains his almost active resistance to helping a person that may have been in life-threatening circumstances. All of these factors made O’Daniels actions unreasonable given the circumstances, making it possible for the plaintiff to pursue civil damages in the absence of there being grounds for criminal action. Furthermore, it was not an issue of whether the help could have been provided at little cost to the defendant, but one of what is reasonable and customary given the moral context of the society. Soldano may have been shot anyway, but O’Daniels’ almost active negligence may have contributed to the threat against Soldano, and therefore, there may constitute grounds for a civil action judged by a jury trial.

Reference

Meiners, R.E., Ringleb, A.H., & Edwards, F.L. (2000). The legal environment of business (7th Ed.). New York: West Legal Studies in Business.