Is litigation truly the best alternative to a mediated agreement ("BATNA")? "BATNA" is the acronym used in mediations to compare what the parties may achieve in mediation versus going to trial. A look at last week's verdict in the first case to go to trial against Bob Filner, the former San Diego Mayor who resigned in mid-2013 amid dozens of women's allegations of sexual harassment or battery, will exemplify why the answer to the question above may well be "no".
In many mediations, the parties, lawyers or both, discuss the litigation tactics they will carry out if the case doesn't settle, such as take depositions, subpoena personal records of the other side, bring forward witnesses, etc., and how each action will adversely affect the other side. In mediation, the plaintiff (or prospective plaintiff) alleging injury feels that the sum offered by the defendant is not enough, and going to court sounds like the nirvana-like path to justice and public vindication True, mediation is a confidential process (or at least we try to maintain it as such), there is usually no press release or book rights that follow. However, there is often closure and a result that both sides can tolerate, even like or be happy with. The defendant professing innocence feels that plaintiff is seeking too much money, so they will be better off, spend less and be vindicated at trial. But, let's be realistic --Numbers at mediation rarely get "real" until later in the process, so it does take some time and "reality-checking" before either side will get realistic in their numbers. Moreover, when a case gets to mediation, the parties usually learn new information, good and bad, about their case or position. In a recent case it was learned that the defendant was truly on the verge of filing bankruptcy. In another recent case, the defense was presented documents of phone calls and text messages which solidified plaintiff's claims; and in a few others, multiple witness statements were presented which surprised the other side. Things almost always look different by the end of a mediation than they did at the start. It is from that vantage point where the risks, numbers, upcoming costs, and potential trial outcomes all need to be seriously evaluated against what is possible at mediation.
The Filner verdict provides a perfect example of things happening that were not expected. The plaintiff testified that she felt violated when Filner stroked her neck, and touched her breasts and buttocks at an event. Plaintiff's lawyer asked the jury to award six-figure damages for her medical expenses plus emotional distress. Against the backdrop of so many other sexual harassment allegations and claims filed against Filner, it is reasonable that plaintiff expected to win. The jury deliberated approximately 2 hours and found Filner DID sexually harass the plaintiff, but they found for defense on the sexual battery or touching charge. Despite a partial victory, the jury awarded the plaintiff zero damages, finding that the harassment was not "serious" nor "pervasive" (which generally is required to even get a sexual harassment verdict in a hostile work environment claim; this case appeared to also include "quid pro quo" claims). The jury found that the plaintiff did not meet her burden of showing that she suffered harm from the incident --- hence, she won, but was awarded no damages. It is unknown what the Judge will do with attorneys' fees, whether plaintiff will be deemed the prevailing party, and if so, how much if any will be awarded. It remains a risk to Filner and the City that the Judge could award fees and costs to the plaintiff despite no damages being awarded.
A party may have the facts, or the law (or both) to support them. But what is the likelihood that someone will get a better verdict than the final settlement offer? The answer perhaps lies in a September 2008 study, led by Randall Kiser, comparing 40 years of historical data about what cases could have settled for, versus what actually happened at trial. Statistically as demonstrated over the past 55-plus years, at least in employment cases, there is a 50% chance of prevailing on either side. Additionally the study found that plaintiffs err substantially more often than defendants when it comes to evaluating and walking away from settlement numbers. Plaintiffs in over 60 percent of the cases studied, rejected a settlement, went to trial and either lost, or did worse than they could have in the settlement. Defendants on the other hand, strategized or "guessed" better, as they went to trial and did worse a small fraction of the time. However, when defendant did lose, their margin of error averaged $1.1 million, versus plaintiff's margin of error which was closer to $40k. Thus, while defendants may be better strategists or guessers on the correct number, when they do mess up, they usually do so in a really big way.
Two other recent cases help to exemplify the risk in "betting the house". In one case, plaintiff had good facts in a disability discrimination case, which the defendant (or carrier) failed to recognize. The numbers were too far apart so it did not settle at mediation. A Motion for Summary Judgment was filed by defendant in a hope that the case would be dismissed without a trial. There were some key factual issues in dispute, but some risk that the motion could be granted. Plaintiff understood the risk of the motion being granted, was willing to continue negotiations up until the motion was heard, but warned that if the motion was denied, their numbers would go up. I continued to mediate the case, and defendant went up a little more, but not to the range that was needed to have a prayer's chance of settlement. The motion was denied in full, then another plaintiff lawyer joined the trial team, and the case ended up settling just before trial, for approximately 3 times the earlier numbers. Another disability case could have settled for a reasonable sum at mediation but defendant only offered $5,000. Despite continued efforts to get it settled, defendant held fast to its $5,000 offer. At trial, the first phase garnered a 7-figure verdict, after which the case settled.
On the flip side, in a recent pregnancy discrimination case, while the defense attorney recognized the risks to his client and tried to settle, plaintiff decided the case was worth much higher than the 6-figure offer and walked away....but defense had unearthed volumes of evidence that the Plaintiff had fabricated not only claims about the case in trial but about other major facts as well. Plaintiff had to stop trial and dismiss her claims altogether. Those are four examples of cases that went awry from one side's perspective. Parties do not anticipate these "land mines" and often, even when their lawyers do, the parties may still disagree and insist on trial. In such cases, I always pose the question to that non-settling party: "Is litigation the BATNA (best alternative to settlement)? That is a question that negotiation participants need to ask themselves throughout the process, and take a good hard look at their trial risks before walking away without a settlement.