André Castaybert, Author at Castaybert Law, NYC

February 1, 2024

Once the client and counsel have identified the parties’ interests and considered alternatives, they should develop objective criteria that both sides will reference during the mediation. Examples include market valuations, precedents, scientific or professional opinions, costs, and traditions.

In a pre-mediation conference, the mediator may ask your client to identify the client’s objective criteria and the standards the client anticipates their counterpart to rely upon in the negotiation. In this step, the mediator will try to frame each issue as a joint search for objective criteria to foster a collaborative approach to problem-solving. As part of this approach, the mediator may ask your client for the reasoning behind the other party’s suggestions. The mediator may then seek to have both sides agree to certain criteria and standards applicable to the matter.

Once objective criteria are established, parties and their counsel should brainstorm options to address the other side’s potential concerns and consider possible tradeoffs as part of the negotiation. The mediator will seek to develop “low cost” options that satisfy each side’s concern, thereby creating value in the negotiation.

During preparation, it is not enough to have the facts and information. Advocates and their clients should spend some time thinking about how they will use and present that information. They should also devote significant time to brainstorming a wide range of possible proposals and options before choosing which to lead with in the mediation.

To read how Castaybert PLLC can assist you with mediation, click here.

January 30, 2024

Employers must carefully consider the confidentiality and severance clauses they include in their agreements, as they may inadvertently violate whistleblower protection laws. Recent enforcement actions by the Securities and Exchange Commission (SEC) have resulted in significant fines for violations of Rule 21F-17, which prohibits actions that impede individuals from reporting potential securities law violations directly to the Commission.

Common clauses in employment agreements, confidentiality agreements, non-disparagement provisions, and settlement agreements have been found to violate Rule 21F-17. These include confidentiality clauses that restrict employees from disclosing information to government regulators without prior consent, clauses that prohibit employees from initiating contact with regulators, and settlement terms that prevent employees from collecting awards from whistleblower programs. Recent enforcement actions against companies like D.E. Shaw, Activision Blizzard Inc., and The Brink’s Company demonstrate the SEC’s commitment to enforcing Rule 21F-17.

Private employers, along with entities in customer and vendor agreements, must also comply with these regulations, as shown by SEC actions against Monolith Resources LLC and J.P. Morgan. Employers should also be aware that other federal agencies, including the Department of Justice (DOJ), the Department of Labor, the IRS, the Department of Transportation, and the Commodities Futures Trading Commission, also have similar whistleblower protection rules. Compliance with these agencies’ rules is equally important.

To avoid penalties, employers should review their policies and agreements to ensure compliance with Rule 21F-17 and other applicable regulations. This involves including carve outs for communications with regulators and ensuring that clauses are not overly broad and do not impede whistleblowing activity. Given the SEC’s demonstrated commitment to enforcing Rule 21F-17, compliance is essential to avoid possible penalties and other legal consequences.

To read how CASTAYBERT PLLC can assist you with employment law matters, click here.

January 30, 2024

Preparing for negotiation in mediation requires thorough consideration of alternatives to increase the likelihood of a successful resolution. To properly formulate and evaluate competing settlement proposals offered during the mediation it is critical to rigorously examine possible alternative proposals and options before the mediation begins.

Before negotiations, parties and their counsel should consider:

The Best Alternative to a Negotiated Agreement (what mediators and negotiators commonly refer to as the party’s “BATNA”);
The worst deal they are willing to accept (“reservation point”);
The other side’s BATNA.

Knowing one’s BATNA is essential for informed decision-making. Without it, parties risk accepting an offer worse than their alternatives or rejecting a better one. A BATNA clarifies at what point it makes sense to walk away from an unsatisfactory agreement and to understand the consequences of not reaching a resolution. Clients and their counsel need to think about the consequences of not resolving the conflict because it affects the choices they make during negotiation.

Once parties know their BATNA, they can assess whether their reservation point is reasonably aligned with their BATNA. While setting a reservation point is necessary to avoid a bad deal, parties should make sure to consider their realistic alternatives when determining their reservation points. In other words, if the goal of a negotiation is to put oneself in a better position than one’s alternatives, then a reservation point should be slightly better than one’s BATNA. Consequently, parties should avoid setting reservation points too high, as it may lead to rejecting offers better than any alternative outside the deal.

Clients and their counsel should also consider the other side’s BATNA for two reasons: (1) to assess the parties’ relative negotiation power and flexibility, and (2) to estimate realistic settlement ranges. A party may have less power if the other side’s BATNA is superior, and vice versa. Parties often fail to assess power accurately, leading to negotiation pitfalls (e.g., rejecting offers better than any alternative, or accepting offers worse than their alternative). Even before the mediation, the parties and their counsel should spend time realistically assessing their relative power so that they can make sound strategic decisions at the mediation during negotiations.

To read how Castaybert PLLC can assist you with mediation, click here.

January 30, 2024

The success of a negotiation hinges on effective preparation. Parties and their counsel must prepare in advance to formulate a proper proposal, evaluate competing proposals, and consider a negotiation strategy that manages expectations and potential concessions. This preparation helps minimize the risk of common negotiating mistakes. Understanding the mediator’s goals and techniques will assist both the advocate and the advocate’s client in understanding the mediator’s role and anticipating issues and questions likely to come up during mediation.

The mediator’s role is to assist parties in gathering pertinent information across four main areas: (1) identifying parties’ interests; (2) evaluating alternatives; (3) identifying objective standards; and (4) generating potential solutions.

From the mediator’s perspective, understanding the parties’ interests is paramount. Interests are the parties’ underlying concerns, needs, and fears that are motivating the conflict. Shifting the focus from the parties’ positions (what they want) to their interests (why they want something) yields several advantages, including discovering solutions aligned with the parties’ true needs, uncovering shared interests, and revealing potential solutions.

The mediator will ask your client to identify the client’s interest and seek to have the client understand their counterpart’s interests. The mediator may ask your client to engage in a “role reversal.” This technique, usually performed in separate sessions, requires parties to imagine themselves in the other’s position, to foster a deeper understanding of each side’s concerns. The mediator may use this technique to offer insights into the other party’s potential interests through leading questions.

The mediator will seek to identify common ground and divergent interests.

Divergent interests may fall into five principal categories:

Different Valuations (parties have different levels of preference for various issues).
Different Expectations (parties have different predictions about an event).
Different Risk Attitudes (parties are willing to take different levels of risk).
Different Time Preferences (parties place different values on when a particular event occurs).
Different Capabilities (parties differ in skills, aptitudes, and resources).

The mediator will seek out mutually beneficial trades by identifying “low-cost options” – things of value one party may provide to address the other party’s interests while advancing their own to address diverse interests while promoting collaborative solutions.

When preparing for the mediation, remember that the mediator will play a key role in the negotiation. Clients and their counsel should prepare by considering the mediator’s goals and perspectives and should be ready for the mediator’s questions and possible interventions as part of the overall consideration of the parties’ settlement negotiation and alternatives in resolving the dispute.

To read how Castaybert PLLC can assist you with mediation, click here.

January 17, 2024

On January 9, 2024, the U.S. Court of Appeals for the Ninth Circuit decided that Madrid’s Thyssen-Bornemisza museum (TBC Foundation) rightfully owns Camille Pissaro’s painting “Rue Saint Honoré, après midi, effet de pluie” (“Rue Saint Honoré, Afternoon, Rain Effect”). The artwork was stolen by the Nazis in 1939 from Lilly Cassirer, who was forced to sell it for 900 Reichsmarks (around $360) to pay the flight tax to escape Nazi Germany. As described in a recent Sullivan & Worcester blog post detailing the case and the Ninth Circuit’s ruling, the Pissaro passed through several owners until 1993, when the TBC museum bought the painting from Baron Hans Heinrich Thyssen-Bornemisza, where it has been on display since.

The lawsuit, initiated in 2005 by Cassirer’s heirs against Spain and the TBC Foundation as an “instrumentality” of Spain, invoked the Foreign Sovereign Immunities Act (FSIA). The FSIA outlines the exclusive conditions allowing a foreign sovereign or instrumentality to face legal action in a U.S. court. The Cassirers relied on the FSIA’s expropriation exception, which grants jurisdiction over claims related to “rights in property taken in violation of international law.” Since the case involves parties and subject matter in different jurisdictions, the court must initially determine which body of law to apply in analyzing a specific case. In 2019, the Ninth Circuit, using a federal court test to choose applicable law, ruled that Spanish law should apply. The Cassirers appealed and the U.S. Supreme Court reversed in 2023, holding that under federal jurisdiction principles, the court should have applied California’s choice of law rule. Back in the Ninth Circuit, the court had to decide, under California’s choice of law rule, which law (Spanish or California) should apply.

As the Sullivan & Worcester blog post explains, that question was critical because of the conflicting bodies of law. On the one hand, California law holds that a thief cannot convey good title. So, if the Nazi regime compelled Lily Cassirer to sell the Pissarro (which is undisputed), no one after that first sale in the chain of title would get good title (without some intervening event). Therefore, if California law applied, the transfers from the Nazi regime’s forced sale, eventually to the TBC, would all have carried that title defect, and the Cassirer family would prevail. On the other hand, Spanish law allows for prescriptive title. Prescriptive title means that an acquirer can obtain valid title even over the true owner by holding it long enough and under circumstances that the true owner could know of or be expected to object. Under these circumstances, TBC held the painting long enough to acquire valid title through prescriptive title and so if Spain’s law applied, TBC would win.

Under California’s choice of law rule, the question is which law would be impaired to a greater degree if the other law applied (also known as a comparative impairment analysis). In other words, would California be harmed more if Spanish law applied, or would Spain if California’s law were applied? Here, the Ninth Circuit held that Spain would suffer the greater impairment because Spain’s interest in providing “certainty of title” to its museums outweighed California’s interest in deterring theft and obtaining recoveries for victims of stolen art who live there. Therefore, applying Spanish law, the Ninth Circuit held that the TBC acquired good title after holding the painting for long enough that prior claims were extinguished.

To read how Castaybert PLLC can help with art law matters, click here.

January 16, 2024

On November 30, 2023, Governor Kathy Hochul declined to sign a proposed bill banning the use of non-compete agreements between employers and employees in New York. Expressing concerns about the overbroad nature of the proposed ban, Governor Hochul believes it failed to strike the right balance in safeguarding low and middle-income workers and acknowledging the greater bargaining power of higher-income workers. Instead of endorsing a wholesale ban, Governor Hochul proposed a minimum salary requirement of $250,000 for employees to be subject to such agreements. Based on the Governor’s remarks, it appears that New York may follow the lead of other states like Illinois and Maryland in establishing minimum income thresholds rather than a complete ban on non-competes. Given New York’s significant economy of about $2 trillion, monitoring the state’s next steps will be essential for both employers and employees in the state.

To read how CASTAYBERT PLLC can assist you with employment law matters, click here.

January 16, 2024

Traditional non-compete agreements have faced increased judicial scrutiny, and several states have passed laws restricting their use. Some states have banned non-competes for low-wage workers. Others have limited them for specific categories such as technology and healthcare professionals. In response, employers may want to consider using garden leave provisions as an alternative to non-competes.

Differences between Garden Leave and Non-Compete Provisions

Under typical notice provisions, employees actively work during their notice period. By contrast, under garden leave provisions, employees are relieved of their duties and responsibilities during their notice period. So employees on garden leave remain employed and are paid a salary, and therefore, continue to owe a duty of loyalty to their employer. This prevents them from working for a competitor during the garden leave period. In this way, the garden leave functions like a traditional non-compete but is challenged less often than non-competes.

During the garden leave period, the employer generally can:

Remove employees from their active duties.
Exclude employees from the workplace.
Prevent employees from contacting staff and customers or clients.
Limit or cut off access to the employer’s computer systems, email and other documents, and information.

Benefits and Drawbacks of Garden Leave

Advantages of garden leave include a higher likelihood of enforcement due to shorter and paid durations. Garden leave also protects employers by extending the duty of loyalty throughout the garden leave period and allowing smoother transitions in client relationships. Drawbacks include the cost of paying non-working employees, shorter durations compared to non-competes (usually 30 to 90 days while typical non-compete periods last 6 to 18 months), and potential logistical issues regarding electronic access if the employee must perform transitional duties. Some courts are also reluctant to enforce garden leave provisions because doing so would require the court to order employees to continue an at-will employment relationship against their will.

Drafting Considerations for Employers That Want To Use Garden Leave Provisions

To maximize the employer’s protections and increase the likelihood of enforcement, when drafting garden leave provisions, employers should:

Require signed agreements and ensure the employee’s clear acknowledgment of the provision.
Identify covered employees. Garden leave provisions are generally not used for low-level employees but may be useful for employees with substantial access to trade secrets and other confidential information, and sales or other employees responsible for developing relationships with clients.
Define garden leave period. Periods of 90 days or less are the most common, but some can last up to six months. Garden leave periods for much longer than that are more likely to be challenged, especially in non-negotiated agreements. The most important factor to determine the garden leave period is the protectable interests at stake. Employers should consider (1) the nature of the employee’s position and (2) the particular concerns associated with the position. Employers may have incrementally longer garden leave periods for employees with greater responsibility.
Determine employee compensation during the garden leave period, ensuring regular salary and benefits at a minimum.
Reserve employer’s right to exclude employees from the workplace and restrict access.
Explicitly reserve employer’s discretion to waive or modify garden leave restrictions in writing.
Consider combining garden leave with non-compete and non-solicitation provisions for added enforcement avenues.

To read how Castaybert PLLC can assist you with employment law matters, click here.

December 21, 2023

Depending on the preferences of the parties, the mediation can take different formats. As explained in a previous post, after the pre-mediation conference, the mediation may either begin with a joint session with all parties present or go straight into an initial caucus with just one party and the mediator. As each dispute is unique, the mediation session itself is flexible and can involve a mix of joint sessions and private, individual caucuses.

The initial caucus is the first confidential meeting between the mediator and one party and their counsel. An initial caucus allows the mediator to better understand the dynamic of the dispute, identify common interests between the parties, and determine how to approach a later joint session with both parties to foster open communication. The private nature of a caucus encourages the party to be open and honest which is an essential component of addressing the underlying issues that led to the dispute. This in turn helps the mediator guide the parties toward a mutually beneficial solution.

Typically, the goals of an initial caucus include:

Privately clarifying the major and minor issues at hand.
Providing a confidential environment for a party to vocalize their goals to the mediator.
Reviewing a party’s ideal resolutions and settlement proposals.
Clarifying any misunderstandings.
Building trust between the mediator and the participants so individuals can freely share their emotions and concerns without fear of judgment or consequences.
Discussing new facts relevant to the dispute.
Asking questions to determine each parties needs and goals which aids in finding mutually beneficial solutions.
Creating an opportunity for the mediator to manage expectations for the mediation process by explaining their role as a neutral facilitator and to provide helpful guidelines for the parties engaging in the mediation.

It is important for the individuals taking part in the caucus to consider what information they are okay with sharing with the other party and disclosing their confidentiality preferences to the mediator prior to the caucus taking place.

Subsequent caucuses can take place at any stage of the mediation after an initial caucus or after a joint session with both parties has occurred. A subsequent caucus can take place for a multitude of reasons including:

When there is a specific issue one party wants to privately discus with the mediator.
When there is a deadlock in negotiations.
To work through settlement options and/or concerns.
To further explore new solutions to the dispute or the consequences of the solutions proposed in the joint sessions.
To address concerns with the other party’s conduct during joint sessions that is impeding finding a mutually beneficial resolution.
When there is a new issue that impacts the dispute.
To discuss pursuing a new negotiation technique in a later joint session.

While some issues and conversations are better suited to a private caucus setting, minimizing joint sessions of both parties actively engaging in finding a solution can enhance feelings of distrust between adversaries. Therefore, as the goal of mediation is for the parties to come to a mutually beneficial resolution, it is critical for the parties to build trust through communication in joint sessions to mitigate this potential issue arising from private caucuses.

To read how Castaybert PLLC can assist you with mediation, click here.

December 20, 2023

On September 14, 2023, Governor Kathy Hochul signed Assembly Bill 836 (A836) into law, restricting New York employers, including asset managers, access to prospective or current employees’ personal, private social media accounts. The law aims to protect employee privacy and prevents employers from taking adverse actions against individuals who refuse to provide such access. An earlier post discusses the key changes under the new law in more detail.

For asset managers, of particular concern is the potential conflict between A836 and the Securities and Exchange Commission’s (SEC) enforcement efforts focused on “off channel” business communications. The SEC has settled actions with several registrants for failing to retain business communications made through alternative methods, including text messages and electronic messaging applications. The SEC asserts such failures could be in breach of recordkeeping requirements under federal securities law. Because A836 restricts employers from requesting access to employee personal accounts, it raises the question of how asset managers can comply with both the SEC’s recordkeeping rules and the new New York law.

Compliance with the SEC’s rules and A836 is possible because of A836’s limited scope and its exceptions related to regulatory compliance. First, A836 applies only to personal accounts used “exclusively for personal purposes,” excluding accounts for business or mixed-use purposes. The law also expressly exempts employer-provisioned accounts used for business purposes if the employee was informed of the employer’s right to access. Second, the law does not restrict employers from complying with duties “to monitor or retain employee communications established under federal law or by a self regulatory organization,” including the SEC’s recordkeeping rules. Other exemptions, such as publicly available information and voluntary provision of access information for misconduct investigations, may also apply to data collection by asset managers.

Asset managers should carefully design and assess their compliance programs to navigate the potential tension between A836 and SEC rules. It is advisable that asset managers:

Ensure that employees receive notice that employers may need access to personal accounts also used for business purposes;
Act cautiously if an employee refuses to participate in a retention program applying to personal accounts to comply with A836’s prohibitions on certain adverse employment actions resulting from a refusal to grant access to purely personal accounts; and
Understand exemptions and establish clear protocols to prevent inadvertent access to personal communications during reviews.

To read how Castaybert PLLC can assist you with employment law matters, click here.

November 29, 2023

In a recent article, ProPublica unveils its Claim File Helper, a new tool to help you find out why your health insurer denied your claim. Under federal law, most people in the U.S. facing a denial have the right to request their claim file from their insurer. A claim file is the information your health insurer uses to decide whether to pay for medical care. This includes documents explaining the reasons your insurer denied your claim. With this information, providers and patients can appeal to get denials reversed. For readers interested in learning more about filing a claim request, ProPublica’s useful guide explains in further detail what a claim file is, why to request one and how the claim file request process works. To make the request process easier, you can use ProPublica’s tool to generate customized letters to send to your insurer and request your claim file.

To read how CASTAYBERT PLLC can assist you with insurance recovery matters, click here.