By Michael D. Young, Esq.
I. THE STANDARD TRIAL MODEL
We peek in at the closing arguments in the case of NewPuke Co. v.
MegaDeth Corp., an environmental lawsuit brought by the current owner of a contaminated
manufacturing facility against the former owner. The dispute revolves around which company
will pay how much of the environmental cleanup costs:
Here is what the defense attorney says, as he looks each
juror squarely in the eye, fist pounding on the podium: "And so to conclude, ladies
and gentlemen of the jury, as the 15 page chart prepared by EnviroNerd so clearly
indicates, my client MegaDeth Corp. can at best be responsible for no more than 12.425% of
those past costs that are NCP consistent since MegaDeth used only sodium chloro-polutinate
in its operations from 1963-71 and then switched to the much milder hydro-chloro-goopinate
through 1982 when the site was sold to the plaintiff NewPuke Co. Moreover, since the
background soil conditions contain tri-sulphate-muckinal, which when mixed with the
chloro-polutinate forms harmless C2-yuckinate, MegaDeth actually improved the soil
conditions. It was NewPuke’s use of poly-gli-incomprehensate from 1982 to 1989,
combined with its total failure to establish a RCRA permitting system which resulted in
the gross majority of its past costs, which were not NCP consistent in the first place,
and which certainly cannot be passed on to MegaDeth. I rest my case."
Here is what the jury hears:
"blah-blah-blah-blah-blah-blah-blah-MegaDeth-blah-blah-12.4
something%-blah-blah-blah-chemical-thing-blah-blah-blah-more-
chemical-things-blah-blah-blah-I rest-my-case."
Here is what the jury thinks:
"Do you think his wife picked out that tie?" "I
wonder what’s for lunch today?" "I think MegaPuke did it." "Why
do engineers always wear short-sleeved shirts?"
Here is what it cost the clients to try the case: Five gajillion
dollars.
So maybe the above is a slight exaggeration. Maybe the trial cost
only four gajillion dollars. The point is the same nonetheless. The fact is, there are
some types of complex cases that simply do not lend themselves to efficient resolution by
trial, whether jury trial or bench trial. While our court system does provide a mechanism
that will, one way or another, resolve a dispute, it is not the system of choice for all
disputes.
It is perhaps because of the excessive cost and the inability to
reach a decision maker with the technical expertise necessary to make a fair allocation
that more and more environmental disputants turn to mediation. But, as illustrated below,
"mediation" in the abstract covers a wide swath and may or may not provide the
dispute resolution process that the disputants need. In light of the special complexities
of an environmental dispute, and the unique needs of the disputants, we suggest a team
mediation approach, which we describe below. But first, let us understand what mediation
is.
II. STANDARD MEDIATION
Mediation is nothing more than a
facilitated negotiation—a negotiation between the parties with the help of a neutral
third party. Like many other things in life, mediation can be good, or it can be
oh-so-bad, depending on whom you are with.
Generally, a mediator controls the process, but not the outcome.
For instance, it is the mediator who determines when the parties will meet in joint
session or when it might be helpful to break into private sessions. It is generally the
mediator who will try to control the movement of the negotiations, focussing on particular
issues at certain times, while ignoring other issues for resolution later. The mediator is
generally not one to tell you whether your case is good or bad, but is one who can work
with the strengths, weaknesses and uncertainties of cases to craft settlements. While the
parties always control the outcome—they do not have to agree to anything, and indeed
can pack up their lawyers and go home anytime they choose—the mediator will impact
the outcome by suggesting solutions or ways of thinking that may create
"win-win" situations. Indeed, in the best of mediations, the parties will come
out with a result that satisfies both of their interests and needs in ways that could
never be achieved in court.
Here is a very simple example based on a real-life case: Tenant
operated a car wash on Landlord’s property, and in the process contaminated it. If
Landlord were to sue in court and win, he would spend many years and hundreds of thousands
of dollars in legal fees and expert costs, and would be left with a clean site but no
tenant. Tenant would lose the car wash, probably could not afford to clean the site, and
would go bankrupt. In mediation, on the other hand, it was discovered by the mediator in
private caucus that the reason Landlord wanted the site cleaned up was so he could sell
it. It turned out that Tenant wanted to buy the site since Tenant already owned the
neighboring site and could expand his operations to cover both parcels. In a
"win-win" result that could only have been accomplished through mediation,
Tenant purchased the property at a "clean" value (established by a neutral
appraiser) and indemnified Landlord for potential future liability arising from the
contamination. This happy ending took a few months with no litigation. No court could have
done this.
Not all mediations are written in Hollywood, however. Here is
another true story: A current owner of a manufacturing facility was suing the prior owner
over cleanup costs. The question was who had to pay how much. One legal issue was the
validity of a clause in a pre-CERCLA purchase and sale agreement that allocated certain
liabilities to the former owner. If this clause were enforceable, the prior owner would
arguably be liable for a greater share of the costs than if the allocation were made under
CERCLA guidelines. The parties spent considerable time and money preparing for the
mediation, having their experts ready to discuss the site, the contaminants, the
historical manufacturing processes, and the like. They did not, however, brief the
contract issue.
Just as the parties were beginning to discuss the issues with the
mediator, the mediator made an off-hand comment that in his opinion, the contract clause
was unenforceable. The prior owner, of course, took this opinion to heart and refused to
budge off of its low settlement position. The current owner, on the other hand, believing
nonetheless that the contract clause was valid, refused to budge off of its high
settlement position. The mediation went belly-up within the first hour and the parties
went back to court (where, by the way, the judge ruled on summary judgment that the
contract clause was enforceable.)
The difference between these two stories is in the selection of
the mediator. The first mediator was trained in the mediation process and understood how
to use differences between the parties to help them create a solution they could both live
with. The second mediator was a former federal court judge who had retired in the early
years of CERCLA and without much CERCLA experience; and was trained to give his opinions,
whether asked for or not, and whether helpful to the process or not. The judge did not
understand that by evaluating a key legal issue without the consent of the parties, he was
inhibiting rather than promoting settlement.
III. A NEW MODEL OF ENVIRONMENTAL MEDIATION
Environmental disputes are a unique breed.
They are not particularly well-suited for judicial determination because they are so
technically complicated and incredibly expensive to try. Nor are they as easily
susceptible to the standard meditation with a retired judge, particularly one not well
versed in modern environmental law and mediation theory. So what is to be done with them
(the disputes, not the judges)?
Our proposal is Environmental Team Mediation. As developed by
this writer’s firm, Environmental Team Mediation is a model consisting of (a) a
lawyer/mediator trained and experienced in the mediation theory and process, (b) a neutral
environmental attorney with subject matter expertise in the legal area of dispute, and (c)
a neutral environmental expert with expertise in the technical issues in dispute. This
potent team has many advantages over a single person mediation, and can accomplish much
more at less cost.
Technical Issues Addressed: Much of the
frustration experienced by disputants is the feeling that their technical case is not
being given a proper hearing by the court or single mediator. This is because a judge,
jury or inexperienced mediator does not have the technical or even legal background to
understand the issues at the level that the parties need for them to be understood. An
experienced panel of neutrals can address these issues on levels that the attorneys
understand as well as the technical consultants. They can help the parties discuss and
evaluate legal issues, for instance (such as the validity of a pre-CERCLA indemnity
clause); or they can discuss on terms familiar to the experts whether the sampling
protocol undertaken to date conclusively determines that the contamination came from one
facility or another.
Creative Business Solutions Explored: The courts
cannot craft creative solutions to meet the true needs and interests of the parties.
Either the defendant pays the plaintiff or he doesn’t. In standard single-neutral
mediation, the ability to brainstorm solutions is limited by the neutral’s lack of
technical knowledge. In Environmental Team Mediation, however, environmental experts and
attorneys with experience in the type of dispute at issue can help the parties think about
and create solutions that might meet their underlying interests, but that had simply not
been broached yet. The panel approach can provide a multi-party "brainstorming"
session that is simply unavailable any other setting. It can address the true business
concerns of the parties and help craft solutions that fit within those concerns.
Solutions the Parties Can Live With: Because it
is inevitably the parties’ solution, the resolution of the dispute is one that both
parties can live with. The "winner" is not the one who was best able to snow a
judge or jury, or who could best oversimplify what is in all respects a complicated task.
The resolution is one that the panel has helped the parties themselves create.
Process Control: With a trained mediator guiding
the "process", there is a much lower risk that the mediation will fail as a
result of mediator error. For instance, trained mediators understand that the parties will
disagree as to almost everything having to do with the dispute—legal theories,
factual issues, costs, fault, blame, liability. However, so long as all parties come to
the table agreeing about one thing—that they want the dispute resolved—a trained
mediator can use those differences, uncertainties and risk as leverage to encourage the
parties to move their settlement positions closer. Generally, to create solutions, the
parties do not need a neutral to present an opinion on disputed factual or legal issues.
And a good mediator will not so opine unless requested by all parties, and required to
move the process along.
Legal Resolutions If Necessary: There are times
where settlement is impossible because of a disagreement over a threshold issue, be it
factual or legal. In the example of the dispute over the pre-CERCLA indemnity provision
above, it is possible that the parties could never settle until the contract issue was
adjudicated by a neutral third party. If the parties so desired, the Environmental Team
Mediation panel could render an advisory (or binding) decision on that legal issue,
supported by a written, researched legal opinion. This binding opinion could be based on
legal briefing by the parties, or the parties could leave the briefing and research to the
Panel, thereby saving money. Ofttimes, resolution of one isolated legal issue is all that
is keeping the parties from fully resolving the dispute between themselves. In the
alternative, if the dispute is in court litigation, the parties can often resolve
threshold issues on motion and return to mediation thereafter.
Impact Of Regulators: More often than not,
complex environmental disputes involve governmental agencies in some degree or another.
Indeed, regulators are participating in mediations now more than ever before. The use of
an environmental attorney with regulatory experience as part of the panel provides the
panel with an understanding and experience of the subtle (and not-so-subtle) influences
that the government can bear on a settlement.
Joint Fact Finding: There is no dispute but that
litigation costs are astronomical in an environmental dispute, particularly when the
remedy is in the multiple millions of dollars. Much of this cost is associated with
pre-trial discovery and expert work. This work can be combined and shared, under the
guidance of the Environmental Team Mediation panel. One neutral environmental firm
conducts one set of necessary tests, and the results are used by both parties and the
Panel to discuss solutions.
Confidentiality: The process is low risk. The
discussions are confidential and inadmissible in Court.
Environmental disputes exist. Somehow, and at some cost, these
disputes will also be resolved. The question is how. Trial is certainly one way to go.
However, where the parties would like to control the costs and address the true issues in
dispute, and are interested in pursuing creative solutions that all parties can live with,
the Environmental Team Mediation model may be the ticket
____________________Environmental Mediation
