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Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal...

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Good Litigators | Good People | Good Counsel Kafi C. Linville, Shareholder Chair, Construction Practice Group 612 375-5936 [email protected] Kafi’s Team Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 [email protected] Arthur Chapman Construction Team Juan M. Avila, Shareholder 612 375-5958 [email protected] Juan’s Team Kathleen A. Adofo, Paralegal 612 375-5942 [email protected] Barbara L. Kelsey, Legal Administrative Assistant 612 225-6776 [email protected] Corey S. Bronczyk, Associate Co-Chair, Construction Practice Group 612 375-5972 [email protected] Corey’s Team Katherine R. Holm, Paralegal 612 375-5961 [email protected] Tanya R. Meyer, Paralegal 612 375-5964 [email protected] Kori L. Morehead, Legal Administrative Assistant 612 375-5934 [email protected] Mark S. Brown, Shareholder 612 375-5926 [email protected] Mark’s Team Karen R. Tulk, Paralegal 612 375-5982 [email protected] Barbara L. Kelsey, Legal Administrative Assistant 612 225-6776 [email protected] Arthur Chapman Kettering Smetak & Pikala, P.A. attorneys at law 500 Young Quinlan Building 81 South Ninth Street Minneapolis, MN 55402-3214 Ph: 612 339-3500 Fax: 612 339-7655 811 First Street Suite 201 Hudson, WI 54016 Ph: 715 386-9000 Fax: 612 339-7655 www.ArthurChapman.com Gregory J. Duncan, Shareholder 612 375-5967 [email protected] Greg’s Team Steven J. Gansen, Paralegal 612 375-5949 [email protected] Shanda L. Wimberger, Legal Administrative Assistant 612 225-6770 [email protected]
Transcript
Page 1: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Good Litigators | Good People | Good Counsel

Kafi C. Linville, ShareholderChair, Construction Practice Group612 [email protected]

Kafi’s Team

Tracy S. Stromberg, Paralegal, Legal Administrative

Assistant

612 225-6775

[email protected]

Arthur Chapman Construction Team

Juan M. Avila, Shareholder612 [email protected]

Juan’s Team

Kathleen A. Adofo, Paralegal

612 375-5942

[email protected]

Barbara L. Kelsey, Legal Administrative Assistant

612 225-6776

[email protected]

Corey S. Bronczyk, AssociateCo-Chair, Construction Practice Group612 [email protected]

Corey’s Team

Katherine R. Holm, Paralegal

612 375-5961

[email protected]

Tanya R. Meyer, Paralegal

612 375-5964

[email protected]

Kori L. Morehead, Legal Administrative Assistant

612 375-5934

[email protected]

Mark S. Brown, Shareholder612 [email protected]

Mark’s Team

Karen R. Tulk, Paralegal

612 375-5982

[email protected]

Barbara L. Kelsey, Legal Administrative Assistant

612 225-6776

[email protected]

Arthur ChapmanKettering Smetak & Pikala, P.A.

attorneys at law

500 Young Quinlan Building81 South Ninth Street

Minneapolis, MN 55402-3214Ph: 612 339-3500

Fax: 612 339-7655

811 First StreetSuite 201

Hudson, WI 54016Ph: 715 386-9000Fax: 612 339-7655

www.ArthurChapman.com

Gregory J. Duncan, Shareholder612 [email protected]

Greg’s Team

Steven J. Gansen, Paralegal

612 375-5949

[email protected]

Shanda L. Wimberger, Legal Administrative Assistant

612 225-6770

[email protected]

Page 2: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Good Litigators | Good People | Good Counsel

Arthur Chapman Construction Team

Beth A. Jenson Prouty, Of Counsel612 [email protected]

Beth’s Team

Barbara L. Kelsey, Legal Administrative Assistant

612 225-6776

[email protected]

Adina R. Florea, Associate612 [email protected]

Adina’s Team

Kori L. Morehead, Legal Administrative Assistant

612 375-5934

[email protected]

Colby B. Lund, Shareholder612 [email protected]

Colby’s Team

Kellie R. Klein, Paralegal

612 375-5966

[email protected]

Tracy S. Stromberg, Legal Administrative Assistant

612 225-6775

[email protected]

Steven J. Erffmeyer, Shareholder612 [email protected]

Steve’s Team

Steven J. Gansen, Paralegal

612 375-5949

[email protected]

Barbara L. Kelsey, Legal Administrative Assistant

612 225-6776

[email protected]

Arthur ChapmanKettering Smetak & Pikala, P.A.

attorneys at law

500 Young Quinlan Building81 South Ninth Street

Minneapolis, MN 55402-3214Ph: 612 339-3500

Fax: 612 339-7655

811 First StreetSuite 201

Hudson, WI 54016Ph: 715 386-9000Fax: 612 339-7655

www.ArthurChapman.com

Bradley L. Idelkope, Associate612 [email protected]

Brad’s Team

Barbara L. Kelsey, Legal Administrative Assistant

612 225-6776

[email protected]

Page 3: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Good Litigators | Good People | Good Counsel

Arthur Chapman Construction Team

Michael P. North, Shareholder612 [email protected]

Mike’s Team

Kathleen A. Adofo, Paralegal

612 375-5942

[email protected]

Linda M. Melcher, Legal Administrative Assistant

612 225-6764

[email protected]

Lee A. Miller, Shareholder612 [email protected]

Lee’s Team

Jan M. Garrison, Paralegal

612 375-5950

[email protected]

Teri A. Inderieden, Paralegal

612 375-5981

[email protected]

Ann M. Vars, Legal Administrative Assistant

612 225-6784

[email protected]

James F. Mewborn, Shareholder612 [email protected]

Jim’s Team

Virginia L. Hefty, Paralegal

612 375-5925

[email protected]

Shanda L. Wimberger, Legal Administrative Assistant

612 225-6770

[email protected]

Perssis Meshkat, Associate612 [email protected]

Perssis’ Team

Tracy S. Stromberg, Legal Administrative Assistant

612 225-6775

[email protected]

Arthur ChapmanKettering Smetak & Pikala, P.A.

attorneys at law

500 Young Quinlan Building81 South Ninth Street

Minneapolis, MN 55402-3214Ph: 612 339-3500

Fax: 612 339-7655

811 First StreetSuite 201

Hudson, WI 54016Ph: 715 386-9000Fax: 612 339-7655

www.ArthurChapman.com

Jeffrey M. Markowitz, Associate612 [email protected]

Jeffrey’s Team

Susan M. Shetty, Legal Administrative Assistant

612 225-6769

[email protected]

Page 4: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Good Litigators | Good People | Good Counsel

Arthur Chapman Construction Team

Michael S. Ryan, Shareholder612 [email protected]

Mike’s Team

Kathleen A. Adofo, Paralegal612 375-5942

[email protected]

Susan M. Shetty, Legal Administrative Assistant612 225-6769 [email protected]

Stephen M. Warner, Shareholder612 [email protected]

Steve’s Team

Steven J. Gansen, Paralegal

612 375-5949

[email protected]

Ann M. Vars, Legal Administrative Assistant

612 225-6784

[email protected]

Jonathon M. Zentner, Shareholder612 [email protected]

Jon’s Team

Tanya R. Meyer, Paralegal

612 375-5964

[email protected]

Kori L. Morehead, Legal Administrative Assistant

612 375-5934

[email protected]

Colin S. Seaborg, Associate612 [email protected]

Colin’s Team

Susan M. Shetty, Legal Administrative Assistant

612 225-6769

[email protected]

Stephanie K. Smodish, Associate612 [email protected]

Stephanie’s Team

Kori L. Morehead, Legal Administrative Assistant

612 375-5934

[email protected]

Arthur ChapmanKettering Smetak & Pikala, P.A.

attorneys at law

500 Young Quinlan Building81 South Ninth Street

Minneapolis, MN 55402-3214Ph: 612 339-3500

Fax: 612 339-7655

811 First StreetSuite 201

Hudson, WI 54016Ph: 715 386-9000Fax: 612 339-7655

www.ArthurChapman.com

Paul J. Rocheford, Shareholder612 [email protected]

Paul’s Team

Virginia L. Hefty, Paralegal

612 375-5925

[email protected]

Kara L. Smith, Legal Administrative Assistant

612 225-6763

[email protected]

Page 5: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 1

2019 Minnesota Construction Law

Seminar

January 31, 2019

January 31, 2019 2019 Minnesota Construction Law Seminar 1

Agenda

• The Who, What, Where, When, and How of e-Discovery

• Attorneys’ Fees in Construction Litigation

• 2019 Minnesota Construction Law Update

• Should we Arbitrate? Merits and Potential Pitfalls of Arbitration vs. District Court Litigation

• Demystifying the Class Action: A Primer for Beginners

1

The Who, What, Where, When, and How of

E-Discovery

Stephanie Smodish andAdina Florea

Page 6: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 2

January 31, 2019 2019 Minnesota Construction Law Seminar 3

You’ve Already Lost Me

• Electronic discovery refers to any process in which electronically stored information (ESI) or data is sought, located, secured, and searched with the intent of using it as evidence in a legal case.

• 90% of documents created today are in electronic format.

• More than 90 billion business e-mails are sent and received each day.

• The construction industry has adapted to using e-mail, iPads, laptops, and text messaging on projects — all of this information is discoverable in legal disputes.

January 31, 2019 2019 Minnesota Construction Law Seminar 4

Who Cares, Isn’t One PDF With All The Documents Good Enough?

• Answer: No.

• Rule 26: ESI must be produced with Initial Disclosures.

• Rule 34: Any party may serve a demand for ESI.

– It is up to the party seeking ESI to specify the form for production.

– If a request does not specify the form, ESI must be produced in the form in which it is ordinarily maintained or in a reasonably usable form.

– ESI requests may be limited if not reasonably accessible because of undue burden or cost, but party opposing production must prove it to the court.

January 31, 2019 2019 Minnesota Construction Law Seminar 5

Who Cares, Isn’t One PDF With All The Documents Good Enough?

• The Courts can impose sanctions for non-compliance.

– Ignorance or inconvenience is not an excuse.

– Lowry v. BRC, 2012 WL8525629, MN trial court imposed $3,000 in sanctions against Lowry for failing to provide ESI as per prior order.

– Alden v. Mid-Mesabi Assoc., 2008 WL 2828892, MN Fed. Ct. awarded $30,000 in attorneys’ fees due to plaintiff’s failure to provide e-mails eventually obtained from a third-party.

Page 7: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 3

January 31, 2019 2019 Minnesota Construction Law Seminar 6

Ok, So What Is ESI?

• The primary focus of standard e-Discovery is the collection of active data and metadata from multiple hard drives and other storage media.

– Active Data: Content readily available to the user, such as e-mail, electronic calendars, word processing files, and databases.

– Metadata: Encompasses all the information about a document that is not visible to the user that tells us about the document’s author, time of creation, source, and history.

January 31, 2019 2019 Minnesota Construction Law Seminar 7

Ok, So What Is ESI?

• Data that is identified as relevant to the case is extracted and analyzed using digital forensic procedures and reviewed using a document review platform.

• Documents can be reviewed either as native files or after a conversion to PDF or TIFF form — often called “load files.”

January 31, 2019 2019 Minnesota Construction Law Seminar 8

Where Is ESI Found?

• On Your Computer, Your Phone, Your E-mail– Basically whenever you create or modify a document or

when you send/receive an e-mail.– Some Native File Forms: .doc, .pdf, .txt, .wpd, .xls, .ppt,

.html, .bpm, .gif, .jpg, .tiff, .pst, .ost, .msg, .dbx, .eml, .mht.– Construction Specific Forms: .dwg (Electronic

Drawings/AutoCAD), .mpp (Microsoft Project), .xls (Excel spreadsheets), .pst/.msg (e-mail).

• Custodians: Any person who works on a construction project is a potential custodian of ESI – Project Managers, Assistants, Superintendents,

Accountants, Presidents/Owners of the Company, Office Managers, Business Development, Marketing Department, Estimators, Surveyors, etc.

– Subrogation cases: Adjuster e-mails and claims files become discoverable.

Page 8: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 4

January 31, 2019 2019 Minnesota Construction Law Seminar 9

When Do I Have To Worry About Collecting ESI?

• Document Retention: Internal policies should include collection of ESI for preservation.

– With the sheer amount of data available and regulatory and legal compliance requirements continuing to evolve, organizations face new challenges when it comes to information retention and governance.

– Develop internal system to log e-mails and documents coming into a project or file.

January 31, 2019 2019 Minnesota Construction Law Seminar 10

When Do I Have To Worry About Collecting ESI?

• Legal Hold: A letter should be issued to the client when a claim is made or lawsuit filed.

– “This is to notify you that you must retain and preserve all records, including documents, which may be relevant to the above-referenced lawsuit…Until cancelled in writing, the following types of documents, information and electronic media (collectively, “documents”) must be retained…”

– E-mails and other data may be useful for adjusters to gather with a new claim.

• Electronic Discovery Reference Model (EDRM)

January 31, 2019 2019 Minnesota Construction Law Seminar 11

How Is ESI Produced?

• Processing of ESI into Load Files: Necessary to reduce the volume of data and convert it, if necessary, to forms more suitable for review and analysis.– De-duplication, filtering by keyword, metadata filtering,

text searching.• Attorney Review of ESI: Must be completed for relevance and

privilege.• E-Discovery Vendors: There are many platforms and software

which can assist attorneys and their clients with the production of ESI and review of opposing party’s productions.– Data Collection Services: Shepherd Data Services, RICOH

Legal.– Data Hosting Services: Relativity, eDiscovery Point, Lexbe,

Concordance, Summation.

Page 9: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 5

January 31, 2019 2019 Minnesota Construction Law Seminar 12

Why Is E-Discovery Important For My Case?

• Helps Provide Evidence for Defenses.– Face of documents themselves may not tell the whole

story.– Refreshes memory.

• E-Discovery Goes Both Ways.– All Discovery Demands to opposing parties should include

a request for ESI.– Impeachment material: People are often unguarded in

e-mails and other communications occurring during a project as opposed to during interrogatory responses or deposition testimony.

– Metadata can confirm when a document was created, modified, e-mailed, received, read, and by whom.

January 31, 2019 2019 Minnesota Construction Law Seminar 13

Why Is E-Discovery Important For My Case?

• Drawbacks: E-Discovery can become expensive and time-consuming on large projects with large volumes of ESI.– ESI Protocols: Often drafted in large cases where the

parties want to create a uniform disclosure of ESI.

January 31, 2019 2019 Minnesota Construction Law Seminar 14

Questions & Answers

Stephanie K. Smodish

612 375-5956

[email protected]

Adina R. Florea

612 375-5980

[email protected]

Page 10: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 6

Attorneys’ Fees in Construction Litigation

Jonathon Zentner andPerssis Meshkat

January 31, 2019 2019 Minnesota Construction Law Seminar 16

Introduction

• Why They’re Important

• Results of Google Images Search for “attorneys’ fees”…

January 31, 2019 2019 Minnesota Construction Law Seminar 17

Attorneys’ Fees

Page 11: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 7

January 31, 2019 2019 Minnesota Construction Law Seminar 18

Attorneys’ Fees

January 31, 2019 2019 Minnesota Construction Law Seminar 19

Core Concepts

• American Rule – Based in statute or contract

• Reasonable – Eight non-exclusive factors

Rule 1.5 Fees

(a) A lawyer’s fee shall be reasonable. The factors to be considered in determining the reasonableness of a fee include the following:

(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;

(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;

January 31, 2019 2019 Minnesota Construction Law Seminar 20

Core Concepts

(3) the fee customarily charged in the locality for similar legal services;

(4) the amount involved and the results obtained;

(5) the time limitations imposed by the client or by the circumstances;

(6) the nature and length of the professional relationship with the client;

(7) the experience, reputation, and ability of the lawyer or lawyers performing the services;

(8) whether the fee is fixed or contingent.

Page 12: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 8

January 31, 2019 2019 Minnesota Construction Law Seminar 21

Core Concepts

Lodestar Method

– The number of hours reasonably expended multiplied by the reasonably hourly rate.

– Strong presumption that lodestar amount represents a reasonable fee.

– In cases where the lodestar amount for an attorney fee award is either unreasonably low or unreasonably high, the court may use a multiplier to adjust the lodestar amount upward or downward.

January 31, 2019 2019 Minnesota Construction Law Seminar 22

Core Concepts

• Degree of Success

– When a plaintiff has prevailed on some, but not all, of his/her claims, court considers potential impact of partial success on fee award.

• Block Billing

– Might hinder court from determining whether hours billed are reasonable.

• Vague Entries

– Exceptionally terse descriptions of activities do not constitute sufficient documentation for court to determine compensable attorney time.

January 31, 2019 2019 Minnesota Construction Law Seminar 23

Who is the Prevailing Party?

• Black’s Law Dictionary

– Main-issue approach

• U.S. Supreme Court

– Material alteration of legal relationship

• Minnesota

– Pragmatic approach

– Hamilton v. Progressive

Page 13: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 9

January 31, 2019 2019 Minnesota Construction Law Seminar 24

Lessons

• Should be considered at contracting stage and not after project has already commenced. Make sure to include attorneys’ fee and expert witness fee recovery clause.

• Keep detailed, clear time entries.

• Consider hiring independent attorneys’ fees expert.

January 31, 2019 2019 Minnesota Construction Law Seminar 25

United Prairie Bank Mountain Lake v. Haugen Nutrition Equipment, LLC,

813 N.W.2d 49 (Minn. 2012)

The Minnesota Supreme Court held that the Minnesota Constitution grants the right of a jury trial for a claim to recover attorneys’ fees based on a contractual provision.

January 31, 2019 2019 Minnesota Construction Law Seminar 26

Minnesota General Rule of Practice 119

Rule provides that the “application for an award or approval of fees shall be made by motion.” The motion must be accompanied by an affidavit from the attorney establishing.

– A description of each item of work performed, the date upon which it was performed, the amount of time spent on each item of work, the identity of the lawyer or legal assistant performing the work, and the hourly rate sought for the work performed;

– The normal hourly rate for each person for whom compensation is sought, with an explanation of the basis for any difference between the amount sought and the normal hourly billing rate, if any;

Page 14: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 10

January 31, 2019 2019 Minnesota Construction Law Seminar 27

Minnesota General Rule of Practice 119

– A detailed itemization of all amounts sought for disbursements or expenses, including the rate for which any disbursements are charged and the verification that the amounts sought represent the actual cost to the lawyer or firm for the disbursements sought;

– That the affiant has reviewed the work in progress or original time records, the work was actually performed for the benefit of the client and was necessary for the proper representation of the client, and that charges for any unnecessary or duplicative work have been eliminated from the application or motion.

January 31, 2019 2019 Minnesota Construction Law Seminar 28

Ramsey CountyKraus-Anderson v. J. Eiden

• Discovery

• Trial

• Jury Verdict Form

• Privilege

• Experts

• Others

January 31, 2019 2019 Minnesota Construction Law Seminar 29

Questions & Answers

Jonathon M. Zentner

612 375-5904

[email protected]

Perssis Meshkat

612 375-5911

[email protected]

Page 15: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 11

2019 Minnesota Construction Law Update

Colin S. Seaborg

Amendments Relating to Insurance Claims for

Residential Contracting

January 31, 2019 2019 Minnesota Construction Law Seminar 31

January 31, 2019 2019 Minnesota Construction Law Seminar 32

Insurance Claims: Residential Contracting

• Minnesota law prohibits a residential contractor providing home repair or improvement services that are to be paid by an insured from the proceeds of a property or casualty insurance policy from “advertis[ing] or promis[ing] to pay, directly or indirectly, all or part of any applicable insurance deductible or offer to compensate an insured for providing any service to the insured.”

• If a residential contractor violates this prohibition, the insurer to whom the insured tendered the claim is not “obligated to consider the estimate prepared by the residential contractor.”

– Minn. Stat. § 325E.66, subd. 1.

Page 16: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 12

January 31, 2019 2019 Minnesota Construction Law Seminar 33

Insurance Claims: Residential Contracting

• H.F. No. 2899 amended the statute to require that “[t]he residential contractor must provide a written notification of the requirements of this section with its initial estimate.”

• The amendment further requires that “[t]he adjuster or insurer must provide a written notification of the requirements of this section in the initial estimate relating to the claim.”

– H.F. No. 2899 § 1 (amending Minn. Stat. § 325E.66, subd. 1).

January 31, 2019 2019 Minnesota Construction Law Seminar 34

Insurance Claims: Residential Contracting

• H.F. No. 2899 does not contain an effective date, so the amendments took effect on August 1, 2018.

– See Minn. Stat. § 645.02.

Amendments toStatute of Limitations on

Construction Defect Claims

January 31, 2019 2019 Minnesota Construction Law Seminar 35

Page 17: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 13

January 31, 2019 2019 Minnesota Construction Law Seminar 36

Statute of Limitations

• H.F. No. 2743 amended the statute of limitations for construction defect claims in Minn. Stat. § 541.051.

• H.F. No. 2743 amended the point at which a cause of action accrues (and, thus, statute of limitations begins to run) for actions for injuries to real or personal property.

January 31, 2019 2019 Minnesota Construction Law Seminar 37

Statute of Limitations

Previously, Minn. Stat. § 541.051 provided: “(a) Except where fraud is involved, no action by any person in contract, tort, or otherwise to recover damages for any injury to property, real or personal, or for bodily injury or wrongful death, arising out of the defective and unsafe condition of an improvement to real property, shall be brought against any person performing or furnishing the design, planning, supervision, materials, or observation of construction or construction of the improvement to real property or against the owner of the real property more than two years after discovery of the injury . . . . . . . (c) For purposes of paragraph (a), a cause of action accrues upon discovery of the injury. . . .”

• Minn. Stat. § 541.051, subd. 1(a) (2016).

January 31, 2019 2019 Minnesota Construction Law Seminar 38

Statute of Limitations

• H.F. No. 2743 amended the statute of limitations such that the specified actions may not be brought “more than two years after the cause of action accrues, as specified in paragraph (c).”

– Minn. Stat. § 541.051, subd. 1(a) (2018).

Page 18: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 14

January 31, 2019 2019 Minnesota Construction Law Seminar 39

Statute of Limitations

Subdivision 1, paragraph (c) now provides:

“For purposes of determining only when the statute of limitations begins to run pursuant to paragraph (a), a cause of action accrues: (1) for a bodily injury or wrongful death action, upon discovery of the injury; and (2) for an action for injury to real or personal property, upon discovery of the injury, but in no event does a cause of action accrue earlier than substantial completion, termination, or abandonment of the construction or the improvement to real property. . . .”

– Minn. Stat. § 541.051, subd. 1(c) (2018).

January 31, 2019 2019 Minnesota Construction Law Seminar 40

Statute of Limitations

• Thus, the amendments mean that:

– For personal injury and wrongful death actions, the cause of action continues to accrue upon discovery of the injury.

– For actions for injury to real or personal property, the cause of action also continues to accrue upon discovery of the injury, except that the cause of action may not accrue before substantial completion, termination, or abandonment of the construction or improvement to real property occurs.

• Effect of the amendments favor property owners.

January 31, 2019 2019 Minnesota Construction Law Seminar 41

Statute of Limitations

• H.F. No. 2743 was approved by Governor Dayton on May 8, 2018.

• The amendments apply to causes of action accruing on or after May 9, 2018.

Page 19: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 15

January 31, 2019 2019 Minnesota Construction Law Seminar 42

Statute of Limitations

• When H.F. No. 2743 was originally introduced on February 20, 2018, it had provided that a cause of action for injury to real or personal property would accrue “upon substantial completion, termination, or abandonment of the construction or the improvement to real property, whichever occurs fist.”

– H.F. No. 2743 § 1.

• This language would have resulted in the statute of limitations beginning to run on construction-defect actions for injury to real or personal property regardless of when the injury was discovered.

January 31, 2019 2019 Minnesota Construction Law Seminar 43

Statute of Limitations

• However, the bill was amended so that a cause of action for injury to real or personal property accrues upon discovery of the injury, provided that substantial completion, termination, or abandonment of the construction or improvement to real property has occurred first.

Great Northern Insurance Co. v. Honeywell International,

Inc.

January 31, 2019 2019 Minnesota Construction Law Seminar 44

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Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 16

January 31, 2019 2019 Minnesota Construction Law Seminar 45

Great N. Ins. Co. v. Honeywell Int’l, Inc.

• In addition to providing a two-year statute of limitations, Minn. Stat. § 541.051 provides a ten-year statute of repose on claims for construction defect claims such that the claims may not accrue “more than ten years after substantial completion of the construction.”

• One exception in the statute is that “[t]he limitations prescribed in this section do not apply to the manufacturer or supplier of any equipment or machinery installed upon real property.” Minn. Stat. § 541.051, subd. 1(e).

• Minnesota Supreme Court in Great Northern considered the exception in subdivision 1(e) as a matter of first impression.

January 31, 2019 2019 Minnesota Construction Law Seminar 46

Great N. Ins. Co. v. Honeywell Int’l, Inc.

• In May 2012, sixteen years after construction of insureds’ home, a fire occurred in one of the home’s heat-recovery ventilators incorporated in the HVAC system and caused property damage to the home.

• Insureds filed a claim and insurer paid the claim in full.

• Insurer brought a subrogation action against the manufacturer of a motor in the ventilator, as well as the manufacturers of the ventilators (who settled before Great Northern was decided by the Minnesota Supreme Court).

January 31, 2019 2019 Minnesota Construction Law Seminar 47

Great N. Ins. Co. v. Honeywell Int’l, Inc.

• District court granted motor manufacturer’s motion for summary judgment on insurer’s negligence, product liability, and breach of warranty claims based on the statute of repose.

• Court of Appeals reversed, concluding that the ventilator was “equipment or machinery installed upon real property” and therefore the limitations in the statute of repose did not apply.

• The Minnesota Supreme Court granted the motor manufacturer’s petition for review.

Page 21: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 17

January 31, 2019 2019 Minnesota Construction Law Seminar 48

Great N. Ins. Co. v. Honeywell Int’l, Inc.

• The parties agreed that the ventilator was an improvement to real property for purposes of the statute of repose.

• The Minnesota Supreme Court considered whether the ventilator constituted “equipment or machinery” such that the exception to the statute of repose applied.

• The court concluded that the ventilator was “machinery” and left the definition of “equipment” for a later case.

January 31, 2019 2019 Minnesota Construction Law Seminar 49

Great N. Ins. Co. v. Honeywell Int’l, Inc.

• The supreme court reasoned that, because the statute of repose in subdivision 1(a) generally applies to persons furnishing “materials” for an improvement to real property, the “equipment or machinery” referred to in the exception in subdivision 1(e) must be “specific types of ‘materials.’”

– 911 N.W.2d 510, 517 (Minn. 2018).

January 31, 2019 2019 Minnesota Construction Law Seminar 50

Great N. Ins. Co. v. Honeywell Int’l, Inc.

• Because the term “machinery” was undefined in the statute of repose, the court looked to a dictionary definition of the term as “‘[m]achines or machine parts considered as a group’ and ‘the working parts of a particular machine.’”

• “Machine,” in turn, “is defined as a ‘device consisting of fixed and moving parts that modifies mechanical energy and transmits it in a more useful form’ or ‘[a] system or device for doing work . . . together with its power source and auxiliary equipment.’”

– 911 N.W.2d at 517 (quoting The American Heritage Dictionary of the English Language 1050, 1051 (5th ed. 2011)).

Page 22: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 18

January 31, 2019 2019 Minnesota Construction Law Seminar 51

Great N. Ins. Co. v. Honeywell Int’l, Inc.

• The court concluded that the ventilator containing the motor satisfied “either definition of ‘machine’” because “[t]he ventilator consists of a motor, fans, air filters, and a heat-exchange core that modify and transmit mechanical energy to efficiently regulate a home’s climate” and also because “when connected to an electrical outlet, the ventilator works to recover heat and remove humidity from the home.”

January 31, 2019 2019 Minnesota Construction Law Seminar 52

Great N. Ins. Co. v. Honeywell Int’l, Inc.

• The court stated that concluding the ventilator was exempt from the statute of repose “makes sense” because “[u]nlike ‘materials’ that are furnished for real property improvements, machinery and its components often carry warranties that extend a manufacturer’s relationship with end users beyond construction” and, thus, the statute of limitations typically applicable to products-liability actions should apply rather than the statute of repose for improvements to real property.

– 911 N.W.2d at 517–18.

January 31, 2019 2019 Minnesota Construction Law Seminar 53

Great N. Ins. Co. v. Honeywell Int’l, Inc.

• The Minnesota Supreme Court declined to follow prior interpretations of the exception from the Minnesota Court of Appeals and federal courts, under which “equipment and machinery are products that assist in some operation, activity, or particular use of a building, as opposed to products that are ordinary building materials incorporated into a building’s structure and then become part of the building itself.”

• The court rejected this rule because “the statute’s plain language requires us to consider the material’s nature and function, not its degree of integration into a structure” and the court of appeals had adopted the rule from the Virginia Supreme Court’s interpretation of Virginia law.– 911 N.W.2d at 518.

Page 23: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 19

Minnesota Common Interest Ownership Act

(MCIOA)

January 31, 2019 2019 Minnesota Construction Law Seminar 54

January 31, 2019 2019 Minnesota Construction Law Seminar 55

MCIOA Amendments

• H.F. No. 3552 amended several provisions of MCIOA. The amendments address:

– Applicability of MCIOA

– Several definitions in MCIOA

– Rules regarding unit alterations

– Applicability of local laws

– Rules regarding conversion properties

January 31, 2019 2019 Minnesota Construction Law Seminar 56

MCIOA Amendments:Applicability of MCIOA

• H.F. No. 3552 amends the applicability of MCIOA to exclude, among other things, cooperatives that are “limited by the declaration to nonresidential uses.” – Minn. Stat. § 515B.1-102(e)(4) (2018).

• Previously, MCIOA excluded application to cooperatives that “are limited by the declaration to nonresidential uses alone or in combination with residential rental uses in which individual dwellings do not constitute units or other separate parcels of real estate.” – Minn. Stat. § 515B.1-102(e)(4) (2016).

• Thus, MCIOA’s application is broader, because it now excludes application to cooperatives only if they are limited to nonresidential uses and not if the cooperative is limited to nonresidential purposes in whole or in part.

Page 24: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 20

January 31, 2019 2019 Minnesota Construction Law Seminar 57

MCIOA Amendments:Amended Definitions

• H.F. No. 3552 amends the definitions of “conversion property” and “declarant” and “residential use.”

• The definition of “conversion property” is amended to mean “real estate on which is located a building that at any time within two years before creation of the common interest community was occupied, in whole or in part, for (i)residential use wholly or partially or (ii) for residential rental purposes by persons other than purchasers and persons who occupy with the consent of purchasers.”

– H.F. No. 3552 § 2 (amending Minn. Stat. § 515B.1-103(12)).

• The amended definition makes clear that it applies to owner-occupied property, as well as renter-occupied property.

January 31, 2019 2019 Minnesota Construction Law Seminar 58

MCIOA Amendments:Amended Definitions

• The definition of “declarant” is amended to add a third category of declarants for unit owners where the unit has been previously restricted to nonresidential use and the restriction expires or is modified or terminated. – H.F. No. 3552 § 2 (amending Minn. Stat. § 515B.1-103(15)).

• Other categories of declarants include generally – persons who executed a declaration (or supplemental or

amended declaration) or who reserved or succeeded to any special declarant rights, and

– persons who offered prior to the creation of the common interest community to transfer their interest in a unit to be created and not previously transferred.

• Minn. Stat. § 515B.1-103(15) (2018).

January 31, 2019 2019 Minnesota Construction Law Seminar 59

MCIOA Amendments:Amended Definitions

• The definition of “residential use” is amended to mean “use as a dwelling, whether primary, secondary or seasonal, but not (i) transient use such as hotels or motels, (ii) use for residential rental purposes if the individual dwellings are not separate units or if the individual dwellings are not located on separate parcels of real estate. For purposes of this chapter, a unit is restricted to nonresidential use if the unit is subject to a restriction that prohibits residential use as defined in this section whether or not the restriction also prohibits the uses described in this paragraph.” – H.F. No. 3552 § 2 (amending Minn. Stat. § 515B.1-103(30)).

• The amended definition makes clear that “residential use” does not include multi-family rentals if the individual dwellings are not separate units or on separate parcels of real estate.

Page 25: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 21

January 31, 2019 2019 Minnesota Construction Law Seminar 60

MCIOA Amendments:Unit Alteration

• H.F. No. 3552 also amends the provisions governing when a unit owner may alter a unit:

• “Subject to the provisions of applicable law, a unit owner of a unit in residential use that is used as a dwelling, whether primary, secondary, or seasonal, may, at the unit owner’s expense, make improvements or alterations to the unit as necessary for the full enjoyment of the unit by any person residing in the unit who has a disability . . . .”

– H.F. No. 3552 § 4 (amending Minn. Stat. § 515B.2-113(b)).

• The deletion of “in residential use” and addition of general language from definition of “residential use” suggests that §515B.2-113(b) applies to the uses excluded from the definition of “residential use.”

January 31, 2019 2019 Minnesota Construction Law Seminar 61

MCIOA Amendments:Applicability of Local Law

• MCIOA generally provides that local law may not “directly or indirectly prohibit the common interest community form of ownership” or impose requirements upon common interest communities (whether upon their creation, disposition, or conversion) that it “would not impose upon a physically similar development under a different form of ownership.”

– Minn. Stat. § 515B.1-106(a).

January 31, 2019 2019 Minnesota Construction Law Seminar 62

MCIOA Amendments:Applicability of Local Law

• H.F. No. 3552 amended one of the exceptions to this prohibition such that a statutory or home rule charter city “may prohibit or impose reasonable conditions upon the conversion of buildings occupied wholly or partially for (i)residential use or (ii) residential rental purposes to the common interest community form of ownership,” but “only if there exists within the city a significant shortage of suitable rental dwellings available to low and moderate income individuals or families or to establish or maintain the city’s eligibility for any federal or state program providing direct or indirect financial assistance for housing to the city.”– H.F. No. 3552 § 3 (amending Minn. Stat. § 515B.1-106(c)).

• The amendment clarifies that this exception applies to buildings occupied for residential rental purposes.

Page 26: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 22

January 31, 2019 2019 Minnesota Construction Law Seminar 63

MCIOA Amendments:Conversion Properties

• Finally, H.F. No. 3552 amends several provisions concerning conversions properties:

– “A unit owner of a unit occupied for residential use in a common interest community containing conversion property shall not, for a period of one year following the recording of the declaration creating the common interest community, require any occupant of the unit who was residing in the unit at the time the declaration was recorded to vacate the unit unless the unit owner gives notice to the occupant in the manner described in this section. . . .”

• H.F. No. 3552 § 5 (amending Minn. Stat. § 515B.4-111(a)).

January 31, 2019 2019 Minnesota Construction Law Seminar 64

MCIOA Amendments:Conversion Properties

• The notice must comply with a number of requirements, one of which was amended as follows:

– “The notice shall state that the occupants of the residential unit may demand to be given 60 additional days before being required to vacate, if any of them, or any person residing with them, is (i) 62 years of age or older, (ii) a person with a disability . . . , or (iii) a minor child on the date the notice is given. . . .”

• H.F. No. 3552 § 5 (amending Minn. Stat. § 515B.4-111(a)(3)).

January 31, 2019 2019 Minnesota Construction Law Seminar 65

MCIOA Amendments:Conversion Properties

• Lastly, H.F. No. 3552 amends the provisions for when an occupant of a conversion property does not have the rights set out in Minn. Stat. § 515B.4-111 or in any municipal ordinance:

– “An occupant of residing in space for residential use in a conversion property shall not have any of the rights set out in this section or under any municipal ordinance if the holder of the lessee’s interest in the space received written notice of intent to convert to a common interest community (i) before signing a lease or a lease renewal or before occupying the space and (ii) less than two years before the common interest community is created.”

• H.F. No. 3552 § 5 (amending Minn. Stat. § 515B.4-111(g)).

Page 27: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 23

January 31, 2019 2019 Minnesota Construction Law Seminar 66

MCIOA Amendments:Effective Date

• H.F. No. 3552 does not contain an effective date, so the amendments took effect on August 1, 2018.

– See Minn. Stat. § 645.02.

January 31, 2019 2019 Minnesota Construction Law Seminar 67

Questions & Answers

Colin S. Seaborg

612 375-5983

[email protected]

Refreshment Break

January 31, 2019 2019 Minnesota Construction Law Seminar 68

Page 28: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 24

Should We Arbitrate?

Merits and Pitfalls of Arbitration vs. District Court

Greg Duncan, Steve Erffmeyer, and Corey Bronczyk

January 31, 2019 2019 Minnesota Construction Law Seminar 70

Overview

• What is arbitration and how do you get there?

• Differences between Arbitration and Litigation

– Procedural rules

– Discovery process

– Trial / Hearing

– Post-hearing options

• Pros / Cons

• Suitability to your case

• Questions/Answers

January 31, 2019 2019 Minnesota Construction Law Seminar 71

What is Arbitration?

• Arbitration: An out-of-court dispute resolution method, decided by an impartial third party (the arbitrator).

• Adjudicatory, not advisory, process because the arbitrator renders a decision at the end of an arbitration hearing.

• Decision is (generally) final and binding, subject only to a very limited court review.

Page 29: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 25

January 31, 2019 2019 Minnesota Construction Law Seminar 72

Many Different Forums

• Many national and local providers

• Most common:

– American Arbitration Association

– JAMS Arbitration Services

– National Center for Dispute Settlement

• Private Arbitration

– Agree to contractual arbitration process

January 31, 2019 2019 Minnesota Construction Law Seminar 73

How Do We Choose Arbitration?

• By agreement after the dispute has arisen

– Parties agree to opt out of the court system and pursue arbitration

– Less common – requires that parties

AGREE

• By Contract

– Example: Construction Contract Contains Arbitration Provision

January 31, 2019 2019 Minnesota Construction Law Seminar 74

Contents of Arbitration Provision

• Parties have great latitude to define the procedure and rules that will govern the arbitration

• Can determine wide variety of items in the contract:

– Scope, forum or even specific arbitrator, applicable law (can avoid unfavorable law), whether third–parties can be joined, etc.

Page 30: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 26

January 31, 2019 2019 Minnesota Construction Law Seminar 75

Notable AAA Arbitration Rules

• Three general arbitration tracks (R-1)

– Fast Track: For claims involving two parties in which no disclosed claim or counterclaim exceeds $100k.

– Large, Complex Construction Dispute Track: Applies where disclosed claim or counterclaim of any party is $1 million or more.

– Regular Track: Everything else.

January 31, 2019 2019 Minnesota Construction Law Seminar 76

Filing Requirements (R-4)

• Demand must include:

– Name of each party;

– Address, phone, and e-mail of each party;

– Name, address, phone, and e-mail of any known party representatives;

– Statement of the claim and relief sought;

– Locale requested.

• Answer: May be filed within 14 days. If none filed, claim deemed denied.

• Counterclaim: If any, may be filed within 14 days.

January 31, 2019 2019 Minnesota Construction Law Seminar 77

Consolidation and Joinder (R-7)

• If parties are unable to agree to consolidate related arbitrations or joinder of parties, AAA shall appoint a single R-7 arbitrator for the limited purpose of deciding the motion for consolidation or joinder.

• All requests for consolidation and joinder must be submitted prior to appointment of Merits Arbitrator or within 90 days from date AAA determines all filing requirements were satisfied, whichever is later.

Page 31: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 27

January 31, 2019 2019 Minnesota Construction Law Seminar 78

Consolidation and Joinder Cont.

• Prerequisite to consolidation: Properly filed requests for arbitration and written request for arbitration with copies provided to all parties at same time request is filed with AAA.

• Prerequisite to joinder: Filed written request for joinder which all contact information and basis for joinder with copies provided to all parties at same time request is filed with AAA.

January 31, 2019 2019 Minnesota Construction Law Seminar 79

Sample Language in Contract

Example of language in a contract which resulted in successful consolidation/joinder:

– If more than one arbitration is begun and any party contends that two or more arbitrations are substantially related and that the issues should be heard in one proceeding, the arbitrator(s) selected in the first commenced of such proceedings shall determine whether, in the interests of justice and efficiency, the proceedings should be consolidated before that (those) arbitrator(s).

January 31, 2019 2019 Minnesota Construction Law Seminar 80

The Rule 7 Arbitrator

• Cannot be a Merits Arbitrator.

• Rule 7 arbitrator may also establish a process for selecting Merits Arbitrators and the allocation of responsibility for arbitrator compensation subject to reapportionment in the final arbitration award.

• Rule 7 arbitrators are selected from a AAA panel of construction attorneys who have experience with consolidation or joinder issues.

Page 32: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 28

January 31, 2019 2019 Minnesota Construction Law Seminar 81

Jurisdiction R-9

• Arbitrator has power to rule on his or her own jurisdiction, including as to existence, scope or validity of arbitration agreement.

• Arbitrator has power to determine existence or validity of contract of which the arbitration clause is a part.

• Arbitrator’s decision that the contract is null and void does not necessarily invalidate the arbitration clause.

• Objections to jurisdiction must be made in answering statement.

January 31, 2019 2019 Minnesota Construction Law Seminar 82

Other Rules

• Mediation (R-10): Required in all cases where claim or counterclaim exceeds $100,000.

• Fixing Locale (R-12): – Parties may mutually agree to the locale.

– Disputes as to locale must be submitted to AAA within 14 days of AAA’s initiation of case and AAA will determine.

• If arbitration agreement is silent, then locale shall be city nearest to site of project in dispute.

• If arbitration agreement specifies a locale and the parties don’t agree to change it, then specified place shall be the locale.

January 31, 2019 2019 Minnesota Construction Law Seminar 83

Appointment of the Arbitrator

• Appointment from National Construction Panel (R-14).

• Direct Appointment by a Party (R-15).

• Number of Arbitrators (R-18): If parties have not agreed on number of arbitrators, the dispute shall be heard by one arbitrator unless AAA, in its discretion, directs that three be appointed.

Page 33: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 29

January 31, 2019 2019 Minnesota Construction Law Seminar 84

Discovery

• Discretion of Arbitrator

• Typically Allowed:

– Exchange of documents

• Particularly any documents which a party intends to rely upon in support of claim/defense.

• Parties must supplement document production.

– Site inspections

January 31, 2019 2019 Minnesota Construction Law Seminar 85

Discovery

• Typically Disallowed:

– Interrogatories

– Depositions

• Typically Depends

– Subpoenas

• Other Issues

– Reasonableness

– Cost

January 31, 2019 2019 Minnesota Construction Law Seminar 86

Motions

• Dispositive

– Arbitrator may permit motions that dispose of all or part of the claim under AAA Construction Industry Rules.

– Authority not always expressly provided to arbitrator, but courts have generally concluded that arbitration has authority to hear and decide dispositive motions.

Page 34: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 30

January 31, 2019 2019 Minnesota Construction Law Seminar 87

Motions

• Potential Legal Issues

– Jurisdiction

– Res Judicata

– Collateral Estoppel

– Contractual Interpretation

– Failure to Comply with Contract

– Statute of Limitation

– Lack of Duty

January 31, 2019 2019 Minnesota Construction Law Seminar 88

Motions

• Potential Procedural Issues

– Hearing/No Hearing

– Cost Increase

– Likelihood of Success

– Impact on Arbitration Hearing

• Will motion reduce costs, expedite hearing, eliminate claims, reduce witnesses, etc.

– Fact Issues

January 31, 2019 2019 Minnesota Construction Law Seminar 89

Motions

• Non-Dispositive Motions

– Discovery Motions

• Non-Compliance

• Scope of Discovery

• Discovery issues typically handled at preliminary hearing.

– Note: Arbitrator likely to take broad approach to discovery.

Page 35: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 31

Arbitration v. Trial

• Arbitration Hearing

– Informal

– Arbitrator has broad discretion

– Faster – more actual hearing time per day

• Limited ability to appeal

– Risk of adverse decision vs. finality

January 31, 2019 2019 Minnesota Construction Law Seminar 90

• Trial

– Formal

– Court must follow law

• Rules of evidence, etc.

– 1 day = +/- 4 to 5 hours of actual trial

• Appeal Process

– Due process

January 31, 2019 2019 Minnesota Construction Law Seminar 91

The Award and Post-Arbitration Issues

• The award will be in writing issued no later than 30 days after the date of closing of hearing, unless parties agree otherwise. (R-46)

• Parties can request a specific form of the award including a reasoned opinion. If parties, agree such an award shall be given. If disagree, the arbitrator determines the form of award. (R-47)

• Arbitrator entitled to grant all just and equitable relief within scope of the agreement, including equitable relief or specific performance. (R-48)

January 31, 2019 2019 Minnesota Construction Law Seminar 92

Award to Include

• Equitable, specific or monetary relief granted;

• Assessment of fees, expenses, and compensation;

• Apportionment of such fees, expenses and compensation;

• Interest at the rate and date determined by arbitrator; and

• Attorney’s fees if authorized by law or contract.

Page 36: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 32

January 31, 2019 2019 Minnesota Construction Law Seminar 93

Confirming an Award

• Any relief sought from the court in connection with an arbitration must be made by a motion to the court. Minn. Stat. § 572B.05

• An initial motion to the court must be served in the manner of a summons in a civil action, e.g. by personal service.

• A party may file a motion with the court for an order confirming the arbitration award. Minn. Stat. § 572B.22.

January 31, 2019 2019 Minnesota Construction Law Seminar 94

Vacating an Award

• A party may attempt to vacate an award Minn. Stat. § 572B.23 for the following:– Award procured by corruption, fraud or other undue

means;– There was evident partiality, corruption or

misconduct by arbitrator;– There was substantial prejudice to a party from the

arbitrator’s evidentiary rulings, the conduct of the hearing or an unjustified refusal to postpone the hearing;

– The arbitrator exceeded his or her powers;– There was no agreement to arbitrate or insufficient

notice.

January 31, 2019 2019 Minnesota Construction Law Seminar 95

Judgment on Award

• Upon granting an order confirming, vacating or directing rehearing the court shall enter judgment on its order. Minn. Stat. § 572B.25.

• Once judgment on an award is entered standard collection procedures are available.

Page 37: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 33

January 31, 2019 2019 Minnesota Construction Law Seminar 96

Arbitration – Pros and Cons

• Pros

– Speed

– Cost

– Arbitrator’s Experience

– Privacy/Confidentiality

– Scheduling Flexibility

– Evidence Flexibility

– Finality

January 31, 2019 2019 Minnesota Construction Law Seminar 97

Arbitration – Pros and Cons

• Cons

– Finality

– Evidence Flexibility

– Cost

– Lack of Discovery

– Subpoena Enforceability

– Multi-party Disputes

January 31, 2019 2019 Minnesota Construction Law Seminar 98

Should We Arbitrate?

• It Depends. . . .

– How much discovery is needed in the case

– How many parties / third-parties

– Applicable legal and factual arguments

– Strategy for the case

– Forum choice — some are more expensive

Page 38: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 34

Questions & Answers

Gregory J. Duncan

612 375-5967

[email protected]

Steven J. Erffmeyer

612-375-5945

[email protected]

Corey S. Bronczyk

612 375-5972

[email protected]

Kafi C. Linville

612-375-5936

[email protected]

January 31, 2019 2019 Minnesota Construction Law Seminar 99

Demystifyingthe Class Action: A Primer

for Beginners

Mike North

Jeff Markowitz

Before Diving In . . .

. . . An Example FromOur Experience

January 31, 2019 2019 Minnesota Construction Law Seminar 101

Page 39: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

Arthur, Chapman, Kettering, Smetak & Pikala, P.A. January 31, 2019

2019 Minnesota Construction Law Seminar 35

January 31, 2019 2019 Minnesota Construction Law Seminar 102

An Example From Our Experience

• Defended window manufacturer

• Homeowner plaintiffs alleging window defect, seeking to represent classes (No defect)

• Started with just 1 case, labeled “class action”

January 31, 2019 2019 Minnesota Construction Law Seminar 103

An Example From Our Experience

• 3 more sued out (different states)

• Class counsel moved for consolidation into what is called Multidistrict Litigation (“MDL”), transferring all 4 to 1 judge

• 3 more cases sued out pending decision on whether to MDL (coordinated, we think)

January 31, 2019 2019 Minnesota Construction Law Seminar 104

An Example From Our Experience

• Ultimately 9 cases from 7 states MDLed (IL, IN, MN, NY, OH, SC, WI) from 10 households

• All sought to represent classes

• Client settled on a nationwide basis to maximize the settlement benefit

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Roadmap

January 31, 2019 2019 Minnesota Construction Law Seminar 105

January 31, 2019 2019 Minnesota Construction Law Seminar 106

Roadmap

• Background, Costs, and Trends

• How Class Litigation Differs from Ordinary Litigation

• A Few Words on Multidistrict Litigation

• A Strong Defense: Where To Take a Stand

Background, Costs, and Trends

January 31, 2019 2019 Minnesota Construction Law Seminar 107

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Class Action Background

• Class action allows one person (plaintiff) to represent and litigate on behalf of many (absent class members) to secure all relief

• Can vindicate small harms that would otherwise not be worth litigation expense

• Noble goal. But a troubling reality.

January 31, 2019 2019 Minnesota Construction Law Seminar 109

Class Action Background

“The class action is a worthwhile supplement to conventional litigation procedure, but it is

controversial and embattled, in part because it is frequently abused.”

Eubank v. Pella Corp., 753 F.3d 718, 719 (7th Cir. 2014) (citations omitted)

January 31, 2019 2019 Minnesota Construction Law Seminar 110

Class Action Background

• The rights of hundreds, thousands, or more absent class members are at stake

• Class counsel often drives the litigation, & may be interested only in hefty attorney-fee awards, even if class relief meager

• Defendants may be (and are) coerced to settle meritless claims (most settle)

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Class Action Background

• Procedure for efficiency and justice, often in federal court (can be in state court)

– Minnesota generally follows federal courts

• Mostly in federal court because of Class Action Fairness Act of 2005 (makes most state-court-filed class actions removable)

January 31, 2019 2019 Minnesota Construction Law Seminar 112

Costs and Trends (2017 Stats)

• Costs on the rise since 2015

• Companies across industries spent $2.24 billion on class-action lawsuits

• Number of companies facing class actions increased from 53.8% (’16) to 59% (’17)

https://classactionsurvey.com/pdf/2018-class-action-survey.pdf

January 31, 2019 2019 Minnesota Construction Law Seminar 113

Costs and Trends (2017 Stats)

https://classactionsurvey.com/pdf/2018-class-action-survey.pdf

“Sixty-eight percent of companies report facing one or more class actions on an

ongoing basis.”

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Costs and Trends (2017 Stats)

• Most Common: Labor and Employment

• Accounted for 24.7% of matters, and 21.6% of the spending

• E.g., employment discrimination, wage and hour, ERISA (pension plans)

https://classactionsurvey.com/pdf/2018-class-action-survey.pdf

January 31, 2019 2019 Minnesota Construction Law Seminar 115

Costs and Trends (2017 Stats)Labor and Employment

https://www.workplaceclassaction.com/wp-content/uploads/sites/214/2018/04/2018-Seyfarth-Shaw.pdf

January 31, 2019 2019 Minnesota Construction Law Seminar 116

Costs and Trends (2017 Stats)

• Second Most Popular: Consumer Fraud

• Third: Product Liability

• Fourth: Antitrust

• Top 4 account for 2/3 of spending

https://classactionsurvey.com/pdf/2018-class-action-survey.pdf

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Costs and Trends (2017 Stats)

January 31, 2019 2019 Minnesota Construction Law Seminar 118

Building Products Class Actions

• Special type of product liability; hybrid of product liability and construction

• Allegation that product is defective (e.g., shingles, siding, windows)

• But many hallmarks of construction lit. (product vs. installation defect, experts)

January 31, 2019 2019 Minnesota Construction Law Seminar 119

Bottom Line

• Class-action litigation is an increasingly common and costly part of doing business

• The more people you employ, the more products you sell, the more likely you are to be . . . invited . . . to defend one

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So let’s learn a bit about them!

January 31, 2019 2019 Minnesota Construction Law Seminar 120

But first, pull out those tape measures.

This will be a little hands on.

January 31, 2019 2019 Minnesota Construction Law Seminar 121

How Class Action LitigationDiffers from Ordinary Litigation

January 31, 2019 2019 Minnesota Construction Law Seminar 122

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Ordinary Litigation

• Scope/Beginning: Plaintiff sues Defendant

• Relief: Pl(s) request relief just for Pl(s)

• Who Is Driving? The Plaintiffs

• Judgment/Settlement: Impacts parties

– No notice is required for anyone else

January 31, 2019 2019 Minnesota Construction Law Seminar 124

Class Action LitigationScope/Beginning

• Scope/Beginning: Plaintiff sues Defendant

– Same as Ordinary Litigation

• Case is not a class action until judge says so

– the “class action” label in the complaint does not make it one, but has practical impacts

• Until then, the “class” is only “purported”

January 31, 2019 2019 Minnesota Construction Law Seminar 125

Class Action LitigationRelief

• Relief: Pl(s) request relief for entire class

– Our case: almost every owner of structure with Windsor windows made from 2000-1/5/2018

• Relief often comes in one of two forms:

– Common Fund (big chunk of money)

– Claims-Made Process (pay as you go)

Page 47: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

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January 31, 2019 2019 Minnesota Construction Law Seminar 126

Class Action LitigationWho Is Driving?

• Who Is Driving? Plaintiffs’ Counsel (a.k.a. would-be class counsel)

• Plaintiffs just interested in their own claims

• Counsel wants to make it a class . . . because they are . . . altruistic/greedy(?)

January 31, 2019 2019 Minnesota Construction Law Seminar 127

Class Action LitigationJudgement/Settlement

• Judgment/Settlement: Impacts a class full of people, not just “named plaintiffs”

• Claims barred by class-wide judgment, and released by class-wide settlement

– Unless class member opted out after class cert.

January 31, 2019 2019 Minnesota Construction Law Seminar 128

Class Action LitigationJudgement/Settlement

• You can still settle just with the plaintiffs

• But that does not settle with the class

• Class counsel free to deal out new plaintiff, to try another run at getting class cert.

• Finality requires class-wide settlement

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Class Action LitigationTwo Significant Features

• Class Certification

• Class-Action Settlement

Class Certification

January 31, 2019 2019 Minnesota Construction Law Seminar 130

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Class Certification

• Cannot have a class-wide judgment or settlement until a class exists

• No class exists until a court certifies one

• Often most important decision of litigation

• Radically impacts exposure

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Class Certification

• Notice Critical: For most common class, court must direct “best notice that is practical under the circumstances” (Fed. R. Civ. P. 23(c)(B)).

• Allows class members to opt out

– No benefit from class litigation

– But no burden either (e.g., no release)

January 31, 2019 2019 Minnesota Construction Law Seminar 133

Class Certification

• Direct notice required when possible, but may resort to media (e.g., magazines, Google)

• Often requires complex notice/media plan

• Very expensive. Default rule: Plaintiff pays.

January 31, 2019 2019 Minnesota Construction Law Seminar 134

Class Certification

• All classes need 4 things (Fed.R.Civ.P.23(a))

1. Joinder Impractical (too many of you!)

• Number varies

• Can be as low as 40

2. Commonality (same injury, common answers to common questions to resolve class issues)

Page 50: Arthur Chapman Construction Team · 2019-01-31 · Tracy S. Stromberg, Paralegal, Legal Administrative Assistant 612 225-6775 tsstromberg@ArthurChapman.com Arthur Chapman Construction

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Commonality: “In One Stroke”

“Their claims must depend upon a common contention—for example, the assertion of

discriminatory bias on the part of the same supervisor. That common contention, moreover,

must be of such a nature that it is capable of class-wide resolution—which means that determination of its truth or falsity will resolve an issue that is

central to the validity of each one of the claims in one stroke.”

Wal-Mart Stores v. Dukes, 564 U.S. 338, 350 (2011)

January 31, 2019 2019 Minnesota Construction Law Seminar 136

Class Certification

• Requirement ## 3 and 4 are overlapping

3. Typicality (plaintiff’s claims, and defenses to them, typical of class, to ensure pl. interests aligned with class)

4. Adequacy of Class Rep (similar interests; looks to class counsel too for qualifications, conflicts of interest)

January 31, 2019 2019 Minnesota Construction Law Seminar 137

Class Certification

• Three different types of classes (each with their own unique requirements)

• Most common is Rule 23(b)(3) class

• Requires predominance and superiority

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Class Certification

• Predominance: the common questions “predominate” over the class-member-specific ones (Fed. R. Civ. P. 23(b)(3))

– Powerful defense tool to defeat class cert.

• Superiority: the class action would be “superior” to ordinary litigation, as a matter of fairness & efficiency (id., factors given)

January 31, 2019 2019 Minnesota Construction Law Seminar 139

No Predominance

“Although plaintiffs have identified some issues with respect to liability that may be common to a class of

individuals, numerous individual questions of fact and law remain, related to timeliness (accrual, tolling and

equitable estoppel), causation, damages and the implied warranty claims (choice of law, notice of breach and privity) that cannot be addressed on a

class-wide basis.”

Haley v. Kolbe & Kolbe Millwork, No. 14-CV-99-BBC, 2015 WL 9255571, at *16 (W.D. Wis. Dec. 18, 2015) (denying class cert.)

Class Action Settlement

(It’s just the beginning . . . )

January 31, 2019 2019 Minnesota Construction Law Seminar 140

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Class Action Settlement

• Painstaking settlement negotiations

• Ours took more than a year and 3 mediations

• Result is only a proposed settlement

• Court needs to approve (to protect class)

January 31, 2019 2019 Minnesota Construction Law Seminar 142

Settlement Approval: 4 Steps

Step 1: Preliminary Approval

Step 2: Notice and Administration

Step 3: Final Approval

Step 4: Appeal (by objecting class members)

January 31, 2019 2019 Minnesota Construction Law Seminar 143

Preliminary Approval

• Preliminarily certify settlement class

– You still need a class, to settle class-wide

• Preliminarily approve settlement

• Appoint class representatives

• Approve notice and administration plan

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Settlement Class Certification

• Must happen before final approval

• Requires “undiluted” court scrutiny (our commentary: doesn’t always get it)

• Often moved for by plaintiffs when parties jointly ask court to approve settlement

– Defs. agree not to oppose motion

January 31, 2019 2019 Minnesota Construction Law Seminar 145

Notice and Administration

• Two critical parts of class-action settlement

• Significant part of settlement negotiations

• Terms of settlement largely govern

• Often handled by professionals

January 31, 2019 2019 Minnesota Construction Law Seminar 146

Notice

• Actual notice not required

• Direct notice if possible (e.g., U.S. mail)

• Published notice allowed (e.g., print magazines, Google Ads.)

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Notice

• Negotiated who pays

– Very expensive. Ours cost more than $800k

• Negotiated effectiveness of published notice

– We needed 80% 3 times (no magic number, but must satisfy due process and judge)

– Interviewed and got quotes from vendors

January 31, 2019 2019 Minnesota Construction Law Seminar 148

Notice

• Notice critical to allow class members to opt out of class, file a claim for settlement benefits, or to object to the settlement

• Vast majority of our claims came from direct notice, not the $800k published notice

January 31, 2019 2019 Minnesota Construction Law Seminar 149

Administration

• It is the “administration” of the many nuts and bolts of class-action settlements

• Covers a number of items: mailings, receiving claims, reviewing for accuracy (and fraud), distributing payment, fielding angry calls

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January 31, 2019 2019 Minnesota Construction Law Seminar 150

Administration

• Key part is administering the Claim Period

• Begins after notice ordered by court

• Claim Period lasts for negotiated length

– Ours was a year

January 31, 2019 2019 Minnesota Construction Law Seminar 151

Administration

• Administrator receives responses from claimants, who have three options:

– Submit claim for settlement benefit

– Opt out

– Object

January 31, 2019 2019 Minnesota Construction Law Seminar 152

Administration

• Cases range in administration complexity

• Simpler cases may just need, e.g., proof of ownership/purchase, and a few basics

• More complex cases might need far more

– Long claim forms, affidavits, pictures

– Mini-adjudications, administrative appeals

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Final Approval

• Parties jointly move for final approval (can be, but need not, be after Claim Period ends)

• Class counsel separately moves for final class certification and award of attorney fees

• Objectors (if any) heard

January 31, 2019 2019 Minnesota Construction Law Seminar 154

Final Approval

• Court must approve only if settlement “fair, reasonable, and adequate.” Fed. R. Civ. P. 23(e)

• Protects absent class members

• Sniffs out “sweetheart” attorney-fee deals

– Courts should consider what the class received, in deciding whether fees fair

January 31, 2019 2019 Minnesota Construction Law Seminar 155

Final ApprovalFocus on Fees

• Often drives the litigation

• Not mandatory for class actions, but often required by one of the legal claims

• Notice must have identified $$$ requested

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Final ApprovalFocus on Fees

• Decided by the court, not by agreement

• Defendants may agree to “clear sailing” (i.e., no objection if fee request below $XXX)

• Class members may object to the number

– These objectors might also want a cut

January 31, 2019 2019 Minnesota Construction Law Seminar 157

Final ApprovalFocus on Fees

• Appellate courts require heavy scrutiny

• Wary of the “sweetheart deal”

• District courts must not approve just because there was a settlement

• (But, in reality, they still might)

January 31, 2019 2019 Minnesota Construction Law Seminar 158

Appeal

• Objecting class members can appeal

• Objectors do not have the best reputation

• But appellate courts see them as being an important check on the system

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Appeal

• Appellate courts can reverse approval

• Decisions can be scathing

• Reversal does not mean the parties can’t settle—they might provide guidance

• But that means you need to start over

January 31, 2019 2019 Minnesota Construction Law Seminar 160

Appeal

“This is a case in which the lawyers support the settlement to get fees; the defendants support it to evade liability; [and] the court can’t vindicate

the class’s rights because the friendly presentation means that it lacks essential

information.”

Pella Corp., 753 F.3d at 729 (quotation omitted) (reversing, remanding after “eight largely wasted years”)

A Few Words on Multidistrict Litigation

(the art of making the big and scary . . . bigger and scarier)

January 31, 2019 2019 Minnesota Construction Law Seminar 161

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A Few Words on Multidistrict Litigation

• An MDL is multiple cases, started in multiple places, sent to a single judge

• Designed for cases with similarities, to provide efficiency for courts and litigants

• Available for all cases (class/non-class)

January 31, 2019 2019 Minnesota Construction Law Seminar 163

A Few Words on Multidistrict Litigation

• Whether to make MDL decided by the U.S. Judicial Panel on MDL (judges)

• For cases with common “questions of fact”

• Often only cursory analysis

January 31, 2019 2019 Minnesota Construction Law Seminar 164

A Few Words on Multidistrict Litigation

• MDL lasts only for “pretrial proceedings”

• But most cases resolve in MDL (trials rare)

• And “pretrial” is broad (motions to dismiss, motions for summary judgment, class cert.)

• This judge will decide your fate

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A Few Words on Multidistrict Litigation

• Plaintiffs’ attorneys like them

• MDLs form early, before claim scrutiny

• All you need are a handful of raised hands (plaintiffs) and conclusory complaints

• Magnet for later filed cases

January 31, 2019 2019 Minnesota Construction Law Seminar 166

A Few Words on Multidistrict Litigation

• Defendants might prefer MDL (e.g., no repeat depos, consolidated discovery)

• But MDLs make it harder to defend (e.g., 1 judge to decide 7 motions to dismiss 1 at a time, versus 7 judges to decide 7 motions to dismiss concurrently/faster)

January 31, 2019 2019 Minnesota Construction Law Seminar 167

A Few Words on Multidistrict Litigation

• MDLs arguably incentivize filing meritless lawsuits, to be drawn into MDL magnet

• Amplifies liability

• Settlement more likely, and more costly

• Worse for MDLed class actions

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A Few Words on Multidistrict Litigation

“[A]n MDL, which was established in part to manage cases more efficiently to achieve judicial economy, becomes populated with many non-meritorious cases that must

nevertheless be managed by the transferee judge—cases that likely never would have entered the federal court system

without the MDL.”

In re Mentor Corp. Obtape Transobturator Sling Prod. Liab. Litig., No. 4:08-MD-2004 (CDL), 2016 WL 4705827, at *1 (M.D.

Ga. Sept. 7, 2016)

January 31, 2019 2019 Minnesota Construction Law Seminar 169

Reform?

• Congress is considering reform, for class actions and MDLs. Impressive proposal.

• H.R.985 - Fairness in Class Action Litigation. But it has been stalled since passing the House on March 9, 2017.

• Loved by business. Hated by pl. attorneys.

A Strong Defense:Where To Take A Stand

January 31, 2019 2019 Minnesota Construction Law Seminar 170

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A Strong Defense:Where To Take A Stand

Early On

1. Motions to dismiss complaint

• Winning gets rid of case early

• Winning early lessens risk of MDL

2. Opposing putting case into MDL

3. Opposing stays of the individual cases pending ruling on whether to form MDL

January 31, 2019 2019 Minnesota Construction Law Seminar 172

A Strong Defense:Where To Take A Stand

Later On

1. Opposing class certification

2. Motions for summary judgment

3. Motions to exclude plaintiff’s expert

• Can be key component of #1 and #2

January 31, 2019 2019 Minnesota Construction Law Seminar 173

Questions & Answers

Michael P. North

612 375-5907

[email protected]

Jeffrey M. Markowitz

612 375-5917

[email protected]

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2019 Minnesota Construction Law

Seminar

Thank you for attending!


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