Don't Let the Distance Destroy Your Communication -- Lessons Learned from Arbitration by Zoom

Is “Remote Arbitration” an oxymoron? Or is it the wave of the future?  While most of the ADR rules allow for video presentation of evidence in an arbitration, there is little guidance on full hearings being conducted through remote procedures. In the past, parties have agreed to present one witness via videotape or videoconference where the witness was not able to travel to the venue of the hearing. However, most parties, lawyers and neutrals have been reticent to agree to fully remote proceedings.  With the continued restrictions required by the COVID 19 pandemic, parties, lawyers, and arbitrators are all starting to look at the need to embrace remote proceedings. Click here for an introductory video from the author.

So What’s the Big Deal About Remote Arbitration?

Most lawyers handling dispute resolution and litigation count on the use of their keen communication skills to present persuasive arguments to the trier of fact in a lawsuit.  In arbitration, the neutral (or panel) is the target of the communication. Lawyers are known for using skill in how to examine a witness to elicit the facts and information needed to present their client’s case. Also, the timely use of an exhibit is key – with the technological advances, some of the best trial lawyers have become quite adept in using video clips, charts, and visual images to effectively communicate information and facts, as well as to engage the tier of fact.  However, the successful lawyer also will use various forms of communication other than the presentation of evidence through witnesses, exhibits, and written briefs. Body language and non-verbal cues are critical to the trial lawyer. In addition, the lawyers in an arbitration often “read” the room – both the neutral and the other parties and counsel present to see how various factual and legal arguments are landing, and the reaction can cause a change in strategy, tone, or emphasis.

Non-verbal communication plays an integral part in effective communication.  “In fact, experts have argued that 70 percent of communication is non-verbal and that includes workplace communication.” Body language can tell you how urgent or serious an issue is. Eye contact and posture can convey confidence or sometimes lack of it. Gestures and movements can show enthusiasm or communicate more than the words express.

“One study from Columbia University found that gesticulation helps a speaker communicate effectively with an audience. Researchers explained that someone who gesticulates actually helps convey the fullness of the message they’re trying to deliver. They’re speaking on two levels at once!” “Business Insider also revealed some rather telling facts on verbal communication. Those stats showed that content is only valued at 7% in a presentation. This was verified in Science of People’s research as well. We can’t stress it enough – it’s not what you say, rather, how you say it." While this may or may not be fully accurate, it is telling that much of our effective communication is not just the words and content of your presentation but how you communicate it that will bridge the gap, even across a video screen.

This is why many lawyers are wary to arbitrate via remote processes – it loses the “feel” of the proceeding where the human interchange and interaction communicates so much more in person across a conference room table than through a screen.

However, with the status of the corona virus pandemic, the future of dispute resolution clearly will be dependent upon the use of remote proceedings, and the well-informed practitioner should come to the proverbial table with an approach to make the most of the remote process.

Four Key Considerations For An Effective Remote Arbitration

As more cases are presented through remote arbitration (potentially jury trials in the near future), there are several considerations that practitioners should keep in mind to ensure the most effective representation of their clients. Of course, reams have been written about communication skills and styles, but there are four key considerations for a remote arbitration proceeding to consider: (1) understanding your audience; (2) getting the evidence to your arbitrator; (3) controlling the room; and (4) managing the technology.

1. Understanding Your Audience

While it is important to know your arbitrator’s background, most counsel are not vetting the neutral’s ability to use technology or how the neutral will be able to engage in the process over video or control the process and witnesses.  This is a difficult skill to assess. However, many arbitrators have been working diligently to come up to speed on the technology and have familiarized themselves with the various platforms.  Once more arbitration occur, some neutrals will likely further distinguish themselves in their abilities to manage remote arbitration hearings.

Don’t let the age or background of a neutral be your guide, however.  There are many younger neutrals who are not adept in using the remote programs and older neutrals who are tech savvy and have every cutting edge device available.

Regardless, it is imperative to know and understand who your arbitrator or panel is and the work with your neutrals to ensure that they feel comfortable with the process, the platform, and the related technology needed, such as the right video camera(s).  Before you begin a remote hearing, if the arbitrator does not ask for it, request a joint session to practice on the platform, including ensuring that the arbitrator understands and knows how to control the process and that all can access and view the exhibits effectively. You may wish to have a technology person available for the practice and the remote hearing itself to assist the arbitrator.

2. Getting the Evidence to the Arbitrator

Be sure that you have worked with the arbitrator to have all of the proper procedures and rules in place to allow for an effective remote hearing as well as to ensure that you can get the necessary evidence to your arbitrator.

Do the Rules Provide For What You Need?

Each of the main arbitration providers’ arbitration rules have some rules that address – at least in part - virtual hearings. However, the perceptive practitioner will review the rules and scheduling order carefully to ensure that the evidence needed can be effectively presented. Notably, there is little formal guidance currently for a full merits hearing by internet or other remote presentation.

JAMS Rule 22(a) acknowledges that an arbitrator may vary procedures so long as they are reasonable and appropriate. Rule 22(g) authorizes an arbitrator, at his or her discretion, or upon the parties’ agreement, to conduct the hearing through virtual platforms, stating: “(g) The hearing, or any portion thereof, may be conducted telephonically or videographically with the agreement of the Parties or at the discretion of the arbitrator.” Like JAMS, the American Arbitration Association is mindful of maintaining the efficiency of arbitrations while securing the parties’ rights to be heard and to present their cases (See, R-32(a), AAA Commercial Arbitration Rules and Mediation Procedures). Rule 32(c) gives the arbitrator the right to “allow for the presentation of evidence by alternative means including video conferencing, internet communication, telephonic conferences and means other than an in-person presentation” but also requires that “[s]uch alternative means must afford a full opportunity for all parties to present any evidence that the arbitrator deems material and relevant to the resolution of the dispute and, when involving witnesses, provide an opportunity for cross-examination.”

Neither the International Institute for Conflict Prevention & Resolution (“CPR”) the International Chamber of Commerce (“ICC”), the London Court of International Arbitration (“LCIA”), nor the Singapore International Arbitration Centre (“SIAC”)  provide any specific rules for full merits hearings by video. There are not specific rules for how such video hearings should proceed in any of the ADR providers’ rules; therefore, counsel should seek a scheduling order with specific details on how the proceedings are to be conducted including the split of time, presentation of witness testimony and hearing timetables, production of exhibits, and opening and closing statements.

Getting the Witness Testimony Clearly Communicated

Many practitioners are concerned about the ability to test the credibility of witnesses in a videoconference format. However, this issue can be overcome with careful preparation of the witnesses, and having clear rules in the scheduling order addressing where and how witnesses can be presented (ensuring there is no coaching or others in the room).  In fact, many arbitrators assert that credibility issues are not as critical as many lawyers may believe. The arbitrator will still be able to observe the witness during video testimony and observe facial expressions and reactions. In fact, as stated by arbitrator Wayne Brazil, “We can see initial reactions to questions, reluctance to respond, indirection, indecision, circularity, obfuscation — as well as forthright, straight-on answering (which, we've learned, sometimes can pose the greatest threat to making accurate findings). Given these facts of videoconferencing life, the real question is this: How much is an arbitrator's ability to assess credibility compromised, really, when he or she watches a witness testify, live, on a big screen, instead of watching the witness testify a few yards away in person?”

Instead, when it comes to witness testimony, you must ensure that you are preparing your witness to testify to the arbitrator – but instead of looking at the small screen of the questioning lawyer, the witness needs to be trained to look at the camera on his screen.  When reviewing an on-screen exhibit, the witness should also be trained to periodically look up at his or her camera to respond to the question. One tip is to advise witnesses to imagine the arbitrator is ‘in the camera” and to focus on that instead of the small box of the questioning attorney.

Who Has Control – Remote Exhibits

One of the most important issues that is a difference for many practitioners is the handling of exhibits in a remote proceeding.  Depending on the agreement of the parties, the exhibits can be exchanged in advance between the parties and a set provided to the arbitrator electronically for use during the hearing, or the exhibits can be uploaded onto the remote proceeding site.  If the exhibits are exchanged in advance, a set will also need to be provided to the witness in advance; it is recommended that they be placed in a sealed envelope to be opened by the witness on screen once under oath.

If the exhibits are presented “live,” the question of how to maneuver through the document can be handled by giving the witness “control” of the screen and mouse to scroll through to specific portions of the document. To do this effectively, counsel will need to have carefully pre-prepared the documents and have a separate copy either in hard copy or on a second screen to ensure a crisp and clear presentation of the information to the arbitrator.

Cross-examination and introduction of exhibits that were not pre-planned will be a bit more challenging in a remote setting.  However, having a set of potential exhibits pre-marked can address this issue. For rebuttal, one good option is to have anticipated potential exhibits saved on your desktop and carefully described/labeled with your prepared cross-examination.  Counsel should practice in advance of the hearing uploading the exhibits and while asking questions.  If appropriate, particularly for document-intensive cases, like many construction cases, having a paralegal or tech assistant participate and upload your exhibits will make the process more streamlined and prevent counsel from distractions of trying to find the right exhibit.

3. Issues Raised By Who Is “In The Room”

One other question to consider before you proceed with the arbitration hearing is how to maintain the confidentiality of the process and who will be allowed to be in the videoconference and when. Will witnesses be held in a “waiting room” and be admitted when their time slot is ready?  Will counsel have pre-set times for when witnesses will be called? Will witnesses be called out of order? These issues will require a discussion of counsel and the arbitrator to resolve these issues in advance.

4. Technology- Choose the Platform

What platform will be used is another consideration that will need to be agreed upon early on. This will allow counsel sufficient advance time to practice and be familiar with the platform. In addition, you can work with your witnesses to practice, particularly with how to work with the exhibits and how to readily find sections on the documents in response to questions posed.

One key issue is to anticipate and plan for technology hiccups.  Have a designated person for trouble-shooting on standby to jump in and have a ready text message to bring them into the call. In addition, be sure that the arbitrator and counsel provide and exchange contact information and the arbitrator should also be provided contact information for all witnesses in case of connection issues.  You also may want to consider having a fall back of what to do if there is a problem with connection for any particular witness – will you have them dial in only or require webcam access? Thinking through and having a backup plan will give you more peace of mind and take away the distractions during the hearing.

Overall, conducting a remote arbitration is not the most ideal scenario, but effective lawyers can prepare their witnesses, ensure clarity and credibility of their cases and presentations by being aware of use of non-verbal communication to support their cases, and pre-planning and preparing exhibits carefully and having a plan in place for maneuvering through exhibits to ensure that the information you want the arbitrator to see, understand, and digest.  In addition, paying careful attention to the technical details and discussing how the witnesses will be presented will allow for a smoother process where the more confident counsel’s case can be effectively presented to the arbitrator.

Addendum: Construction companies and practitioners should be aware that some of the ADR providers are starting to develop protocols for remote arbitrations. In fact, CPR has developed a Model Procedure Order for remote arbitrations. The model order can be found here.

Author Brenda Radmacher is a Partner in the Los Angeles office of Gordon Rees Scully Mansukhani LLP and a noted expert in construction law.  Ms. Radmacher is called on as a counselor, litigator, and noted speaker on issues involving land owners, general contractors, developers, and builders.  Ms. Radmacher's practice emphasizes resolving complex construction disputes through negotiation, mediation, and, when necessary, arbitration and litigation, on projects in California, nationwide, and internationally.

Virtual Arbitration CLE - August 19 1PM ET

With many civil court proceedings on hold or delayed indefinitely, online arbitration is becoming more and more prevalent.

The ABA Forum on Construction Law's panel includes two litigators (including a Division 1 member - Jessica Sabbath) who gained their experience in virtual hearings after their in-person hearing in New York City was shut down abruptly due to the pandemic. 

The panel also includes a senior representative from the American Arbitration Association. 
This CLE will explore the legal issues presented by online hearings, applicable arbitral institution rules, and discuss important considerations and best practices for conducting an arbitration hearing remotely.

Register: https://www.americanbar.org/events-cle/mtg/web/402246508/

1.5 credits of CLE are eligible and registration closes at 10am ET on August 19th.  

Forum's Diversity + Inclusion Brunch (August 20th at 1-2PM ET)

Division 1 Members, the Diversity and Inclusion Committee of the Forum is starting a monthly brunch series.  The first one is scheduled for later this month on August 20th at 1PM ET.  Please register!   

Diversity + Inclusion Brunch

This free webinar will be featuring speaker Tewanee Joseph, CEO of Tewanee Consulting Group, a First Nations-owned and operated company, and leader in planning the 2010 Olympic and Paralympic Winter Games. Mr. Joseph, will discuss how the 2010 Winter Games’ management team’s focus on inclusion was a critical element in ensuring the Games’ success and lasting legacy.  Date: August 20 | 1-2:00 pm ET Speaker: Tewanee Joseph, CEO of Tewanee Consulting Group

Register Now  ⟶❯❯

Meet D1's Neutrals - Adrian L. Bastianelli, III

As the litigation and dispute resolution division of the Forum, our members regularly serve as arbitrators, mediators, and other neutrals who resolve disputes. In an effort to promote and educate our membership about our talented neutrals, D1's Incoming Chair, Tom Dunn, decided to spearhead a series here on The Dispute Resolver blog to feature our Division 1 Neutrals (email him at rtdunn@pierceatwood.com if you'd like to be featured!).

First up is Adrian Bastianelli, III, one of the most seasoned construction lawyers who has served as a Chair of the Forum, is a fellow of the American College of Construction Lawyers, and was among the first class of construction neutrals. D1, Meet Adrian!

ADRIAN'S MEDIATION PRACTICE

When and why did you choose to become a mediator?

In approximately 1988, a mediation provider in Seattle, who saw construction as a new mediation market, contacted a group of construction lawyers who were active in the Forum and invited us to a weekend training session.  After taking the course, all of us were convinced that mediation was the wave of the future in resolving construction disputes.  I devoured every course and writing available on mediation.  Since I had been doing arbitration for ten years by that time, AAA put me on their initial mediation panel, where I have resided for the last thirty years.

While serving as a mediator is very taxing because you are being pushed by both lawyers and their clients, who know the facts and law far better than you and are trying to convince you to help them maximize their position in the settlement, it is very satisfying when you can help the parties reach a settlement that they might not have achieved without you.

Can you describe your mediating style? 

I follow the principals of Guided Choice mediation.  I encourage parties to mediate as early as possible because that is when (1) there are more opportunities for business solutions to achieve a win-win settlement, (2) costs can be minimized, and (3) positions may not have hardened as much.  I prefer a robust pre-mediation phase during which I attempt to ensure that the parties have an adequate exchange of information, without an expenditure of an unreasonable amount of money.  I also use the pre-mediation phase to develop a relationship with the principals and lawyers, educate the parties, design the mediation process for the particular dispute, and identify the interests and positions of the parties, obstacles, and people problems.  While a vigorous pre-mediation phase has become more accepted in recent years, it still is often limited to ex parte conference calls between the mediator and each of the lawyers.  With the advent of virtual mediation due to COVID-19, I am using Zoom for pre-mediation with the decision maker, lawyer, myself, and possibly others on a video call, thereby, developing a relationship with the principal and more thoroughly delving into the issues.  The virtual pre-mediation conference is far better than the perfunctory telephone call with the lawyers.  As a result, I believe the virtual pre-mediation will be around long after the virus is gone.

I am first a facilitator to help the parties explore and focus on the reasons for settlement including their business interests and issues. In addition, I help the parties understand the alternative if a settlement is not reached. If facilitation does not work, I engage in evaluative mediation.  I attempt to educate each party regarding the other party's arguments and how the trier of fact might view the issues.  I review the cost of litigation and arbitration with the parties, including the non-legal costs and potential damage to business interests.  I look for innovative ways and opportunities to help both parties achieve their goals and interests.  For example, in one case a public owner and contractor were locked in a high stakes battle in the middle of the project over a very difficult legal issue and were headed for the court room and ultimately the State Supreme Court to determine a winner many years later.  At the same time, the public was being severely inconvenienced by the actions of the contractor allowed by the contract and which the owner had no ability to stop.  I changed the focus of the mediation from the risks and costs involved the legal issue, which was the original focus of the mediation, to the business interests of the parties, i.e., could the contractor change its method of operation to eliminate the public inconvenience.  The result was a win-win resolution for the parties.   I use closing techniques that are appropriate for the circumstances of each case, including a mediator's proposal.  However, a well-known precept of mediation controls the bounds of my closing techniques: it is the parties' choice on whether to settle and on what terms.  The parties ultimately control the decision to settle.  If the parties cannot reach a settlement, I try to help them develop a cost-efficient and expeditious method of resolving the dispute in litigation or arbitration, including selection of an arbitrator, developing a plan for discovery, and limiting the issues in the arbitration.

What is a common mistake you see parties and/or their counsel employ in mediation and what steps do you recommend to avoid it?  

Probably the most common mistake I see parties employ in mediation is making an inaccurate evaluation of the party’s likelihood of success, risk, cost of litigation, and business interests, which often comes from a lack of preparation and an objective view of the facts and law.  Mediation is well suited to address this problem because the parties’ evaluations and analyses will be tested at every turn, which hopefully will cause each party to change their expectations and analyses at the end of the mediation resulting in settlement.

What is the most important skill to have as a mediator?

I always cite the three P’s: preparation, patience, and persistence.  Too many people shoot from the hip in mediation and don’t recognize that the more prepared you are, the better you will do in mediation.  Nothing is more important than preparation.  Culturally, most Americans want to achieve settlement as quickly as possible.  Patience is seldom viewed as a virtue.  However, in mediation, the person who hurries will seldom do as well as the patient one and may, therefore, lose the settlement entirely.  Finally, when a party says no, the mediation is not over.  Instead, the party who is still on the ship needs to be persistent and try other approaches, or at least find other objectives, that can be achieved in the mediation.  Don’t ever give up.

ADRIAN'S ARBITRATION PRACTICE

When and why did you choose to become an arbitrator?

I started a new law firm with another lawyer in 1978 and was afraid we would go broke, so I walked across the street to AAA and asked to be put on its panel. Mind you, this was at a time when the AAA’s pay for arbitrators was minuscule and there were few construction arbitrators.  It was a very lucky move for me because my personality and background fit the job, and ADR grew dynamically in construction, as the industry searched for and found better ways than litigation for resolving disputes that are inevitable in large construction projects. .

Can you describe your arbitrating style? 

The arbitration is a dispute resolution process agreed to by two parties through a contract.  Therefore, I try to work with parties to help them find an arbitration process that economically and expeditiously achieves a fair and just result that is in line with what they contracted for.  I encourage parties to be innovative in developing their procedures. However, I also understand that my job is to call balls and strikes, and I must do so in a fair, decisive, and expeditious manner if the parties cannot agree amongst themselves. I bring an engineer’s mind and training to the table, and, therefore, am not afraid to dig into the technical and scheduling issues. I take command and maintain control of the hearing room, while remaining courteous and respectful to the lawyers, witnesses, and party representatives.

What is the most important skill to have as an arbitrator?

Neutrality.  The minute the parties believe you are not neutral, you will no longer have an arbitration practice.  In addition, decisive analytical skills are essential. The construction arbitrator needs to have the ability to sift through and analyze extensive factual information and difficult legal arguments to arrive at a logical award in an expeditious and decisive manner.

What should drafters consider when drafting an effective arbitration clause?

One size seldom fits all. Too often the parties attempt to draft a single detailed clause that fits all disputes from the $10,000 mini-dispute to the $100 million mega-dispute.  That does not work. In my opinion, the parties’ primary goal in drafting an arbitration clause should be to agree on a method to select an arbitrator or arbitration panel that both parties trust to assist them in developing procedures that fit the specific dispute that is being arbitrated. The ability to design the procedures to fit the dispute and parties is one of the real advantages of arbitration over litigation.  Thus, in my opinion, the key to an arbitration clause is arbitrator selection, since selecting the right arbitrator can provide an expeditious, economical, and just result.  The parties can list a group of pre-approved arbitrators in the contract alongside a clear method of selecting the panel from that group when the dispute arises. The rules of an arbitration provider, such as AAA, should be incorporated into the agreement as well, so as to cover issues not specifically addressed in the clause.

What measures do you take as an arbitrator to ensure arbitration is less costly and more efficient to litigation?

I am always trying to fit the process to the dispute in a way that reduces costs and time.  One example of a technique that has worked for me when there are a lot of claims is an Excel spread sheet that lists each claim by number, a short description of the claim, the amount claimed, a list of exhibits that support the claim, the defense to the claim, the maximum amount Respondent believes Claimant can recover assuming it wins, and a list of exhibits refuting the claim.  With this spreadsheet in hand, the proceedings may be streamlined and often little or no testimony is needed on the smaller claims. The advantage of arbitration is that there are many ways to reduce costs, which is, of course, mostly dependent on the nature of dispute and the parties to the arbitration.

GET TO KNOW ADRIAN & HEAR HIS TIPS FOR FELLOW DISPUTE RESOLVERS

What geographic area will you serve as a mediator/arbitrator?

I serve on arbitrations and mediations throughout the United States and internationally.  My home turf is Washington, D.C. and the surrounding areas including, Baltimore, western Maryland, and Northern Virginia.

What is your experience and thoughts regarding virtual ADR?

I have just started doing virtual mediation and have several virtual arbitrations on my calendar for which I am preparing.  I have taught three webinars on virtual ADR and have written a paper on virtual mediation that will be published shortly. 

Live music is better than recorded music, even if it is Memorex – likewise, live ADR is better than virtual ADR.  However, virtual ADR is what we have at this time and we can, and must, figure out how to make it work.  In addition, there are some real advantages to virtual ADR, i.e., the reduction in cost to fly and house witnesses, lawyers, company representatives, and arbitrators/mediators to the site, the lack of standby for those participants waiting for their turn, the ability to reconvene the next day if the case does not settle, and many others.  As mentioned above, maybe the most significant development is virtual pre-mediation. As lawyers handle more virtual cases and improve their virtual skills, so too will the viability and acceptance of virtual ADR.

How can ‘dispute resolvers’ better resolve disputes?

Dispute resolvers can improve their likelihood of success by laying a strong foundation, i.e., being thorough and realistic in their evaluation of the risk and cost of litigation and imaginative in developing the procedures to resolve disputes. Although most lawyers simply default to what they are used to doing, there are so many ways to attack resolution of a dispute that will produce reasonable results at a lower cost.

How does the Forum and Division 1 relate to your mediation and arbitration practices?

The Forum and Division 1 have been one of the main reasons my mediation and arbitration practices have been successful.  Many of my cases come through acquaintances I have made at the Forum.  In addition, the Forum has provided me with many great educational programs that have, in turn, made me a much better mediator and arbitrator.

What was your first Forum meeting?

My first Forum meeting was a lunch in Washington, D.C. in approximately 1985.  There were only a few attendees and most of them were surety lawyers.  Wow, how the times have changed.

What hobbies, activities, or interests do you do outside of work and the Forum? 

I spent twenty years coaching kids’ basketball and many years playing basketball, tennis, golf, and running.  My creaky bones now limit me to the golf course.  While I have no musical talent, I love music of all kinds, and my wife has led me to the theater.

_____________________________________________________________

Adrian L. Bastianelli, III is a Partner at Peckar & Abramson. His practice focuses on construction claims and litigation, with an emphasis on government construction contracts. He represents all sectors of the construction industry, including general contractors, subcontractors, owners, design professionals and sureties. Mr. Bastianelli also has an active alternative dispute resolution (ADR) practice. He has served as an arbitrator, a mediator, and a DRB member on hundreds of construction disputes.

Contact Adrian: ABastianelli@pecklaw.com | 202.293.8815

____________________________________________________________

Neutrals interested in being featured can contact Tom Dunn here: rtdunn@pierceatwood.com

Editor Lexie R. Pereira is an incoming third year J.D./M.B.A. student at Boston College Law School and Carroll School of Management, studying to become a litigator, with a specialty in construction law. Currently, she works as a legal intern at Consigli Construction Co., Inc., serves on the Editorial Team of the ABA’s Forum on Construction Law’s Dispute Resolver blog, and acts as the new 2020 Student Liaison of the ABA's Forum on Construction Law. This summer, she was invited to rejoin Hinckley Allen as a Summer Associate with a focus in the Construction and Public Contracts group. At school, Lexie is the President of the Real Estate Law Society and the President of the Eagle-to-Eagle Mentoring Program. Lexie earned her B.A. and a varsity letter from Boston College in 2017. 

Contact Lexie: pereirle@bc.edu | https://www.linkedin.com/in/lexie-pereira/

What's Up with Division 1 (No. 1 | July 2020)!

I hope you all are enjoying your summer so far and staying healthy and safe.  In this message, I want to announce a couple of changes with Division 1 (Litigation & Dispute Resolution) and some upcoming events / ideas.

Announcements New Division 1 Leadership

Division 1's Liaison to Special Programs and Education Committee (SPEC).  

After many years of dedicated service on serving as our liaison, Anthony Osborn, Gehling Osborn Law Firm, PLC, is stepping down as our SPEC liaison. Thank you Anthony for all your years of service in this role and for your future involvement in other Division 1 activities!

Longtime Division 1 member, George Fink, BRG, is stepping into this role.  George is energetic about getting involved in this committee.  We look forward to your ideas and feedback on how Division 1 can greater contribute to the SPEC Committee.








Division 1's Liaison to Diversity and Inclusion Committee.  

Kelsey Funes, Phelps, a Division 1 Steering Committee Member, has become an at-large member of the D&I Committee.  In her role as Division 1's liaison, Kelsey has been a leader on numerous initiatives including but not limited to planning numerous D&I breakfasts at the national meetings.

I am excited to announce that Jessica Sabbath, King & Spalding, has agreed to take-on the liaison role to the D&I committee. Nick Holmes, a past chair of Division 1, is the Chair of that Committee and we wanted to send one of our best new, active members to help him.  Good luck and thank you Jessica!






Division 1's Liaison to Technology Committee 

Like Kelsey, Katie Kohm, Pierce Atwood LLP, has served as the Technology Liaison for many years.  In that role, Katie has taken on almost every initiative and become the technology specialist and go-to Forum volunteer because of her skill and commitment.  Most recently, Katie is the volunteer in charge of coordinating updates to ABA Connect -- which is a very important role given that is our means to communicate with each other.  Katie has been appointed as an at-large member of the Technology Committee.

Brett Henson, Shumaker, has agreed to jump into this role.  Brett is very active in the Florida Bar construction litigation section.  I am confident that he will bring fresh ideas and perspective into Division 1 from his experience working with that group.  With COVID, the Technology Committee has increased importance to find new and creative ways to reach and collaborate with Division 1 members. Thanks Brett for taking this on.  I look forward to working with you.





Upcoming Programs and Ideas

Division 1 has started a few working groups to find ways to foster communications and sharing of information with each other during this period.  Some of them are highlighted below:

• Division 1 ADR Neutral Feature Series.  We are the litigation and dispute resolution division of the Forum.  Our members regularly serve as arbitrators, mediators, and other neutrals to resolve disputes.  To promote and educate our membership about our talented neutrals, we decided to start a series on The Dispute Resolver blog to feature our Division 1 Neutrals.  The first of those features will be published next month.  
• Law School Outreach Program.  We are in the planning stages of putting on a Division 1 / Forum law school outreach program to provide an overview of construction law and ADR to law students.  We are communicating with the Membership Committee and Forum leadership to get this scheduled for mid to late September.  There will be a panel followed by a brief networking session.  If you are interested in helping out with this program, please contact me (rtdunn@pierceatwood.com).  
• Distance Learning CLEs.  Our steering committee member, Rob Ruesch, Verrill, heads up the Forum's distance learning CLEs / webinars. There will be in increased focus with webinars in the coming months and we want to help Rob's team out as much as possible. Bill Shaughnessy, Jones Walker, and George Fink are going to lead up our team to help generate CLE content for distance learning in the coming months. If you have ideas or would like to be involved in this group, contact me, Bill, or George.  

We have other ideas that we are in the early implementation stages such as scheduling a series of discussion / round-table series on a variety of topics.  

Big thanks to Lexie Pereira who was instrumental in helping me and Division 1 get the ADR Neutral Series and Law School Outreach program off the ground.  Lexie is a law student at Boston College Law and a contributor to The Dispute Resolver blog.  

As you can see, Division 1 has room for many to contribute.  We invite your ideas -- especially those that are creative and embrace how we can help each other with our practices during the COVID era.  Reach out to me and any other Division 1 Steering Committee Member.  

Make sure to join us on D1's ABA Connect Page and follow our blog - The Dispute Resolver!  

On a personal note, since March, my daughter demanded a new pet.  In fact, she wanted a pet ferret!!!  After many, many, many discussions about it, we decided to add a third cat to our family.  Here are two photos of pumpkin!  A kitten has to make you smile and read this post, right! 

Pumpkin visiting me at my home office desk.

Pumkin likes playing in dirt. Here he is our pepper plant.  We had to take all of these outside :)

I hope you enjoy the rest of your summer!  I look forward to hearing from you!

Tom Dunn

Incoming Division 1 Chair

Pierce Atwood LLP

401-490-3418 (d)

508-838-9779 (m)

rtdunn@pierceatwood.com

Why Every Lawyer in the Construction Industry Should Pay Attention to Level 10 Construction v Sea World LLC

“We will not process outstanding payments to contractors or subcontractors until the pandemic restrictions are lifted.”

Since the pandemic began, I have wondered what courts across the country would do when businesses started breaking contractual obligations and blaming, or using, pandemic restrictions as their defense. Most lawyers would agree that a force majeure clause would likely be the deciding factor in these types of breach of contract claims. However, the United States has never experienced the pandemic restrictions we have faced over these last few months and many companies recognize that their force majeure clause might not be as reliable as they might have once hoped. Now, we have the unique ability to witness what a California federal court will rule regarding this exact argument.

On June 8, 2020, California contractor Level 10 Construction, LP (“Level 10”) filed a Complaint in the United States District Court for the Southern District of California alleging Sea World declined to pay for construction of a 2020 theme park attraction until Sea World reopens. Specifically, Level 10 alleges that the payment for work, originally over $11 million, “was not conditioned upon Sea World San Diego’s theme park being open for business to the public,” that Sea World San Diego repudiated the contract by stating “Sea World San Diego would not process any outstanding payments until the parks open,” and that “Sea World San Diego understands they are in breach of contract.” As a result, Level 10 is claiming damages in the principal amount of not less than $3,278,471.30 plus interest.

The fact that Sea World has recognized that they are in breach of contract means that they may be relying on their force majeure clause or the doctrine of impossibility to justify their delayed payments to Level 10. Typically, the party relying on their force majeure clause may be granted relief from performing their contractual obligations if certain events render performance untenable or impossible.

As a refresher, the legal definition of force majeure, or “act of God,” describes any event that is unexpected by all parties, not caused by any party, and affects the relationship between them. A force majeure clause indicates that a party owes no liability to the other in the event force majeure makes performance impossible. A force majeure clause includes not only natural events but also acts by a human agency that are usually not within the scope of “acts of God.”

The pivotal moment in Level 10 Construction v Sea World LLC might be whether the pandemic restrictions make Sea World’s contractual obligations “impossible.” Performance of a duty is excused when a change of circumstance renders it impossible. Impossibility of performance of a duty under a contract is a defense for a claim of breach for non-performance of that duty when the performance of the duty becomes impossible due to unforeseen but changed circumstances.  Simply stated, impossibility is a condition in which an event cannot physically or lawfully take place.  Sure, the pandemic could easily be argued as an unforeseen event, but is the contractual obligation impossible?

SeaWorld Entertainment, Incorporated owns Sea World San Diego, and, according to their most recent Securities and Exchange Commission Form 10-Q filing (quarterly period ending March 31, 2020), they have roughly $192,760,000 in cash and cash equivalents. Sea World San Diego will likely need to show how meeting their contractual obligation is impossible due to the COVID-19 pandemic restrictions, when they seem to have enough cash on hand to pay Level 10. While this seemingly simple breach of contract case might depend on Sea World’s force majeure clause or the doctrine of impossibility, the effects of this case are potentially deafening.

Assume for a minute that Sea World San Diego argues that they are, for all intents and purposes, bankrupt due to COVID-19. An argument which is not so absurd because it was reported that SeaWorld Entertainment recently raised $227.5 million through a private offering that it could use to help pay its bills after projecting a revenue decease of roughly 32%. The court might be put in a position to determine just how far they are willing to stretch the definition of impossibility. Having to raise money in order to make ends meet might be enough to make courts agree with Sea World’s defense.

Every industry, especially the construction industry, should be paying attention to Level 10 Construction v Sea World LLC. If Sea World is successful, then businesses that have requested a Paycheck Protection Program loan might have an argument that the doctrine of impossibility applies in their contractual obligations. This could lead to thousands of businesses refusing to honor their contractual agreements and significantly increase the number of cases in an already inundated court system.

Author Christopher M. Wise is an attorney and the Managing Member of Wise Law, LLC in Louisville, Kentucky. He focuses on contractor-subcontractor litigation and family law litigation.

SCOTUS Allows Atlantic Coast Pipeline to Cross Appalachian Trail

The two energy companies constructing the Atlantic Coast Pipeline have abandoned their six-year bid to build it.  Despite the recent U.S. Supreme Court win discussed below, the companies cite high costs and regulatory uncertainty behind their decision to discontinue the project.

The Atlantic Coast Pipeline is a planned $8 billion, 600-mile natural gas pipeline from West Virginia to North Carolina. Petitioner Atlantic Coast Pipeline, LLC seeks to build the pipeline, which would traverse 21 miles of national forests and require crossing of 57 rivers, streams and waterways in those forests.

At issue before the Supreme Court, in a major environmental case of this term, were two consolidated cases decided by the Fourth Circuit. The cases involved a 2017 permit granted by the United States Forest Service (“Forest Service”) to allow the Atlantic Coast Pipeline to cross the George Washington National Forest in Virginia. The permit also authorized construction of a tunnel consisting of a 0.1-mile segment of pipe 600 feet beneath the Appalachian Trail within forest limits. The Fourth Circuit vacated that permit, holding that the entire 2,100-mile Appalachian Trail is part of the National Park System and, therefore, under the Mineral Leasing Act, no pipeline rights-of-way may be built on the trail.

On June 15, 2020, the Supreme Court reversed the Fourth Circuit and ruled 7-2 that the Forest Service had authority to issue the permit over the trail.

The National Park Service (“Park Service”) administers the Appalachian Trail, even where the trail runs through national forests. The trail has been an official “unit” of the Park Service for fifty years, but that status alone, now, does not prohibit construction of natural gas pipelines under the Mineral Leasing Act, which prohibits federal agencies from authorizing a pipeline right-of-way through “lands” in the National Park System. The question before the Supreme Court was whether the entire Appalachian Trail is such a “land” as defined by the Mineral Leasing Act.

The Court ruled that the Park Service had an easement under the 1968 National Trails System Act (“1968 Act”) to run a footpath over the trail, but the trail itself remained fully under the jurisdiction of the Forest Service. After providing a thorough primer on the common law of easements, the Court found that the trail is not a “land” in the National Park System but is simply a right-of-way, subject to the administrative supervision of the Park Service. But because the trail remains under the jurisdiction of the Forest Service, the Forest Service had authority to approve the crossing under the trail by way of a tunnel 600 feet beneath the trail.

The majority reasoned that Congress never transferred jurisdiction over the trail from one agency to another in the 1968 Act, but rather described the trail as a “right-of-way” through land under the jurisdiction of other agencies. The 1968 Act gave administrative authority over the trail to the Secretary of the Interior, not to the Park Service. The Secretary of the Interior then delegated the authority over the trail to the Park Service in 1969. But the Court said, “We will not presume that the act of delegation, rather than clear congressional command, worked this vast expansion of the Park Service’s jurisdiction and significant curtailment of the Forest Service’s express authority to grant pipeline rights-of-way.”

Justice Sonia Sotomayor and Justice Elena Kagan argued in dissent that the majority’s private-law easement analogies were unconvincing and inapposite. Easements are rights of limited access granted by a landowner to another, but the federal government owns all the land at issue in this case. So, federal statutory commands, not private-law analogies, should govern. The dissenting Justices argued that the majority improperly separated the trail from the land it occupies. The Park Service administers the trail, and therefore, it must also administer the land upon which the trail sits. The Secretary of the Interior had already delegated responsibility for trail administration to the Park Service when Congress passed a 1970 statute making all lands administered by the Park Service part of the National Park System. In the dissent’s view, the majority did not construe the relevant statutes in a way that effectuated what Congress intended.

Notwithstanding administrative delegation of authority over the trail to the Park Service, and the statute characterizing all lands administered by the Park Service as part of the National Park System, the Court held that the trail is not “land” in the National Park System. Rather, the trail is a right-of-way, subject to administrative supervision by the Park Service but subject to the jurisdiction of the Forest Service.

This decision removes major obstacles to constructing the Atlantic Coast Pipeline. If the Fourth Circuit decision had been upheld, the pipeline likely would have had to be rerouted, resulting in tremendous expense and delay. Other obstacles to the pipeline remain, however, as the Fourth Circuit has vacated several other permits required for the project.

United States Forest Serv. v. Cowpasture River Pres. Ass'n, No. 18-1584, 2020 WL 3146692, at *3 (U.S. June 15, 2020)

Author Megan B. Burnett is an attorney in the Baltimore office of Miles & Stockbridge P.C., with offices in Maryland, Washington, D.C., and Virginia. She practices in the areas of commercial and business litigation, with a focus on construction law and commercial real estate disputes.

Disclaimer: This is for general information and is not intended to be and should not be taken as legal advice for any particular matter. It is not intended to and does not create any attorney-client relationship. The opinions expressed and any legal positions asserted in the article are those of the author and do not necessarily reflect the opinions or positions of Miles & Stockbridge, its other lawyers or the American Bar Association Construction Law Forum.

Courts to Decide COVID-19 Business Interruption Claims

The COVID-19 pandemic and resulting government orders helped grind construction projects to a halt. States varied significantly regarding the level of restrictions enacted. Some states allowed construction to progress relatively unimpeded while others permitted only “essential” projects to continue. Some jurisdictions enacted waiver programs where businesses could apply for exemptions. Several cities, including Boston and San Francisco, went beyond their state’s restrictions to stop all construction projects.

Although many of these restrictions are gradually being lifted, the resumption of construction activity remains subject to important limitations regarding social distancing and other public health measures.

Will Business Interruption Insurance Cover Losses from COVID-19?

The COVID-19 pandemic is creating profound, ongoing interruptions to businesses operations across the country. “Non-essential businesses” closed by state government orders have lost income and furloughed employees. Millions of customers were ordered to shelter in place for months, depriving the economy of much-needed demand. Insurance industry experts estimate total business losses arising from the pandemic may soar above $200 billion.

Many businessowners pay for business interruption insurance. To their disappointment, their claims continue to be denied by insurers. The resulting wave of litigation has yielded several important trends. While it remains unclear how courts will rule in these cases, seldom-used policy exclusions are suddenly at the center of the debate. With billions of dollars on the line, the legal and economic stakes are both extraordinarily high. Although many of these high-profile claims involve restaurants, the same arguments apply to the construction industry. 

Business interruption insurance is separate form of first-party coverage which seeks to compensate policyholders for losses due to a suspension of operations.  Typical policy language states coverage will be triggered only by a “physical loss” or “physical damage.” 

Many business interruption policies also offer Civil Authority coverage. This provision has been cited widely in many of the pending business interruption lawsuits pending across the country. Civil Authority coverage is designed to protect policyholders from situations where a government authority prevents access to their place of business. Insurers argue this is not applicable to most COVID-19-related claims because many policies require a nexus of physical damage involving the insured premises.

What is a Physical Loss, Anyway?

Whether policyholders will prevail on their COVID-19 business interruption claims turns largely on the definition of a “physical loss.” In certain instances, courts have sometimes extended the definition of “physical loss.” In some examples, courts have held a large presence of ammonia or asbestos rendered a structure unusable.  

Arguably, the same logic could apply to certain COVID-19 claims, especially where the virus was present at the insured premises. Insurers argue this extension would not only be erroneous but lead to the widespread insolvency of carriers who did not price such coverage into premiums.

It’s important to remember that insurance remains in large part a creature of state law. Although many contract law principles will apply generally, many state courts have carved out important distinctions particular to their jurisdictions. This not only makes a generalized analysis difficult, it undermines the argument that business interruption cases warrant multi-district litigation.

What About Exclusions?

Virus exclusions are a relatively new limitation on coverage. In only the past 15 years they’ve become common in most business interruption policies. As coverage litigation proliferates in the wake of the COVID-19 pandemic, virus exclusions are poised to take center stage alongside traditional insurance law concepts like “physical loss” and “reasonable expectations.”

Insurers will likely argue a virus exclusion isn’t required to deny coverage because COVID-19 does not produce a physical loss sufficient to trigger coverage. However, this argument will lead to a predictable response by policyholders: If a virus exclusion isn’t needed to limit coverage, then why has the exclusion become standard on so many policies in the first place?

Other policy exclusions may address bacteria or fungi. These do not appear relevant to COVID-19. However, a surprising number of commercial liability policies don’t contain a virus exclusion at all. Several recent complaints filed by policyholders underscore the potential exposure of insurers to business interruption claims arising from COVID-19 in the absence of this exclusion.

Possible Legislation Could Require Coverage

Congress and several states have drafted legislation which could require insurers provide business interruption coverage under certain situations.  These proposals vary and thus far none seem to be gaining momentum.

Some of the most notable variables include, but are not limited to; whether coverage would be retroactive to cover losses arising from COVID-19 or only apply to future pandemic claims, whether the coverage will only apply to “small” businesses, and whether insurers will be eligible for reimbursement for coverage.

Conclusion

Policyholders should review their policies to determine whether it contains a virus exclusion. If a policyholder believes their losses are covered, filing a claim quickly is critical. Policyholders should file an accurate and complete proof of loss statement and be prepared to cooperate with their insurer during the claims-investigation process. If a virus exclusion was added during the renewal of a pre-existing policy, state law may limit its applicability if the insurer failed to disclose the new limitation. Finally, it’s important to note that impacted policyholders have a limited window of opportunity to enforce their existing contractual rights.

Regardless of the outcome of the hundreds of business interruption cases now before the courts, virus exclusions appear likely to become even more common in the wake of COVID-19.

Author Patrick McKnight is an associate in the Litigation Department at Klehr Harrison Harvey Branzburg LLP in Philadelphia, Pennsylvania. Patrick also serves on the Klehr Harrison Coronavirus Task Force. He can be reached at pmcknight@klehr.com.

Plot Twist: Construction Industry Groups Applaud Court's Decision to Defer to OSHA

Construction industry association groups applaud the June 11, 2020 U.S. Court of Appeals for the District of Columbia’s decision, which denied the AFL-CIO’s (American Federation of Labor and Congress of Industrial Organizations) emergency petition for a writ of mandamus against OSHA (Occupational Safety and Health Administration).¹ In what some may call a surprising turn of events, the construction industry is celebrating deference to OSHA.

The administrative petition, filed on May 18, 2020 by the AFL-CIO, together with 23 national unions, was intended to compel OSHA to issue an emergency temporary standard ("ETS") to protect U.S. workers against COVID-19. OSHA is authorized to issue an ETS upon its determination that an ETS is "necessary" because "employees are exposed to grave danger" in the workplace. 29 U.S.C. §655(c); see In re AFL-CIO, USCA Case #20-1158, (D.C. Cir. 2020). The court stated that OSHA is owed "considerable deference," especially in these unprecedented times, and found that it acted reasonably when it determined not to issue an ETS at this time. In re AFL-CIO, USCA Case #20-1158, (D.C. Cir. 2020).

Construction industry association groups, such as the Associated Builders and Contractors and National Association of Home Builders, are happy with the decision because they considered an ETS to be an inappropriate measure in such turbulent times. Following the decision, OSHA will continue to develop guidance documents. Not only does this approach allow the agency to swiftly adapt to new COVID-19 information released by other government officials and scientists, it also allows OSHA to continue to rely on the Centers for Disease Control and Prevention.

The problem with this approach, as alleged by AFL-CIO, is that these guidance documents are not mandatory. As follows, AFL-CIO and its supporters are disappointed with the decision, claiming that OSHA’s guidelines are too flexible in that they do not pose a threat of OSHA action for an employer’s noncompliance. Given that OSHA in-person checks of construction sites have fallen to about 16% of pre-COVID-19 inspection levels, the concern may not be unfounded.² Construction workers, perhaps to a layperson’s surprise, were among the most universally essential workers during the pandemic. This fact can be concerning since, as mentioned by Gaetano Piccirilli and Patrick McKnight in an earlier Dispute Resolver blogpost, construction workers had one of the highest mortality rates during the 1918 Flu pandemic. The combination of higher risk and less frequent OSHA visits may be a reason complaints have increased nearly tenfold.³ In fact, the AFL-CIO’s petition set forth that thousands of workers have been infected on the job.

Nonetheless, construction sites are certainly not going unwatched. Instead, the decrease of OSHA visits is most likely replaced with an increase of state and local inspections. States like Massachusetts, for example, have implemented their own Mandatory Workplace Safety Standards and sector-specific workplace protocols, including Safety Standards for Construction. And although nobody knows exactly how to proceed during COVID-19, after the U.S. Court of Appeal’s decision, at least some construction industry groups are comfortable leaving it up to the "experts."

Learn more about the scope of OSHA, the extent it preempts (and does not preempt) state and local government action, and what state and local governments are doing to ensure the safety of workers within their jurisdictions at an upcoming ABA webinar on June 29 at 1 pm ET. More details here: https://www.americanbar.org/events-cle/mtg/web/401521567/.

---

1 Court Rejects Bid for OSHA COVID-19 Emergency Standard, CONSTRUCTION DIVE (June 12, 2020).^↩
2 OSHA Construction Safety Inspections Plunge 84% in Pandemic, BLOOMBERG LAW (May 14, 2020).^↩
3 Id.^↩

Author Lexie R. Pereira is an incoming third year J.D./M.B.A. student at Boston College Law School and Carroll School of Management, studying to become a litigator, with a specialty in construction law. Currently, she works as a legal intern at Consigli Construction Co., Inc., serves on the Editorial Team of the ABA’s Forum on Construction Law’s Dispute Resolver blog, and acts as the new 2020 Student Liaison of the ABA's Forum on Construction Law. This summer, she was invited to rejoin Hinckley Allen as a Summer Associate with a focus in the Construction and Public Contracts group. At school, Lexie is the President of the Real Estate Law Society and the President of the Eagle-to-Eagle Mentoring Program. Lexie earned her B.A. and a varsity letter from Boston College in 2017. Contact Information: pereirle@bc.edu; https://www.linkedin.com/in/lexie-pereira/

Division 1 Opportunities Galore! Join Us!

Hi, my name is Tom Dunn.  I am a construction lawyer at Pierce Atwood LLP.  I represent owners, contractors, subcontractors, suppliers, and other participants in the construction industry in state and federal trials and ADR.  I am an arbitrator panelist with the American Bar Association's Construction. I am the Partner-In-Charge of our Providence office, but I practice and office in both of my firm's Providence and Boston offices. 

COVID-19 Time Capsule Photo.
Note the Forum branded vest. Buff for face
coverings.  And, of course, the long hair with a hat!

For the past nine years, the ABA Forum on Construction Law's Division 1 (Litigation & Dispute Resolution) has been an active, fun, and rewarding part of my career.  

First, I attended D1's breakfasts/lunches.  I tested out 2-3 Divisions at the time to see which one fit the best.  

Next, I attended a D1 Planning Retreat as a guest and started to communicate with the D1 Chair (Buzz Tarlow) about involvement. He asked that I draft the Division meeting minutes, join the publications subcommittee, and serve as D1 liaison to the Forum's Membership Committee.   

Tony Lehman (former D1 Chair and incoming Governing Committee Member) and I, with the assistance of others (oddly mostly named Anthony or Tony), started The Dispute Resolver blog under Buzz' guidance.  We did it in PDF / paper format for a number of years before transitioning it to this blog. Working as one of the editors of this The Dispute Resolver blog led me to becoming the Editor of the Forum's publication, Under Construction, in 2015.  I also serve as an at-large member of the Membership Committee doing various things for the Forum. None of those leadership opportunities would have been available without Division 1!

Following the incredible leadership of Buzz, Luis Prats, Nick Holmes, Tony Lehman, and Cassidy Rosenthal, it is now my time to serve as the Division 1 Chair. I am SO EXCITED to work with you all!  I view my role as D1 Chair to be a matchmaker / facilitator for our members. You tell me what you are thinking and I do my best to give you an opportunity:

If you have an idea, I want to hear it.  

If you want to volunteer, but don't know how, contact me and I will find a place for you.

If you don't know why it makes sense to get involved with the Forum or Division 1, reach out to any of Division 1's Steering Committee members.  You will find out that each of them have stories similar to mine. 

If you are a trial attorney, arbitrator, mediator in the construction industry, we want to hear from you on The Dispute Resolver, we want you to speak at one of our programs, we want you to help plan our events, and/or we want your input.   

While Division 1 is one of the larger Divisions of the Forum, we have a strong steering committee and dedicated volunteers. So, you have the benefit of a larger platform while being able to form strong contacts within Division 1.  

One of my goals was to work to improve our blog that Tony and I started many years ago. I am jazzed about the planning Catherine Delorey, TDR's Editor-in-Chief, has done to improve this blog.  She scheduled numerous meetings with interested participants and has finally formed an impressive editorial team of contributors: 

• Megan Burnett
• Patrick McKnight
• Lexie Pereira (a law student!)
• Christopher Wise

I can't wait to see the great articles this team publishes in the coming months!  Thank you for your efforts!

In addition to this blog, remember to join Division 1's ABA Connect Page and set your notifications to current notifications (as opposed to digests).  This will ensure you get our posts as soon as they are made.  

I know the past 3+ months have been a challenge for us all in dealing with COVID-19. The numerous zoom calls I have had with Forum members over the past months have made it a lot better for me.  Whether a zoom happy hour, webinars, or business meetings, this technology has enabled Forum members to stay connected throughout the country. Division 1's monthly calls (second Monday at 3PM) will be on the zoom platform and I welcome each of you at attend: 

Click here to join
Meeting ID: 669-178-3882Password: ForumCL2020!

Before our next call (July 14th), send me your ideas or express your interest in joining Division 1 in a more active manner.  I will add you to our "Friends of D1" email list and work with you on getting a D1 job!  

Looking forward to collaborating with all of Division 1's Members -- new and old!  If you have questions, reach out. Stay safe and be well.  

Tom Dunn, Division 1 Chair

Pierce Atwood LLP

rtdunn@pierceatwood.com

508-838-9779 (m)

#TheDisputeResolver #FCL_D1 

Emerging from COVID-19: Impacts to Consider

The relaxation of COVID-19 stay-at-home orders and reopening of the economy is a prominent news headline. As the return to everyday activity progresses it is important to prepare in advance for this “return to normalcy”, which will almost certainly come in stages, especially as it relates to construction activity. As it happens, there will be numerous considerations depending on the stage of your project in the construction lifecycle, the status of the project stakeholders, and the implementation of revised or new safety requirements. Consideration should be given to productivity, schedule, and supply chain impacts.

Productivity Impacts

Projects that have been allowed to continue operations during COVID-19 restrictions should not expect normal work activity to be achieved as the stay-at-home restrictions are relaxed. Current social distancing and personal hygiene requirements will likely remain in place and continue to impact site access and worker productivity until a vaccine is developed or the severity of the virus wanes. There are numerous considerations for assessing realistic productivity when planning for work in the post-stay-at-home world:

• How will the flow and assignment of workers be coordinated and monitored to ensure required distances are maintained?
• What about coffee and lunch breaks?
• Are adequate cleaning stations and disinfectant supplies available per applicable regulations worker hygiene and tool and equipment cleaning?

Careful consideration of social distancing and personal hygiene requirements should be applied to projects resuming operations following a shutdown as well as those starting from day one. The construction industry’s emergence from COVID-19 will be a slow, methodical process that will result in reduced productivity levels. Losses in productive time will come in many forms:

• Vertical transportation (hoist / elevator) limitations
• Site workflow constraints
• Getting workforce to project site
• Work area changes / restrictions
• Field health checks
• More regular cleaning requirements
• Additional tools to minimize sharing
• Longer/more workdays to stagger shifts
• Added supervision
• Limitations on labor on site

For projects that were suspended or restricted, a reforecasting of costs will be in order as many contractual Notice provisions require an estimated cost of the anticipated impacts to be provided to Owners. For new project starts, the same steps will be needed to justify changes in bid price.

Projects that have been shut down or slowed will need to account for demobilization and remobilization impacts. The pre-shutdown conditions and worker productivity must be thoroughly documented and communicated to all project stakeholders. This baseline condition will be critical to establishing the additional effort expended to remobilize and resume operations on site.

Schedule Impacts

On projects that have been shuttered, scheduling impacts will need to be addressed before work can resume and some of those steps may be significant.

• What will be the impact of the timing for restarting a project?
• What is the availability of labor, particularly in union markets?
• Will multiple work shifts or resequencing of work be needed?
• Are contractual actions required to document and address schedule impacts?

Validation of your project schedule will be necessary regardless of what stage your project was in when it was shuttered or otherwise impacted by COVID-19 restrictions. Some projects will require a recovery schedule to make up for delays and account for changes resulting from COVID-19. This schedule should memorialize the schedule scenario that was in effect before the project was impacted by the virus and it should clearly show what changes were made to recover from any resultant delays.

There will be many projects looking to restart at the same time and that could put constraints on resource availability including materials, equipment, and labor. The work force will be restricted and will be driving the schedule not the other way around.  Based on the work force and expected productivity, adjustments to the schedule will be needed to reflect reality. Only then can the labor force, to the extent possible, be effectively coordinated and a schedule implemented.

Notice of COVID-19 impacts submitted earlier should be amended to reflect current conditions, and the amended notices should accompany submissions of recovery schedules in order to: (1) strengthen contractors’ arguments for relief, and (2) allow the owner to evaluate the financial implications of following the recovery schedule. Regardless of whether a recovery schedule is submitted and/or accepted, regular monthly schedule updates should be prepared and submitted in order to document progress as well as any additional COVID-19 related impacts that may arise.

Supply Chain Impacts

Procurement is another serious consideration because, although construction may be allowed to resume in your area, there may be supply chain impacts.

• Are subcontractors and suppliers located in states that remain under stay-at-home orders?
• Are subcontractors and suppliers able to pick up where they left off before a shutdown?
• Were lead times interrupted on orders placed before shutdowns came into effect?

All vendors should be contacted to confirm material delivery dates. These arrangements need to be made in advance of remobilization and resuming job site operations, especially if alternate options need to be pursued because of restrictions on the use of international or bankrupt suppliers.

Contractors should consult with their subcontractors and suppliers when they resume work. Overlooking these parties can give rise to unnecessary delays and claims. Clear communication on changes to the project and collaboration on recovery actions are some steps that can be taken to involve subcontractors and suppliers.

We will emerge from COVID-19, but it will take a concerted effort by all of us. It will be no different for the construction industry. Taking time now to consider and address impacts will set the stage for successful recovery that will benefit all stakeholders.

Author Information

Charles F. Boland, PE, is principal and chairman at GREYHAWK in Mt. Laurel, New Jersey. He has over 40 years of experience in engineering, construction, project management, and in cost/schedule analysis in the preparation and evaluation of contract claims on construction and industrial projects.

Barrett L. Richards, CCC, CEP, PSP, is a senior managing consultant at GREYHAWK in Melville, New York. He has over 20 years of experience in project management oversight; claims and litigation support; project planning and scheduling; as well as preconstruction and construction cost estimating.