Monday, November 30, 2015

Paper Experts: How a CV Can Create Apparent Expertise

Jim Cohen
In May, Jim Cohen of Thornton Tomasetti and Dan Valentine of Simpson Gumpertz & Heger Inc. (along with Dispute Resolver editor Tony Lehman) introduced a series of articles regarding Expert Witnesses and False Representation of Credentials. As that original article mentioned, one way that experts may misrepresent their experience and credentials is through the use of a curriculum vitae (CV) that makes it appear that the expert is more experienced than they really are.
Dan Valentine

The ways in which a CV can hide an expert's inexperience are myriad. As a result, this article regarding expert resumes being bolstered in artificial or potentially misleading ways will be broken down into two installments. The first section is being posted today, and the second half of the article will follow next week.  With that introduction, here is the first half of "Paper Experts."

Paper Experts: How a CV Can Create Apparent Expertise

Part 1 of this series discussed the real problem of false representation by experts and the need for attorneys to evaluate their potential experts carefully. Failure to do so may result in disqualification of the expert and exclusion of his or her testimony under Federal Rule of Evidence 702. Although it is important to know that there is a problem, the key is knowing how to avoid it in the first place. This installment discusses how credentials may be used, either intentionally or not, to create the appearance of having expertise that the expert actually does not have. Knowing what to look for and what questions to ask will help to avoid later embarrassment or worse.

Initial Due Diligence

Due diligence should always start by confirming the basic information the expert provides. As an initial step, this includes verifying the current employer and title, educational degrees, and active professional licenses. For example, most states provide free databases for licensed professionals that should be searched immediately to verify claimed licenses or authorizations.  If reasonably ascertainable, memberships in organizations and related committees should also be checked.  This can often be accomplished through a simple telephone inquiry. Of course, this is only the starting point for properly assessing a potential expert. Stopping with this step is very risky for both attorney and client alike.

At the outset of most expert retainers is a review of the expert’s curriculum vitae or CV. A CV will include education, professional licenses, employment history, and project experience. The potential expert may include published papers, professional research, membership in professional organizations and committee involvement, and other industry accepted methods of recognition, such as awards, as further evidence of their expertise. Additionally, the testimonial experience of the potential expert is also used to gauge expertise and ability to testify.

Each of these items will be discussed briefly.


The basic evidence used to establish educational qualifications is the issuance of a degree, typically some combination of a Bachelor’s degree, a Master’s degree, and a Doctorate degree. Occasionally Certificates of Completion or Training Certificates may also be provided. Even though having a pertinent degree would seem basic, it can still be the subject of resume padding or worse.

First, the date of the degree is often not included on a CV. Discrepancies between date of issue and times of employment may be a flag. For example, if the degree postdates experience, then  the prior experience listed might not be relevant as part of the “knowledge, skills and training” requirement of Fed. R. Evid. 702.   

Similarly, the school issuing the degree may not be listed. Not all colleges are created equally, with some being accredited and others not, and even within the group of legitimate institutions there is wide range of quality of the education provided. It is not unknown for degrees to be available for purchase from suspect organizations. One of many examples can be found in a New York Times article on May 17, 2015, which identified a Pakistani software company selling fake academic degrees using fabricated news reports, actors pretending to be professors, and even photographs of fictitious university campuses.  The consequences of such alleged degrees can be catastrophic, as evidenced by the following excerpt from the article:
In Britain, the police had to re-examine 700 cases that Mr. Morrison, the falsely credentialed police criminologist [and graduate of the fake college] had worked on. “It looked easier than going to a real university,” Mr. Morrison said during his 2007 trial.
Though it does not negate the damage done, the CEO of the software company, along with four other executives, were arrested by Pakistani investigators and charged with fraud, forgery, illegal electronic money transfers, money laundering, and validating Pakistan’s electronic crimes act. 

Certificates of Completion may reflect a partial completion of a degree program, more indicative of a failure to complete than an accomplishment of merit. Training Certificates may reflect attendance at sales events rather than training. On-line course and training certificates may reflect simple payment of a fee or completion of a simple exam for which no actual study was required.

Even if the individual’s educational credentials are from a true, accredited institution, the subject matter of the degree is typically not provided on many CVs. While B.Sc., M.Sc., or Ph.D. degrees may be relevant to structural engineering, they could be equally relevant to plant sciences. The relevancy of the field of study to the claimed expertise should be confirmed in addition to the degree itself.

This last point, the relevancy of the stated experience or activity to the expertise sought, is one which should be carried through the entire evaluation of the expert.

Professional Licenses

Today, it is often possible to confirm a professional license is current and active via the internet. For example, in New Jersey, the My New Jersey License website provides instant confirmation of a license based upon drop-down menus which include Profession, License Type, and License Number. However, what confirmation of a particular license may not provide is information on any discontinuity of the license or violations, complaints, or citations which may have been resolved. Even if the information provided is limited, it is vital to check the status and history of any licenses that the expert claims to hold. Learning this from the opposing attorney during trial could be damaging to your expert’s credibility and, at the very least, disconcerting.

Employment History

Some CVs list employment history, with the month/year of employment provided, while others do not.  Most will contain the title held by the expert during employment. The reasons for a change in employment are rarely, if ever, provided and can create an opportunity for abuse.
Gaps in employment may mask weaknesses in experience. Reasons for changing employment may be simple individual advancement or a better job offer. However, it may also indicate poor performance, or violations of employment conditions.

Job titles often change and can sometimes mask the individual’s true level of responsibility. What may be an Associate Principal at one company may be a Senior Vice President at another. An individual who commences work at a company as an intern may finish as a Senior Project Manager or Vice President. During the intervening period there may be many changes to title and job responsibilities. It may be that some companies use impressive titles to retain employees, or obtain clients, without the employee having first obtained the experience implied by the title and/or without the implied job responsibilities. Again, surprises are rarely a positive event once the expert has been engaged.

Project Experience

Knowledge, skill, experience, and training following attainment of primary and secondary education are typically obtained through job experience. Job experience may be shown on the CV through either a project list or summary description of experience. Sometimes both are provided.
The summary description should be assumed to have been written to reflect the specific focus of a possible assignment by an expert. The same should be true of a list of projects which are likely to have been selected to reflect specifically related experience.

For many individuals, having been associated with any project may be sufficient to list the project on their CV. However, unless the duration, role and duties are also provided, there is little basis for assuming that that expertise may have been developed in any individual project. For example, following Superstorm Sandy, innumerable engineers became involved in the clean-up, evaluation, and other post-disaster activities. While some may have been involved in detailed investigations of damages, others may have performed only administrative work. Those involved in the investigation may have done as little as carrying a tool bag or as much as directing, managing, and taking full professional responsibility for the outcomes of the investigation.  If one or more projects seem to be directly on point for the potential engagement, then ascertaining exactly what the individual did on those projects is essential.

One way a company may “pad” employees’ CVs is by rapidly rotating their employees through multiple projects. The employee will gain relatively little experience from any particular project, but the number of projects listed on their CV will appear impressive. Project lists may therefore represent a false front of expertise rather than truly reflecting the depth of knowledge and experience gained by the individual.

Careful scrutiny of dates, including attainment of degrees, licenses and employment may provide sufficient information to show an inflated project list. However, detailed interviews of the prospective expert will be needed to assess any level of possible false advertising. 

Tuesday, November 24, 2015

ABA Forum on Construction Law's Reserve Spending Program -- Proposals Due March 2, 2016

Starting in September 2016, the ABA Forum on Construction Law will fund innovative and extraordinary special projects that advance long term benefits or strategies of the FCL, particularly those that fit the Forum’s Strategic Plan. A total of approximately $85,000 will be earmarked for this purpose. In addition, the Forum will fund a total of about $35,000 in innovative and extraordinary special projects that increase or provide supplemental member benefits.

The Forum is calling upon all members to submit ideas and proposals for this exciting new program.  The deadline to submit an application to Joseph C. Kovars ( and Tamara Harrington ( is March 1, 2016.   The Governing Committee will review applications at the Annual Meeting in Nashville, Tennessee (April 28-30, 2016).

This is a great opportunity for Division 1 members. Share your ideas with Nick Holmes (D1's Chair) or one of the Steering Committee members in advance of the December Steering Committee meeting.  

To download an application, click HERE.  

To view the funding guidelines, click HERE.

Monday, November 23, 2015

Getting Beyond Emotion in Mediations

Wendy Fassberg
Legal research and scientific research -- especially in the psychological realm -- overlap from time to time. A recent article in the ABA Journal was titled "Mediators find more tools through neuroscience" discusses how decision making in mediation may not be as logical and rational as we once thought.  

Division 1 Member and Mediator Wendy Fassberg has seen this first hand in her practice in Los Angeles County, California.  Wendy's practice focuses on mediation involving homeowner association disputes, with a particular emphasis on construction-defect issues. The article below outlines how mediators need to focus on the emotional aspects involved in getting to settlements in that context in particular, but it applies across the spectrum in the construction industry.  We thank Wendy for graciously providing this article to Division 1.

Getting Beyond Emotions Typically Present 
When Mediating with Common Interest Developments

by Wendy J. Fassberg, Esq.

Too often, disputes arise between the end users in common interest developments and the design and construction team that developed, designed, and built the subject property, whether the project is a condominium community, a gated community, or a mixed use development.   What the design and construction professionals must understand when trying to resolve these types of disputes is that, notwithstanding the fact that they may be dealing with a board of directors or officers of the HOA, the individuals with whom they have their dispute are homeowners dealing with their homes.  Most disputes that involve homeowners are emotionally charged.  The parties come to the table angry, resentful, hurt, fearful, or feeling vengeful.  Paradoxically, these emotions can be present even in a purely business, market relationship.  So, they are understandably a factor in many homeowner disputes where the issues are typically very personal. 

One of the greatest impediments to the successful resolution of conflict is emotion.  Under a behaviorist approach, it is posited that because the parties are in conflict, they are so embroiled in that conflict that they experience a high level of stress, which causes them to put blinders on and to hyper-focus only on the conflict.  They have no peripheral vision which would allow them to see how this conflict integrates into the rest of their lives.  They have the selectivity of considering only their own position, often consulting family, friends, and fellow HOA members for opinions that are, of course, guaranteed to boost their sense of confidence.  This leads to an inflated sense of power.  And sometimes the attorneys get just as invested in the conflict as their clients. 

But, if there is so much emotion involved, can mediation actually be effective in connection with these disputes?  There are several ways that emotion laden parties can improve the chances of resolving their dispute at mediation.  The first is to recognize when emotion rather than reason is directing their actions.  Once having acknowledged this important fact, there needs to be an understanding that when trying to resolve a dispute, the existence of emotion as a driving factor generally works against one’s own interests.  Therefore, ideally emotions should be checked at the door before entering the mediation.  This can be accomplished by stepping back from the controversy, and thinking through the ramifications of moving forward with litigation or other similarly costly alternatives.  Sometimes parties can do this on their own before mediation, and sometimes they need help.  The mediator is hired to be the one who is not in a state of conflict, and who is charged with remaining clear and mindful of the big picture.  It is the mediator’s job to help shift and change the parties’ thought process.  This includes working to bring the parties to the understanding that there are emotions present and how those emotions affect their decision making.  The mediator must then coax the participants back to a place where they can rationally evaluate their options and their alternatives.  For example, because mediation is conducted in a somewhat informal setting relative to arbitration and litigation, but one which is nonetheless overseen by a mediator, the parties can feel free to express their emotions during mediation.  This can sometimes provide a path toward rational decision making.  It is the ability of a party to “let it all out” that clears the way for them to compromise and reach a settlement.  Sometimes people just want to be heard.  Some are satisfied to tell their story and vent to the mediator, and some demand that the other parties hear what they have to say.  Design and construction professionals and their counsel must be mindful of this and accept, even invite this release in mediation.  Once having been heard, these parties are often ready to ramp down and look at practical solutions. 

Timing can also play an important role in getting past emotional barriers in mediation.  If it is convened prematurely, and one or both parties’ emotions are still raw and exposed, the mediation can fail to yield a settlement.  On the other hand, given just a little time and space, and an intuitive mediator who understands the dynamic of the situation and who recognizes very quickly the frame of mind of each party, most of these disputes can be resolved.  Another common problem with parties who enter mediation emotionally charged is that they are constantly “looking sideways.”  Looking sideways is where a party is more interested in how the other side is benefiting than in whether their own interests are being met.  This can serve as a severe obstacle to settlement.  It is important when this happens for the mediator to get the party to step back and focus on their own portion of the settlement, and how they will benefit from resolution.

At the end of the day the dispute belongs to the parties.  Assuming that the parties have any interest in resolving their dispute, it is incumbent upon those parties to do everything they can, including controlling their emotions, to try to achieve a resolution that best satisfies their interests taking into account all of the relevant circumstances.  But it is up to the mediator to read the situation and to utilize the most appropriate tools with which to help the parties to get past their emotional barriers and to make rational, informed decisions.  Consequently, working with a mediator who comes equipped with the essential tools and who knows how to use them is key.

Wendy Fassberg, Esq. is the president of Fassberg Mediation Services, Inc.  She is a private commercial mediator with a comprehensive background in real estate, construction and common interest development matters.  She can be reached at

Friday, November 20, 2015

Speedier With a Few More Sticks: The Amendments to the Federal Rules of Civil Procedure

On December 1, 2015 the federal courts will put into effect amendments to Civil Rules 1, 4, 16, 26, 30, 31, 33, 34, 37, 55, and 84.  A succinct comparison of the current rules with the amended rules, as prepared by the U.S. District Court for the District of Maryland, is available here.

The changes offer several overarching themes including reducing delays and costs and focusing on proportionality.  The new rules also tackle the discovery of electronically stored information (ESI).  With one limited exception, the amendments are applicable to all pending cases provided such application is “just and practicable.”  The individual courts likely will be tasked with making determinations whether certain rules can be applied to cases already in progress.  Below are some key takeaway points about the changes or emphasis that the amendments impart.

Rule 1
  • further emphasizes just, speedy, and inexpensive determination of cases.
Rule 4
  • time for service after filing the complaint is shortened from 120 days to 90 days.
  • this rule will not apply to pending cases; only cases filed on or after December 1, 2015.
Rule 16
  • focuses the courts’ early and active case management
  • time for issuing the scheduling order is shortened from 120 days to 90 days from service or from 90 days to 60 days from any defendant’s appearance (whichever is earlier)
  • by deleting the enumeration of  the ways to hold the scheduling conference (“telephone, mail, or other means”), the amended rule actually gives the court more flexibility on holding the scheduling conference (e.g. video conference perhaps)
  • added three new topics that may be included in the scheduling order:
    • preservation of ESI,
    • agreements concerning inadvertent disclosures, and
    • whether to require a court-led discovery conference before launching into a discovery motion
Rule 26
  • discoverable information is tied to relevance, as always, and, now with focus on proportionality.
  • for information to be “proportional to the needs of the case,” consider:
    • importance of the information to the case as a whole
    • the size of the case and/or the amount in dispute
    • the access to and resources available to get the information
  • significantly, the new rule deletes the oft-cited requirement that discoverable information be “reasonably calculated to lead to the discovery of admissible evidence”
  • now it just notes that information “need not be admissible” to be discoverable
  • with respect to protective orders, the court now may specify the allocation of expenses for obtaining certain discovery
  • likely with an eye to ferreting out disputes over the scope of discovery, now available is the early delivery of Rule 34 requests for production.  The requests may be submitted 21 days after the complaint, but the time to respond does not start until after the 26(f) conference.
Rules 30 & 31
  • housekeeping changes to conform to amendments to Rule 26 
Rule 34
  • requires that the grounds for objections must stated with specificity and must state whether materials are actually being withheld based on the objection
  • The changes effectively conform the rule to usual practice by offering up the option to just produce the documents and ESI rather than permitting an inspection.
  • If the party opts for production rather than inspection, the response must state when that production will be completed.
Rule 37
  • significant change to the approach to ESI – the safe harbor is eliminated
  • now there is an obligation to preserve ESI in anticipation of litigation
  • if there is a negligent failure to preserve ESI, information is totally lost, and there is prejudice, the court can order “measures no greater than necessary to cure prejudice”
  • only if there is an intentional failure to preserve ESI, the court may take steps akin to spoliation with instructions, presumptions, or dismissal
  • query whether the measures to correct a negligent failure to preserve ESI could include instructions, presumptions, or dismissal OR if those measures are “only” appropriate for an intentional failure to preserve ESI
  • pay attention to the caselaw on ESI.  For example in the 2nd Circuit, a written directive to preserve ESI is required or else the court will assume any failure to preserve was intentional. See Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of Am. Secs, LLC, 2010 U.S. Dist. LEXIS 4546 (S.D.N.Y. Jan. 15, 2010).
Rule 55
  • housekeeping change clarifying that “final” default judgments under rule 60(b) may be set aside for good cause
Rule 84 & the Appendix of Forms
  • the forms previously included with the rules as templates are all deleted. 
The author, Katharine Kohm, is a committee member for The Dispute Resolver. Katharine practices construction law and commercial litigation in Rhode Island and Massachusetts.  She is an associate at Pierce Atwood, LLP in Providence, Rhode Island.  She may be contacted at 401-490-3407 or

Monday, November 16, 2015

New Feature: The Litigation Tech Tip

At the Fall Meeting Division 1 lunch in Austin, local Texas attorney Karl Seelbach of Doyle & Seelbach provided a great demonstration regarding what technology he uses to reducing the amount of paper that he drags with him when going to depositions or to trial. Our own Tom Dunn spoke as well and provided a written summary of the presentation here on the blog about a month ago.

Karl Seelbach, Doyle & Seelbach, Austin, TX
Karl also provides a monthly technology tip to his contacts, and he has agreed to allow us to republish his technology tips here on The Dispute Resolver. 

Before we get into the tip, here is a little background on Karl:  his firm handles commercial and personal injury litigation. Before starting his own firm with Trek Doyle, Karl was an associate and then a shareholder with Winstead PC, one of Texas's largest law firms. In each of the past three years, Karl was named a Texas Rising Star by Thomson Reuters, Texas Monthly, and the Texas Super Lawyers Magazine.

Karl is well known in the Texas legal community as being on the cutting edge of legal apps for use on tablets, smart phones, and computers to reduce paper in the office and to increase persuasiveness through the use of technology.

This month's tip is a brief list of a few applications that can help organize your practice and your depositions.
  • Consider using a task management app (e.g., Todoist) to organize your projects, assign tasks to your entire team and monitor their progress.
  • Stop printing reams of paper and carrying heavy boxes to depositions. Instead, use electronic exhibits (e.g.,AgileLaw) to go paperless. 
  • Stop writing your notes on paper. Instead, use a note taking app (e.g., Evernote) to make your notes searchable and shareable with team members. At the very least, scan your handwritten notes for safekeeping (bonus: some apps like Evernote convert your handwritten notes to searchable text).
As an aside, there are other options available if Todoist is not the platform for you. This website mentions a few. My firm uses a platform that we have customized for our own purposes. If you are willing to spend more money on a task management software, consider contacting one of these companies to determine whether they can customize a solution for you.  

I have not tried AgileLaw. As construction lawyers, I think many of us are hesitant to go away from paper simply because of how document-intensive our cases are, so I would be interested to hear from anyone here who has tried it or any other similar app.

As for Evernote, there are other options available here as well. This website has a list of ten. I have tried other available software -- Microsoft's OneNote in particular -- and I have found that Evernote is more intuitive to use. An option that attorneys may consider is using Evernote or OneNote as a way to organize electronic legal research obtained from Google searches, blogs, or other online resources. I have done this in the past and have found it to be a major time saver.

Please let us know if you have any thoughts on Karl's tips or my comments.

Saturday, November 14, 2015

North Carolina Business Court Allows Subcontractor’s Unfair Business Practice Claim Against General Contractor to be Arbitrated, Stays Same Claim Against Other Defendants

Electrical subcontractor Gaylor, Inc. of North Carolina (Gaylor) brought an action against general contractor Vizor, LLC (Vizor) and seven other defendants stemming from an apartment building construction project in Chapel Hill, North Carolina.  Gaylor asserted eight total claims against the defendants with four claims stemming from the subcontract directly with Vizor, three claims against non-contracted parties, and a final claim under North Carolina’s unfair and deceptive trade practice statute (UDTP) against all eight defendants.  Gaylor brought a motion to compel arbitration against Vizor and all of the non-contracted parties brought a motion to stay non-arbitrable claims, pending the arbitration. 

The contract between Gaylor and Vizor contained an arbitration clause which stated all claims and disputes arising out of the contract shall be subject to arbitration which shall be conducted in accordance with Construction Industry Arbitration Rules of the AAA (CIAR). Gaylor and Vizor did not dispute the validity of the arbitration clause nor the arbitrability of claims arising from the subcontract.  The parties disagree as to the enforceability of the arbitration of the UDTP claim. 

The Court began its analysis by stating that the Supreme Court held that, “unless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator.” AT&T Techs v. Communs. Workers of Am., 475 U.S. 643,649 (1986) The court further points to the Fourth Circuit’s finding that, “clauses requiring arbitration to resolve disputes regarding the terms of this Agreement [or] concerning the interpretation of the provisions of this agreement…do not clearly and unmistakably commit questions of arbitrability to arbitration.” Carson v. Giant Food, Inc., 175 F.3d 325 (4th Cir. 1999) The court found that the arbitration provision provided in the contract alone would not satisfy the “clear and unmistakable” standard of the Fourth Circuit. The Court next looks to Rule 9(a) of the CIAR, which reads, “the arbitrator shall have the power to rule his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement.”

The Court points to a federal district court in Virginia that recently observed that, “[al]though the Fourth Circuit has not yet addressed whether an incorporation of the AAA Commercial Rules satisfies the “clear and unmistakable” test, the seven circuits that have explicitly addressed this question have held “that the express adoption of these rules presents clear and unmistakable evidence that the parties agreed to arbitrate arbitrability.” United States ex rel. Beauchamp & Shepard v. Academi Training Ctr., No 1:11cv371, 2013 U.S. Dist. LEXIS 46433 (The CIAR shares same provision as AAA Commercial Rules). The Court finds the Virginia federal district court’s reasoning persuasive and rules that the UDTP claim must be submitted to the arbitrator to determine if it arises out of or relates to the subcontract. 

The Court next finds that a stay in the UDTP litigation against the non-contracted parties “is appropriate to avoid piecemeal litigation of that claim. Should the arbitrator determine that the UDTP claim against Vizor is arbitrable…a stay would avoid litigation…against the [non-contracted parties] while arbitration of the same claim proceeds against Vizor alone.”  Further, the court notes that if the arbitrator determines the UDTP is not arbitrable, the claim would be litigated in its court, only once, after the arbitration. 

The authorBrendan Carter, is a contributor to The Dispute Resolver and a former Student Division Liaison to the Forum on Construction Law. He is an attorney and a Senior Consultant with  
Navigant's Global Construction Practice based out of Boston, MA.  He may be contacted at 
617.748.8311 or 

Wednesday, November 11, 2015

Federal Court in Pennsylvania Holds Design Professionals’ Negligence Claim Against Pump Supplier Barred By Economic Loss Rule

Kristopher Berr, Associate, Pepper Hamilton LLP

Elliot-Lewis Corp. v. Skanska USA Building, Inc., 2015 U.S. Dist. LEXIS 98405 (E.D. Pa. July 27, 2015)

This dispute arises out of a major renovation and expansion of the Franklin Institute in Philadelphia (the “Project”). Plaintiff Elliot-Lewis Corporation (“ELCo”) was a subcontractor hired to install the piping and controls for the Project’s heating, ventilation and air conditioning (“HVAC”) system. The Project’s schedule required that start up and testing of the HVAC system begin by February 23, 2013 and that the system be operational by April 1, 2013. But, when the HVAC was started for testing, flooding issues arose due to problems with the condenser pumps specified in the HVAC system’s specifications. Ultimately, the HVAC system was not operational by April 1 and ELCo was required to perform additional work and install temporary cooling equipment so that the Franklin Institute could open during the summer. ELCo was never paid by the prime contractor for this additional work.

ELCo filed a complaint against the prime contractor for breach of contract. In turn, the prime filed a third party claim for negligent misrepresentation against a number of design professionals who had performed design work on the Project (the “Design Defendants”), alleging that ELCo’s additional work had been caused by errors in the Project’s plans and specifications.

The Design Defendants filed a fourth-party complaint sounding in negligence against the manufacturer and supplier of the condenser pump (the “Pump Suppliers”), alleging that they had relied upon inaccurate information provided by the Pump Suppliers. The Pump Suppliers moved to dismiss, arguing that the economic loss rule barred the claims against them.

The Design Defendants argued that the economic loss rule was inapplicable. First, they argued that Section 522 of the Restatement (Second) of Torts, which was adopted by the Pennsylvania Supreme Court in Bilt-Rite Contractors v. The Architectural Studio, 581 Pa. 454 (2005), provides an exception to the economic loss rule where the defendant is in the business of supplying information. Next, they argued that this exception should apply under the circumstances because the Pump Suppliers provided information to the Design Defendants in the course of transacting the sale of condenser pumps and were aware that the Design Defendants would rely on the information in creating the Project’s design documents.

The court rejected the Design Defendants’ argument and dismissed the claims against the Pump Suppliers. The court reasoned that the Pump Suppliers “are not in the business of supplying information”, which is a “necessary predicate to be subject to liability under Section 522.” While the Pump Suppliers did in fact supply information to the Design Defendant as part of the sale of the condenser pump, the “sale of a product is fundamentally different from the sale of information, even if the seller provides information about the product to consummate the sale.” If the supply of information in those circumstances  could subject a seller to Section 522 liability, the court determined that Section 522 would  “eviscerate the economic loss doctrine.” Thus, the court held that the economic loss rule applied to bar the Design Defendants’ claim against the Pump Suppliers.

Article originally posted November 5, 2015 on Constructlaw, an update and discussion of recent trends in construction law and construction, maintained and edited by Pepper Hamilton's Construction Law Practice Group. 

Friday, November 6, 2015

Ninth Circuit: Incorporation of the AAA’s Rules Is Agreement to “Arbitrate Arbitrability”

The Ninth Circuit’s recent decision in Brennan v. Opus Bank, ­­­­­­­­­­­­­­­­­­­Nos. 13-35580 & 13-35598 (9th Cir. 8/25/15) is not a construction case.  However, the court’s decision might be pertinent to parties seeking to compel arbitration of construction disputes, particularly disputes arising from contracts that incorporate the American Arbitration Association’s (“AAA”) Construction Industry Arbitration Rules and Mediation Procedures (“AAA Construction Rules”).  That is because the Ninth Circuit held in Brennan that an employment agreement’s express incorporation of the AAA’s Rules in the agreement’s arbitration provision constituted clear and unmistakable evidence that the parties agreed that the arbitrator would determine whether claims were subject to arbitration.  In other words, the parties agreed to “arbitrate arbitrability”. 

The case arose from an employment dispute under an employment agreement that provided that the employer and employee would resolve claims arising from the agreement under the AAA’s Rules.  The plaintiff employee, however, claimed that his dispute should be resolved in litigation because the arbitration clause was procedurally and substantively unconscionable and, therefore, unenforceable.  The issue the Ninth Circuit faced on appeal was “who-an arbitrator or a judge-should decide whether the arbitration clause is unconscionable”.

The court first addressed the issue of applicable law.  The employee plaintiff argued that state law applied to the issue of arbitrability.  The Ninth Circuit disagreed, holding that federal law governed the issue of arbitrability because the Federal Arbitration Act (“FAA”) governs the agreement.

Applying federal arbitration law, the court held that the arbitrator should decide arbitrability because the employment agreement expressly incorporated the AAA’s Rules, which includes a rule that the “arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the ¼validity of the arbitration agreement.”  Particularly, the court held that “incorporation of the AAA rules constitutes clear and unmistakable evidence that the parties agreed to arbitrate arbitrability.”  The court did not address the issue of whether the “delegation provision” that delegates arbitrability issues to arbitrator determination is itself unconscionable because the plaintiff had not urged that the delegation provision itself was unconscionable.

Because Rule 9 of the AAA’s Construction Rules also grants the arbitrator the power to rule on his or her jurisdiction and the existence, scope, or validity of the arbitration agreement, parties could argue that, based on the Ninth Circuit’s decision in Brennan, parties to construction contracts that incorporate the AAA’s Construction Rules have agreed to “arbitrate arbitrability”.

For your reference, linked here is a copy of the opinion.   

Apollo 13 Astronaut (Fred Haise) -- Keynote Speaker at Midwinter Meeting (1/21-22/2016) in San Francisco

Don't miss the Forum's Midwinter Meeting in San Francisco!  Beyond all the fabulous construction law programs, here is a preview of other events.  Registration -

“Houston, we have a problem.”  Fred Haise, one of the astronauts on Apollo 13 will be our keynote speaker to start the program, bright and early on Thursday morning, January 21, 2016.  In that our theme for the Midwinter meeting is "Livin’ on the Fault Line:  Cutting Edge Solutions for Seismic Events that Threaten Your Construction Client," what could be more apropos than having Fred Haise describe how he and his co-astronauts faced and conquered that Apollo mission’s crisis.

In addition to Fred Haise, we are equally thrilled to have Carla Christofferson, AECOM’s Executive Vice President and General Counsel, speak at our diversity breakfast on building diverse teams.
The meeting is the Westin St. Francis, Union Square, in San Francisco on January 21-22, 2016. Register Here:
But great speakers and programming is not all.  We are having a Sunset Wine Tasting on the top of the St. Francis for our welcome reception on Thursday evening.  Later on Thursday is the Forum After Dark event at Slide, a former San Francisco speakeasy. 
On Friday, January 22, 2015, there is the Women’s Networking Luncheon & Reception at the Westin and, afterwards, the Escape to Alcatraz twilight tour of the infamous prison island in the Bay.  Last but not least is the Saturday Napa Valley Getaway, an unforgettable tour of one of Napa’s hidden gems, MadoroM Vineyards.
Be sure to register and reserve your room at the St. Francis right away!
#FCLSanFran #ABAConstruct