Recent Articles in Alternative Dispute Resolution from LexMonitor

Do You Have a Discovery Plan?

klgallo@discoveryreferee.com (Katherine Gallo) — Wed, 01 Sep 2010 17:30:00 GMT

As a discovery referee, I normally come into cases when there already is a problem. Either discovery in the case is out of control, or the antagonism among counsel is so great that the Law and Motion Judge is done dealing with the parties. In many instances, I see an all out war between counsel, with discovery being used as a weapon. There is no rhyme or reason to the 105 special interrogatories that were served, the 200 categories of documents being demanded or the 20 depositions that have been noticed. The meet and confer process has broken down into a rampage of insults. Yet nobody has bothered asking the demanding party the fundamental question “Why do you need this?” When that question is finally posed by me, too frequently that counsel cannot answer the question. In such circumstances, it is clear to me that the attorneys have no idea what direction they want to case to proceed, no plan of attack and no idea what they are trying to accomplish. In other words--No Discovery Plan!

It is at the beginning of a case that you need to plan your litigation strategy. Before you propound discovery you need to go through three steps.

First, you need to determine your goal: Are you obtaining discovery to evaluate the case for mediation, to file a motion for summary judgment/adjudication, or to prepare for trial? Each goal has a different strategy and certain discovery devices are better suited for each goal.

In evaluating the case for mediation, form interrogatories, a preliminary set of requests for production of documents and an informal exchange of information between the parties may be all you need.
If you are going to trial, you are going to need admissible evidence, so the formal exchange of information with verification and authentication is going to be necessary as well as testimony under oath.
The discovery is going to have to be even more pinpointed if you are planning to file a motion for summary judgment/adjudication. The evidence is going to have to be verified, authenticated and uncontroverted. You are going to have to make sure that any declaration being filed by the opposition will not create a triable issue of fact. The discovery devices most effective to elicit “motion-ready” responses that can be attached to your MSJ are requests for admissions and depositions. Requests for admissions allow no wiggle room. Also, you can use them to have the opposing party authenticate documents you will need to make or oppose your MSJ, or for trial [C.C.P. §2030.010 (pdf)]. Depositions allow you to nail down the testimony – and a declarant’s subsequent declaration attempting to disavow his uncorrected deposition testimony will not defeat the motion. Weil and Brown, Civil Procedure Before Trial (TRG 2010) §10.155 citing D'Amico v. Board of Med. Examiners (1974) 11 C3d 1 (pdf)

Second, you need to determine the essential elements of each of the causes of action and the evidence you are going need to prove or defeat that cause of action.

Third, you need to determine what discovery device is best suited to obtain the evidence to achieve your goal.

After this Three-Step Analysis, serve your discovery.

WHAT SHOULD YOUR DISCOVERY MOTIONS LOOK LIKE?

klgallo@discoveryreferee.com (Katherine Gallo) — Fri, 27 Aug 2010 22:14:00 GMT

Discovery motions are the banes of most attorneys’ existence and they are often relegated to the newbie in the office to prepare. Young associates as well as other attorneys struggle on what needs to be in the papers and exactly how to convince the court that they should win.

With the courts’ having budgetary problems and staff shortages, it is in your best interests to make it real clear to the court (1) what has happened; (2) what you want the court to do; and (3) why you are entitled to the discovery and sanctions in a succinct fashion.

The practice guides--Weil and Brown, Civil Procedure Before Trial (TRG), CEB California Civil Discovery Practice (2011) 4^th Ed and Matthew Bender Practice Guide: California Civil Discovery-- are good starting points in preparing your motion. There also are numerous seminars on law and motion practice which I encourage you to attend. To get an idea on what a judge likes and dislikes, go to the website of legal newspapers and magazines to see if there has been an interview of your particular judge.

Yet, you still may be unsure as to what the meat and potatoes of the motion should look like. After two years in the law and motion department in Alameda County Superior Court and sixteen years as a private Discovery Referee, I can tell you what I like and you can take whatever pearls and nuggets you find from there.

Meet and Confer Letter:

This is a very important document. It sets the tone of your dispute with opposing counsel so don’t be hostile. Remember this letter is going to be an exhibit to your motion and could make or break your request for sanctions if the court finds that you have not been professional.
List every interrogatory, request and/or deposition question separately and explain why the objections are garbage and why you are entitled to discover the information. You can later take your arguments in this letter and drop it into your Separate Statement of Items in Dispute (pdf)saving you much needed time.

Notice:

The Notice is not wasted space. The notice is to tell the court and opposing party not only the name, date, time and location of the motion, but the “nature of the order sought” as well. So make sure you state the exact remedy you’re seeking in detail. Also, make sure to list the nature and tile of all documents to be attached.
If you are seeking sanctions it must be in the Notice.
List the nature and title of all documents that will be attached (i.e., Memorandum of Points and authorities, declarations, etc.)
Make sure you comply with CRC 3.1110 (pdf).

Points and Authorities

Give a good explanation of the facts of the case. The relevant scope of your discovery depends on these facts. Don’t assume the court remembers your case as they handle anywhere from 75 to 100 cases a week.
Provide a procedural history of the discovery motion in a time line laid out like the one below:
- 6/1/10 Served interrogatories via mail (Exhibit A)
- 6/28/10 Counsel asked for an extension via telephone call (Declaration)
- 7/30/10 Received responses full of objections (Exhibit B)
- 8/5/10 Meet and confer letter sent (Exhibit C)
- 8/25/10 Response to meet and confer letter (Exhibit D)
State your arguments why you are entitled to your discovery. Categorize your arguments (i.e., “Special Interrogatories #1, 7, 15 are asking for information regarding . . .”) Apply the facts and the law accurately. Point out the obligation to respond in good faith. Point out the garbage objections. Point out that the failure to provide proper responses has delayed your case. If the motion requires a Separate Statement of Items in Dispute (pdf)as required by CRC 3.1345 (pdf), then make specific arguments to the specific interrogatories, requests or deposition questions in that document.
State your request for sanctions in detail.
Detail the exact relief you are requesting: (i.e., “Plaintiff to serve verified responses to interrogatories 1, 2, 3, 4 by 11/1/2010 and attorneys’ fees in the amount of $2200 and costs in the amount of $40.”)
Make sure you comply with CRC 3.1113 (pdf).

Separate Statement of Items in Dispute

This is the most important document of your motion and the first document that a court will rely on. Do your real argument here. Be detailed in the law as to why the objections are garbage. Apply the facts of your case to show why the information you are seeking is discoverable.
Make sure you comply with CRC 3.1345 (pdf)

Declaration:

Authenticate all your exhibits.
Describe your meet and confer with opposing counsel.
If there is a request for sanctions, state your hourly rate. Outline in detail the time spent on the motion and any future time you anticipate spending. Calculate the attorneys’ fees and add the costs.

Proposed Order:

Have the order state which interrogatory, request and/or deposition question have been granted and the date line as to when that verified response is to be served or the deposition needs to take place by (i.e., “Verified answers to Special Interrogatories, Set #1, #1, 2, 5, 7, 13 are to be served no later than ____.”). This allows the court to strike the numbered interrogatory, request and/or deposition question that has been denied and to put in their own compliance date.
Do the same thing for sanctions. List the award of attorneys’ fees and the award for costs. State who the award is against by name.

Other Helpful Hints:

Do not go over the 15 page limit without obtaining a court order. CRC 3.1113 (pdf)(e)
Do not use smaller fonts. CRC 2.104 (pdf) and CRC 2.105 (pdf)
Though CRC 2.08 (pdf) allows for 1.5 line spacing, double space is preferred.
Understand the procedural rules for Judicial Notice and their effect on your motion. See Evidence Ev. C §451 (pdf), Ev. C §452 (pdf), CRC 3.1113 (pdf)(l).
You must do a table of contents and table of authorities if the motion is 10 pages or over. CRC 3.1113 (pdf)(f) However, many judges appreciate a table of contents in any motion.
If you are bringing a motion to compel answers to special interrogatories or requests for admissions that are over the initial 35 allowed, then make sure and attach your “Declaration of Necessity.”
If a department wants courtesy copies, make sure you get a full set to the department in a timely fashion.
Most importantly PROTECT YOUR REPUTATION. Be accurate in your citation of the facts as well as the law. Do not overreach. Do not try and be clever. Do not show disrespect to opposing counsel or their client. The research staff as well as the judges will remember you.

Next: GAME ON--Opposing the Motion to Compel.

New Jersey Court Green Lights Provider-Patient Arbitration Agreements

Wed, 25 Aug 2010 14:55:00 GMT

In two rulings handed down over the last two weeks, the Appellate Division of the Superior Court of New Jersey removed any doubt that New Jersey healthcare providers can enter into enforceable, pre-dispute agreements to arbitrate medical malpractice claims.

Estate of Ruszala v. Brookdale Living Communities involved an arbitration clause in a nursing home admissions agreement, which on its face violated a 2003 New Jersey statute barring such agreements. The Court found that the New Jersey statute was preempted by the Federal Arbitration Act (a result consistent with recent, similar rulings by the Supreme Courts of Illinois and Missouri), and went on to state that there is nothing about such agreements to render them unenforceable, per se. The Ruszala Court did strike down aspects of the arbitration agreement found to be unconscionable and against public policy in New Jersey, i.e., a cap on compensatory damages, limited discovery and a ban on punitive damages.

Moore v. Woman to Woman Obstetrics & Gynecology concerned the ability of a physician to enforce an agreement to arbitrate signed by a patient as part of the physician's patient intake process. The Moore Court ruled that such an agreement was not, per se, unenforceable. Once again, the Court made clear that such agreements must be judged on a case by case basis to determine whether the patient's rights to due process have been preserved. Issues such as the patient's receipt of a copy of the agreement and the circumstances of her signing the agreement were remanded to the trial court for findings of fact.

I wrote here previously about the growing practice among physicians to require patients to sign pre-dispute arbitration agreements. Ruszala and Moore make it clear that there is nothing to prevent New Jersey hospitals, nursing homes, physicians and other healthcare providers from requiring that patients agree to arbitrate future disputes, including malpractice claims. To be sure, providers choosing this path would do well to tailor their agreements to accomplish their primary objective: shifting the forum for the resolution of malpractice disputes from a jury to an arbitrator (or panel of arbitrators). Piling on other impediments to the patient's claim, such as limitations on non-economic damages, discovery and punitive damages remain suspect, and are ill-advised. Care should also be taken in assuring that the patient fully understands what he or she is signing, and has a realistic right to "opt out."

Absent an appeal and reversal by the New Jersey Supreme Court, or federal legislation along the lines of the proposed Arbitration Fairness Act of 2009, pre-dispute agreements to arbitrate malpractice claims in New Jersey are here to stay. Two major providers of ADR services, the American Arbitration Association and the American Health Lawyers Association have policies against accepting medical malpractice claims arising under pre-dispute agreements to arbitrate. Accordingly, providers and counsel considering the use of such agreements must carefully address the language governing the arbitrator selection process.

[Image: Green Traffic Light, by TheGo Team]

SANCTIONS--DENIED!!!

klgallo@discoveryreferee.com (Katherine Gallo) — Fri, 20 Aug 2010 20:23:06 GMT

When I started this blog I asked fellow attorneys what issues they would like me to address. I received this response from a lawyer in San Francisco:

Key problem – judges that won't crack down on parties that lodge bogus objections and don't answer interrogs, and object to discovery demands that are straight forward. Amount of sanctions awarded is usually pitiful.

I can easily respond to this complaint by saying “Judges want to be liked,” or “Maybe the judge was intimidated by the big law firm” or “The judge is trying to establish a working relationship with the parties and awarding sanctions makes the losing party more hostile” or “The judge may have seen fault on both sides of the table.” However, the bottom line is I don’t know why your judge didn’t give you sanctions and neither do you, unless you argued the issue at the hearing.

In order to overcome the reluctance of the judge, you need to be proactive in your moving papers and your arguments at the hearing regarding your request for sanctions. Don’t be timid on asserting your position on this. It is just as important as your other arguments. Filing motions and the imposition of sanctions curbs discovery abuse and the 1986 Discovery Act recognizes this. Thus you need to bring the motion and start establishing a pattern of opposing counsel’s discovery abuse and create a record of an imposition of sanctions. Moreover, remember that judges are reluctant to impose a terminating sanction unless a history of lesser sanctions have first been imposed or prior discovery orders have been violated. See Weil and Brown, California Practice Guide: Civil Procedure Before Trial (TRG 2009) ¶ 8:1215 et seq.

When seeking an order to recover sanctions, C.C.P §2023.040 (pdf) requires your discovery motion to contain the following:

Notice --The notice of motion must expressly state that you are seeking [monetary, issue, evidence or terminating] sanctions as well as the identity of the person, party or attorney against whom sanctions are being sought.

Points and Authorities–Your moving papers must state the facts of the noncompliance, the authority as to why it is discoverable and the authority for the award of sanctions. Don’t make the argument requesting sanctions in your P’s and A’s an afterthought. Spend time on it. List all the garbage objections to very basic questions and the law’s supporting your interrogatory or request. For example: “The identity and location of witnesses are not protected by attorney work product or the right of privacy. C.C.P. §2017.010 (pdf) clearly states that the identity and location of witnesses are discoverable.” Detail all the stonewalling, hostility and lack of good faith efforts during the meet and confer process. Make it clear that your train has not left the station and you are losing precious trial prep time. Make sure you site the authority for the sanctions you are requesting.

Declaration--Declarations need to state (1) facts of the noncompliance and discovery abuse in which the declaring party has personal knowledge (If necessary use multiple declarations) (2) the meet and confer process, (3) time you have spent and are going to spend on each aspect of the motion, (4) your hourly rate and (5) the calculations for the sanctions. Again, do it in detail!! Hint: Do not cut your hours. You need to let the judge know how much money this discovery dispute is costing your client.

In your moving papers point out to the court:

C.C.P. §2023.030 (pdf)(a) states that “If a monetary sanction is authorized by any provision of this title (and almost all of them are), the court shall impose that sanction unless it finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust.” [Emphasis added]

The purpose of discovery sanctions is not to provide a weapon for punishment, forfeiture, and the avoidance of the trial on the merits, but to prevent abuse of the discovery process and correct the problem presented. California Discovery Citations (TRG 2010) ¶1:6 citing Parker v. Wolters Kauwer U.S., Inc. (2007) 149 CA4th 285 (pdf) at 301.

Discovery sanctions are not a windfall. They are to compensate for costs and fees incurred by the party in enforcing discovery or defending a meritless motion. See Weil and Brown, California Practice Guide: Civil Procedure Before Trial (TRG 2009) ¶8:1213 citing Caryl Richards, Inc. v. Superior Court (1961) CA2d 300 at 303.

Discovery sanctions are not reported to the State Bar. See Bus. & Prof. Code. §6068(o)(3) (pdf).

The “trial court is not required to make findings at all” in granting any discovery sanctions, including terminating sanctions. See Weil and Brown, California Practice Guide: Civil Procedure Before Trial (TRG 2009) ¶8:1241.5 citing Ghanooni v. Super Shuttle of Los Angeles (1993) 20 CA 4th 256 (pdf) at 261.

At the hearing:

Be prepared to argue for sanctions. Do not be afraid to make a record. If you think that the judge is still reluctant to give you sanctions, then suggest that the sanctions be stayed to be lifted by the court at a later date (i.e., when the party complies with the order or, the one I like to use, by the trial judge.). This is important, because you need to establish a history of abuse. Past conduct that has already been considered by the court cannot be the basis for additional sanctions. See Weil and Brown, California Practice Guide: Civil Procedure Before Trial (TRG 2009) ¶8:1209a citing Andrus v. Estrada (1995) 39 CA4th 1030 (pdf) at 1043.

The court needs to take discovery motions seriously. They impact a case just as much as and in many cases more than demurrers and motions for summary judgment. However, it is your job to educate the judge as to why you are entitled to sanctions. Good luck!!

Let us know if you are successful in your next quest for discovery sanctions.

When an Apology is a Discovery Response

klgallo@discoveryreferee.com (Katherine Gallo) — Wed, 11 Aug 2010 18:00:00 GMT

Nine years ago, in the middle of a Deposition, defense counsel called plaintiff counsel a "Bitch." Plaintiff counsel immediately filed a motion for a Discovery Referee and I was appointed. The court ordered that I sit in on all the depositions and attend the site inspection. All communication including the scheduling of discovery was to be done through me.

When I look back on this case, I realize that the moment defense counsel used the word "Bitch" it became the turning point of the case. These two well-respected attorneys’ hostility toward one another drove the case. There were no more professional courtesies and the parties took extreme positions in their settlement negotiations. The case eventually went through a lengthy bench trial and appeal process that lasted years before plaintiff recovered an eight-figure judgement.

I always wondered what more I could have done as their Discovery Referee, but then I came to realize that I had done what the Court had sent me in to do–end the open hostility and get the discovery completed by the trial date. The professional relationship between counsel was beyond repair before I got there. So the real question is, "was there anything counsel could have done?" Although defense counsel regretted his outburst, there was never an apology. Instead, this incident entrenched counsel into becoming hostile combatants much to the eventual detriment of defense counsel's clients.

The morale of the story here is "you gotta know when to hold’em and know when to fold’em." In other words, is your discovery battle worth it in the long run? In this case, a simple, sincere apology could have put the case back on track, possibly leading to settlement and I may never have been appointed to wear the black and white striped shirt.

A court is not obliged to read an arbitration clause

K.Pilkov@lp.ua (Konstantin Pilkov) — Tue, 10 Aug 2010 14:06:06 GMT

This is another post in the Ukraine – arbitration-friendly jurisdiction set of comments. The Highest Economic Court of Ukraine being a body that is responsible for elaboration of the unified court practice of resolution of commercial disputes in Ukraine, adopted the ruling that answers the question: “Is a court obliged to terminate proceedings if a [...]

As follows from the decisions of the court of first instance in case No 3/180, which were supported by the court of appeal and the Highest Economic Court of Ukraine as the court of cassation the answer was “No”. The court of cassation stated that the court of first instance should terminate the case and propose the parties to go to arbitration only if the contract contained a valid arbitration clause (or the separate arbitration agreement existed) and if any of the parties challenged the competence of the court because of that arbitration agreement before any objections or clarifications related to the essence of the case were submitted to the court. Probably, this may seem logically and evident, but in several cases economic courts expressed the opinion the court should terminate the case even if both parties agreed to resolve it the court regardless of the arbitration clause.

Thus, the reasonable position of a respondent in a similar case is to object against the competence of the court as soon as possible and not wait for the decision in essence of the case. Of course the recommendation is worth to apply only if the respondent feels that he will have better position in arbitration than in the court.

Posted by Konstantin Pilkov, MCIArb

You've Blown the Dreaded Draconian 45-Day Rule-Now What Do You Do?

klgallo@discoveryreferee.com (Katherine Gallo) — Thu, 05 Aug 2010 18:00:00 GMT

Motions to compel further responses to interrogatories, requests for productions of documents and requests for admissions require that the motion be filed within 45 days. CCP §§ 2030.300(c), 2031.310(c) and 2032.290(c) Delaying the filing of the motion waives a party’s right to compel further responses. The case of Vidal Sassoon, Inc. v. Superior Court (1983) 147 Cal. App. 3d 681 (pdf) at 685 (Pre-1986 Discovery Act) takes the position that the court lacks jurisdiction to order further responses after time has expired. The Second District Court of Appeal upheld this rationale in Sexton v. Superior Court (1987) 58 Cal. App. 4th 1403 (pdf), 1410.

Weil and Brown Civil Procedure Before Trial (TRG 2009) §8:1150 suggests that you may be able to obtain relief under C.C.P. Section 473(b) which allows for relief generally from “any judgement, order or other proceeding” on a showing of “mistake, inadvertence, surprise or excusable neglect” citing Zellerino v. Brown (1991) 235 Cal. App. 3d 1097 (pdf). In that case the Court of Appeal stated that relief can be obtained under CCP § 473(b) when the Discovery Act does not provide a remedy. However, Zellerino involved experts and none of the cases citing Zellerino involved the 45-Day Rule. To date, I have never heard anyone being successful and after 20 years of the Discovery Act, I seriously doubt that any court would give relief under CCP § 473.

So now what do you do? The answer is another discovery device. In Carter v. Superior Court (1990) 218 CA3d 994 (pdf) the court held even though a party had missed the deadline for compelling inspection of documents under C.C.P. Section 2031 it did not bar him from requesting the same documents be brought to a deposition. Therefore, you can serve any of the following discovery devices and pretty much get the same result:

Interrogatories–Use requests for admissions coupled with Form Interrogatory 17.1 and request for documents.
Request for Production of Documents –Use deposition notices with a document requests, corporate deposition notices with a document request and/or third party subpoena for deposition with documents.
Request for Admissions –use special interrogatories or deposition notices

One thing you can’t do is reserve the same interrogatories, requests for documents and/or requests for admissions and “reset the clock.” Sexton at 1408 citing Professional Colleges, Magna Institute, Inc. v. Sup. Ct. (1989) 207 CA 3d 490.

Your other alternative is let the objections stand. Then at trial serve a motion in limine excluding all evidence that was not produced in discovery. If a party does not cough up the info during discovery they can’t use it at trial.

These are a few suggestions on the dreaded draconian 45-Day Rule. Does anyone have any more?

Are Your Objections Garbage?

klgallo@discoveryreferee.com (Katherine Gallo) — Thu, 29 Jul 2010 18:30:00 GMT

Not only are most objections garbage, we tend to recycle our garbage objections from one case to the next. Sometimes, we pick up other attorneys’ garbage objections and contribute to more litter. This is done over and over again without even thinking what it is doing to the environment of the litigation.

Garbage objections fuel the ire of opposing counsel. The “meet and confer” letter that is soon to follow is usually full of hostility and threats. Any amicable relationship you had hoped for with opposing counsel is on the cusp of being destroyed. More important, you are now costing your client more money in attorneys’ fees and possibly in settlement. So before you throw out the trash, look at these common objections and why they will be overruled:

General Objections: C.C.P. §2030.210(a) (pdf) states that "[t]he party to whom interrogatories have been propounded shall respond in writing under oath separately to each interrogatory . . . ” Even though several interrogatories may be objectionable on the same ground they may not be objected to as a group. Hogan and Weber, California Civil Discovery (2d. ed 2009) §518

“Ambiguous” Valid objection only if the question is totally unintelligible. A party has a duty to answer if “the nature of the information sought is apparent.” Deyo v. Kilbourne (1978) 84 CA 3d 771(pdf), 783. Rather than sustaining the objection, the judge may ask the propounding to rephrase the question or request. See Cembrook v. Superior Court (1961) 56 C2d 423 (pdf), 430 Hint: instead of objecting state what you think the interrogatory is asking then answer.

“Hearsay” Discoverable as long as it may lead to admissible evidence. C.C.P. §2017.010 (pdf), Greyhound Corp. v. Superior Court (1961) 56 C2d 355 (pdf), 391 Hint: Don't confuse rules of evidence with rules for discovery. Discovery rules are more liberal.

“Irrelevant” The interrogatory must be relevant to the subject matter of the litigation. Deaile v. General Tel. Co. (1974) 40 CA3d 841 (pdf), 850. Hint: fishing trips are permissible Greyhound Corp. v. Superior Court (1961) 56 C2d 355 (pdf), 383-385, just be prepared to state what you are fishing for.

“Overbroad” Valid only if the question calls for an undue burden such as “shotgun” interrogatories” as they are too general (i.e., “Please state the identity of each and every person who has knowledge of the relevant facts of the litigation.”) See CEB, California Civil Discovery Practice (4th ed. 2009) §7.85

“Burdensome and Oppressive" The showing required to sustain this objection is that the intent of the party was to create an unreasonable burden, or that burden created does not weigh equally with what requesting party is trying to obtain from it. See Mead Reinsurance Co. v. Superior Court (1986) CA3d 313 (pdf). In the Mead case, the objecting party showed that it would require the review of over 13,000 claims files requiring five claims adjusters working full time for six weeks.

"Information equally available to asking party" The only time this objection works is if a party has to go get public records [Bunnell v. Sup. Ct. (1967) CA2d 720 (pdf), 723-724] or interview independent witnesses [Holguin v. Sup Ct. (1972) 22 CA3d 812 (pdf), 821] in order to answer the questions.

Referencing Documents: The “see complaint” type answer is not proper. If the question requires reference to some other document, then the document should be identified and its contents summarized so that the answer by itself is fully responsive to the interrogatory. Weil and Brown Civil Procedure Before Trial (TRG 2009) §8:1049 citing Deyo v. Kilbourne (1978) 84 CA 3d 771(pdf). The exception to this is C.C.P. §2030.230 (pdf) where the code allows the answering party to allow the interrogating party to inspect the files and records. However, the answering party must show: (1) a compilation, abstract, audit or summary of its records is necessary in order to answer the interrogatory; and (2) no such compilation etc. exists; and (3) the burden or expense of preparing or making it would be substantially the same for the asking party as it would for the answering party.

Though the statutory authorities used above are for interrogatories, there is corresponding statutory authority for requests for production of documents and requests for admissions. The case law can be applied for other discovery devices.

The Goddess of the Deposition

klgallo@discoveryreferee.com (Katherine Gallo) — Wed, 21 Jul 2010 19:11:29 GMT

A few months back I received an e-mail from a court reporter regarding a very unpleasant incident that occurred in a deposition. It went like this:

So...during questioning the attorneys were apparently getting to a very sensitive area of inquiry -- and [Attorney #1] had already argued with all of the other attorneys -- so, he stared me straight in the eye and said, "God damn it, when you're asked to read a question back, you don't just read a question, you read the answer also, do you hear me? Now I've got to object and say it's asked and answered when if you would just do your fucking job I wouldn't have to do so. When it happens again, you better read it the right way."

I was in shock. I just looked at him, and I didn't say anything because then [Attorney #2] said..."[Court Reporter], let's go on." And he asked another question. We went on for a few more minutes, and the witness said she didn't understand. She asked me to read the question back for her. So, I did. And immediately after I started reading, [Attorney #1 ] said... “You fucking idiot. Didn't I tell you that when you read the question back you are to read the answer too. You aren't going to do anything until you do exactly what I said." I couldn't believe he was talking to me like this, and I was getting more and more livid with every word. I looked at the attorneys and they were just sitting there stunned too. [Attorney #2] said, "[Court Reporter], don't worry about him, let's just...", and then [Attorney #1] said again..."No. You're not telling her to do anything. She's going to sit there and do exactly what I told her to do, and we're not going any further until she does. You either read it my way or...’ -- and he went on and on.

The court reporter advised me that she admonished the attorney for speaking her that way and left the room. She eventually went back in and finished the deposition.

Besides the breach of Section 9 of the California State Bar Attorney Guidelines of Civility and Professionalism (pdf), this was just plain stupid on the part of the attorney. His final outburst had come after he had constantly interrupted the witness, interjected himself while other attorneys were asking their questions and argued at the top of his lungs with numerous counsel. The transcript was a disaster. It would have been utterly useless in any motion for summary judgment and probably at trial. If it was used at trial, the words by Attorney #1 would come back to haunt him as you can bet opposing counsel made sure that the Judge assigned to the case would know what happened. Also, you know that opposing counsel would make every attempt to have that portion of the deposition read in front of the jury.

The moral of the story is that court reporters are the caretakers of the deposition. Their job is to accurately record all statements made in the deposition for later review by attorneys, judges and appeals courts. It does nobody any good if the court reporter can’t get down an accurate rendition of the deposition. So, at the beginning of the deposition, advise the court reporter and all parties in the room that the court reporter is the “Goddess of the Transcript” and she is to immediately tell you all when she can no longer get an accurate rendition of the deposition. If the yelling, hostility and abuse continues, then recess the deposition and go to court and get a protective order and/or request a referee be appointed to sit on the continued deposition. See C.C.P. §§2025.420 and 639(a)(5). Do it sooner than later because your goal is an accurate transcript.

Interrogatories--You have An Obligation to Respond in Good Faith

klgallo@discoveryreferee.com (Katherine Gallo) — Sat, 17 Jul 2010 17:10:52 GMT

Imagine this: At the beginning of the case you serve interrogatories asking basic information about your case. Thirty-five (35) days later you receive responses that state for every interrogatory:

"Vague, ambiguous, overbroad, burdensome, oppressive, not likely to lead to admissible evidence and the information is equally accessible to the defendant. Plaintiff further objects on the grounds of attorney client privilege and the work product doctrine. See Nacht & Lewis Architect, Inc. v. Superior Court (1996) 47 CA4th 214 (pdf).

Does this sound all too familiar? The frustration level is high with attorneys as it will take at a minimum 121 days to get basic information if you have to file a motion to compel further responses. Meanwhile the court is scheduling a trial date and your discovery train hasn't even left the station.

The purpose of discovery is to take the “game” element out of trial preparation by enabling the parties to obtain evidence necessary to evaluate and resolve their dispute before a trial is necessary. Weil and Brown, Cal Prac. Guide: Civil Procedure Before Trial (TRG 2009) ¶ 8:1, citing Greyhound Corp. v. Superior Court (1961). Unfortunately, now it appears the call of the wild is “Let the games begin” as the dreaded process unfolds.

It is time to rethink how you respond to interrogatories and what you can do if you do get the above response. Code of Civil Procedure §2030.220 requires that

(a) Each answer in a response to interrogatories shall be as complete and straightforward as the information reasonably available to the responding party permits.

(b) If an interrogatory cannot be answered completely, it shall be answered to the extent possible.

(c) If the responding party does not have personal knowledge sufficient to respond fully to an interrogatory, that party shall so state, but shall make a reasonable and good faith effort to obtain the information by inquiry to other natural persons or organizations, except where the information is equally available to the propounding party.

The code requires that a party must make a reasonable and good faith effort to obtain the information. Regency Health Services, Inc. v. Superior Court (1998) 64 CA4th1496 (pdf)“A party cannot plead ignorance to information which can be obtained from sources under his control.” Deyo v. Kilbourne (1978) 84 CA3d 771,782. This includes a party’s lawyer Smith v. Sup. Ct (Alfred) (1961) 189 CA 2d 6, agents or employees Gordon v. Sup. Ct. (U.Z.MFG.Co) (1984) 161 CA 3d 15,167-168, family members Jones v. Superior Court (Benny) (1981) 119 CA 3d 534, 552 and experts who have been retained by a party and designated as a trial witness. Sigerseth v. Superior Court(1972) 23 CA 3d 427,433. See Weil and Brown, Cal Prac. Guide: Civil Procedure Before Trial (TRG 2009) ¶ 8:1051-1060 This means that you can't just pawn off the responses to your client or spend an hour and dictate off the top of your head and then answer "inability to respond." See Sinaiko Healthcare Consulting, Inc. v. Pacific Healthcare Consultants (2007) 148 CA4th 390 The statute and the case law make it very clear that a party and the attorney must be proactive in obtaining the information to respond to the interrogatories.

Discovery motions are by no means the Courts' favorite motions to hear and, unfortunately, they have seen the above interrogatory response too many times. So don't be surprised if you get sanctioned for providing false or evasive answers. See CCP §2030.300

Next: Are Your Responses Garbage?

Are Official Form Interrogatories Objection Proof?

klgallo@discoveryreferee.com (Katherine Gallo) — Wed, 14 Jul 2010 15:24:51 GMT

Official Form Interrogatories--General (Disc-001) prepared by the Judicial Council were intended to be used to cover basic matters as well as being a foundational discovery device in personal injury and contract cases. They also contained sub-parts which were not allowed when serving special interrogatories and they were not subject to the "Rule of 35". See California Code of Civil Procedure §§2030.030(a)(2) and 2030.060. Their use was usually the first volley in the discovery battle.

For years the Courts had found that the Form Interrogatories were objection proof as to form with minor exceptions. These minor exceptions usually involved case specific issues such as checking the box with the definition of "INCIDENT" versus creating your own definition for "INCIDENT" and cases which involve complex business transactions.

Then came the case of Nacht & Lewis Architect, Inc. v. Superior Court (1996) 47 CA4th 214 (pdf) which stated that Form Interrogatory 12.2 which asks:

"Have you or ANYONE ACTING ON YOUR BEHALF interviewed any individual concerning the INCIDENT? (If so, identify them.)"

The Third District Court of Appeal found that Form Interrogatory 12.2 was objectionable on the grounds of work product stating:

[c]ompelled production of a list of potential witnesses interviewed by opposing counsel would necessarily reflect counsel's evaluation of the case by revealing which witnesses or persons who claimed knowledge of the incident (already identified by defendants' response to interrogatory No. 12.1) counsel deemed important enough to interview.

For the last 14 years, litigants have objected to Form Interrogatory 12.2 as well as other Form Interrogatories in 12.0 series based on Nacht & Lewis. However, on March 4, 2010, the Fifth District Court of Appeal ruled in the case of Coito v. Superior Court (2010)182 Cal. App. 4th 758(pdf) that Form Interrogatory No. 12.3 which states:

“Have YOU OR ANYONE ACTING ON YOUR BEHALF obtained a written or recorded statement from any individual concerning the INCIDENT? If so, for each statement state..."

was not protected by the work product privilege. The court stated at pages 768,769:

... witness statements are classic evidentiary material. They can be admitted at trial as prior inconsistent statements (Evid. Code, § 1235), prior consistent statements (id., § 1236), or past recollections recorded (id., § 1237). Yet, if the statements are not subject to discovery, the party denied access to them will have had no opportunity to prepare for their use. Moreover, a witness statement could contain information favorable to the party denied access, who otherwise could use the statement to refresh the witness’s recollection, impeach the witness’s testimony, or rehabilitate the witness after cross-examination. These impacts on the quest for truth simply are not justified by the policy of encouraging lawyers to prepare their cases for trial or the policy of protecting the diligent attorney from others who would take advantage of his or her industry. (§ 2018.020.) “The purpose of the [work product] doctrine is to prevent incompetent counsel from taking unfair advantage of his adversary’s efforts in preparation for trial, not to suppress relevant testimony which happened to have been obtained by the opposition.” (Jasper Construction, Inc. v. Foothill Junior College Dist. (1979) 91 Cal.App.3d 1, 16 [153 Cal.Rptr. 767].)

With these two cases in conflict with one another, the California Supreme Court has granted review. In the meantime, Coito v. Superior Court (2010)182 Cal. App. 4th 758(pdf) is not citable pursuant to California Rules of Court.

I believe that the California Supreme Court will uphold Coito v. Superior Court (2010)182 Cal. App. 4th 758(pdf). First of all, the basic purpose of the discovery is to take the "game element" out of trial preparation. See Weil and Brown Civil Procedure Before Trial (TRG 2009) ¶8:1 citing Greyhound Corp. v. Superior Court (1961) 56C2d 355, 376; Emerson Elec. Co. v. Superior Court(1997) 16 C4th 1101, 1107. Second, knowing whether or not there are witness statements is not protected under a document production as you would have to disclose the information in a privilege log, so why should it be different for interrogatories. Third, California has a work product statute--C.C.P. §2018.010 et seq.-- which codifies California law which makes witnesses statements qualified work product. And, finally, C.C.P §2018.060 allows allows any party to request an in camera review of the documents, which the defendants in Coito v. Superior Court (2010)182 Cal. App. 4th 758(pdf). did not request. Do you agree?

Successful Physicians And Healthcare Reform: Will Old Dogs Learn New Tricks?

Fri, 25 Jun 2010 00:41:00 GMT

Last week I was fortunate to hear a presentation to a group of hospital trustees and senior management by noted healthcare consultant Jamie Orlikoff. For three hours, Jamie shared his knowledge and predictions on what healthcare reform and related developments will mean for hospitals and doctors in the near (2-5 year) future. The audience was riveted, but to say the least, his comments were unsettling.

In a nutshell, Jamie sees change coming not so much from what the recent healthcare reform statute says, but from the economic and political forces that inspired the new law. In his view, the implementation of the law through regulatory action, and the corresponding movement of private health insurers in parallel with the federal payors, will create irresistible forces, compelling hospitals and physicians to radically alter their current modus operandi.

The number one driver of change is the unsustainable growth in U.S. healthcare costs. Although the healthcare reform law, on its face, does almost nothing to reduce costs (and increases costs by covering many now uninsured), it sets the stage for future regulatory action that will decrease the amount of money the federal government spends on every covered person. Once everyone is covered, and private insurers are following the federal government's lead, there will be few places for hospitals and doctors to shift their costs. They will have to learn to get by with less, much less.

Slashing reimbursement rates will be part of this process, but the primary focus will be on using economic incentives to create improved quality and outcomes. Whether through accountable care organizations ("ACOs") or value based purchasing ("VBP" - bundling payments for episodes of care), these measures will require hospitals and doctors to actively cooperate with respect to the economic consequences of their patient care decisions, and to be prepared to accept smaller slices of a smaller pie. This has been unheard of in most places outside of the Mayo Clinic and Geisinger Health System. That is about to change. According to Jamie Orlikoff, many hospitals around the country already have doctors on their medical staffs banging on their doors, asking to be acquired and "integrated" into a larger network of providers. I don't disagree that when the money starts to shrink, many physicians will seek safety in numbers and a bigger tent.

Where I disagreed with Jamie Orlikoff was on the inevitability of this process as it concerns well established, successful physicians. In my mind, physicians who have been in practice for 20-25 years, who have a loyal patient following, strong referral sources and a sterling reputation, will look at ACOs and VBP and ask themselves, what does this mean for me? Many of such physicians will have the ability to retire in the next 5 to 15 years. What will be their incentive to embrace changes that, when all is said and done, translate into lower incomes than they now enjoy?

Jamie Orlikoff would argue that such physicians will have no choice - they must either get on the bus or get run over. I'm not so sure. No matter what the government does, whichever physicians are thought of as the best in their areas will not change, and patients will still want to see them. Patients will pay out of pocket, complain to their insurers and call their Congressmen if they are denied that opportunity. This may not last forever, but it may last for enough of that 5-15 year window to make successful physicians less than eager to jump on the reform bandwagon. In addition, such physicians may easily overestimate how long they will be protected by this phenomenon.

What does this mean for those attempting to construct the relationships and systems that healthcare reform seems to require? It means they need to identify how many highly successful physicians they have to work with, and how many of those "old dogs" will learn new tricks.

For some hospitals/health systems, there simply may be too many old dogs that will not learn new tricks, at least not in their current environment. Jamie Orlikoff advised that such hospitals/systems, regardless of their current financial performance, would be wise to seek a merger or affiliation with a larger system, thus gaining the ability to better absorb or manage physicians unwilling to accept the changes required by healthcare reform. For those with fewer such old dogs, or for the hospitals/systems with no ability or willingness to merge, the challenge will be formidable.

Hospitals/health systems should resist an extreme response to their old dogs in either direction, i.e., neither write them off nor capitulate to their every demand. Integrating successful physicians into the relationships and systems mandated by healthcare reform will require understanding their view of the world, a commitment to collaboration and skillful conflict resolution.

[Image: Gloria Swanson and Teddy the dog, from the film "Teddy At The Throttle," 1916]

All or Nothing? – A Debate on the Production of Documents

K.Pilkov@lp.ua (Konstantin Pilkov) — Thu, 24 Jun 2010 13:24:29 GMT

On 15 September 2010, Young Arbitrators Stockholm (YAS) will host a seminar together with ICDR Y&I, the International Centre for Dispute Resolution Young & International. The program will take the form of a debate, titled "All or Nothing - A Debate on the production of documents", and will be moderated by Patricia Shaughnessy (Stockholm Centre for Commercial Law, [...]

On 15 September 2010, Young Arbitrators Stockholm (YAS) will host a seminar together with ICDR Y&I, the International Centre for Dispute Resolution Young & International.

The program will take the form of a debate, titled "All or Nothing - A Debate on the production of documents", and will be moderated by Patricia Shaughnessy (Stockholm Centre for Commercial Law, Sweden) and Mark Kantor (Georgetown University, Washington, USA).

The seminar will take place in Stockholm, 4 – 6 p.m. on Wednesday 15 September 2010 at the premises of the Arbitration Institute of the Stockholm Chamber of Commerce on Trädgårdsgatan 9. It will be followed by a cocktail reception. The event is timed to complement attendance at SAA’s Swedish Arbitration Days. For further information on the Swedish Arbitration Days, see www.swedisharbitration.se .

Attendance at the event is free of charge.

BP and Faux Mediation

glkaplan@managingdisputes.com (Gary L. Kaplan) — Tue, 15 Jun 2010 22:17:42 GMT

The U.S Government has today again raised the estimate of the amount of oil spilling into the Gulf of Mexico. The estimated rate now stands at 60,000 barrels per day. As of yet, there are no estimates of the cost of the flood of litigation to follow.

Perhaps in an effort to stave off some claims, BP has declared on its website that:

Appointing an Independent Mediator is a recognized practice to strengthen claims processes and resolve disputes. BP is working to appoint the best possible person to fill this important role.

In those cases in which a claimant and BP cannot agree on resolution of a claim, the claimant can seek review from the Independent Mediator. The Independent Mediator then will make an advisory decision on the claim.

- If the claimant feels the advisory decision is unreasonable, he or she retains all rights under OPA either to seek reimbursement from the Oil Spill Liability Trust Fund or to file a claim in court.
- If BP feels the advisory decision is unreasonable, the company may choose not to accept it, but the claimant then may use the Independent Mediator's decision in claiming against the Oil Spill Liability Trust Fund or in a subsequent court action.

I am, obviously, all in favor of voluntary dispute resolution processes that might reduce some of the litigation costs to come from this catastrophe. But BP's "ADR" plan misses the mark and risks giving mediation undeserved bad name.

Mediation, as the term is used by everyone except apparently BP, involves (i) dialogue and negotiation between the parties with the help of an independent and impartial facilitator (or mediator) agreed upon by both parties, (ii) decision-making by the parties themselves, and (iii) confidentiality. A company may provide a list of mediators with whom it is willing to work to facilitate selection and initiation of the mediation, but a unilateral appointment of a supposed "Independent" Mediator does little to instill confidence in the fairness of the process. Further, the goal of mediation is to enable the parties to reach their own agreement on a fair settlement, not to replace their assessments of the disputes with the Mediator's "decision."

While BP's plan has nothing to do with mediation, it is akin to non-binding arbitration. Arbitration, again as commonly understood, refers to the appointment of an impartial, independent, and disinterested person (the arbitrator or neutral) to consider the parties' arguments and evidence and then decide the dispute. Again, however, a critical hallmark of, and requirement for, fairness of arbitration is the parties ability to jointly decide on who will serve as the "neutral" or arbitrator.

Finally, BPs offer of an incentive to participate in its process--the right to use the "Independent Mediator's" decision in claim in subsequent lititgation--may not be of great benefit to the claimants. Over the past twenty years, research on negotiations has shown that numbers are, in a sense, "sticky"--once a number has been thrown out, the number ultimately agreed upon by the parties will gravite to that number. If the matter ends upon in court, the "Independent" Mediator's decision will likely stand somewhere between BP's proposal and the claimant's demand. If introduced into evidence, whlle it might imply that BP has been unreasonable, it might do the same to the claimant. In the end, I suspect such decisions would work to moderate any payouts.

Perhaps I'm being too cynical, but there is little doubt that BP knows the differences between mediation, arbitration, and what it has offered. Using the term "mediation" for this process strikes me as being more about marketing than substance, and ultimately may serve only to further undermine BP's credibility.

Guido v. Duane Morris: Court Requires Kabuki Dance For Mediated Settlement

Thu, 10 Jun 2010 23:15:00 GMT

Earlier this year I wrote about the oral argument before the New Jersey Supreme Court in Guido v. Duane Morris. The case concerns the plaintiffs' right to sue their former lawyers for malpractice based upon a settlement the plaintiffs accepted after mediation two years earlier. It required the Court to reconcile two previous opinions, Puder v. Buechel, 183 N.J. 428 (2005) and Ziegelheim v. Appollo, 128 N.J. 250 (1992). In a decision handed down last week, the New Jersey Supreme Court ruled that the former clients could overcome a motion for summary judgment and proceed to trial - essentially to attempt to prove that the settlement agreed to by them could have been better but for the negligence of their former lawyers.

Despite assurances in the Court's opinion to the contrary, Guido paints a large bullseye on every lawyer whose client has second thoughts about a mediated settlement after the ink is dry. Significantly, the Court emphasized that when putting the mediated settlement in Guido on the record,

"unlike in Puder, plaintiffs did not represent to the court that
they were satisfied with the settlement, or that the settlement
was fair and adequate. (emphasis added) The entirety of the colloquy between the court and plaintiffs concerning the settlement addressed but two questions: whether plaintiffs understood and agreed to abide by the settlement terms, and whether plaintiffs were subject to any impediments in understanding those terms. Glaringly absent is any representation by plaintiffs that the settlement was 'fair' and 'adequate,' a representation deemed crucial in Puder."

Did the Court really believe that the plaintiffs in Guido v. Duane Morris would not have answered "yes" if asked whether they were satisfied with their settlement, and whether it was fair and adequate? Apparently these are now magic words that all counsel would be wise to include in written acknowledgments from their clients upon approving any mediated settlement.

[Image: Kitano Odori kabuki dance, by Onihide, April 18, 2009]

Stockholm Court Rules Against Naftogaz Ukrainy in RosUkrEnergo Gas Arbitration Case

K.Pilkov@lp.ua (Konstantin Pilkov) — Thu, 10 Jun 2010 14:53:37 GMT

RosUkrEnergo, the controversial former intermediary in the supply of Russian and Central Asian gas to Ukraine, has won a key ruling in its arbitration case against Naftogaz, but the Stockholm Arbitration Tribunal has said that the cash-strapped Ukrainian state gas firm Naftogaz must restore 12.1 bcm of gas in storage to RosUkrEnergo rather than paying [...]

IHS Global Insight Perspective
Significance	The Stockholm Arbitration Tribunal ruling essentially restores ownership title to RosUkrEnergo of 11 bcm of gas in Ukrainian storage that the intermediary claimed was "expropriated" by Naftogaz in the aftermath of the political deal that ended the January 2009 Russia-Ukraine gas dispute and awards a further 1.1 bcm of gas in lieu of damages.
Implications	The court ruled that Naftogaz (which has already been held responsible for paying US$197 million in damages to RosUkrEnergo), must provide this 12.1 bcm by 1 September, giving it nearly three months to pump additional supplies into storage and transfer title to this gas to RosUkrEnergo—or come up with another solution.
Outlook	Although the arbitration court's ruling is a clear victory for RosUkrEnergo, the decision to award the company (a joint venture between Centragas and Gazprom) in gas rather than in cash means that state-owned Ukrainian firm Naftogaz—which could scarcely afford to pay several billion dollars in cash damages—has dodged a bullet that could have pushed it into bankruptcy.

RosUkrEnergo Triumphs in the End

Despite having its role as intermediary in the supply of Russian and Central Asian gas to Ukraine eliminated from the start of 2009, RosUkrEnergo (RUE) never really went away. The company, a joint venture between Russia's Gazprom and Centragas (itself a joint venture between Ukrainian businessmen Dmytro Firtash and Ivan Fursin), rose to prominence with its key middleman role in the deal that ended the January 2006 "gas war" between Gazprom and Naftogaz, but its position became untenable after Yulia Tymoshenko became Ukraine's prime minister in December 2007. Tymoshenko argued loudly for the elimination of RUE, securing agreement from the Russian government on a return to a direct trading relationship between Gazprom and Naftogaz from the start of 2009. However, the subsequent gas war that broke out in January of that year between Russia and Ukraine ended up with RUE caught in the crossfire. Not only was the intermediary left to fend for itself in claiming damages for late payments by Naftogaz dating to 2008, but the Swiss-based company then got squeezed in a complex addendum to the January 2009 transit contract between Gazprom and Naftogaz, which resulted in the Ukrainian firm essentially taking ownership of some 11 bcm of gas in storage.

Therein the seeds of a new dispute, this time between Naftogaz and RUE, were sown. According to the addendum, Gazprom transferred the right of recovery of a US$1.7-billion debt, owed by RUE, to Naftogaz. Tymoshenko effectively took this to mean that Naftogaz (which at the time was facing a price of US$360 per 1,000 cm for new gas supplies from Russia, double the price from the fourth quarter of 2008), could take title to this gas from RUE as payment of that debt, meaning that Naftogaz de facto "paid" a price of US$154 per 1,000 cm for the gas. RUE, however, claimed that Naftogaz expropriated the gas in storage, and that such a move was never part of any deal. The resulting transfer of title of this gas in storage prevented RUE from fulfilling the terms of its own export contracts with clients in Poland and Hungary. In the face of stiff resistance from Naftogaz and the Tymoshenko-led government, RUE then opted to press its case with the Stockholm arbitration court.

Yesterday, RosUkrEnergo was vindicated, as the arbitration court ruled in RUE's favour. Centragas released a statement saying that the arbitration court ruled that the 11 bcm of gas in storage was taken by Naftogaz in breach of its storage contract with RUE, further requiring that the Ukrainian firm return that amount to RUE on the same terms. In addition, the arbitration court awarded an additional 1.1 bcm to RUE from Naftogaz, in lieu of RUE's entitlement to penalties for breach of contract. Earlier this year, in March, Naftogaz was held responsible in an earlier phase of the arbitration case for paying RUE US$197 million in damages for various breaches of the supply, transit, and storage contracts. RUE said that in response to the ruling, it was withdrawing its legal action against the Ukrainian government under the Energy Charter Treaty, although the Stockholm court is still slated to rule on several minor remaining issues of dispute between Naftogaz and RUE later this month as well. Robert Shetler-Jones, the CEO of Group DF, the parent company of Centragas, said in a statement that the ruling was a "satisfactory and just outcome" of the dispute, vindicating RUE's determination to hold Naftogaz and the Ukrainian government accountable for their actions.

A Pyrrhic Victory?

Nevertheless, it is hard to dismiss the notion that Naftogaz has managed to escape the gallows with the arbitration court's ruling. Not only did the Stockholm tribunal give Naftogaz nearly three months, until 1 September, to return the ownership title to the 11 bcm of gas in storage to RUE, but the decision to make the damage award in gas rather than cash is something of a victory for the Ukrainian firm. Naftogaz, which has struggled for the past two years in paying its monthly bill for gas imports, could scarcely afford a multi-billion-dollar cash damage award, but will have an easier time of it in simply transferring title to gas in storage to RUE. For its part, RUE said recently that it would prefer to be compensated in the arbitration case in cash, suggesting that the firm was perhaps aiming to secure the value of the gas in storage at the time it was taken in early 2009 (which RUE put at around US$5.4 billion).

Receiving title to the gas in storage now is a mixed blessing for RUE, as the value of this gas (around US$2.8 million) is much lower at current European prices than it had been in early 2009. What is more, since it was unable to fulfil the terms of the gas export deals with Hungary and Poland in 2009, RUE no longer has any firm export deals for which this gas could be used. RUE said that it plans to make this gas available on the market and sell it for the best possible price, but its damaged reputation may make it difficult to find buyers in Europe, particularly with the market already over-supplied—a situation that has seen Gazprom agree to reduce minimum bill levels in its "take or pay" contracts with its European partners. Rather than restarting its niche gas export business in central Europe with the return of the 11 bcm of gas in storage in Ukraine, RUE may be left with limited opportunities to monetise these assets, perhaps in selling the gas directly to Gazprom or even back to Naftogaz itself.

Outlook and Implications

RUE's victory in the arbitration case is vindication for the intermediary, but the terms of the court's ruling mean that this is a heavily qualified win. Together with the March 2010 ruling—which saw Naftogaz held responsible for just a fraction of the US$3.4 billion in claims lodged against it by RUE—the Stockholm tribunal's decision to award RUE with gas rather than cash is tantamount to an 11th-hour death sentence reprieve for the state-owned Ukrainian gas firm. The April 2010 "fleet-for-gas" agreement between Russia and Ukraine that secured a 30% gas price discount for Naftogaz has helped stabilise the firm's finances, while the rulings by the arbitration court have now removed another black cloud that had been hovering over the company. Instead of racking up gas debts to Gazprom and potentially going bankrupt as a result of the RUE case, Naftogaz is now in a position to begin to look towards the future rather than dealing only in short-term crises.

Then again, the fears that Ukraine's former government (now in opposition) had voiced over a potential forced bankruptcy of Naftogaz—that the company and its prized gas transit system (GTS) could be taken over by Gazprom—could still be realised, albeit in a much more straightforward fashion. Ukrainian president Viktor Yanukovych has moved to restore political and commercial ties with Russia since taking office earlier this year, and although he has responded coolly to a proposal by Russian prime minister Vladimir Putin to merge Gazprom and Naftogaz, Yanukovych has not entirely dismissed the idea. Improved co-operation between the two gas firms has reduced the threat of a new gas war, implicitly serving to improve Europe's energy security. A potential joint venture between Naftogaz and Gazprom that could include the GTS is still on the cards as well.

The greatly improved relationship between Gazprom and Naftogaz, as well as the two governments, means that the potential for the outcome of the RUE arbitration case to generate renewed controversy was already significantly diminished. Indeed, this improvement surely gave Gazprom less incentive to push hard for a cash award in the arbitration ruling, which Shetler-Jones said represented a "fair and sensible outcome for all concerned". Naftogaz had only about 10–12 bcm of gas in storage as of end-April, of which 5 bcm is cushion gas, so the Ukrainian firm has just 5–7 bcm of gas available at present for which it could conceivably transfer ownership to RUE. Nonetheless, with nearly three months before Naftogaz must transfer the 12.1 bcm of gas to RUE, the Ukrainian firm has time to buy additional gas—from Gazprom, of course—and restock its gas storage facilities, something that it would have to do in any case in advance of the winter heating season. With lower gas seasonal gas demand in Ukraine and reduced import prices as a result of the discount to which Ukraine and Russia agreed in April, Naftogaz should be able to afford to buy enough gas to meet the 1 September deadline and meet its obligations to RUE under the court ruling.

Source: http://www.ihsglobalinsight.com

RosUkrEnergo is demanding the Stockholm Arbitration that Naftohaz Ukrainy compensate some USD 5.4 billion of losses

K.Pilkov@lp.ua (Konstantin Pilkov) — Fri, 21 May 2010 12:27:20 GMT

RosUkrEnergo (Switzerland) is demanding the Arbitration Institute of the Stockholm Chamber of Commerce that Naftohaz Ukrainy national joint-stock company compensate some USD 5.4 billion of losses for withdrawal of 11 billion cubic meters of gas stored in the Ukrainian repositories, RosUkrEnergo press secretary Andrii Knutov has informed Ukrainian News. In his words the arbitration court opened [...]

In his words the arbitration court opened hearings within the framework of consideration the dispute between RosUkrEnergo and the national oil and gas company.

At the hearing they considered interrelationship of the sides in 2009, namely the withdrawal of 11 billion cubic meters of gas by Naftohaz Ukrainy from RosUkrEnergo in the Ukrainian underground repositories.

"Our company confirmed claims it previously mounted to the Ukrainian side to compensate the damages with money. The claims total about five point four billion dollars," he said.

According to the proceedings schedule, the Stockholm arbitration will produce an award before August 2010.

As Ukrainian News earlier reported, according to Supplement No. 1 to the contract for natural gas transit Naftohaz Ukrainy and Gazprom signed on January 19 and which was published in the mass media, Gazprom was entitled to advance payment of up to USD 1.7 billion in January or February 2009 for natural gas transit in 2009 and 2010.

Naftohaz Ukrainy undertook to use this money and pay for assigned receivables from Gazprom and its subsidiaries and affiliated companies to RosUkrEnergo.

Gazprom later confirmed that Naftohaz Ukrainy could demand RosUkrEnergo to pay its debt of USD 1.7 billion in currency or with natural gas.

As a result, the State Customs Service cleared customs for 11 billion cubic meters of natural gas for Naftohaz Ukrainy basing on the document signed.

Businessman Dmytro Firtash, a co-owner of RosUkrEnergo, expects the Arbitration Institute of the Stockholm Chamber of Commerce to award a decision in the dispute between the Naftohaz Ukrainy national oil and gas company and RosUkrEnergo on 11 billion cubic meters of natural gas by July 2010.

In early 2010, the arbitration institute of the Stockholm Chamber of Commerce, Sweden, passed a preliminary decision to order Naftohaz Ukrainy national joint-stock company return USD 197 million to RosUkrEnergo (Switzerland) in frames of a dispute between the companies concerning realization of contracts for sale, purchase, transit and storage of gas.

Ukrainian News Agency

Entwicklung der alternativen Streitbeilegung

K.Pilkov@lp.ua (Konstantin Pilkov) — Wed, 19 May 2010 09:36:40 GMT

Seit Kurzem stellt die Deutsche Institution für Schiedsgerichtsbarkeit auf ihrer Homepage (http://www.dis-arb.de/) mit der DIS–Konfliktmanagementordnung (DIS-KMO), der DIS-Mediationsordnung (DIS-MedO), der DIS-Schiedsgutachtensordnung (DIS-SchGO) und der DIS-Gutachtensordnung (DIS-GO) vier neue Regelwerke für den Bereich der alternativen Streitbeilegung zur Verfügung. Alle Regelwerke sind zum 1. Mai 2010 in Kraft getreten. Die DIS-Konfliktmanagementordnung ist ein Regelwerk für ein Konfliktklärungsverfahren, in [...]

Die DIS-Konfliktmanagementordnung ist ein Regelwerk für ein Konfliktklärungsverfahren, in dem ein auf Antrag einer Partei von der DIS benannter Konfliktmanager mit den Parteien möglichst innerhalb weniger Tage nach Ausbruch eines Konflikts klärt, wie und mit welchem neutralen Dritten der Konflikt einer Lösung zugeführt werden soll.

Als neue Verfahrensordnungen für das auszuwählende Streitbeilegungsverfahren stehen zur Verfügung:

eine Mediationsordnung (DIS-MedO) für die Fälle, bei denen die Parteien zu einem konkreten Streitfall ein einigungsorientiertes Verfahren durchführen wollen;
eine Schiedsgutachtensordnung (DIS-SchGO) für die Fälle, bei denen die Parteien ebenfalls zu einem konkreten Streitfall eine Drittentscheidung mit vorläufiger (oder endgültiger) Bindungswirkung zu einem bestimmten Streitpunkt anstreben;
eine Gutachtensordnung (DIS-GO) für die Fälle, bei denen die Parteien ebenfalls ein Drittvotum erhalten wollen, dies aber nicht bindend sein soll, also "nur" eine sachverständige Beurteilung und eine Empfehlung für die Streitbeilegung darstellt.

Daneben steht weiterhin die bereits seit 2002 gültige DIS-Schlichtungsordnung (DIS-SchlO), in der keine konkreten Vorgaben für die Verfahrensprinzipien des Schlichters genannt werden, zur Verfügung.

Alle Verfahrensordnungen können die Parteien auch ohne ein vorgeschaltetes Konfliktmanagement-Verfahren vereinbaren.

Außerdem wird die DIS in Kürze noch eine Verfahrensordnung für Adjudikation (DIS-AVO) für die Fälle zur Verfügung stellen, bei denen die Parteien bereits zu Projektbeginn ein Dispute Board einsetzen, das für die Lösung aller Konflikte während der Projektabwicklung zuständig ist.

Die DIS ist überzeugt, mit dem neuartigen Verfahren der Konfliktklärung und den dazugehörigen Verfahrensordnungen den Unternehmen weiter entwickelte, optimierte Instrumente anzubieten, die eine zügige, kostengünstige und interessengerechte Konfliktlösung ermöglichen.

Rebates under New Jersey's Renewable Energy Incentive Program

Mon, 17 May 2010 13:02:38 GMT

The Renewable Energy Incentive Program (REIP), which is part of the Board of Public Utilities’ Clean Energy Program offers New Jersey utility customers, who contribute to the societal benefits charge authorized by Section 12 of the Electric Discount and Energy Competition Act (N.J.S.A. 48:3-60), access to the renewable energy certificate (REC) market and rebates for the installation of renewable energy systems, such as solar, wind, and sustainable biomass facilities at existing residential and non-residential buildings and in connection with new construction located in Smart Growth areas (i.e. Planning Areas 1 and 2 and designated centers). For example, persons who submit complete and qualifying rebate applications for solar installations during Funding Cycle 2, which began on May 3, 2010, will receive $1.35 per watt for residential projects and $0.80 per watt for non-residential projects.

Stark & Stark Shareholders Present Legal Update on Important and Precedent-Setting Legal Decisions and how they Impact Condominiums, HOAs and Co-Ops

Fri, 14 May 2010 13:23:47 GMT

Shareholders and Co-Chairs of Stark & Stark's Community Association Group, David J. Byrne and A. Christopher Florio, and Stark & Stark Construction Litigation Group Chair, Donald B. Brenner, presented materials updating everyone on recent and important legal decisions. The seminar was entitled "Legal and Legislative Update: Important Decisions, New Laws, and how they Impact Your HOA, Condo. and/or Co-Op".

The presentation was part of the New Jersey Cooperator Expo which was held in Secaucus, New Jersey on May 5, 2010. Mr. Byrne discussed the United States Fair Housing Act and a recent decision regarding its application to 'companion animals'. Mr. Florio discussed two recent cases involving the fiduciary duties of board members and the business judgment rule. Mr. Brenner discussed two key Appellate Division decisions published in 2009, both of which relate to the 'economic loss doctrine' and homeowners’ claims against sellers of defective building materials that were incorporated into the construction of their homes (Marrone v. Greer & Polman Constr. Inc., 405 N. J. Super. 288 (App. Div. 2009) & Dean v. Barrett Homes, Inc., 406 N. J. Super. 453 (App. Div. 2009))

You can listen to the full presentation online here. (27 MB)