http://sportsillustrated.cnn.com/2012/football/nfl/03/08/anthony.hargrove/index.html

The interesting passage to me, and the passage that I believe is both true and exculpatory with respect to liability for potential bounty-award hits, is the following:

But did I personally want Favre INJURED? Absolutely and categorically NO! Did I feel like we, the Saints, had a better chance of being in the Super Bowl with Favre on the sideline? Of course.

This again gets back to the analysis of conduct that is “totally outside the range of ordinary activity involved in the sport.” (Knight v. Jewett (1992) 3 Cal.4^th 296, 318.)  Hargrove concludes, “But players all over the league do the same thing every Sunday, make late hits and say stupid things.” Exactly, which is why, in the context of Knight, the conduct of the Saints, regardless of the potential bounty payments, falls within the ordinary activity involved in NFL football.

I.              Assumption of the Risk

As a general rule, we all have a duty of care to avoid injury to others. (Bushnell v. Japanese-American Religious and Cultural Center, et al. (1996) 43 Cal.App.4^th 525, 529.) The California case of Knight v. Jewett laid out the rule for primary assumption of the risk, which recognized that in certain situations the nature of the activity at issue is such that the defendant does not owe a legal duty of care to the plaintiff to act with due care. (Knight v. Jewett (1992) 3 Cal.4^th 296, 318-319.)  The principle is that imposition of legal liability for accidentally careless behavior “even when a participant’s conduct violates the rule of the game and may subject the violator to internal sanctions…imposition of legal liability for such conduct might well alter fundamentally the nature of the sport by deterring participants from vigorously engaging in activity that falls close to, but on the permissible side of, a prescribed rule.”  (Id.)  The Knight court concluded that liability may only be imposed “when [the participant] intentionally injures another player or engages in reckless conduct that is totally outside the range of ordinary activity involved in the sport.”  (Id. at p. 318.)

In the context of the NFL and of the bounties apparently paid by players and/or coaches on teams for hits that knock opponents out of games or result in opponents being carted off the field, Knight provides what seems to be an inherently contradictory instruction: is it the intent or is it conduct that is totally outside the range of ordinary activity involved in the sport?

II.           Individual Player Liability

First, it is not likely to be the goal or desire of an injured player to individually pursue another player for his injuries.  But this cuts to the crux of the issue: if a player is doing something that is “totally outside the range of ordinary activity involved in the sport,” then individually-named players will need to be named as defendants in any lawsuit.  Player A will have to contend that Player B intentionally and outside the range of ordinary NFL football set out to debilitate him.  (Then he will have to prove causation, another issue for another day.)  We are literally looking at a case of offense vs. defense, which reverts to the fallacy or lunacy of the argument that hard hits are outside the scope of the risk assumed by NFL players.

Sports Illustrated’s Peter King called this hit “an egregious high-low hit from [Bobby] McCray and tackle Remi Ayodele.”  It wasn’t egregious enough to warrant a flag at the time, although the NFL subsequently fined McCray for the hit.  This is a hit that arguably falls under the “Brady Rule,” designed to prevent defenders from hitting the quarterback’s knees.  To me, it looks like two defenders who are going all out at a critical juncture in the game to try get to the opposing team’s quarterback, not a design with the intent to injure, regardless of whether there was a motivation of $1,000 or $1,500 at the other end if they were to knock Vikings QB Brett Favre out of the game.  Were both players intending to hit Favre? Unquestionably. Was there an intent to injure? Possibly. Did it fall totally outside the range of ordinary activity involved in the sport? No way.

Here’s something else to consider, at least in the context of the McCray/Ayodele hit: if the Saints beat the Vikings, they make the Super Bowl where the losing team receives $42,000 per player and the winner receives $83,000 per player.  Players on both the Saints and Vikings were paid $38,000 apiece for the NFC Championship Game, regardless of who won.  So, were McCray and Ayodele more likely motivated by a bounty of $1,000 or $1,500, or the opportunity to earn as much as $83,000 playing in the Super Bowl two weeks later?  The point is, proving intent and proving conduct outside the range of ordinary activity involved in the sport is a very, very slippery slope.

One final point on player liability: boxers intend to injure each other with every punch. NFL players intend to physically contact each other on every play, some more vigorously than others.  One of the primary tenets of Knight is that the vigor with which one pursues the sport is not to be diminished by a potential imposition of legal liability.  Whether there is an intent to injure an opponent on any specific football play is entirely subjective, but the violence is a part of the game. Absent an enraged steroid-fueled helmet-swinging episode or something similar, but not related in any way to legitimate on-field contact, I cannot see liability for individual players. In short, unless it happens after the whistle or off the field of play, I have trouble believing any contact-related injury that happens on the field does not fall under a primary assumption of the risk.

III.         Team Liability

The Saints are alleged organizationally to have participated in, organized, and in no way discouraged players’ efforts to knock their opponents out of games.  Reports are rife that teams have been complicit in such bounties for tens of years.  Fundamentally, players’ jobs are on the line each week.  If they don’t compete to the level expected, they are considered replaceable.  Some guys are in the NFL not because of their talent but because of their drive, desire, and willingness to do whatever it takes to be on next week’s payroll.  Defenders are taught to square up the ball carrier, to drive a helmet or shoulder pad through the ball carrier’s sternum, and to wrap up and drive the ball carrier to the ground. If an injury results, it’s part of the game. The hunter bears as much risk of injury as the hunted.

The job of the coach is to get his players as motivated as possible, literally so they will “run through a wall.”  Some coaches get players motivated without financial incentive; apparently other coaches motivate by way of a relatively paltry financial incentive.  Is there any proof that one method is more effective than the other, or that players who play with a bounty as incentive are any more likely to injure an opponent?

Legally, the question is whether the Saints’ coaches (or any other coaches who participated in an injury-incentive program) “increased the risks inherent in” NFL football. (Kahn v. East Side Union High School District (2003) 31 Cal.4^th 990, 1001.)  There is an argument that the Saints organizationally increased the risks inherent in NFL football by placing incentives on hits that injured their opponents; the question, again, is whether the Saints’ brass encouraged conduct that was totally outside the range of ordinary activity involved in the sport.  Simply put, I don’t see small financial incentives as increasing the risks inherent in NFL football.  The incentives were an ill-conceived motivational tool to get players to compete at the highest level, which in NFL parlance means more physical, meaner, and tougher than the guy on the other side of the line.

IV.         NFL’s Liability

I have previously addressed the NFL’s liability with respect to MTBI’s or concussion-related injuries.  Do revelations of financial incentives by individual players and/or team personnel change the NFL’s liability in any way?  The NFL has a duty not to increase risk to its players.  There is nothing to suggest that the NFL knew or condoned of bounties or other off-the-book incentives, and in fact the league’s rules prohibit any off-the-books incentives as a violation of the collective bargaining agreement.  Absent evidence to the contrary, which would be shocking, the NFL as an entity faces no liability for the acts of rogue coaches or players.

Generally speaking, the fee that you pay to your attorney will take one of three primary forms: (1) flat fee, (2) hourly fee, or (3) contingency fee.  There is a fourth way to structure a fee agreement, combining any two of flat fee/hourly/contingency into a “hybrid” agreement.

Attorney fee agreements must be fair, reasonable, and fully explained to the client. (Alderman v. Hamilton (1988) 205 Cal.App.3d 1033, 1037.)  Attorneys also have a “professional responsibility to make sure clients understand their billing procedures and rates.” (Severson & Werson v. Bolinger (1991) 235 Cal.App.3d 1569, 1573.)  An attorney may not recover a fee in excess of that which was explained to the client, and to which the client has consented.  (Id.)  Moreover, an attorney may not charge an unconscionable fee.  (Cal. Rules. Prof. Conduct 4-200.)

Before addressing fee structures, it is also important to note that another component of your attorney-client fee agreement is the “costs” portion of the agreement.  Costs include everything from court filing fees to deposition transcripts to faxes, copies, and postage.  Some attorneys, generally on contingency fee cases, will pay the costs (or “front” the costs), to be reimbursed at the conclusion of the case.  I will front costs on occasion, however a wise attorney (and past president of the San Diego County Bar Association) once advised me that it is important for clients to “have a stake” in the outcome of the case, and to pay costs as a case proceeds.  I have heeded this advice, and have found that it is important for clients to understand, and pay, the costs as they are incurred.

One final note on costs: as indicated above, some attorneys will charge for faxes and copies, on top of their other fees and costs.  To me, such charges are nickel-and-diming the client, and are excessive.  Yes, attorneys incur costs for faxes and copies, but those costs are negligible.  When the client is charged $1.00 per page for these services, the costs are no longer negligible, but rather are a revenue stream for the attorney.  (If there are 1,000 pages of discovery in your case, at $1.00 per page the attorney could buy 33 reams of paper (at $30/ea.) for the $1,000 you have paid for your two reams ($60) of paper.)

As far as fee structures are concerned, criminal cases are generally charged on a flat fee basis.  Based upon the allegations leveled against you, the skill and experience required to defend those charges, and amount of time that will likely be required, the attorney will decide how much he/she is going to charge to defend you to the conclusion of your matter.  The fee is generally required to be paid up front, and if the matter resolves the day after you pay your fee or a year later, you still pay the same fee.  Flat fees in civil cases are rare.

An attorney may take a case on a contingency, generally 25% to 40% of the gross recovery, if it appears to be a case of clear liability and if the damages are ascertainable and adequate to compensate both client and attorney.  Generally speaking, civil plaintiff’s cases can be taken on a contingency basis.  Defense cases generally are not suitable for a contingency as there is no prospective recovery at the conclusion of the case.  Similarly, certain cases, such as breach of contract cases, may have multiple prospective goals, including but not limited to monetary recovery.  Therefore, plaintiff’s breach of contract cases are often taken on an hourly basis.

Civil defense cases and certain categories of civil plaintiff’s cases – including breach of contract cases, as set forth above – are generally taken on an hourly basis.  Hourly fees generally run from $200-750, depending on the experience level and subject matter expertise of the lawyer.  Hourly fee cases are generally charged in 6-minute (or 0.1/hour) increments.  Some lawyers will bill in minimum 0.2 (7-12 minutes) or even 0.3 (13-18 minutes) increments, meaning that reviewing an email or talking briefly to opposing counsel is going to cost you several times the actual time spent.  My belief is that fees should be billed in 0.1 (0-6 minute) increments; similarly, if you are told that you will be billed in 0.1 increments and then your bill reflects all charges of 0.2 or greater, the attorney has misrepresented how you will be charged and, in my opinion, is guilty of misrepresenting the terms of the agreement, and also of charging an unconscionable fee.

Finally, some cases may call for a unique, hybrid fee arrangement.  Generally this will take of the form of a reduced hourly rate (say, half of the attorney’s standard rate) plus a reduced contingency percentage (again, half or thereabouts) of the gross recovery at the conclusion of the case.  I saw one fee agreement in which the attorney, on a false arrest case, charged a hybrid fee of $350/hr. plus 40% of any recovery.  In other words, there was no reduction in either the attorney’s hourly or his contingency, leading to the strong likelihood that the attorney would bill in excess of the value of the case.  I have taken hybrid cases when there is a possibility (but not a strong likelihood) of recovery at the end of the case, and in cases where there is both a defense component and offense component to the case, which can occur in breach of contract litigation.

If you have a concern about the fee your attorney is going to charge you, you should either ask your attorney or seek out alternative representation.  If it feels like your attorney is looking at you as a blank check, and/or if you receive a bill and realize that the attorney saw you as a blank check, then it’s probably in your best interest to seek alternative representation.

The complaint, which can be read in its entirety here, claims that multiple concussions caused Chronic Traumatic Encephalopathy (CTE), and led to the early deaths of several former players.  The lawsuit states that in 2002, Dr. Bennet Omalu found CTE in the brain of former Pittsburgh Steelers center Mike Webster.  Then, in 2004, the NFL Committee on Mild Traumatic Brain Injury (MTBI) published their findings showing “no evidence of worsening injury or chronic cumulative effects” from multiple concussions.  Finally, in June, 2010, the NFL acknowledged that concussions can lead to dementia, memory loss, CTE, and related symptoms.

The lawsuit at Paragraph 111 claims the NFL knew as early as the 1920s of the harmful effects of concussions on players’ brains, and that these effects were concealed until 2010.  The suit goes on to allege in the next paragraph that the 75 plaintiffs did not know the long-term effects of concussions and relied on the NFL and the helmet makers (referred to in the complaint as the “Riddell Defendants”) to protect them.

The suit states that it arises for two reasons: (1) the failure to warn and protect players against the long-term brain injury risks, and (2) because the NFL negligently failed to enact league-wide guidelines and mandatory rules regulating  post-concussion medical treatment and the “return-to-play standards” for players who suffer one or more concussions.  These statements are interesting because the league has recently enacted such guidelines and rules and the scuttlebutt is that the players are already devising ways to beat the tests to get back on the field.  If this case makes it to trial, it is not a stretch to say that the entire culture of the NFL will be on trial.

The suit contends that the NFL’s failures have resulted in the deaths of some players and brain injuries to others, including these plaintiffs.

The crux of the suit centers on the creation in 1994 of the NFL’s Mild Traumatic Brain Injury Committee, which is more or less alleged to be a farce and a sham, complicit in duping the NFL’s players into believing that concussions were, singularly or cumulatively, harmless.  The NFL’s MTBI Committee is alleged to have studied the short-term effects of concussions on NFL players and concluded that “because a significant percentage of players returned to play in the same game [as they suffered a mild traumatic brain injury] and the overwhelming majority of players with concussions were kept out of football-related activities for less than one week, it can be concluded that mild TBI’s in professional football are not serious injuries.”  In tenth grade I did a science fair project on the effects of a rock concert on hearing loss.  Based on my own personal experience, I concluded that ringing in the ears for 24-48 hours is expected but thereafter hearing returned to normal.  It appears as though I should have set my course on becoming a doctor for the NFL in spite of the “D” that I received for my efforts.

The suit goes on to claim that the NFL, through its MTBI Committee, intended to deceive its players until the body of evidence regarding the long-term effects of concussions was simply too great and, in 2010, the NFL capitulated under the weight of the evidence.

Initial reaction from fans, by way of message boards and blogs, indicates an overwhelming reluctance to buy into the former players’ cause.  Implicitly or explicitly, the “court of public opinion” believes that players assumed the risks of injuries, including multiple concussions.  “Primary assumption of risk arises where a plaintiff voluntarily participates in an activity or sport involving certain inherent risks; primary assumption of risk … bar[s] recovery because no duty of care is owed as to such risks.” (Connelly v. Mammoth Mountain Ski Area (1995) 39 Cal.App.4th 8, 11.)  The NFL has a duty not to increase risks to its players, which it arguably violated by and through the (allegedly) sham NFL MTBI Committee.   (Note: The NFL MTBI Committee was established in 1994; only 20 of the plaintiffs in the lawsuit played in 1994 or later.)  The NFL will argue that its only duty was to decrease the risk of violent collisions, which are certainly inherent in the sport, and therefore it breached no duty.

Finally, the suit lists 36 sources of information “available and easily accessible to the Defendants” regarding the long-term effects of concussions”; if that information was available and easily accessible to the Defendants, doesn’t that also mean that it was available and easily accessible to the players and their union?  The plaintiffs’ argument in this regard certainly cuts both ways.

What we know for sure is that concussions (aka mild traumatic brain injuries, or MTBIs) are cumulative, and that the long-term effects are both dangerous and debilitating.  The Maxwell plaintiffs are going to have to overcome several prominent legal hurdles, including (1) issues with the applicable statute(s) of limitations, as many of these players’ careers ended 10, 20, 30, or even 40 years ago, (2) that the players did not assume the risk of the head injuries when they chose football as their respective careers, and (3) showing that the NFL had access to knowledge that the players did not have regarding the long-term effects of concussions, and that the NFL actively concealed that knowledge from the players.  Stay tuned…

To view a PDF of the operative complaint, click here.

Surprisingly, in the digital era many companies still erase footage that is more than a week old.  The statute of limitations in California for a claim based upon negligence is two years.  This means if you were injured inside of a California retail location, or outside on its premises, you have two years to file suit.  But you only have one week to notify the store of the incident, and to request that the store save its video from the incident.

While it may seem obvious that you should immediately report an incident to store personnel if you are injured in a store due to a slip-and-fall or trip-and-fall accident, many people at the time of the accident insist they are fine, only to later realize that their sore knee has torn ligaments, or their aching ankle has a torn tendon.  At the same time, you should request that any and all store video be retained (generally it can simply be burned onto a CD) pending the outcome of any insurance claim that you make.  Similarly, businesses in which an injury claim is made should prepare an incident report for every reported incident, and should have a policy in place to ensure that video is saved that corresponds to every reported incident.

I have a case right now where my client was wrongfully accused of shoplifting.  The retailer had at least five cameras in the store but kept the footage from only one camera.  The retailer retained one video since it decided to press charges with the authorities with respect to the alleged shoplifting and the one camera had the most footage of my client’s visit to the store.  However, there are several relevant activities that were presumably caught on video that we now have to piece together through testimony rather than being able to see them on tape:

1. My client set off the theft sensor when she entered the store; there is no footage of this.
2. My client set off the sensor as she exited the store; there is no footage to confirm whether she acknowledged a sales associate when leaving.
3. My client, who was five months pregnant at the time of the incident, is alleged to have suspiciously run to her car.  (As far as I know, the only thing a woman who is five months pregnant runs to is the bathroom.)  Predictably, there is no video of this “suspicious” behavior.

Whether you are a business or an individual claiming to have been injured on a business property, it is very important that the best evidence of the incident be preserved.  Businesses can only save what they are made aware of, so while the statute for filing a negligence lawsuit in California is two years, the earlier the claim is made directly with the business, the more likely that your best evidence will be preserved.  If you think you may have been injured on a business premises, advise the business’s management as soon as possible, and you may want to contact an attorney to preserve both your rights and your evidence.

Fortunately, my simple understanding was more or less accurate, albeit oversimplified and incomplete.  The IRS looks at whether the settlement, verdict, or award is intended to make you whole (non-taxable) or whether it is income (taxable).  The definition of “income” is an accession to wealth, clearly realized, over which you have dominion.  Since that means nothing, we have to dig a little deeper and get into specifics to determine what is and is not taxable.  The IRS uses the term “excludable from gross income” to mean non-taxable.  Why can’t they keep it simple?  It’s the IRS.  If it was simple then we’d all understand, and the IRS couldn’t sleep well at night if we were to collectively understand the tax code.

Here’s what the IRS says about physical injuries[1]:

If an action has its origin in a physical injury or physical sickness, then all damages (other than punitive) that flow therefrom are treated as payments received on account of physical injury or physical sickness whether or not the recipient of the damages is the injured party. [These] damages…are excludable from gross income [i.e., non-taxable].  [T]he exclusion from gross income under IRC section 104(a)(2) also applies to any compensatory damages received based on a claim of emotional distress or mental/emotional injury that is attributable to a physical injury or physical sickness.

In an employment context, damages received to compensate for economic loss, for example, lost wages, business income, and benefits, are taxable unless a personal injury caused the loss.  Back pay received on a claim for denial of a promotion due to disparate treatment or discrimination is taxable.

Any other non-physical injury is taxable, whether the claim is for emotional distress (without a physical injury underlying it), breach of contract, fraud, or negligence. Because these are nonphysical injuries, under the current version of IRC section 104(a)(2), only out-of-pocket amounts for medical costs incurred to treat any emotional distress claims would be excludable from income.  All amounts determined to represent punitive damages are taxable under IRC section 104(a)(2).

Finally, any interest associated with a settlement, verdict, or award is always taxable.

The bottom line is that you will definitely want to consult a lawyer when constructing your settlement agreement, and you may be wise to consult your CPA as well.

When you hire a law firm, you generally hire the senior partner.  The senior partner has his name on the firm’s letterhead and trophies of his successes on the wall.  And then you sign the fee agreement and shake the senior partner’s hand, oftentimes speaking to the senior partner for the last time.  The junior partner/senior associate takes over the big picture handling of your file, and the junior associate – trying to make his or her billable hour requirement in order to make senior associate or junior partner – gets tasked with the day-to-day operation of the file.

Law firms make money by billing, and therefore law firms tend to be really good at billing.  Some cases may be complex enough to require a team of lawyers and the built-in support of a law firm; most are not.  It is not uncommon for a law firm to bill $30,000 – 40,000 per month on a file.  While that sounds like a lot, at a rate of $300/hr., that is roughly half-time for the junior associate assigned to your file.

I am a sole practitioner.  I have resources available to me as needed, including experienced contract lawyers (i.e., lawyers who will pick up projects on short notice) and paralegal support.  But for the most part, every facet and aspect of my practice has my hands on it.  When you call, I answer.  When you email, I respond, and generally very quickly.  If more than 24 hours have elapsed since you called or emailed and I did not respond then I am not doing my job.  I do get very busy, and I do get very wrapped up in deadlines and discovery and research and all of the other things that constitute the practice of law.  I shouldn’t ever get so busy that I cannot timely respond to calls or emails.

If I were to be in the process of hiring a lawyer, it would be very important to me that the lawyer I hire be the lawyer who is going to work on my case.  It would be very important that the lawyer I hire be the lawyer who is responding to my calls or emails.  Personally, I do not care to have a call or an email pawned off to someone else tasked with responding.  (The thought just went through my head that when I get big I will probably rue the day I composed this blog, but my structure is a choice and it’s the right choice for me.)  To me, the fundamental question you should ask me is whether I have the resources to handle your case.  If it’s too complex I will tell you so, and I will refer you on to a firm that bills ethically and has the structure to competently handle your case.  Otherwise, in my opinion you are much better off with the sole practitioner who has low overhead and no billable hours requirement than the firm with the marble floors that requires its associates and junior partners to bill 200 hours per month.

As I offer a free 45-minute consultation, I am happy to discuss structure further with you if that is a concern.  I would also like to note, in closing, that I do not charge clients for telephone calls between the client and I, as it is my belief that a client should be free to call with a question or concern, or to provide information to me that will help me with his or her case.  Ask the big firms if they do that!

Each deposition is its own separate event, meaning that only one witness can be questioned per deposition.  If the witness has an attorney, that attorney will “defend” the deposition.  Defending a deposition means objecting to questions posed by the questioning attorney; the artful counselor will also attempt to coach his or her witness as necessary during the course of a deposition, however coaching (or making speaking objections) is expressly forbidden and is to be avoided.  Sanctions can issue for the defending attorney who impedes, coaches, or counsels on the record during a deposition proceeding.

The witness being questioned may be questioned by an attorney from one party or many parties, but never multiple attorneys for the same party.  More important than the deposition itself is the pre-deposition meeting that occurs between an attorney and his or her client.  Attorneys generally know in advance whether a client is going to present as a good witness.  The questioning attorney – the attorney who has noticed the deposition – is looking for two things from the witness: (1) the witness’s testimony, and (2) whether the witness will present as credible and sympathetic to a jury.  The witness’s appearance and manner are taken into consideration by the questioning attorney, and part of deposition preparation (“depo prep”) is to ensure that all angles, including appearance and manner, have been addressed.

Some witnesses need a lot of preparation time, whether to refresh on facts or to learn to provide concise answers.  Lawyers tend to ask very precise questions.  One of the biggest mistakes a deponent can make is to try to anticipate where a lawyer is going with a question and to answer “the next question.”  Most lawyers are competent enough to ask the next question.  Most.  A witness needs to answer the question pending and to let the questioning lawyer listen, process, and proceed.

For lawyers, the intent of a deposition is to box the witness’s testimony.  Expert witnesses, many of whom have been deposed hundreds of times, tend to engage in a cat-and-mouse game whereby they refuse to commit to a response.   While it is primarily younger lawyers who allow witnesses to control the course of a deposition, I have reviewed deposition transcripts by highly respected lawyers who have been in the game for over 40 years (i.e., longer than I have been alive!) who have failed to nail down critical testimony.  There is nothing worse than preparing for trial and realizing that you have obtained testimony that is ambiguous and that cannot be used to impeach a witness.  The deposition transcript is very expensive kindling at that point.

The legal system is very difficult to navigate without a lawyer.  There are numerous deadlines and tricks and traps to avoid.  If you are representing yourself and trying to minimize costs, at a minimum it is wise to hire a lawyer for the express purposes of defending your deposition.  You need to anticipate that a lawyer is going to need time to review the file, to interview you, to prepare you, and to sit in at your deposition.  The preparation time could exceed the actual time that you are testifying under oath, but in my opinion you will find that it is money well-spent and will likely end up saving you a lot more than it costs you.

In every contract there is an implied covenant of good faith and fair dealing.    In the case of first party disputes between and insured and his/her/its insurer, the insurer must not take an unreasonable stance on the validity of a defense nor investigate the claim with a conscious disregard of facts which might support coverage.  (Beck v. State Farm Mut. Auto Ins. Co. (1976) 54 Cal.App.3d 347, 354; and Delgado v. Heritage Life Ins. Co. (1984) 157 Cal.App.3d 262, 276-278.)  Under California law, the gravamen of the wrong in a first party bad faith action is the unreasonable refusal to pay all benefits due under the terms of the policy.  (Paulfrey v. Blue Chip Stamps (1983) 150 Cal.App.3d 187, 192.)  An insurer may also be liable for bad faith if it unreasonably delays payment on a claim.  The exception to this rule is if the insured fails to cooperate.  (Globe Indemnity Co. v. Superior Court (1992) 6 Cal.App.4th 725.)

While insurers (smartly) have proved hesitant to cooperate with the discovery process, my colleagues and I have unearthed some very damning and valuable information over the years.  One major insurer incentivized its adjusters to deny claims, and kept statistics on its adjusters’ denial rates.  Bonuses were offered for higher rates of denial.  Another large insurance company instructed its adjusters to deny mold claims based upon a faulty reading of its own policy, and even after the courts had found that such a reading was improper.

Insurance companies work off of probabilities, and some insurers have taken the position that it’s easier to deny claims initially and overpay on bad faith claims than it is to just pay valid claims in the first place.  The rationale works like this: if Insurer X denies 10 claims valued at $100,000 apiece, and it knows that only 1 of 10 people are going to sue for bad faith, and on a bad faith claim it may pay anywhere from $100,000 to $400,000, in the long run making 10 denials in bad faith results in profits of $600,000 to $900,000.  (Not to mention, in delaying payment on that claim by 12-24 months, the insurer has the benefit of collecting interest on those funds during the time of non-payment, further reducing the value of the expenditure.)

Damages available on a bad faith claim include actual damages (the amount of the claim), consequential damages (including financial and emotional distress), attorneys’ fees, and punitive damages.  Even though the law in California is very tough on insurers who breach the implied covenant of good faith and fair dealing, there are still many insurers within California who fail to operate under the letter of the law.

If you have made a claim to your insurer and that claim has been denied, you may want to check with a lawyer to ensure that the denial was proper.  I offer a free 45-minute initial consultation, generally an ample amount of time to discuss the facts of your claim and to review the pertinent documents.  In order to be prepared for an initial consultation you will need a copy of your insurance policy and any and all correspondence and communication related to your claim, including the denial letter.  It is always best to have every communication with your insurer in writing (email is sufficient), and make sure each communication is dated.  Be firm, don’t allow yourself to be railroaded, and when the time is right get a lawyer involved to ensure that your rights are protected.

This is viewed as a victory for the NFLPA, who wanted Judge Nelson to oversee the mediation process.  The NFL sought to return to Washington, D.C., and mediator George Cohen at the Federal Mediation and Conciliation Service.

By all accounts, Mr. Cohen was able to bridge many gaps and overcome many hurdles—minor and major, real and perceived—between the owners and the NFLPA.  I have yet to read a negative account of the mediation sessions; by all accounts, Mr. Cohen did an admirable job.

So why would the NFLPA want a federal judge to oversee mediation from this point forward?  Mediation is a process whereby a neutral third party facilitates dialogue between the parties, who must reach agreement voluntarily in order for a settlement to occur.  A mediator lacks the ability to force anyone to do anything.  The NFLPA has been the beneficiary of 20 years of favorable decisions in U.S. District Court, and apparently the NFLPA is convinced that the magistrate judge assigned to preside over the upcoming mediations will attempt to strong-arm the owners into a favorable deal for the players.

I think the NFLPA is making a big mistake by insisting on leveraging what has been a winning hand in the U.S. District Court.  On the one hand, Magistrate Judge Boylan and Judge Nelson could potentially get a firsthand look at the owners’ tactics within the guise of the mediation and form an opinion of the owners’ position that colors future rulings.  On the other hand, the players and owners were apparently not too far off when the mediations with Mr. Cohen broke down.  These negotiations have been very tense and emotional, and it seems fair to categorize the relationship as fragile.  If the players believe that a deal will only get done after receiving favorable rulings in the U.S. District Court, and that it needs to expose the owners to the judges in order to obtain favorable rulings, then the current strategy is a sound one.  If the players are optimistic that a deal can be reached voluntarily between the parties with the court only minimally involved, then this strategy runs the risk of blowing up all of the progress achieved with Mr. Cohen.

In the big picture, the most important thing for the two sides is dialogue.  This requires building off of previous agreements reached with the assistance of Mr. Cohen.  The mediation between the NFL and NFLPA is the ultimate example of many small agreements leading to a larger agreement.  In requesting that mediation be held in the federal court before a magistrate judge, the players and their association seem to be intent on “winning” these negotiations.  My concern is that the progress made to date could be negated by this move, and the players’ minor victory—mediation in front of a U.S. District Court judge—could ultimately result in a major loss.

One final thought: If the parties are interested in resolving their dispute with the assistance of a mediator, my belief is that the owners should be receptive to mediating in front of Judge Boylan and the players should be receptive to mediating in front of Mr. Cohen.  Mediators beat up parties; both Judge Boylan and Mr. Cohen are going to try to make the owners give up a greater percentage of revenue and to provide lifetime health care to the players, and they’re going to try to get the players to reduce the percentage of shared revenue and to implement a rookie salary scale that reduces the amount of guaranteed money players who have never played a snap in the NFL receive.  The mediators are going to habitually reinforce the need for labor peace sooner than later for the good of the game, to preserve and protect the golden goose.  In other words, the mediator is going to play the same role whether he is in Leucadia, Minnesota, or Washington, D.C.  It stands to reason that if the parties can’t agree on the forum for mediation, the chances of resolving an exponentially more complex dispute is pretty low.