Anti-arbitration bills will cost consumers, enrich trial lawyers

Monday, March 19, 2018

Anti-business extremists at the State Capitol would have Coloradans believe that giving up their "right to sue" in exchange for a more efficient, less adversarial process of dispute resolution is somehow playing into the hands of "big corporations." 

In fact, consumers and businesses alike have often found arbitration to be a better way to resolve disputes than long, drawn out lawsuits in which the only real winners are the lawyers who rack up hundreds of billable hours.

House Bills 1261 (sponsored by Rep. Mike Weissman, D-Aurora) and 1262 (Reps. Dominique Jackson, D-Aurora, and Dylan Roberts, D-Eagle) purport to bring "fairness" and "transparency" to arbitration proceedings.

In reality, they would make Colorado's arbitration system just as big a mess as our state's system of civil courts.



Many business contracts require arbitration as a means to settle disputes, rather that lawsuits. That's a choice that businesses and consumers deserve to make for themselves - without unnecessary meddling by politicians.

Arbitration can be cheaper and faster for both parties in a dispute, reducing costs for the largest driver of litigation costs - attorney fees. Arbitration can also be more flexible, less complex, more private and less hostile than endless litigation.

Instead, HBs 1261 and 1262 will make arbitration more difficult and more expensive by inviting litigation against arbitrators.

These bills are also likely to erode modest gains made by the Legislature last year to make it easier for homeowners and builders to resolve disputes over home construction problems and to reduce litigation costs that drive up home prices.

HB 1261 creates new standards for "impartiality" in an environment in which the Colorado Uniform Arbitration Act, case law, Colorado Rules of Professional Conduct, and private contractual standards already establish ethical requirements on arbitrators. This isn't solving a problem. Instead, it's creating one!

HB 1262 creates disclosure requirements that violate contractual confidentiality provisions that typically benefit both parties in a dispute. The bill also creates a cloud over any contract containing an arbitration clause because, U.S. Supreme Court precedent strongly suggests, it will be preempted by the Federal Arbitration Act.

It is important to note that judges and courts do police arbitrator impartiality by reviewing arbitration awards. A party that believes an arbitrator to be biased can ask a court to vacate the award. Ironically, these protections do not apply for judges who preside over lawsuits.

These bills would harm consumers by making arbitration more expensive, thereby leaving consumers at the mercy of trial lawyers and a costly, over-crowded civil litigation system.


Supreme Court upholds limits on wage claims, backing CCJL position

Monday, March 12, 2018

Colorado Supreme Court unanimously ruled that claims for disputed wages must be filed within the statute of limitations (either two or three years) and that the clock starts ticking "on the date that each set of wages first became due and payable—not on the date of separation."

The opinion, written by the court's newest member, Justice Melissa Hart — Yes, we were pleasantly surprised! — largely echoes the salient points submitted by CCJL in a friend of the court brief, authored by Chris Ottele and Sonia Anderson of Husch Blackwell, and which was joined by the Denver Metro Chamber and Building Jobs 4 Colorado.

As summarized by a blog:

The plaintiffs in Hernandez v. Ray Domenico Farms, Inc.had sought to exploit an unusual feature of the Colorado Wage Claim Act (the Wage Act). It allows employees to bring suit for unpaid wages under two separate provisions, depending on whether the employee is currently employed or no longer employed. Plaintiffs in this case had reasoned that the provision that applies to former employees revived claims that were time-barred under the provision that applies to current employees. If true, former employees could bring suit for unpaid wages dating to the beginning of their employment, possibly 20 or 30 years ago. 


On behalf of the Colorado Civil Justice League and other business interests, Husch Blackwell attorneys filed the only amicus brief in support of the employer. The Supreme Court’s opinion agreed with each of the positions set forth in Husch Blackwell’s amicus brief and disagreed with the briefs of the plaintiffs, their amici and, with respect to at least one issue, even the defendant employer.

Asbestos transparency advances in Senate

Monday, March 05, 2018

There's an unseemly underside to some of those mesothelioma commercials that dominate late-night television. It hasn't come to Colorado yet, and if the Colorado General Assembly passes Senate Bill 123 (sponsored by Sen. Jerry Sonnenberg), it never will. 

Mesothelioma is a cancer that develops from asbestos fibers that become lodged in the lungs. Because it usually goes undiscovered until it has become advanced, it is almost always fatal.

While it is just to feel sympathy for those suffering from mesothelioma and to want them to receive timely compensation, the way some asbestos plaintiffs lawyers abuse the asbestos claims process is not only unjust - it also endangers the ability of future victims to receive adequate compensation.

Those suffering from mesothelioma can seek relief in two ways: a lawsuit against manufacturers of asbestos products that are still in business or a claim against one or more "asbestos trusts" established during bankruptcy proceedings to pay claims against insolvent companies.

Many injured parties may have legitimate claims against both. However, as more primary companies declared bankruptcy, plaintiffs attorneys began focusing lawsuits against secondary users of asbestos, including those whose products were less dangerous.

One such company, Garlock Sealing Technologies, regularly settled for very small amounts while the primary companies were still solvent. But when the trusts were established, Garlock and other secondary companies suddenly saw claimants argue that they had been exposed only to these secondary products and not to those manufactured by the likes of Owens Corning or Johns Manville.

Garlock's lawyers smelled a rat and, thanks to an inquisitive judge, uncovered a scam in which plaintiffs lawyers first sued solvent companies, claiming exposure only to one or two products, then after reaching a settlement, they applied to the asbestos trusts, now claiming exposure to many other products which were manufactured by now-bankrupt companies.

Bankruptcy Judge George R. Hodges examined 15 such cases and found that in "each and every one" evidence of exposure to other products was withheld by the plaintiffs' attorneys.

"It was a regular practice by many plaintiffs' firms to delay filing Trust claims," Hodges wrote. He found that, on average, plaintiffs against solvent companies disclosed only about two exposures to bankrupt companies' products, but after settling with Garlock, those same plaintiffs subsequently made claims against 19 of the trusts.

Because exposure happened decades ago, "there's no way for defendants to get information on exposure (to asbestos) except from claimants," said Phil Goldberg, who testified for the U.S. Chamber of Commerce in favor of SB 123.

SB 123 requires claimants to first file trust claims before litigating against existing companies in state courts and to provide the same information to each.

"The fastest way to pay plaintiffs is to file trust claims first," Goldberg testified. "The only reason to file civil claims first is to game the system."

While no such abuses are yet known to have occurred in Colorado, we should institute safeguards before these deceptive practices undermine the integrity of our judicial system.