Tag: litigation

Is Your Lawsuit Stuck Due to COVID? Stipulated Mediation May Be the Answer.

You may wish to give mediation a second look. If you are business owner involved in pending business litigation, you are likely frustrated with the progress – or rather the lack of progress – in your case. Whether as a plaintiff looking for a resolution of your grievance or a defendant eager for vindication, it is frustrating when the courts keep pushing back deadlines and hearings, with no end in sight. When Michigan shut down back in March 2020, the Michigan Supreme Court directed (and rightfully so) that criminal cases be prioritized. Civil matters – and especially business disputes – got pushed to the back of the docket. Now, as many of the courts have resumed normal (albeit remote) operations, they are playing catch-up. This is especially so in busy circuits like Wayne and Oakland.

Business owners do not make money in litigation. Lawsuits are expensive in terms of both time and money – there is little doubt that you are not making the best use of your time if you are stuck in an 8-hour deposition, rather than out there selling your product. This is why mediation is always a good idea, even in the best of times, but during COVID, it is the best possible solution to a number of complicated problems facing business owners attempting to resolve their disputes in the courts.

Even if you have already mediated (unsuccessfully), you may consider another attempt. There is no limit to how many times you can try to facilitate a case. Some judges even order the parties to mediate multiple times during the process at different stages of the case. The court rule that governs mediation, MCR 2.411, is very flexible and allows the parties to stipulate to a mediator of their choosing, whether an attorney, a former judge, or even a respected neighbor in the community. COVID has brought about a sea change for businesses across the United States and there is little doubt that the primary facts, interests, and goals, are different now than they may have been pre-COVID. Accordingly, you may want to try again and possibly with a different mediator.

Effective mediation can work wonders, even with the most stubborn parties. I once represented a former employee, whose employer owed her at least $60,000 in back wages. The employer was a start-up entrepreneur in the fitness business, who was big on making promises, but not so big on delivering them. In other words, he promised to pay many times, but at the end of the day, was either unable or unwilling to write a check for services rendered. The employer was also very aggressive and responded to a rather simple breach of contract complaint with counter-allegations of embezzlement and fraud that were unsupported by any evidence whatsoever. The court strongly suggested mediation, but I had no hopes that this case was going to end up anywhere other than trial. Much to my surprise, our mediator was able to craft a solution that settled the case. Not only that, but the mediator’s resolution made both sides feel like they won. That to me is the hallmark of a good mediation – where both sides feel like they are better off than they were prior to mediation. Better yet, the employer could now devote his time and money to his business instead of the lawsuit, and the former employee could spend her time working elsewhere and making money, instead of paying attorneys and going to hearings.

Now is a time like no other to engage a mediator to resolve that business case. The advantages are numerous:

  • Many judges will encourage parties to settle anyway, and even before COVID less than 1% of all business cases were resolved through trial.
  • The monetary cost of taking a case to trial has increased exponentially, as disputes have been more complex and the costs of discovery has skyrocketed in large part due to technology.
  • The time opportunity cost of taking a case to trial has also increased exponentially, as discovery has grown more complex and requires more time input from business owners.
  • The opportunity cost of taking a case to trial is also unpredictable and may largely depend on the forum and the particular judge’s preferences. I once was involved in a relatively straight-forward contract dispute that was pending for over a year, the judge refused to rule on any motions or set the case for trial, and ordered mediation at least 3 times. The parties eventually gave up and settled after the third mediation.
  • In the same vein, the parties can mutually decide on a mediator that fits their needs, whereas in litigation, the parties do not chose their judge.
  • If you filed pre-COVID litigation, consider whether mediation (even if you have previously tried mediation) can be a way out of the slowed-down docket across the state. After all, the facts, interests, and goals of the parties may look quite different than they looked back in February 2020.

Also, online mediation through videoconferencing (like Zoom) is viable and surprisingly effective option. Consider the following advantages:

  • No need for parties or attorneys to travel, allowing for convenience of all.
  • Greater flexibility means potentially lower costs and quicker resolution.
  • Potentially lower mediator fees.
  • Option to have multiple days or extended sessions, as may be needed.
  • Increased scheduling flexibility for all parties.
  • Technological advances such as separate virtual conference rooms, screensharing, text chat, and online whiteboards make it easy for the parties to share information with each other and the mediator.

Artaev at Law offers mediation services as well as representation in alternative dispute resolution proceedings. Contact Dan at dan@artaevatlaw.com or by call or text at 269-930-0254 to schedule your mediation or to secure representation.

© 2020 Artaev at Law PLLC. All rights reserved.

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Into the Fire: Effective Strategies for Litigation Management Before Going to Court

Are you a litigious business owner? Do you copy your attorney on correspondence to a non-paying client or a vendor? Have you ever threatened another business owner with “I’m going to sue you”? Is this something you do as part of your day-to-day business routine? Does your county’s local business judge know you by name? If so, you probably are not effectively managing the litigation aspect of running a business.

As a Metro Detroit business attorney, I frequently encounter clients who are always “ready to sue.” However, as an attorney, my job is to counsel the client regarding all possible approaches, and to the extent that litigation is the preferred route, I am always honest with the client regarding the judicial process. If your lawyer talks up your case, or uses terms like “sure thing” or “slam dunk” to describe the lawsuit, stop and ask questions. Litigation is not a “hammer” with which to punish someone who wronged you – rather, the justice system is designed to be a neutral process to achieve a the correct result by applying the law to your specific facts.

But you may be thinking–come on Dan, this guy or girl totally screwed me! File the lawsuit tomorrow! I WANT BLOOD!!! I’ll pay you, whatever it takes!

But that approach is only likely to result in added time, expense, and headache for you. No matter how strongly you feel about your case, you absolutely must consider the following and discuss with your attorney:

  1. Litigation is a lengthy process – it may take years to reach a resolution at the trial court level, and then there is always the risk of appeal. Yes, years. Even if you think your case is “easy.” Remember the goal of the justice system is to reach the correct result, given certain facts and the law. Very rarely do the courts dispose of a case quickly, and it is especially so when you are the plaintiff (the side who initiates the lawsuit) because you will have the burden of proof. Most judges are also inclined to let cases drag on, in hopes that the case will settle and the judge won’t have to make a decision. If you file a lawsuit, be prepared for the long haul.
  2. Litigation is a disruptive and unpleasant process – as a business owner, you should never approach litigation as a money-making scheme. Litigation will not only require a substantial financial investment (see below), but it will also be disruptive to your business. You and your staff will need to search for and provide all relevant documents, emails, texts, phone logs, etc. as part of the discovery (or fact-finding process) to your attorney. You and your staff will have to appear for depositions (to provide testimony in this case). Then there are motion hearings and trial. If there are electronic data storage issues, you will need to retain an IT expert. All of this takes time and resources away from your business and you must do a careful cost-benefit analysis before getting involved in litigation.
  3. Litigation is an expensive process – you may easily end up paying tens of thousands of dollars to your lawyers over the course of the case. The fact-finding process that is discovery is the most costly and lengthy. Paying your attorney to attend a 5 hour deposition, review the transcript, respond to discovery requests, and craft your own discovery requests adds up very quickly. And, even if you win, YOU DO NOT GET YOUR ATTORNEY FEES PAID BY THE OTHER SIDE. The only exception to this general rule in the business world is a contract provision that expressly provides that the loser pays the winner’s attorney fees in the event of litigation. Of course, such a provision is a double-edged sword that applies to both parties.
  4. Litigation is an uncertain process – cases are rarely black and white and no attorney can predict what a judge (or jury) will do with your claim. You may have an unpredictable or eccentric judge. You may have attorneys on the other side that will make life not only difficult through discovery, but also expensive by dragging out the process. Also, even if you go to trial or win on a motion, there is always a chance for the losing party to appeal. And, if the Court of Appeals “remands” the case–meaning sends it back to the trial court with instructions–the process could very well restart and drag on for years more.

So what’s a business owner supposed to do? What are some options to enforce your contracts short of going to court? You should consult an attorney about the following options:

  • Consider pre-suit facilitation, but be mindful of the applicable statute of limitations.
  • Consider using arbitration clauses in your contracts to mandate an alternative dispute resolution process between the parties.

The unpredictability and expense of litigation also highlights the need to retain an attorney to advise your business and review any contracts before signing them.

The bottom line is a business does not make money litigating. It is a huge drain on time and resources that could be spent growing market share. If you find yourself considering litigation or on the receiving end of a lawsuit, contact an experienced business law attorney immediately for a consultation.

Contact attorney Dan Artaev today at dan@artaevatlaw.com or by phone or text at (269) 930-0254.

Don’t Spin Out: 5 Lessons for Every Business Owner From the Peloton Copyright Lawsuit.

Those of you who follow me on Instagram know that I am the #Trilawyer (basically, a lawyer whose hobby is doing triathlons). The cycling leg just happens to be my favorite, I love going to spin class at the gym, and I am also a big fan of watching pro cycling on TV. So obviously when I saw the news featuring BOTH the law and indoor cycling training, I had to write about it. A group of music publishers are suing Peloton, the company behind those heavily advertised stationary bikes and on-demand spin classes, for allegedly using popular music in their on-demand videos without the proper licenses.

The Peloton situation actually provides some valuable lessons for every business owner, regardless of industry. But first, some background on what happened with Peloton, at least according to the plaintiffs’ one-sided view in the Complaint. For those who have not seen their advertising barrage, Peloton is a public company that sells high-end stationary bikes and treadmills. How high end? A spin bike will set you back a couple thousand dollars, but luckily you can finance it with low low monthly payments over 36 months (just like your TV, couch, cell phone, pure-bred poodle, and anything else these days). The treadmills are even more expensive at something like $5k, but the lawsuit is about the spin bikes.

Why would someone pay $2000+ for a stationary bike when you can buy a great one for $300-400 on Amazon? I have no idea. But one of Peloton’s central marketing points is a subscription service (for a separate monthly fee) that will give you access to streaming fitness videos, spin instruction, competitions, and other content that simulates an in-studio workout from your mid-town high-rise apartment or summer chalet or weekend home in the Hamptons. At least according to the commercials.

If you have ever been to a spin class at the gym, you know that the instructor’s playlist is a big part of the experience. The instructor plays a list of songs for the workout session that are generally synchronized to the tempo of the current workout intervals. For example, if the instructor wants the class to sprint at 110 RPMs on a flat road (meaning easy resistance), then she may play something fast and upbeat to get the class going. If the session calls for hills at 60-70 RPMs and heavy resistance, then she may play something slower and heavier to match the workout. Peloton offers a library of pre-recorded workout sessions that it streams to subscribers and like the in-gym spin classes, the recordings feature an instructor with a playlist taking the participants through a particular class. The problem – according to the lawsuit – is that Peloton does not have permission to use the musical content in its workout videos. In the world of copyright law, a company must have the proper license for commercial use before it can use music as part of its business. In the case of videos synchronized to music, the law requires what is called a “sync” license that permits that particular song to be used with a specific video. Apparently Peloton failed to secure those “sync” licenses for at least some of the videos that it broadcasts. Copyright law also provides for punitive damages for willful violation of copyright, and Peloton may be facing a steep price tag if the court determines that Peloton’s failure to secure licenses was a deliberate decision. Which it very well may have been, as it is surprising to think that a company that size missed a rather obvious music licensing issue.

Whatever the merits of the litigation, and whatever the outcome, there are some important takeaways for all business owners from this lawsuit. Even if you have never been inside a spin studio, even if you do not use music at your business, there are still valuable lessons to be keep in mind:

  1. Trying to save a few bucks at the beginning may cost you big bucks later on. The most common reaction online to the Peloton lawsuit is that “how could a big public company not have seen this coming?” Peloton grew quickly, and it may be possible that the company deliberately skipped paying licensing fees at the beginning to save money, but this attempt to scrimp at the outset may end up costing millions down the road. This is why no matter your size, it is important to properly budget and anticipate all expenses. For example, talk to an insurance agent you can trust and get the right amount of insurance coverage for your business. Buy workers’ compensation insurance. Comply with MIOSHA regulations. Hire a lawyer to draft a proper business agreement between you and your partner to reflect your respective rights and obligations to the company. Do not co-mingle personal and business bank accounts. You get the picture – a cheap shortcut now can come back and cost you much more money in the future. It could even potentially sink your entire business.
  2. What may seem like common sense to you may be illegal. You may be thinking – but if I buy a CD at the store or a song from iTunes, don’t I own the music? Can’t I play it for whoever and whereever I want? It may be common sense that you own something that you buy, but it is not always true, especially in the modern age of digital media. With respect to music for example, you are often buying a license for personal, in-home use. Say you have a bar or a restaurant, and you decide to play your own iPod playlist over the speakers for atmosphere. Without a separate license, you just violated the music studio’s copyright and can be sued. Or, if you decide to start your own weekend DJ business using your old LPs. Same thing – the CD you buy at the store to listen to in your car does not give you the right to play that same CD at a wedding for money. Sound confusing and counter-intuitive? It may be, but it also protects the rights of the music publisher and keeps the cost of CDs and iTunes singles accessible to the general public. The bottom line is that you need to consult with a professional about all aspects of your business to make sure you are doing it the right way, and to ensure compliance with all applicable laws. And the right professional will identify all the relevant issues, not just the obvious ones.
  3. You are never too big (or too small) to be sued. You might also be thinking, oh who cares, I run a mom-and-pop gas station/grocery store/bar and no one is going to sue me for playing my CD collections over the speakers. Or you might think, my business partner is my friend, he will never sue me. My employees are all like family, right? Wrong. Just one example is a string of lawsuits filed against nightclubs for playing songs without the proper commercial license in 2016. From my own experience as a business litigator, there are far too many cases where business partners break up and decide to sue each other because they never had a written agreement. Actually, one of the major reasons to create a separate legal entity for your business – like an LLC – is to anticipate lawsuits and to protect your personal home, car, and bank account in case of unanticipated trouble. Luckily, creating the right corporate entity and maintaining corporate formalities to ensure protection are not particularly complex or expensive endeavors, and should be done by all business owners.
  4. Anticipate and budget for lawsuits as the cost of doing business. You can take all of the precautions in the world, hire the best attorneys, and run a flawless business. You are still going to get sued. That’s the reality of doing business. There may be a disagreement with a supplier over the quality of the product supplied. One of your workers may get injured on the job. Or, a vengeful ex-partner or employee may decide to use entirely frivolous litigation to harass and extort you. Thus, it is critical to budget for such eventualities just like you budget for utilities, rent, or salaries. I have counseled numerous businesses who think that they can handle a legal proceeding in-house, and end up creating more trouble for themselves that then costs MORE money to untangle down the road. It is a great idea to treat litigation as just a cost of doing business, set aside some funds each month, and have a lawyer on retainer, so that when you do get sued, your attorney can jump on the case right away and minimize any damage.
  5. Hire the right lawyers to review all aspects of your company. Of course, you have to have the right people for the job. Contact a knowledgeable and well-rounded business attorney like me to provide a consultation for your business. That way you can make sure that you have all the right documents, that you have secured the necessary licenses, and that you are fully prepared in case something goes sideways. And remember, there is always someone willing to do it cheaper. Choose your professional wisely!

Contact attorney Dan Artaev today at dan@artaevatlaw.com or by phone or text at (269) 930-0254.

© 2020 Artaev at Law PLLC. All rights reserved.

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