Tag Archives: Mediation

‘Link Rot” and the Litigator

A recent decision of the Federal District Court in Massachusetts highlights one of the problems of including a citation to a website in a brief or judicial opinion – a phenomenon colloquially known as “link rot”.

In Henning v. Wachovia Mortgage, FSB, 2013 WL 5229837 (2013), the Court dismissed Plaintiff’s predatory lending claims on preemption grounds, holding that the claims asserted by Plaintiff in his Second Amended Complaint were preempted by the Federal Home Owners’ Loan Act. Following the Court’s technical analysis of the issues presented, the Court stated, “And so, [Wachovia] wins on a technicality.” The Court then stated that should Plaintiff prove his case on the merits, the conduct of Wachovia would be shown to be “nothing short of outrageous.” The Court then observed as follows:

“A quick visit to [Wachovia’s] website confirms that it vigorously promotes itself as consumer friendly, Loans and Programs page within Home Lending, wells fargo.com, www.wellsfargo.com/mortgage/loan-programs/(last visited September 17, 2013); a far cry from the hard-nosed win-at-any-cost stance it has adopted here.”

Apparently prompted, in part, by the Bank’s pro-consumer representations in its website, the Court concluded that it would inquire as to whether the Bank wished to rely on the technicality it used to obtain dismissal of the case, or whether it wished to address the merits of the claim. To clarify the Bank’s position, the Court ordered the Bank to submit a corporate resolution as to the Bank’s endorsement of the legal position asserted in the case.

The decision highlights, among other things, the interesting and pernicious problem known as “link rot”. This slang term refers to the condition where hypertext links lead nowhere because web pages have been removed or reorganized. In the Henning case, there is no way of knowing whether the hyperlink in the Court’s decision continues to connect to the same content which prompted the judge to issue his coda and subsequent order in the case. A recent report from Harvard Law School found that 49% of hyperlinks in Supreme Court opinions no longer link to the current content. Another study found that more than 70% of URLs in the Harvard Law Review and other journals fail to connect to the original documents. Various proposals have been considered, including a central repository of links. The United States Judicial Conference has developed suggested practices, including a recommendation that web pages cited in an opinion be added as an attachment to the opinion. To date, no protocol has been generally accepted.

In the Henning case, the docket indicates that the Bank obtained a stay of the Court’s order to produce a corporate resolution, and the case is scheduled for mediation in mid-January, 2014.

Attorney Liability for Statements Made in Connection with Mediation and/or Performance of a Settlement

A recent Superior Court case, ZVI Construction Company, LLC v. Franklin Levy, et al, Suffolk Superior Court Civil Action No. 2013-SUCV-00342, explored the circumstances under which an attorney could be held liable to an opposing party for statements by the attorney during a mediation session or for post-mediation statements and actions relating to a client’s performance (or lack thereof) under a settlement agreement. In ZVI Construction, the Court found that, although neither the statutory mediation privilege nor the general litigation privilege protected the cited statements of counsel during the mediation, the parties’ mediation agreement itself precluded use of such statements as a basis for a claim against the attorney. As to the claims based on allegedly false or misleading post-mediation statements, the court noted the very limited circumstances in which attorney liability could be found, and, after carefully parsing the alleged statements, rejected those claims as well. The court did find that the allegations regarding the attorney’s actions in paying his law firm from funds allegedly to be used to perform under the settlement were sufficient to survive a motion to dismiss.

ZVI initially sued Upper Crust Pizza for payment for services for a restaurant build out. The parties engaged in voluntary mediation at which they settled the case. Upper Crust, however, failed to pay sums due under the settlement agreement and instead filed for bankruptcy. Without a solvent defendant, ZVI sued Upper Crust’s attorney, alleging that the attorney made misrepresentations during the mediation outside of the presence of the mediator which induced ZVI to enter into the settlement and that, post-mediation, Upper Crust’s attorney and law firm had made misrepresentations, including both misstatements and omissions of fact, and took actions, which assisted Upper Crust in diverting promised settlement funds.

Addressing the alleged mediation statements, the court held that the mediation statute, G.L. c. 223, §23C, did not preclude reliance on the mediation statements at issue because the statute only bars use of communications “made in the presence of the mediator.” The court further found that the general litigation privilege that precludes claims based on statements made by counsel in the course of judicial proceedings was inapplicable because the parties were engaged in a voluntary, as opposed to a court-ordered, mediation. Thus, the court concluded that the mediation was not a judicial proceeding. However, the parties had entered into a written mediation agreement which, without limitation or condition, barred the use for any purpose of any statement made in the course of and relating to the mediation. The court found that the sophisticated parties, both of whom were represented by counsel, were free to make such an agreement, even if it was broader than the otherwise applicable statutory provisions. Based on this provision of the mediation agreement, the court dismissed all claims based on the statements made in connection with the mediation.

The court also rejected ZVI’s claims regarding alleged post-mediation misrepresentations, in this case, the attorney’s alleged omission in failing to disclose that Upper Crust did not intend to pay the funds due under the settlement, but, rather, intended to file for bankruptcy. The court noted that “courts will not infer a duty to disclose information to nonclients when to do so would conflict with the duty of loyalty to a client.” ZVI Construction (citing Lamare v. Basbanes, 418 Mass. 274, 276 (1994) and others). The court further found that the alleged statements or omissions by Upper Crust’s counsel were clearly professional advocacy at the request of or for the benefit of the client, not personal statements of the lawyer. Thus, claims based on such statements or omissions were not cognizable.

Finally, the ZVI Construction court found that allegations that Upper Crust’s counsel acted improperly by diverting settlement funds to pay his law firm, rather than ZVI Construction, was sufficient to state a claim for potential tortious interference with contractual relations, conversion and a violation of G.L.c 93A.