Mediation? Arbitration? Same Thing, Right?

Mediation? Arbitration? Same Thing, Right? There is often some confusion on the part of business clients concerning the differences between mediation and arbitration.  Some people tend to use the terms interchangeably, but in actuality mediation and arbitration are quite different. In a mediation, typically the parties hire a third party “neutral” person who, while she may be a lawyer, does not need to be in order to help facilitate settlement discussions.  Sometimes the attorneys involved will suggest a mediation as a way to have their clients listen to a neutral third party describe the strengths of the opponent’s case and the weaknesses of their own client’s case so that the parties can try to reach a resolution before incurring significant costs.  As previously noted in this blog, you are not sacrificing anything legally by engaging in mediation or other forms of settlement negotiations.  That is because if the case does not settle at mediation, any judge or jury who ultimately tries the case in court will never hear what offers of compromise may have been made by the parties. It is important to remember that in a mediation, the mediator makes no decisions.  Rather, all of the ultimate decisions about whether to settle, and for how much, are left to the parties.  The mediator cannot force a settlement on anyone.  The mediator can make suggestions, and the parties can agree on different ways to mediate.  However, ultimately it is up to the parties to decide if the case will settle or not.  This is one of the big advantages of mediation, because the parties control their own destinies.  After...

Ten Years to Fight Over a Contract?

Ten Years to Fight Over a Contract?! We are constantly emphasizing to our clients the importance of reading and understanding all of their contracts before signing them.  We also continually counsel our clients about the incredibly slow pace of litigation and how resolving business disputes through the courts can take many years.  A recent decision by the 7th Circuit Court of Appeals (which would hear federal cases under Indiana law) serves as a good illustration of these points: In that, the 7th Circuit reversed a jury’s award of $1,500,000.00 in favor of a sales representative, and found that the plain language of that representative’s contract showed that he was only entitled to $54,000.00 in commissions.  The reason for the reversal was that his contract very clearly stated that in order for the sales person to receive commission credit under the employer’s previous compensation plan, any sale must close on or before December 25, 2005.  The sale at issue did not close until March, 2006.  During the original trial, the trial court allowed evidence to be introduced concerning what was intended by the parties, as opposed to simply enforcing the plain terms of the contract.  With the introduction of that extra evidence, the jury awarded $1,500,000.00.  The Court of Appeals reversed that ruling and directed that the employee was only entitled to $54,000.00. A few interesting points that came out of this recent decision include the fact that this dispute has been ongoing for ten years.  For some perspective, the sale at issue closed about 18 months before the introduction of the iPhone and the decision was entered on July...

What Triggers the Beginning of a Non-Compete?

In a recent case decided by the Indiana Court of Appeals, the judges unanimously agreed that a 10 day break in employment with a prior employer started the running of the non-compete agreement between that employer and its employee, despite the fact that same employee was rehired by that same employer 10 days later.      At the time of the employee’s original hire, he was asked to sign a non-compete agreement, which he did.  He was subsequently fired.  Ten days later his employer offered to revoke the termination and allow him to return to his prior position.  The employee returned to his position but the employer did not ask the employee to sign a new non-compete agreement.  Approximately 2 ½ years later, the employee left that employment and immediately began working for his former’s employer’s competitor.      The employer filed a lawsuit seeking to enforce the non-compete agreement that the employee signed at the time of his original hire.  The employer argued that because the termination was “revoked”, and the employee rehired, the non-compete agreement signed when the employee was originally hired should still remain in full force and effect.      The Indiana Court of Appeals rejected the employer’s argument and ruled in favor of the employee.  The Court noted certain principles related to non-compete provisions, which we have previously discussed here.  Included among these are the fact that covenants not to compete are in restraint of trade and are not favored by the law; they are strictly construed against employers and are enforced only if reasonable; and those covenants must be reasonable with respect to legitimate protectable interest of the employer....

Law Does Not Always Keep Pace with the Rest of the World

Lawyers rely upon previous court decisions when determining what advice to give to clients. By reading previous decisions based upon facts similar to a particular situation, a lawyer can best advise the client what is likely to happen and how to approach the problem.  For this reason, lawyers rely on the law generally being the same year after year. The law can and does change, however.  In fact, sometimes a court will actually reverse one of its prior rulings.  The 7th Circuit Federal Court of Appeals recently did just that, and noted it is “not attractive” to “move from one side of a conflict to another,” but because the Court has a duty to apply the relevant law in a way to avoid “unnecessary litigation,” then the Court must do so. Furthermore, as we all know the world changes, and sometimes changes very quickly.  It is amazing to think that the iPhone was not introduced until October 2007. Think about how much the world has changed as a result of the introduction into our lives of the iPhone/ Smartphone.  Looking back a few years further, the Internet used to be a novelty, and yet now is a practical necessity to everyday life, school and business. However the process for changing the law is often quite slow, and so situations arise where technology and the world change so fast that the law is unable to keep pace and so there is no legal precedent to deal with new situations.  As a result matters  must be resolved using laws that were not really designed to deal with issues in the modern...

Non-Competes/Non-Solicitations: What is reasonable?

Courts in Indiana have uniformly held that covenants not to compete or not to solicit, while being in restraint of trade, can nevertheless be enforced if they are found to be “reasonable”.   Whenever a loaded term like “reasonable” is used, the meaning of such term is always in the eye of the beholder.   The “reasonableness” of the geographic region involved and time period during which the restriction applies have led to significant litigation and legal expenses.  However, the one thing that many attorneys overlook when analyzing these cases is that such covenants are only enforceable if there is a legitimate proprietary interest that is deserving of protection.   For instance, if the departing employee is going to work for a company which is not a competitor, or is going to perform a task different than what that employee performed for the now offended employer, it is possible to attack the enforceability on the grounds that there really is no proprietary interest worthy of protection.   Given the fact that the Indiana Supreme Court has said these types of covenants are “disfavored by the law”, counsel should always analyze first whether or not there is actually any proprietary interest substantiating the...

Wage Claims Under Indiana Law

Indiana has two statutes which function to provide a serious incentive to employers to ensure that an employee’s final paycheck is paid by the next regularly scheduled pay date.   One statute applies to an employee whose position is terminated (I.C. §22-2-9-2) while the other statute applies if the employee leaves voluntarily (I.C. §22-2-5-1).   The penalty provisions have been interpreted to be the same.   An employee is entitled to 10% of the amount owed accruing on a daily basis up to the point where an additional 200% of the owed wages has accrued.   This is effectively a treble damages award.   Additionally, the employee is entitled to the costs, including attorney’s fees, that the employee incurs in seeking collection of the unpaid wages.   This is a very valuable provision which gives attorneys the incentive to take on cases for relatively small amounts of wages which would otherwise be unprofitable to pursue.  All corporate clients should be advised that they need to pay the employee’s last paycheck, in full, with no deductions for any claimed expenses or other amounts allegedly owed to the employer, at the time of that last pay date.   Failure to do so not only results in the rapid accrual of additional monies, but often, the amount of attorney’s fees exceeds the amount of unpaid...