Jerry Seinfeld Meets eDiscovery: Rules of the Game and the Pony Scene

May 14, 2022
Ralph Reading the Rules

I could not resist writing about a new case that mentions electronic discovery (yes, I have a standing Lexis search), not because it creates any kind of great precedent or anything, but because it involves one of my all-time favorite comedians, Jerry Seinfeld. Charles v. Seinfeld, 2022 U.S. Dist. LEXIS 54387, Case No. 18-cv-1196 (AJN), (SDNY, April 29, 2022). The opinion is by Judge Alison Julie Nathan, who was sitting by designation after her elevation on March 30, 2022, to the Second Circuit Court of Appeals. The opinion itself, is, with all due respect, kind of like the Seinfeld’s series. It is not about anything terribly important. It’s not about much really. But still, I found it very funny in a cynical, jealous lawyer sort of way and it does have an important, between the lines, message. Read on if you are into that sort of thing.

Rules of the Game

To lay the proper groundwork for this blog about Seinfeld (personal opinions only), I have to start by sharing, for fair use educational purposes only, one of my favorite Jerry Seinfeld quotes. You’ve all heard it, the one about lawyers and judges. It explains my photo.

“What are lawyers, really? To me a lawyer is basically the person that knows the rules of the country. We’re all throwing the dice, playing the game, moving our pieces around the board, but if there’s a problem, the lawyer is the only person that has read the inside of the top of the box. I think one of the fun things for them is to say, ‘objection.’ ‘Objection! Objection, Your Honor.’ Objection, of course, is the adult version of, ‘’fraid not.’ To which the judge can say two things, he can say, ‘overruled’ which is the adult version of ‘’fraid so,’ or he could say, ‘sustained,’ which is the adult version of ‘Duh.’”

Jerry Seinfeld, Seinfeld, Season 4: The Visa

Who Wouldn’t Love A Pony ?

I have seen every episode of Seinfeld many times. The famous Pony scene in Season 2, Episode 2, immediately came to mind when I read Charles v. Seinfeld. As you read on, see if you can figure out why that popped into my head. In case you don’t have instant recall of this great, family dinner table scene, check out this excerpt on YouTube. Better yet, treat yourself and watch the whole episode. It’s one of the best.

Before I do a fair use educational quote of the Pony script, let me share another Seinfeld quote, one that is supposedly serious. Being the naive idealist that I am, I believe it. Anyway, Jerry is credited with saying: “I like money, but it’s never been about the money.” I get that, as I truly feel the same way. Still, I do like money as much as the next person, maybe even the next lawyer (nah, probably not), and money is what Charles v. Seinfeld is all about. It considers a request for an award of fees and costs in favor of the prevailing party, Jerry Seinfeld, which includes costs of $32,692.21 for electronic discovery database hosting fees. Charles v. Seinfeld at *18 (by the way, check out Fn 5 on that page for a great Seinfeld-like note by the obviously very sharp, Judge Nathan: “There is a $0.30 discrepancy in the costs requested ($100,918.71) and the sum of the component costs.”)

Here are the lines and scene that came to mind when I read Charles v. Seinfeld. First, to set the stage, Manya is an elderly Jewish immigrant relative who is hosting a family dinner that Jerry and Elaine were roped into attending. Jerry and Elaine were bored and wanted to leave. At Elaine’s prodding, Jerry started to rant about children who had ponies.

Elaine: What about Ponies huh? What kind of abnormal animal is that? And those kids who had their own ponies.

Jerry: I know. I hated those kids. In fact, I hate anyone that ever had a pony when they were growing up.

Manya: I had a pony!

Jerry: Well, I didn’t mean a pony per se

Manya: When I was a little girl in Poland, we all had ponies. My sister had pony, my cousin had pony. So, what’s wrong with that?

Jerry: Nothing. Nothing at all. I was just expressing

Helen: Should we have coffee? Who’s having coffee?

Manya: He was a beautiful pony. And I loved him!

Jerry: Well, I’m sure you did. Who wouldn’t love a pony? Who wouldn’t love a person who had a pony?

Manya: You! You said so!

Jerry Seinfeld, Seinfeld, Season 2, Episode 2.

At the end of this scene, Manya storms out, very upset at Jerry, saying “That’s it! I had enough!” Unfortunately, Jerry learns the next day that Manya died later that night.

Charles v. Seinfeld: A Run of the Mill Frivolous Copyright Case

If you are really interested (I’m not) in the dubious merits of the case, see the 2019 order granting the defendants’ motion to dismiss (Fraid-so!) by then District Court Judge Nathan. Charles v. Seinfeld, 410 F. Supp. 3d 656, 2019 U.S. Dist. LEXIS 169543, 2019 WL 4805684 (S.D.N.Y., Sept. 30, 2019). It is enough for my purposes to hear Judge Nathan’s later summary of the case in her April 29, 2022 order ruling on defendants’ motion for attorneys’ fees and costs under 17 U.S.C. § 505.

Plaintiff Christian Charles, an award-winning writer, director, and producer, alleged copyright claims against Jerry Seinfeld and several related Defendants related to the show Comedians in Cars Getting Coffee. The Court ultimately dismissed the second amended complaint on statute-of-limitations grounds, explaining [*2] that Charles was on notice of his claims since at least 2012 but did not file suit until 2018, far outside the three-year statute of limitations for such claims. Id. at 8.

Charles v. Seinfeld, 2022 U.S. Dist. LEXIS 54387, Case No. 18-cv-1196, *1-2, at pg. 5 of 13, (SDNY, April 29, 2022),

The Second Circuit affirmed (Fraid not. Duh!) the Sept. 30, 2019 dismissal on June 18, 2020. The obvious Statute of Limitations winner, Jerry Seinfeld, et al, then moved for fees. That’s when the real fun began. To get an award of fees under the copyright statute Seinfeld’s attorneys had to show that Charles’s claims were objectively unreasonable. They failed to convince the Magistrate (Fraid not!) who was assigned to hear their motion for fees and costs, Judge Katharine H. Parker.

Seinfeld then objected to Judge Parker’s Report and Recommendation and Judge Nathan agreed (Fraid so. Duh!) with Seinfeld. Judge Nathan concluded that Charles’s claims were objectively unreasonable and that other relevant factors favored awarding Defendants’ attorneys’ fees. Id. She ordered Charles to file a brief on “the amount of the fee award,” with particular attention to the relative financial strength of the parties. Id.

Charles didn’t do that, instead he re-argued the merits of the Magistrate Judge’s report and recommendation denying any award at all. That usually upsets a judge, but here, Judge Nathan, now an appellate judge sitting by designation to wrap up old business, showed great restraint. She heard the procedurally improper, caveman lawyer type motion for rehearing and ruled on it here. She denied the rehearing argument (Duh!) and went on to address the issue of the amount of the award with no help from Charles. Id. at *3-5 at pgs. 5-6 of 13. Who knows, that might have been a smart move on his part.

Seinfeld Attorney’s Fee and Costs Motion – Those Are Some Expensive Ponies!

Before we get to the ponies, remember that this case was decided on a motion to dismiss. There was no discovery. None. Yet, somehow Seinfeld’s attorneys incurred costs of $32,692.21 for electronic discovery database hosting. Hmm. They moved for an award of these costs and, of course, the motion was denied. They got nada, because, as all ediscovery lawyers know, the ancient federal costs award statute does not allow for ediscovery costs. Moreover, as Judge Nathan patiently explained, instead of just saying duh:

Similarly, the electronic database hosting fees are [*19]  very high and not properly imposed on Charles in a case that did not proceed to discovery. Defendants of course had an obligation to preserve relevant documents for discovery, as did Charles, but both sides bear and typically retain that cost.

Id. at *17 at pg. 11 of 13.

Seinfeld’s attorneys were, however, awarded costs of $92 for paper copies. I personally find that funny.

In another Fraid Not! type eliciting move, Seinfeld’s attorneys also asked for an award of costs of $66,386.26 for electronic research fees. Again, same result, zero award for that. (Duh!) As Judge Nathan ruled, it is well settled such charges are already accounted in the attorneys’ hourly rates and research time. Id. at *16 at pg. 10 of 13. Wish it were not so, but it is; besides, $66,386.26 is one large Westlaw or Lexis fee for a simple Statute of Limitations case. Plus, as everyone knows, including the judge I presume, law firms are not charged by the project.

Still, Seinfeld’s attorneys justified the reasonableness of the fees and costs award requested on the representation that these were the fees and costs at rates actually billed to and paid by their clients. Here again is Judge Nathan explaining that argument, one which I have carefully used myself, and I emphasize carefully, because the representations better be true. Note I have omitted the lawyers names here as I have no intent to offend and I understand their frustration perfectly well with the obviously very annoying opposing counsel.

Generally, an “attorney’s customary billing rate for fee-paying clients is ordinarily the best evidence of” a reasonable hourly rate.

According to the ______’s declaration, the rates listed above are those actually charged and paid by ___________ clients for comparable work. That weighs in favor of finding the rates reasonable, but is not dispositive.

Id. at *6, *9 at pgs 6, 7 of 13.

Now we finally get to the unusually large ponies, the facts that took my breath away, namely the hourly rates of the attorneys, the fees requested, and the things they billed their client for. They also seemed to shock Judge Nathan, a very experienced judge in New York City, where all of the judges have pretty much seen it all, and so that’s really saying something.

Defendants request a staggering $872,939.66 in attorneys’ fees and $100,918.71 in costs. … That fee amount is constituted by 1,465.9 hours of work completed by eight attorneys as well as paralegals and support staff…

Id. at *8 at pg. 7 of 13.

Wow. I’m staggered. All for a simple copyright case that the defense argued was frivolous and they won on a motion to dismiss based on an obvious statute of limitation defense. But wait, there are still more ponies. The senior partner in charge of the case represented that his hourly rate in 2020 was $1,550.00. Yup, that’s One Thousand, Five Hundred and Fifty Dollars per hour. Ok. I’m really impressed, maybe just a wee bit jealous. <Secret thought: I really need to raise my rates. I’ve read the rules on the back of many game boxes.> And that was two years ago. I bet his rate is even higher now.

But wait, my sisters and cousins have ponies too. The sixth year associate working on the case had a standard rate of $965 per hour. Gees! But wait, there’s more. Five first-year associates, yup, kids barely out of law school, had their own ponies. Their hourly rates ranged from $545 in 2018 to $650 in 2020. <Secret thought: All right, that does it! I’m raising my rates.> There’s still more. Everyone had ponies. Three paralegals working on the case had standard rates of $431.25 per hour. If you are not astonished yet, consider this additional detail by Judge Nathan, who, along with her clerks, obviously put a lot of work into this. But I guess “a lot of work” is relative as these comments show.

A few examples demonstrate the excessive nature of the hours billed. First, take the series of motions to dismiss that Defendants filed. The lead associate, _______, alone billed 120 hours to research and draft the initial motion to dismiss; an additional [*14]  130 hours to update the motion following the first amended complaint; and a further 37 hours to update it following the second amended complaint. And partners and junior associates also billed hours to contribute to and review this work. The Court finds substantial overlap in the authorities across the three briefs filed in support of the motions to dismiss, suggesting that the hours billed to modify later briefs were in large part unnecessary. And the approximately 180 hours spent by associates to analyze Charles’s response and to draft a reply exacerbates the issue. At bottom, given the straightforward statute-of-limitations defense at the center of this case, Defendants’ request of $300,000 for drafting just the moving briefs alone is plainly unreasonable.4

FN 4- As Defense counsel observed at the oral argument before Judge Parker: “There was no novelty here. There was no mystery here. This case was as dead on arrival as a copyright case can be. I’ve been practicing copyright for a lot of years, 30 years.” Tr. at 13, Dkt. No. 135.

Id. at *13-14 at pg. 9 of 13.

I could go on, but the icing on the pony cake for me was that the defense attorneys put on and billed for a mock argument. Not only that, they even billed for first years to watch it. I kid you not. Here is Judge Nathan again and her dry wit. I’m pretty sure she is a Seinfeld fan too.

Third, the records reflect hours billed for multiple attorneys, including junior associates, to attend a mock argument and oral argument. Typically, courts do not pass the cost of associates observing mock arguments or oral arguments on to the opposing party in a fee award.

Id. *15 at pg. 9 of 13.

Conclusion – DUH!

Judge Alison Nathan

Second Circuit Court of Appeals Judge Alison Julie Nathan, sitting by designation as the former trial judge of Charles v. Seinfeld, considered Seinfeld’s motion for award of fees of $872,939.66 and costs of $100,918.71. She also considered the objections of the plaintiff, Charles. She ruled and awarded only $28,750 in attorneys’ fees and $92 in costs for a total of $28,842. Judge Nathan did make the award joint and several against the plaintiff and plaintiff’s counsel. Some small solace to Seinfeld’s attorneys. They were pushing hard for personal sanctions against opposing counsel. On the other hand, as a final gesture, that seems funny to me at least, Judge Nathan said Charles and his attorney could make these payments in equal monthly installments over a ten-year period.

Dear fellow lawyers, even if opposing counsel is beyond annoying, a real caveman, don’t kid around with a judge in seeking sanctions. This is, in effect, what was going on here, seeking sanctions in the form of fees against opposing counsel. The judges have not only read the rules of the game, but they know them well and know how to apply them fairly. Do not try to game the system with inflated demands.


The Importance of a 502(d) Order and Attorney Candor

October 27, 2019

I always suggest that attorneys ask for a 502(d) Order under Federal Rules of Evidence before production of ESI. A new case out of Texas demonstrates some of the many bad things that can happen if you do not. Bellamy v. Wal-Mart Stores, Texas, LLC, No. SA-18-CV-60-XR, 2019 WL 3936992 (W.D. Tex. Aug. 19, 2019). The opinion is from one of the leading e-discovery jurists in the country, Texas District Court Judge Xavier Rodriguez. Although he allowed the inadvertently produced documents to be clawed back, it was a close call. In the process Judge Rodriguez considered those documents and sanctioned defendants based on what he read. He struck defendant’s comparative negligence defense and awarded fees and costs. It could have been worse. The accidentally disclosed attorney emails suggested multiple rule violations and a disturbing lack of candor to the court.

This is a must read opinion, not only because of who wrote it, Judge Rodriguez, and the quality of his research and analysis, but also because of the facts of the case. There are many things we can learn from the mistakes highlighted in this opinion. Including the all important ethical values of attorney candor to the court and cooperation.

I will let the learned Judge Rodriguez’ own words in Bellamy explain this case, which was colored by the  attorney conduct he uncovered.

This is a slip and fall case. Plaintiff alleges that she . .  tripped over a pallet while walking through sliding doors into the garden center. . . .

There have been several discovery disputes that have arisen in this case. The Magistrate Judge presided over the first round of disputes and eventually ordered that the Plaintiff’s [First] Motion for Sanctions be dismissed without prejudice to allow for the deposition of a Wal-Mart employee who may have been responsible for leaving the pallet unattended. The Magistrate Judge further ordered that Defendant supplement its disclosures and discovery responses, amend its objections, and provide Plaintiff with a privilege log as to any withheld documents.

This latest round of disputes centers on what happened next. In responding to the Magistrate Judge’s Order, a paralegal in counsel for Defendant’s office inadvertently produced documents that Defendant claims are privileged under the attorney-client privilege or work product. Plaintiff responds that some documents are not privileged. With regard to documents that are privileged, Plaintiff argues that these documents nonetheless demonstrate that Defendant’s counsel has acted in bad faith and engaged in discovery abuse.

Id. at pg. 1 of 7.

Judge Rodriguez starts with an analysis of Evidence Rule 502.

This Court encourages parties to enter into a Rule 502(d) Order[1], which states: “A federal court may order that the privilege or protection is not waived by disclosure connected with the litigation pending before the court.” FED. R. EVID. 502(d). Despite this Court’s encouragement, the Defendant did not request such an Order.[2] This was the first of many mistakes by Defendant’s counsel in this case. In the absence of a 502(d) Order, the Court then turns to an analysis under Rule 502(b).  . . .

In this case the privilege log was woefully deficient. Specifically, the Court is unable to ascertain the identities of various recipients of the emails in question.

Id. at pg 2 of 7.

The emails were all submitted to Judge Rodriguez for review in camera. The opinion makes clear that Judge Rodriguez did not think all of these emails were in fact privileged under case law, but plaintiff’s counsel had for some reason, not explained, conceded that they were.

But as stated above, because Plaintiff concedes that the documents are privileged, the Court will not disturb the concession that the documents are covered by the attorney-client privilege.

Id.

The elements of Rule 502(b) were met with this odd concession, so Judge Rodriguez had no choice but to order their return and prevent plaintiff from using the emails at trial, but Judge Rodriguez was not at all happy about the contents of the emails. This is where the hammer falls:

*3 Accordingly, pursuant to Fed. R. Evid. 502(b) and Fed. R. Civ. P. 26(b)(5)(B), Defendant is entitled to “claw back” the documents it inadvertently produced. But that is not the end of this analysis. Although Plaintiff may not further use these documents in this case, preventing their use in analyzing the pending motion for sanctions would result in a perverse result, upending the rules of civil procedure and encouraging discovery abuse.

Id.

Judge Rodriguez starts by noting defense counsel became aware of key witnesses and failed to disclose them.

With regard to the above individuals, Defendant failed to list them in its Fed. R. Civ. P. 26(a)(1) initial disclosures and failed to timely list them in answers to interrogatories. It is apparent from a reading of the materials submitted either Defendant’s counsel was grossly negligent in fulfilling their discovery obligations or they realized they had an uncooperative manager who was refusing to assist in their investigation, and they did not want to disclose the identities of potentially “bad” witnesses. Counsel for Defendant attempts to shift some of this blame by stating that Plaintiff was already aware of the manager and garden center employee because of her prior employment with Wal-Mart. This shifting is unpersuasive. Defendant’s counsel had obligations to provide this information and it unreasonably and untimely did not.

Id. at pg. 3 of 7.

The in camera privileged emails Judge Rodriguez read also showed that a video of the slip and fall once existed. Yikes. That is a real problem.

Counsel for Defendant never disclosed to Plaintiff’s counsel that at one time video may have existed that was now lost. Rather, counsel merely kept repeating that video does not exist.

Id.

That was way too cute. Disclosure to opposing counsel and the court was expected by Judge Rodriguez.

If that were not all bad enough, the emails revealed another hidden fact:

Finally, Plaintiff’s counsel discovered in the inadvertently produced emails that: (9) Defendant hired an
investigator to conduct a full social media/background check on the Plaintiff on June 20, 2018; and (10)
outside counsel for Defendant notified “Travis Rodmon-Legal” that surveillance had been completed on the Plaintiff and “it is debatable if the footage will be beneficial…. The investigator informs me that she moves very slowly, gingerly and hobbles a bit.”

*4 Counsel for Defendant never disclosed that it possessed video of the Plaintiff. Defendant was under an obligation to disclose any such video as a request for production had been made to that effect. Likewise, Wal-Mart had obtained numerous statements from the Plaintiff prior to her obtaining representation. These statements were requested in requests for production, but not timely disclosed. Counsel for Defendant attributes this failure to the fact that one attorney working this file left the firm and the file was reassigned and the new attorney was unaware of the video’s existence. Although this suggests no “bad faith”, at the time Wal-Mart sent its responses to requests for production and stated that it had no video of the Plaintiff it violated Rule 26(g).

Plaintiff requests that Defendant be sanctioned for failing to disclose that store surveillance video at one point existed and at some point became “lost.” Plaintiff also seeks sanctions because the Wal-Mart manager testified at her deposition that she took multiple photos (including of the pallet) and these photos have never been produced. Likewise, the manager testified that she obtained a statement from the employee who left the pallet unattended and that statement has never been produced. Plaintiff also seeks sanctions because Wal-Mart did not preserve the pallet in question. Finally, Plaintiff requests sanctions generally for Defendant’s failure to honor its discovery obligations. Plaintiff also requests that the Court provide an adverse inference instruction to the jury regarding the missing information. Plaintiff seeks these various sanctions citing generally to Fed. R. Civ. P. 37 and the court’s “inherent
authority.”

Id.

Judge Rodriguez examines the law on sanctions and then considers the ethical Duty of Candor to the Court (Rule 3.3, Model Rules of Professional Conduct) the Duty of Cooperation and Rule 1, FRCP (just, speedy and inexpensive).

D. Duty of Candor, Cooperation and FED. R. CIV. P. 1

Counsel for Defendant wisely opened its Response brief with the following: “Defendant’s counsel
acknowledges and accepts it made mistakes during the discovery of this matter. It accepts that consequences may come from the Court as it considers Plaintiff’s Motions before the Court.”

It is apparent that at the time of the accident, Defendant considered this a low-value or nuisance case. It did not contemplate the severity of the Plaintiff’s injuries and medical treatment. But once Plaintiff placed Defendant on notice that she was going to pursue litigation, reasonable and proportionate preservation obligations were required to be met. Likewise, defense counsel may be on billing constraints, but discovery obligations and adherence to the rules of civil procedure must be met.

*7 Federal Rules of Civil Procedure 1 and 26(f) contemplate that the parties meet in good faith to discuss the case and facilitate resolution of the case and discovery issues because the parties have an obligation “to secure the just, speedy, and inexpensive determination of every action.” Rather than complying with the rules, defense counsel delayed the production of adverse material and the identity of witnesses and the extent of the inappropriate acts only fully became revealed after an inadvertent production of emails was made (after intervention by the Magistrate Judge).

Id. at pgs. 5-6 of 7.

Judge Rodriguez then concludes:

A reading of the file in this case makes apparent that Wal-Mart has known early on that it is responsible for the pallet being left unattended for some period of time in an area frequented by customers. Many counsel for defendants argue that the burden is on a plaintiff to establish all elements of their causes of action. That is true. But if that is going to be the Defendant’s strategy (even when knowing they will likely suffer defeat), this Court is not sympathetic to complaints that litigation is too expensive. In this case, rather than focusing on the extent of Plaintiff’s damages, Wal-Mart has now expended significant time and fees on the liability issue its own claims investigator conceded a long time ago.

Conclusion

Defendant’s Motion to Abate or Strike Plaintiff’s Second Motion for Sanctions (docket no. 49) is DENIED, but as stated above Plaintiff may not use the inadvertently produced documents for any other purpose and counsel must return any documents still in Plaintiff’s possession, if any, to Defendant. Plaintiffs’ Motion for Sanctions (docket no. 50) is GRANTED as stated above. Defendant may not assert any comparative negligence defense in this case, including arguing that the danger was open and obvious.

Id. at pgs. 6-7 of 7.

 


EARLY NEUTRAL EVALUATION: Can a Stitch in Time Save Nine? – Part One

July 18, 2022

First of a two part blog on experiments by the US District Courts, in both the Southern and Northern Districts of California, with a type of Alternative Dispute Resolution procedure called Early Neutral Evaluation (ENE).

Losey ponders and tests whether a stitch in time can save nine?

ENE is different than mediation and special mastery assignments, somewhat of a hybrid, but with an emphasis on expert input. The basic idea behind this alternative dispute resolution tool can be found in the old adage: A stitch in time saves nine. As applied to ediscovery, I have seen many cases where early input of an authoritative discovery expert can be beneficial. If the expert input is provided very early, and if it is followed, it can save the parties both time and money. But can an timely expert stitch really save 90% as the adage suggests?

Common wisdom aside, a ninety percent savings is incredibly high and likely impossible to attain in all but a few cases. Still, in all cases, based on my experience, early expert input can save the parties substantial time and money. Maybe a ninety percent savings is possible in some rare, big cases, where the expert is good and carries a big stick. One has only to think of the savings possible from one expert suggestion, the use of AI instead of armies of attorneys doing linear review. Maybe an overall 90% savings could be reached in a case like that. What is important is that ENE should result in savings, far more than the cost of the exercise, in almost very case. Hopefully, the experiments with ENE now going on in California and elsewhere will confirm my experience.

The current ENE procedures in California are shown in McCormack v. Sterling Jewelers Inc., No. 22-cv-00525-AJB-BGS, 2022 U.S. Dist. LEXIS 106345 (S.D. Cal. June 14, 2022). The order granted the parties a continuance of a mandatory ENE Conference, a continuance that Magistrate Judge Bernard G. Skomal referred to as rare and would not to be repeated. After all, one of the main points of ENE is to be early. The stitch can only save nine if done early, and, if done by an expert.

ENE Has Been Around a Long Time

ENE is not a new idea, although the California Courts pushing the procedure is relatively new. The ABA has long had a one paragraph article explaining ENE: Early Neutral Evaluation. Here is how the ABA introduces practitioners to this form of Alternative Dispute Resolution (ADR):

Early neutral evaluation is a process that may take place soon after a case has been filed in court. The case is referred to an expert, usually an attorney, who is asked to provide a balanced and unbiased evaluation of the dispute. The parties either submit written comments or meet in person with the expert. The expert identifies each side’s strengths and weaknesses and provides an evaluation of the likely outcome of a trial. This evaluation can assist the parties in assessing their case and may propel them towards a settlement.

As a practitioner in District Courts since 1980, I personally think ENE is a very good idea. So too did Congress in 1990 when it first enacted the Civil Justice Expense and Delay Reduction Plans Act (CJRA), which included Early Neutral Evaluation as one of many recommended ideas. 28 U.S.C.S. § 473(a)(3), (b)(1) & (b)(4). Ironically, it has taken more that thirty years for this type of early intervention ADR to catch on, but I’m reminded of another old saying I believe in – Better late than never.

The California District Courts recent ENE rules are an implementation of this initiative to reduce federal litigation expense and delay. This is a longstanding problem. This article provides citations at the end to other federal courts with active Early Neutral Evaluation programs. I urge all attorneys and judges to give ENE a try. It may not save ninety percent in all cases, but, if done with a good expert, it should certainly help effectuate the goals of Rule 1, Federal Rules of Civil Procedure.

ENE in the United States District Court for the Northern District of California.

Different forms of the ENE Rule have been adopted by the Southern and Northern Districts in California. This blog article will focus on the much more detailed ENE rule found in the United States District Court for the Northern District of California.

The rule is identified in the Northern District as Local Rule 5 governing Alternative Dispute Resolution, ADR Local Rule 5. Here is the Local Rule’s description.

5-1. Description

In Early Neutral Evaluation (ENE) the parties and their counsel, in a confidential session, make compact presentations of their claims and defenses, including key evidence as developed at that juncture, and receive a non-binding evaluation by an experienced neutral lawyer with subject matter expertise. The Evaluator also helps identify areas of agreement, offers case-planning suggestions and, if requested by the parties, settlement assistance.

The Rule goes on to describe eligibility, which I interpret to mean it is available in any case where at least one party wants it, and may be required anyway, if the judge wants it. Most judges would want any complex cases to try such an early case settlement with the help of an expert neutral. Note the rules requirement as to availability of requisite expert. This shows there is a need for Neutrals with special skills and experience, including technology, to play a role much like that of a special master, but with settlement tasks within the scope of their assignment.

5-2. Eligible Cases

Subject to the availability of administrative resources and of an Evaluator with subject matter expertise, appropriate civil cases may be referred to ENE by order of the assigned Judge following a stipulation by all parties, on motion by a party under Civil L.R. 7, or on the Judge’s initiative.

Here is how the next Rule 5-3 on Evaluators begins. See the full rule for many remaining details.

5-3. Evaluators (a) Appointment. After entry of an order referring a case to ENE, the ADR Unit will appoint from the Court’s panel an Evaluator who has expertise in the subject matter of the lawsuit, is available during the appropriate period and has no apparent conflict of interest. . . .

It is interesting to note that under 5-6, much like situations where special masters are appointed, and unlike mediation appointments, ex parte communications are strictly controlled.

5-6. Ex Parte Contact Prohibited

Except with respect to scheduling matters, there shall be no ex parte communications between parties or counsel and the Evaluator, including private caucuses to discuss settlement, until after the Evaluator has committed his or her evaluation to writing and all parties have agreed that ex parte communications with the Evaluator may occur.

The timing component here is very important. First you get the written opinion, then settlement discussions can begin. The Evaluator has no adjudicatory power, so this is just a peek into how the court itself will probably rule. But this kind of neutral evaluation can often have a very sobering impact onto one or both sides.

At least seven days before the first Early Neutral Evaluation meeting with the Evaluator, the parties have to serve on the Evaluator, and each other, an ENE Statement. ADR ENE Rule 8. These are not to be filed with the court and so would be outside of Pacer and the public disclosure that goes with Pacer. Subsection c. sets out the contents of the ENE Statement. Note its similarity with a typical mediation statement.

(c) Content of Statement. The statements must be concise, may include any information that may be useful to the Evaluator, and must, unless otherwise directed by the Evaluator:

(1) Identify, by name and title or status:

(A) The person(s) with decision-making authority, who, in addition to counsel, will attend the ENE session as representative(s) of the party, and

(B) Persons connected with a party opponent (including an insurer representative) whose presence might substantially improve the utility of the ENE session or the prospects for settlement; Describe briefly the substance of the suit, addressing the party’s views of the key liability issues and damages and discussing the key evidence;

(3) Address whether there are legal or factual issues whose early resolution would reduce significantly the scope of the dispute or contribute to settlement negotiations;

(4) Identify the discovery that is necessary to equip the parties for meaningful settlement negotiations; and

(5) Include copies of documents out of which the suit arose (e.g., contracts), or whose availability would materially advance the purposes of the Evaluation session, (e.g., medical reports or documents by which special damages might be determined).

This is what you would expect and follows typical mediation rules.

As a big believer of the rights of litigants to protect their trade secrets, I was pleased to see Rule “5-9. Special Provisions for Patent, Copyright, or Trademark Cases.” Has what parties need to protect their confidential data.

Rule 5-10 governs attendance at the ENE hearing with the Evaluator. All parties and their counsel are required to appear with a few exceptions allowed. The reason provided in Rule 5-10 for these stringent attendance requirements is instructive:

This requirement reflects the Court’s view that the principal values of ENE include affording litigants opportunities to articulate directly to other parties and a neutral their positions and interests and to hear, first hand, both their opponent’s version of the matters in dispute and a neutral assessment of the merits of the case and the relative strengths of each party’s legal positions.

Again, much like mediation.


Surprise, it’s whole cloth!

To be continued . . . Part Two of this Blog will examine the Procedures to be followed in an ENE Session, the suggested helpful input of the EDRM’s often overlooked, Metrics Model, ENE and Rule 1, ENE Experiments in Other Courts and, as always, my Conclusion. As a bonus, I’ll also consider the crazy idea of mixed idiots, um, I mean mixed idioms. What happens if a stitch in time reveals a case made out of whole cloth? Surprise!



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