I wrote here that mediations are often preferable to settlement conferences. The mediator is chosen by the parties, while the trial judge who presides over the settlement conference generally is not. Further, the mediator often has more time than the trial judge to devote to the settlement process.

This month’s Forum Magazine published an article by Kristine Meredith and Judge John Judge John F. Herlihy (ret.)Herlihy (recently retired from the bench and now a private judge) that touched on this very topic.  Kristine asked Judge Herlihy, who has 29 years experience on the bench, why the parties should even bother attending a pre-trial settlement conference if the case couldn’t be settled at a mediation.  According to Judge Herlihy, timing can be everything:

As the case gets closer to trial the [likely] outcome becomes clearer.  I often told lawyers that although the case didn’t resolve at mediation, as a trial judge, I had an advantage that the prior mediator did not have.  If the case didn’t resolve when it was in my department for trial, then the next step was to call for the jury panel.  That immediacy had a direct effect on the parties’ and attorneys’ willingness to try one last time to settle.

"Reality Check: A Trial Judge’s Approach to Settling Cases," appears in the May/June issue of Forum Magazine.  The full text is available from the Consumer Attorneys of California

A settlement conference is supervised by the trial judge or by another judge who is assigned to the settlement conference by the court administration. The parties mAviation Accident Mediationeet with the judge informally in the judge’s chambers (his office) and try to resolve the case.  The judge makes no rulings and issues no orders during the conference.  The decision either to settle or to proceed to trial remains with the parties. 

Given the pressure of his court docket, the judge may have only a couple of hours to devote to the settlement conference. Because aviation cases can be complex, that often isn’t enough time.

A mediation is similar to a settlement conference. But instead of the settlement talks being supervised by a judge, in a mediation the talks are supervised by a neutral lawyer or a retired judge.  The parties pay the mediator for his time.  The mediator, unlike a sitting judge, has no docket pressures and may spend several days working with the parties if that appears constructive. That’s one reason why a mediation may be more likely than a settlement conference to resolve an aviation accident case.

Another reason a mediation may be more effective is that, while a settlement judge is assigned to the case, a mediator is selected by the parties. Though the parties to an aviation lawsuit can choose any mediator they want, they usually select one who is knowledgeable about airplane or helicopter accidents or, depending on the case, airline mass disasters.  The mediator may even be a pilot.  Sometimes the parties select a mediator because he or she has experience — as either a lawyer or judge — in cases involving the type of burn injuries or traumatic brain injuries that are common in aviation accidents. The expertise means that the mediator is "on the same page" with the parties as well as with any insurers who may be involved.  

An aviation insurance company must fairly compensate those injured due to the negligence of one of its policy holders.  Of course, in most cases, the insurance company’s  financial responsibility is limited to the dollar limits of the insurance policy. 

But not always. 

When an insurance company unreasonably forces an aviation accident victim to take his case to trial instead of paying the policy limits to settle out of court, the rules change.  In that situation, the insurance company may be required to pay whatever amount the jury decides would fairly compensate the injured person, even if that amount is more than the limits of the policy.  That is because an insurance company who unreasonably refuses to pay its policy limits to settle a case is considered to be acting in "bad faith." 

Here’s an example of how California insurance law works. Let’s say that a passenger is injured in an aircraft crash, and that the crash was caused by the pilot’s negligence.  Let’s also say that the passenger has medical bills and lost wages or more than $250,000, but that the limit of the pilot’s insurance policy is only $100,000.  If the injured passenger demands  from the pilot’s insurance company $100,000 to settle out of court, the insurance company should pay it.  After all, it would be unreasonable not to pay that amount given the harm  the passenger has suffered.  But what if the insurance company decides to play "hard ball" and force the case to trial?  If a jury renders a verdict against the pilot of, say, $500,000, the insurance company may be required to pay the entire amount.  It is no defense that its policy was for only $100,000.  

This doesn’t mean that the insurance company must automatically fork over the policy limits to the accident victim in every case. Rather, the insurance company must pay the limits to settle only when it would be unreasonable not to.  In short,  if the insurance company decides to play hardball with the injured party, then the insurance company can be held financially responsible for the consequences.