New England Legal Foundation welcomes inquiries from the media. To contact us by e-mail, click here or call NELF’s President, Martin J. Newhouse, 617-695-3660 - ext. 201. 

Articles by and about NELF:

Whatever Happened to "No Harm No Foul"?

         - Boston Business Journal, May 2005
Misusing Courts Against Companies

         - The Boston Globe, May 2005

Maine Deserves a Business Court

         - Portland Press Herald, March 2004

Should Business Enjoy Less Freedom of Speech Than Individuals? 

         - Boston Business Journal, June 2003

Confidential Settlements: Is The Cure Worse Than The Disease?

The following article, by NELF's former President, Andrew R. Grainger, appeared in the Boston Business Journal in May 2005:

Whatever Happened “To No Harm No Foul”?

Are we suffering from a serious litigation shortage?  Do we need to encourage people to bring lawsuits against businesses even when nobody has been damaged?

A series of recent consumer cases has been developing the notion that any legal mistake, even unintentional and without consequence, can give rise to substantial monetary awards.   

This began in 1985 when the Supreme Judicial Court ruled that illegal language in a lease was actionable, even though the tenant was not aware of the language and the landlord never tried to enforce the improper verbiage. Nor was the landlord’s stated willingness to ignore any illegal language enough to protect him from a lawsuit and damages. This unfair result may have been partly brought about by the fact that the defendant was Harold Brown, not the Commonwealth’s most popular landlord. It does explain an expression used by lawyers: “Hard cases make bad law.”

Last year, the intermediate Appeals Court tried to repair, or at least limit, the damage by ruling that the 1985 case, Leardi v. Brown, only applied in the landlord-tenant context, and that you couldn’t sue someone if you weren’t injured, even if they had committed a technical violation of some kind. That case, Lord v. Commercial Union, involved an insurer that failed to provide a required notice to a policyholder who was already aware of the information that the notice would have contained.

Despite the face saving offer in Lord, our highest court plunged ahead in another “hard” case, Aspinall v. Phillip Morris, and decided that even individuals who had actually benefited from reduced toxin levels in so-called “light” cigarettes could join a class of plaintiffs asserting that the cigarette-makers’ claims of reduced harm were false because the benefit depended on your method of smoking. This latest decision, combined with the previous two cases, creates the interesting result that if you claim to have been actually damaged, you must show that the defendant was responsible - while if you don’t claim any damages you can sue anyway.

Now the Supreme Judicial Court has an opportunity to clean up the mess in three pending cases. Two of these, known as Roberts and Hershenow, involve rental car contracts. The plaintiffs in one case are claiming that some limits to coverage under collision damage waiver insurance listed in the rental contract are illegal; but the plaintiffs never made a claim for coverage. The second case involves a complaint that the contract should contain more emphasis of the possibility that renters already have such coverage through other policies; but these plaintiffs didn’t even purchase the insurance.  The third, Albats v. Town Sports, involves a health club contract containing an impermissible waiver for injury. The plaintiff has no injuries and the health club has removed the offending verbiage.

Even without damages most of these cases are for very real money. Consumer protection statutes and many other laws allow for a minimum award, punitive damages, attorneys’ fees, or all three. In the class action context, businesses can now be exposed to multiple six figure liability for innocent mistakes that caused no harm to anyone.  While businesses are hurt, consumers don’t benefit.  But the attorneys who bring these cases enjoy a windfall.

Andrew Grainger, Former President of New England Legal Foundation, which filed briefs in the Supreme Judicial Court in the Hershenow, Roberts, and Albats cases.

--------------

The following article, by NELF's former President, Andrew R. Grainger, and current President, Martin J. Newhouse, appeared in the Boston Globe in May 2005:

Misusing Courts Against Companies

WITH SEVERAL investigations and criminal prosecutions of major corporations, it may be hard to believe that corporations could not always be criminally prosecuted.

Traditionally, a corporation was considered only a legal entity, with no actual physical, mental, or moral capacity of its own. In 1909, however, the Supreme Court held that a corporation could be prosecuted for the criminal acts of its officers and employees if those acts were committed on the job to benefit the corporation. While this formulation appeared to preserve for corporations the basic principle that criminal liability requires criminal intent, recently the principle has been all but abandoned.

Today, under federal law, a corporation may be found criminally liable for the criminal conduct of a single employee, even if the conduct was forbidden by corporate policy or the corporation took reasonable steps to prevent it. Thus, Arthur Andersen was criminally charged for crimes allegedly committed by a few partners and employees, regardless of whether the company had authorized, or even known about, the conduct.

Keeping pace with the expansion of criminal liability for corporations has been the equally striking expansion of penalties. Today a corporation may be excluded from any government business, or, in the healthcare area, from participation in all federal and state healthcare reimbursement programs if it is convicted of criminal activity or, in some cases, simply suspected. The threat of these penalties has become a shortcut of prosecutors pursuing corporations whose employees have allegedly committed criminal acts. Companies have decided they have no choice but to plead guilty and pay staggering criminal fines simply to survive.

Nowhere have federal prosecutors used this strategy of forcing companies to plead and pay more effectively than against the pharmaceutical industry. In the past seven years, they have won $2.8 billion in settlements from nine companies.

The US Attorney's Office in Boston alone was responsible for four of these, totaling more than $1.6 billion. Often the prosecutors are aided by whistleblowers, who, under federal rules, can recover a portion of a settlement. In the drug company cases brought in Boston, that has meant individual payouts of up to $77 million, an enticement that has led to a steady increase in whistleblower cases here.

Of course, because of the exclusion threat wielded by prosecutors, the allegations whistleblowers provide against companies are never tested in court because the companies cannot run the risk of a conviction.

The injustice of this strategy was dramatically demonstrated by the recent prosecutions in Boston of TAP Pharmaceuticals and individual TAP employees around the marketing of Lupron, a popular treatment for prostate cancer. Prosecutors extracted an $875 million criminal fine from TAP, the largest ever in a healthcare fraud case, and a guilty plea from one of nine individual defendants. The remaining individuals insisted on their right to a trial. All were acquitted. The US District Court then reopened the one individual guilty plea and, after reexamination, vacated it. The obvious conclusion is that if TAP Pharmaceuticals had gone to trial, it, too, would have been acquitted. But TAP could not take the chance of losing all federal reimbursement for Lupron, even though its president said the company ''fundamentally disagreed" with most of the prosecution's allegations.

This prosecutorial hunt for enormous, well-publicized settlements has not only set aside the presumption of innocence; it also threatens immediate and practical injuries to the public. In Massachusetts, it handicaps an industry that is vital to the economic well-being of the Commonwealth.

Additionally, suspension or exclusion of a drug company from government programs threatens to deprive patients of needed medications. These punishments should therefore be reserved until there has been an actual finding of guilt against a company that has failed to reform its practices, as opposed to the current system, where such measures can be imposed before prosecutors prove their case and even if companies have adopted strong compliance programs.

A greater risk is that the use of these threats to gain settlement payments from drug companies will divert financial resources from the research and development of new drugs and therapies. The $875 million TAP Pharmaceuticals payment represents enormous lost potential in healthcare research.

Prosecutors should do the work required by law to prove their cases instead of threatening corporate suspects with extinction if they seek a trial. And Congress needs to clarify when these threats are appropriate.

-------------

The following article, by NELF's former President, appeared in the Portland Press Herald in March 2004:

Maine Deserves A Business Court

Maine Supreme Court Chief Justice Lee Saufley recently revived an important discussion that surfaced several years ago in the Maine court system – the concept of removing complex time consuming business cases from the general docket (“Business Court Is On To-Do List”, Portland Press Herald, 8/22/03).

More than a dozen states, including Massachusetts, Rhode Island and Connecticut, have introduced specialization into their courts to deal with business disputes. Some programs are recent and some, like those in New York and Delaware, have been operating for decades. The track record established by these programs demonstrates that everybody – not just business litigants – benefits from having them.  Already probate courts, bankruptcy courts and housing courts around the country help to apply expert knowledge where it is needed, and to release other resources where they can do the most good. Similarly, business courts have shown that they allow court systems to use their increasingly strained resources to better effect. 

The state as a whole, not just the court system and those who use it, derives an advantage from carving complex time-consuming cases out of the mainstream. Business needs speed and expertise to resolve disputes, and this is increasingly true in a world everyday rendered faster and more complex by technology. Businesses consider a number of factors, such as taxes and schools, in deciding where to locate and whether to move. The ability to resolve uncertainty quickly and predictably is high on the list. Maine ignores the business courts found in nearby states to its own disadvantage.

The current inability of many court systems to provide effective dispute resolution is causing businesses to seek private solutions, including arbitration, mediation and ADR. This has proven to be an interim solution for larger companies, or at least those with the resources to afford the additional expense. The solution is temporary because only the court system can create precedent and give us rules for future cases.  Private systems can’t resolve cases without an existing body of law on which to base decisions that both sides will accept.

Massachusetts recently completed a study of its Business Litigation Session, or BLS as it is called, with exceptional results. The BLS was instituted in October of 2000, and a report covering the first eighteen months of operation conducted by an independent survey firm, Atlantic Research and Consulting, was released last fall.

In the period covered by the survey, the Massachusetts BLS resolved over 200 complicated multi-party lawsuits. These commercial cases, together with other complex disputes such as medical malpractice, had previously consumed a disproportionate amount of public resources for much longer periods.

The numbers produced by the survey are dramatic. Fully three quarters of all the attorneys who appeared before the BLS took the time to respond to the survey, and more than half of these had more than one case in the Session. An astounding eighty-seven percent of these attorneys placed the Session in the top two of seven available ratings for overall satisfaction, while only three percent put it in any of the bottom four ratings. Eighty-three percent said that the BLS enabled them to give better legal service, citing the consistency of having one judge in charge of the case, the promptness of hearings and the promptness of decisions.

These respondents, who are experienced trial attorneys and not easily impressed, considered the Session as good or better than private dispute mechanisms by eighty-four percent. Their cases were of all kinds, involving contract disputes, landlord-tenant contests, shareholder fights, partnership dissolution, employment disputes - in short, the basic fabric of most civil litigation today. They won, lost and settled in relatively equal amounts, and praised the process regardless of which side they were on.

National and multi-national corporations will ultimately be able to absorb the inefficiencies that a slow and uncertain court process can create. Small and medium-sized businesses cannot. And these are a significant part of our region’s economic engine, not to mention an ever increasing part of the employment and tax base. The good news is that courts have shown they can achieve these efficiencies with very little, if any, additional cost simply by reallocating cases and judges to reflect interest and expertise. Chief Justice Saufley’s proposal is a good one, and should be given a chance. 

-------------

The following article, by NELF's former President, appeared in the Boston Business Journal in June 2003:

Should Business Enjoy Less Freedom of Speech Than Individuals? 

One reason free speech is considered so important to our society is the concept of “enough rope.” Free speech gives everyone enough rope to hang themselves, at least in terms of reputation. The best way to generate good ideas and get to the truth is to engage, literally, in a free-for-all. Until recently, we have always trusted our ability to separate what is silly, wrong or misleading from what is genuine, useful and true. 

Slowly, in the past few decades, courts and legislatures are losing confidence. Courts, in particular, have carved out a difficult and dangerous exception to freedom of expression – so-called commercial speech. The assumption now is that the average citizen needs protection from sales talk. This extends not just to direct sales pitches, (“my oat bran will lower your cholesterol”) but also to corporate commentary on public issues (“dairy cooperatives don’t inflate the price of milk – they just support family farmers”) intended to influence opinion, enhance a business’ image, or both. Which is why the U.S. Supreme Court is currently faced with the case of Nike, Inc. v. Kasky.

Nike, like other shoe and clothing companies, has come under attack for the conditions under which its products are manufactured abroad. In response to sustained adverse publicity, Nike sent letters to University Presidents and Athletic Directors, bought newspaper ads, and made statements through press releases. Nike claimed that its labor practices were being misrepresented. The persons and organizations that had been complaining about Nike then claimed that the responses were inaccurate, and sued Nike for unfair competition and false advertising under California consumer protection laws.  Nike’s legal defense, based on the First Amendment, is that it should not have to risk a lawsuit for engaging in public debate. Each side claims the other was making false claims but only Nike, seeking to protect its corporate reputation, can be sued because another person has accused it of inaccurate statements.

Everyone has an agenda when they speak in public. They want you to vote for them, contribute to their campaign, buy their products or services, join them in a cause, contribute to their charity, give them name recognition, admire the rightness of their position or the clarity of their thought. The idea that a commercial motive sets you apart, and should therefore give you less freedom of expression, is based on several misconceptions. One misconception is that a business knows more about its products or services than anyone else, and enjoys an unfair advantage in public debate.  How this could be true, for example, in a debate between General Mills and the American Medical Association over the curative effects of oat bran remains to be explained.

Another misconception is that there is some sort of clear dividing line between “commercial” speech and the rest. The Nike case is a good example. The extent to which affluent Americans are exploiting workers in underdeveloped countries is a social and possibly a political issue.  It is also an issue which can affect Nike’s bottom line. Suit against Nike was upheld in California despite the fact that it was engaged in a debate on issues of public interest, because its remarks were directed to consumers and it was talking about its own business. In other words, a business is free to enjoy public speech like anyone else only if the subject is of no real interest to it. In today’s world of infomercials, product placement in films and a dozen other creative (if tasteless) techniques to sell the public what it does or doesn’t want, there is no real dividing line. It is unsettling to contemplate state regulators acting as speech police over expression that includes serious matters of public concern.

Freedom of speech is especially important when the government is involved. Public officials have essentially unlimited access to the media. While most everyone has a healthy skepticism of corporate messages, businesses at least have the resources to disseminate points of view that will differ from political pronouncements. We need to hear from commercial interests on subjects like NAFTA, the health care system, dividend taxes and many others. It is healthy to question a business’ motives and examine its statements carefully. It is unhealthy and socially self-destructive to erect barriers that will require a business to defend lawsuits because others disagree with what it has to say.

Everyone, including corporations, is liable for fraud, slander and similar harm inflicted through speech. Returning public discourse to a level playing field will not immunize anyone from improper behavior, but it will demonstrate that we still trust ourselves enough to give everyone enough rope.

Andrew Grainger is President of New England Legal Foundation, which filed an amicus brief with the U.S. Supreme Court in the Nike v. Kasky case.

-------------

The following article, by NELF's former General Counsel, appeared in the Massachusetts Lawyers' Weekly on May 19, 2003:

Confidential Settlements:  Is the Cure Worse than the Disease?

There have been many shocking aspects to the scandal over the Catholic Church’s handling of allegations of sexual abuse by priests. One of the most compelling has been the coverage of the “secret” settlements between claimants and the Church. Although national newspapers reported on the Church’s confidential settlement of sexual abuse cases as long ago as 1988, these agreements are nonetheless blamed for hiding and perpetuating the abuse. These cases, together with the Bridgestone/Firestone tire settlements, other product liability settlements, settlements of environmental contamination, and other toxic tort cases, have given rise to an increased call to ban confidential settlements.

Attorneys and their clients can no longer assume that disputes which have been settled confidentially will remain private matters. This problem is not new – as long as two years ago Massachusetts Superior Court Associate Judge Connolly refused to approve a confidentiality provision in a settlement agreement and an assented-to motion to impound documents, ruling that the defendant’s privacy rights were outweighed by public’s right to know about a potentially dangerous product. Gleba v. Daimler Chrysler Corp., No. 98230, 2001 WL 1029678 (Mass. Super. Aug 06, 2001). Today, Massachusetts is among those states considering legislation regulating secrecy orders and agreements. Declaring that the public has a “right” to information about alleged hazards to the public, proposed Senate Bill No. 1021 would void confidentiality agreements under certain conditions. The heart of the bill, Section 3, provides that in actions alleging personal injury, wrongful death, or monetary or property damages allegedly caused by a public hazard or financial fraud, information concerning the public hazard or financial fraud “shall be presumed to be public information and may not be kept confidential pursuant to an agreement of the parties.” The bill would void confidentiality agreements, settlement agreements, or “other documents purporting to keep such information from the public.” Under Section 4 of the bill, a court could issue an order to keep such information confidential “for a period of time that the court deems appropriate.” To issue such an order, a court would be required to hold a hearing and to find that the information is a trade secret “which is not itself evidence of a defective product or an environmental hazard or a financial fraud,” or is information otherwise privileged (not merely confidential) under existing law. Alternatively a court must find that an overriding interest exists that overcomes the right of public access to information. In addition to finding this overriding interest, a court would need to find a “substantial probability” that the overriding interest will be prejudiced if the information is not kept confidential; that the proposed confidentiality is narrowly tailored; and that no less restrictive means exist to achieve the overriding interest.

In the last eighteen months, at least ten state legislatures have introduced bills that would limit the ability of citizens to agree to keep details of a dispute private as part of a settlement of that dispute. Last year federal district judges in South Carolina adopted local civil rule 5.03 providing that the court would seal no settlement agreement filed with the court, to the praise of newspapers, consumer groups, and plaintiffs’ lawyers across the country.

The media, which has a predictable industry bias against confidentiality (except, perhaps, when it comes to the ability of reporters to protect their sources) has been active in calling to an end to confidential settlements, publishing editorials like the Los Angeles Times’ September 2000 editorial entitled “Lethal Secrets” or the New York Times’ September 2002 call for “Ending Legal Secrecy.”

This seems to be an idea whose time has come – or is it?  Sex abuse, product liability, and toxic tort settlements are the sensational tip of what is a vast and commonplace iceberg—the routine settlement of claims and lawsuits with contracts that include a boilerplate promise of confidentiality. People make these agreements for legitimate and understandable reasons. Someone falsely accused may prefer to end unfounded rumors with a nominal payment in exchange for a promise of silence, rather than enduring the expense, unpredictability, and publicity of a lawsuit. Businesses may prefer a private negotiated resolution to a trial which will reveal valuable company information to competitors in open court. Not only defendants have reason to settle disputes confidentially. Even in this day of tell-all journalism, some people prefer not to make public their medical histories, the details of discrimination or harassment they endured, that they were taken in by a fraud or scam, let alone the fact that they are now in possession of a significant cash settlement. Courts generally encourage settlement, both because it conserves judicial resources and because an agreement reached by the parties themselves is often more practical and gratifying than a judgment imposed from above.

This issue is not a simple one, because it involves many basic, and sometimes contradictory, principles of American jurisprudence: the basic right of parties to contract, and the belief that a relatively unfettered right of contract assists society in making economically rational choices; the public policy encouraging settlement of disputes; individual and corporate privacy interests; protecting the public from dangers to health and safety; the public right of access to the courts; and the appropriate degree of judicial discretion.

The urge to prevent the devastation wrought by sexual predators, dangerous products, and environmental contamination is legitimate and understandable. It remains to be seen whether outlawing confidential settlement agreements will have that effect. There are several indications that it might not.

Since 1991 both Florida and Texas have had rules on the books—called by some the toughest in the nation—outlawing or regulating agreements that conceal information about public hazards. Yet both states experienced the tragic results of defective Bridgestone/Firestone tires, leading newspapers in both states in 2000 to call for—you guessed it—an end to secret settlements. Much of the legislation proposed in the wake of the Catholic Church scandal is modeled on these two states’ rules, suggesting that some evaluation of their efficacy—or lack of it—is in order before other states blindly follow suit.

In Massachusetts, the advocates on either side of the debate need to look closely at the proposed legislation. Critics of the “secret” settlements with the Catholic Church should question whether this legislation, if in place at the time, would have prevented those settlements. The proposed legislation applies only in “actions” alleging damages caused by a public hazard or financial fraud. Many of the Catholic Church settlements were reached prior to the filing of any action; and it is an open question whether they, or any pre-litigation settlement, would be covered under this language. Furthermore, the legislation applies to damages caused by a “public hazard,” which the statute defines as “any device, instrument, person, procedure, or product or a condition of any device, instrument, person, procedure or product that is alleged to have caused or is likely to cause injury or financial loss.” Under this definition, is a priest accused of sexual abuse a “public hazard”?

Lawyers and clients involved in cases comprising the rest of the vast and commonplace iceberg—the routine settlement of claims and lawsuits—need also be concerned about this legislation.  If a priest accused of sexual abuse is a “public hazard,” is there any client accused of causing injury or financial loss that isn’t? Can one trigger this new statutory right of public access to private information merely by filing a complaint alleging harm from a “public hazard” or financial fraud? What, exactly, constitutes “information concerning the public hazard or financial fraud” to which the public now has a “right” of access? Who has standing to assert this “right”? Is it analogous to the right of access to public records under M.G.L. c. 66? Are there exceptions to this “right”?

Finally, and perhaps most importantly, are confidential settlements the problem and is legislation the answer? Those opposed to confidential settlement agreements argue that they delay the discovery of public dangers. Thus, the reasoning goes, if confidential settlements are restricted or regulated, meaningful information about a danger will flow to those who can prevent the danger before it recurs. This presumption is based on any number of unproven assumptions: that some plaintiffs, having settled a claim to their satisfaction, will take it upon themselves to publicize a danger, that they will do so in sufficient numbers to be significant and worthy of notice, that the danger will be real,  that the information will be communicated in an effective way and will be sufficiently meaningful to permit the public to protect itself and regulators to act to prevent further danger, and that they in fact will do so. Implicit in this reasoning is the notion that the potential harms from restricting or regulating confidential settlement agreements are insufficiently serious to outweigh the benefits of enhanced information flow, or that those harms can be limited by court oversight and that the burden on the court of functioning in such an oversight capacity is also insufficiently serious to outweigh the benefits of enhanced information flow.

Much of this confidence in the benefits of increased regulation may be misplaced. The fact that public dangers have ultimately come to light despite the existence of confidential settlement agreements suggests instead that the agreements are a relatively short-term means of restricting the flow of information. The public dangers cited as justification for curtailing confidential settlement agreements—sexual abuse of minors, dangerous products, environmental contamination, medical malpractice, employment discrimination, and financial fraud—have all occurred in areas heavily regulated by state and federal agencies. Those agencies possess tools of investigation and enforcement that far exceed that of the average investigative journalist, including specialized technical expertise, familiarity with the regulated area, investigative authority that often includes subpoena power, and the authority to mandate reporting obligations through statute and regulation. That these agencies, with these tools, fail to uncover issues that became readily apparent to the press suggests, in the words of Harvard law professor Arthur Miller, that confidential settlement agreements may be “a convenient scapegoat for other failures in the flow of information in our society.” If this is so, then laws banning confidential settlement agreements, without more, are unlikely to increase the flow of relevant information to the proper authorities. They will, however, represent yet another inroad on the ability of private individuals and businesses to decide for themselves how best to resolve their disputes, and they will deprive the judicial system of a valuable tool to resolve disputes efficiently without further burdening already beleaguered court dockets. 

Christine Hughes is General Counsel of New England Legal Foundation and the author of the Foundation’s recently released White Paper on the issue of Confidential Settlements.

------------

The following article appeared in the Metropolitan Corporate Counsel in October 2002:

 -------------

The following article, by NELF's former President, appeared in the Boston Business Journal in July 2002:

A Bright Spot In The Court Crisis 

It is no secret that the Massachusetts court system is in turmoil. Funding for vital functions such as interpreters and court reporters is almost depleted or already gone. The Courts and the Legislature are locked in not one, but two, incipient constitutional crises relating to Clean Elections and to an unseemly power struggle over hiring and control of court employees. 

All of this is happening in the context of state-wide budget cutbacks and, as if that weren’t enough, an election year. A businesslike reform of the system to give litigants and taxpayers a rational cost effective system of justice and dispute resolution is desperately overdue. Supreme Judicial Court Chief Justice Margaret Marshall has recognized the need for management reform, and the need not to abandon the field to the legislature, by enlisting Boston College Chancellor Father Donald Monan to head a commission on improving court management. The coming months are likely to witness finger pointing and a struggle with the legislature over the line item budget by which it presently decides where, and on which clerical positions, to allocate funds. 

Neither legislators nor judges are automatically entitled to run the court system. The right result--effective and widespread access to justice at a reasonable cost to the public--is too important. Self-government of our court system makes inherent sense, but only if the judiciary can demonstrate that it will manage the courts in a cost effective and businesslike manner. Fortunately, a recent report on one judicially created program provides a model for good self-government. 

For the past twenty months, the Suffolk County Superior Court has produced exceptional results dealing with complex multi-party commercial disputes, and has done so without adding one dollar of additional expense. The Business Litigation Session, or BLS as it is called, was instituted in October of 2000 thanks largely to the foresight and determination of Superior Court Chief Justice Suzanne DelVecchio. The BLS takes advantage of the benefits of specialization and the hard work of a few very dedicated judges, principally Judge Allan van Gestel who has presided over the project since its inception. 

The BLS is monitored by a volunteer Resource Committee of in-house and corporate attorneys from large and small offices, and from different areas of the state. A report covering the first eighteen months of the Session sponsored by the Resource Committee and conducted by an independent survey firm, Atlantic Research and Consulting, was released last month. Both the statistical results and the opinions of close to 100 experienced trial lawyers who were interviewed for the survey show that with good organization and hard work Massachusetts courts can be second to none. 

In the eighteen month period covered by the survey, the BLS resolved over 200 complicated multi-party lawsuits. It should be emphasized that commercial cases and other complex disputes such as medical malpractice consume a disproportionate amount of public resources. By removing commercial cases from other dockets and closing so many in such a relatively short time, the Session has benefited everyone seeking access to the courts. 

The numbers produced by the survey are dramatic. Fully three quarters of all the attorneys who have appeared before the BLS took the time to respond to the survey, and more than half of these had more than one case in the Session. An astounding eighty-seven percent of these attorneys placed the Session in the top two of seven available ratings for overall satisfaction, while only three percent put it in any of the bottom four ratings. Eighty-three percent said that the BLS enabled them to give better legal service, citing the consistency of having one judge in charge of the case, the promptness of hearings and the promptness of decisions. 

Almost ninety percent of those interviewed wanted to expand the BLS to other courts and counties in Massachusetts. These respondents, who are experienced trial attorneys and not easily impressed, considered the Session as good or better than private dispute mechanisms by eighty-four percent. Their cases were of all kinds, involving contract disputes, landlord-tenant contests, shareholder fights, partnership dissolution, employment disputes - in short, the basic fabric of most civil litigation today. They won, lost and settled in relatively equal amounts, and praised the process regardless of which side they were on. 

The bottom line is that in a very difficult environment, the BLS has compiled a case resolution and customer satisfaction record that would be the envy of any business or institution. If judges and court administrators must demonstrate to the public that they will run the system cost effectively and at a high level of quality, Chief Justice DelVecchio and Judge van Gestel are doing just that with the Business Session. 

Andrew Grainger was President of the New England Legal Foundation, which supported the creation of the BLS and provided funding for a survey to measure its results.

-------------

Andrew Grainger is the former President of the New England Legal Foundation, which supported the creation of the Massachusetts BLS and provided funding for a survey to measure its results.

 The following article, co-authored by NELF's former President, appeared in the Boston Globe Business Section in March 2002:

It Just Got A Little Harder To Keep Your Business Out of Court --
Supreme Court’s Waffle House Decision Throws Uncertainty on Arbitration Clauses in Employment Agreements

 Andrew Grainger and Thomas Royall Smith

Because this is also an age of widespread litigation, arbitration has become popular among businesses and individuals seeking a way to resolve differences without dedicating a substantial part of their time and assets to the process. Arbitration clauses have become exceedingly common in most business agreements, including employment contracts. And, until mid-January, lawyers were able to advise their clients that such clauses are generally respected and enforced by the courts.

Now a chink has appeared in the armor that these clauses are intended to provide. In a recent case, EEOC v. Waffle House, Inc., the U.S. Supreme Court has declared that the EEOC may go to court to seek all available remedies for alleged job discrimination regardless of the employer-employee agreement to resolve their disputes through binding arbitration. In Waffle House these remedies included reinstatement, backpay, compensatory and punitive damages – all of which the employee had agreed only to seek through arbitration.

Since the EEOC itself was not a party to the arbitration agreement between the company and the individual, the Court found the agency could pursue remedies in court for the alleged discrimination, including “victim-specific” relief. Once the EEOC files a charge, the Court noted, the agency becomes “the master of its own case ....” and is not considered a mere stand-in for the aggrieved worker. Unfortunately at the end of the day, it makes little difference to the company whether it had to undergo a lawsuit because it was brought by the EEOC on an individual’s behalf, or by the employee himself.

The situation the Supreme Court considered in the Waffle House case was unusual. As the Court noted in its opinion, the EEOC files a lawsuit in less than one percent of all charges that come before it each year. In fact, in fiscal year 2000, the Commission filed fewer than 300 lawsuits, representing less than five percent of all cases in which the agency itself found reasonable cause to believe discrimination occurred. In contrast, alleged victims of employment discrimination filed more than 21,000 lawsuits in the federal courts in 2000. Thus, it was a rare occurrence that the EEOC filed the lawsuit independently of the employee, alleging that Waffle House’s employment practices, including the discharge, violated the law. Although the employee had agreed to resolve any disputes with Waffle House through arbitration, in this instance he had instead gone directly to the EEOC with his complaint.

Where Does Arbitration of Employment Disputes Stand Now?

Many employers may be wondering whether this Supreme Court decision limits the enforceability or desirability of private agreements to arbitrate employment disputes. In theory, the answer is yes. But, as a practical matter, the Supreme Court is correct, at least temporarily, when it said that its decision “will have a negligible effect on the federal policy favoring arbitration.” The Court went on to say that, given the EEOC’s restrained litigation practice over the past 20 years, concerns that this decision will discourage use of arbitration agreements are “highly implausible.” Legal scholars may say that it is poor argument to defend a decision on the basis that it won’t apply very often, but to businesspeople it will make all the difference.

The reasons employers have turned to the private arbitration of employment disputes have not disappeared. In the past decade, the tremendous increase in employee lawsuits, the ability of plaintiffs to recover virtually unlimited damage awards, and the unpredictability of juries have combined to make employment litigation even more treacherous and costly for employers. Arbitration offers a change of forum, while still assuring the parties the same rights and remedies as a court or fair employment practice agency. The Waffle House decision has not, and cannot, change any of these facts. Let us hope that the Court’s predictions of restraint on the part of the EEOC are proven correct.

Attorney Thomas Royall Smith is the managing partner of the Boston office of Jackson Lewis Schnitzler & Krupman, which represented Waffle House before the Supreme Court. Andrew Grainger is President of New England Legal Foundation, which filed an amicus brief in support of Waffle House.

 -------------

The following article, by NELF's former President, appeared in the Rhode Island Lawyers Weekly of August 16, 2001:

Two weeks ago the United States Supreme Court issued its decision in Palazzolo v. Rhode Island et al. 69 U.S. Law Week 4605. At first glance, Palazzolo is a familiar dispute between a landowner and a regulatory body over land use restrictions, in this case wetlands provisions. But the Court's decision goes well beyond the immediate context of the case, and strikes at the relationship between government and governed.

Through a corporation of which he was sole shareholder, Anthony Palazzolo owned roughly twenty acres of shoreland in the town of Westerly, Rhode Island. Eighteen of these acres were designated "coastal wetlands" by the Rhode Island Coastal Resources Management Council, an agency created in 1971 at which time Palazzolo, as shareholder, had owned the property for a decade. Seven years later, in 1978, Palazzolo's corporation was dissolved and he took title individually. Thereafter, Palazzolo submitted a series of applications which sought to fill part or all of the property for development.

The state's denial both of Palazzolo's applications and of his subsequent takings claim was upheld through the Rhode Island Supreme Court. The United States Supreme Court granted certiorari on four issues. Two of these, involving ripeness and the effect of residual value of an uplands portion of the property, are fact intensive and real estate law specific.

This article will discuss the remaining two issues:

1. Whether Palazzolo had standing to challenge as unreasonable (and hence compensable) regulations which were already on the books at the time he acquired individual title to the property.

2. Whether Palazzolo's "acquisition" of the property (the transition from shareholder to titleholder) after the wetlands designation was imposed impedes recovery because he cannot meet the so-called "Penn Central test" of having a "reasonable investment-backed expectation."

These two, it is submitted, are really a single issue splintered by overlawyering. Reduced to its operative core this issue is: Should transfer of property have any effect on the right to challenge existing regulations? The Palazzolo, decision, though in turn splintered by overjudging (six opinions from nine Justices), provides the right answer and, moreover, provides it in exactly the right context by ruling that under our system of government, the state must remain answerable to citizens.

The majority opinion, authored by Justice Kennedy, explicitly recognizes the social import of the case: "Future generations, too, have a right to challenge unreasonable limitations on the use and value of land." (Id. At 4611) "[Restrictions which are unreasonable] ...do not become less so through passage of time or title...[and therefore we cannot] absolve the state of its obligation to defend any action restricting land use...." (Id.)

The extent to which the opinion, as reflected by these statements, transcends the context of Palazzolo itself has been largely lost in the media's characterization of the decision as property law specific and anti-environmental. It is really neither, since in the final analysis there are many types of laws and regulations which state and local governments might wish to enact with the hope that passage of time or title will remove the need to defend their reasonableness or legality.

The Palazzolo decision does not permit development of Palazzolo's land, nor does it provide him with an award because his property use is restricted. It holds only that Palazzolo is entitled to be heard. Consistent with the burdens placed against summary judgments, directed verdicts and other automatic disqualifiers in our system, this is the right result.

If Palazzolo prevails on remand, the most likely legal result is a compensatory award. This, again, is probably a good result. The social policy behind takings claims is that society, not selected individuals, should pay for social programs. This brings us to Penn Central Transp. Co. v. New York City 438 US 104 (1978) which recognizes that the Fifth Amendment prohibition against taking private property for public use is "...designed to bar government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole." Id. 123-124 citing Armstrong v. United States, 364 US 40,49 (1960). Because "fairness" and "justice" depend on the facts in each case, Penn Central identifies tests to be applied to each claim. One of these is "...the extent to which the regulation has interfered with distinct investment-backed expectations." Id. at 124. The Palazzolo majority simply notes that because Palazzolo was not given the opportunity to have his case analyzed under Penn Central, it should be remanded.

In an entertaining sideshow, Justices O'Connor and Scalia have issued sparring concurring opinions over the reasonableness of Palazzolo's investment-backed expectation in the face of regulations which, on their face, defeat the expectation. This issue was ignored by the majority opinion, and rightfully so, because it is completely circular. The reasonableness of an expectation which would violate a restriction depends on the unreasonableness of the restriction. An unreasonable restriction, accurately recognized as unreasonable by an acquirer, cannot suddenly be deemed reasonable because it existed before the change of title. Any other result would allow the state, by tautology, to bootstrap itself through Penn Central back to immunity from attack because title has changed. Unfortunately, and dangerously, as many as five Justices (the four dissenters plus O'Connor and possibly Stevens) would allow the pre-transfer existence of a regulation to be used to dispute a showing of expectation. In Palazzolo this remains dicta.

In yet another indirect attempt to immunize the state, Justice Stevens, in a partly concurring and partly dissenting opinion, engages in a back-to-the-future exercise by asserting that a "taking" can only occur when the restriction at issue is first imposed. From this he concludes that only the owner at the time of enactment has a takings claim. This is frankly difficult to swallow. It should be evident that the owner against whom an unreasonable restriction is imposed, and every subsequent owner to whom it applies, are deprived of property. Any them should be able to make a claim for compensation. Once one of them does so, the result will be reflected by the market in all subsequent transfers, thereby eliminating future claims.

The number of opinions, and the attempts in many of them to undermine the basic concept of fairness laid down by the majority, are unfortunate. But the Palazzolo decision currently brings to a halt attempts in many states, of which Rhode Island is but one, to avoid responsibility for the implementation of land use provisions.

Andrew Grainger is President of New England Legal Foundation, which filed an amicus brief in the United States Supreme Court on behalf of other Rhode Island property owners in the Palazzolo case. The author wishes to acknowledge the invaluable assistance of Staff Attorney Michael Malamut in preparing this article.

-------------

The following article co-authored by NELF's former Chair and former Vice-Chair, appeared in the January 2001 issue of Women's Business:

New Legal Issues for a New Age

Andrew Grainger is President of New England Legal Foundation which, with the American Society of Law, Medicine and Ethics, is co-sponsoring this fall's conference in Boston "Practical Applications Of Genetics: What the Genomics Revolution Means To You And Your Company".