What’s the Verdict?

How Are Virtual Trials Working, and Are They Here to Stay?

Mark P. Scheer and Joe L. Hogan | CLM

“You’re on mute, your honor.” If Black’s Law Dictionary held a “Phrase of the Year” contest for the last 12 months, that would be our nomination. Like most attorneys with active trial practices, when COVID-19 hit our region, we had a number of cases postured for trial. Unlike most attorneys, fortune and circumstance led us to several “virtual verdicts”—cases tried from voir dire to verdict completely virtually.

After trying one of the first virtual jury trials in the nation, we presented and spoke with local and national bar groups, claims professionals, and groups of judges about our experiences. In doing so, we have a unique perspective on the virtual trial: What it looks like, its pros and cons, and whether it will survive the end of the pandemic.

The Virtual Trial—How Did it Happen?

One of the first virtual jury trials in the country was conducted by Judge Thomas Zilly in the Federal District Court for the Western District of Washington in September 2020. The case had unique factors favoring a virtual trial, including an elderly plaintiff who might not have been able to survive the end of the pandemic for a trial. The case also had many out-of-state experts and witnesses who probably would have testified virtually anyway.

Since then, the Western District of Washington has been a leader in conducting virtual Zoom trials both by bench and by jury. As of July 2021, the Western District has held 26 fully virtual trials, with more than half of them tried with a jury. Some of the reasons cited in favor of virtual trials include the cost and time savings of allowing jurors to sit at home rather than travel to a city (especially for distant counties that are part of the federal district), as well as convenience for court and counsel. All of it was necessitated by COVID-19, of course, but the arguments are advanced for proceeding in this fashion in the future.

State courts in Washington also joined in the experiment. King County, which is home to Seattle and Bellevue, was a leader in setting protocols for virtual jury trials. In December 2020, we participated in one of the first fully virtual jury trials. Every aspect of trial was conducted via videoconference, including jury selection, presentation of evidence and exhibits, closing and deliberations, and entry of verdict. Jurors attended via videoconference from their respective homes. Since then, we have conducted four fully virtual trials under similar circumstances.

Virtual trials have been the subject of much debate, and considerable motions practice. This article is too short to go into the details on the topic of legal challenges to virtual trials, but Federal District Judge Marsha Pechman, in Goldstine v. FedEx Freight, Inc., 2021 U.S. Dist. LEXIS 46478 (W.D. Wa. Mar. 11, 2021), has issued a ruling clarifying the constitutional issues surrounding (and allowing) fully virtual trials. State trial court judges issued similar rulings in favor of holding a virtual trial.

What’s Different?

When we speak about virtual trials, the most common question we get is, “Who does it favor—plaintiff or defense?” It is also our favorite question to ask audiences because everyone disagrees, and it always creates a discussion about trial tactics and strategy. If you are looking for our answer, you might be disappointed, since our answer is usually—drumroll please—“it depends.”

In our experience, voir dire is the part of the trial affected most by the virtual format. Of course, we are biased; we believe voir dire is the most important part of trial. In King County, potential jurors were asked to complete a lengthy questionnaire given to counsel in an Excel format the night before voir dire. Potential jurors were broken into groups of 15 to 25. Each panel was then examined separately. This is a huge change from normal practice in which all potential jurors would be examined at once in the courtroom.

In a virtual format, the attorneys essentially repeat their voir dire for each panel—sometimes up to five or six panels—until there are enough qualified jurors from which to select the jury. Jury selection did not take more time than the “normal” method, but it is a decidedly different process. Smart attorneys reacted to each panel by changing their presentation—anticipating the other’s presentation or abandoning a dull line of questions. Jurors seemed less willing to react to each other’s responses, but were no less willing to be candid and open in responses.

Another major difference is presentation of exhibits. All attorneys are becoming proficient at introducing exhibits electronically and virtually in depositions, but it is a very different thing when it comes to a virtual trial. Gone are the days of excellent (and vastly enlarged) demonstrative exhibits, such as blow-ups of testimony and medical records. Instead, we now have pre-marked electronic copies that can be referenced and shown on the screen, and on command (after admission by the judge, of course). This strips much of the theater away from exhibits. Hitting “screen share” is not as dramatic as waiving the report in front of the witness or slamming a heavy stack of records on the table. The upside is that virtual jurors can review exhibits whenever they want, and every juror has electronic access to the exhibits (at least in federal court).

Addressing the Negatives

As for the negatives, there are several—and this list is not exhaustive. Being inclusive to all demographics is a major concern. Some of our objections to virtual trials are that they may disadvantage, and even preclude, those who are less likely to have access to the internet and a web camera.

Yet, this topic is being addressed by the courts. We have heard proposals for loaning iPads to jurors or setting up remote juror rooms at the courthouse or a library. All of this might be a solution in the future. Time will tell if courts can get it right. From our conversations with both federal and state judges, we know that this is one issue that is on the forefront of many jurists’ minds.

Another negative is the loss of the grandeur, gravitas, and “significance” of attending a trial in an actual courthouse, with the solemn and reverent responsibility that goes with that process. Common sense suggests jurors and witnesses might act differently in the marbled halls of a courthouse than when sitting on their couch holding a laptop.

On the other hand, some judges believe that virtual proceedings will be able to deliver justice to those who might otherwise be preempted from a trial due to location, age, finances, or other circumstances. In our minds, there is no question that a virtual proceeding could level the playing field by decreasing the cost of bringing witnesses and parties to a courtroom—especially if the courtroom is far away.

Positive Perceptions

On the positive side, jurors seem to love virtual trials. Many jurors commented that the virtual format helped them manage the difficulty of taking time off for jury duty. We know many jurors “alt-tab’ed” from the virtual trial to work emails as soon as the judge sent them to their virtual jurors’ room. Others used breaks to check in on children who themselves were attending a virtual classroom.

Initially, we were concerned that jurors would drift off or watch Netflix on a second screen (the former is not unheard of, even in live trials). We were pleasantly surprised that this did not occur in our virtual trials. The credit belongs to the judges, who required jurors to have their cameras on and took the added responsibility of monitoring jurors for inattention or napping. The best virtual judges also made sure that no one else was in the room with a juror during a presentation. This helped narrow the gap in formality between a normal and virtual trial.

There are too many other variables to cover all the pros and cons of fully virtual jury trials, but anybody who has tried or watched a trial can easily make a list. Can you tell if someone is telling the truth or lying on screen? Can you do so better or worse than if they are in person, but farther away? Remember, anybody speaking during a virtual trial will “fill up” the screen for the jurors, as they are supposed to be watching in speaker mode, not gallery mode.

From a true trial lawyer’s perspective, virtual trials do not encompass the full theatrical opportunity that an in-person trial affords. Hand gestures are all but gone, and there is no more pacing the courtroom or using the space of a courtroom in a strategic manner for cross-examination. Is this necessarily a bad thing? Trials have evolved constantly over the years, but one thing has stayed the same: True trial attorneys have found ways to use the procedures and circumstances to tell their clients’ stories. A move to virtual trials doesn’t change that.

What Happens Next?

You would not be alone if you thought that ending COVID-19 protocols would see the end of the virtual trial. We believe otherwise. As previously discussed, there are real benefits to jurors. If using a virtual trial increases juror participation, then many jurisdictions will consider it.

        Additionally, jurisdictions that have conducted virtual trials have spent resources in the form of time and money to develop the capability. Those jurisdictions may want to reap the benefits of those investments. Clients and claims handlers may enjoy the benefit of attending trials without having to sit in a courtroom (and rely on spotty courthouse Wi-Fi to catch up on emails).

The biggest factor behind virtual trials may have nothing to do with litigation. We now live in a virtual world. Increasingly, everyone is more accustomed to remote work, virtual meetings, and videoconferencing. In the litigation world, virtual depositions, virtual mediations, and virtual hearings have become commonplace. Law can be slow to react to social change; to some extent that is with good reason. But law cannot escape social change forever.

That raises the question: Under what circumstances should courts allow or require virtual trials once the pandemic has ended? Our view has evolved.

First, courts should allow virtual trials where the court has the capacity and where the parties stipulate to the procedure. We envision a spectrum of virtual trials—on one end, only voir dire is held by videoconference; on the other end, the entire trial is held virtually. 

Second, we see a role for virtual trials in helping rid overburdened courts by expediting lower-stakes lawsuits. Cases with damages under a certain threshold could be required to be held virtually. If any party disagrees with the result and thinks that they would do better in person, then they could request a second live trial. To encourage acceptance of a virtual verdict, parties who request a live trial but fail to meaningfully improve their positions would face exposure to attorneys’ fees. This proposal would help move cases to trial but also preserve litigants’ perceived right to have their day in court (in person).

One thing is for certain: Some form of virtual trial practice is here to stay. Courts and jurors have embraced the concept, and despite questions regarding fairness, equity, and full demographic participation in virtual trial process, the efficiency factor is undeniable and the need for virtual hearings and trials to clear the backlog of cases seems inevitable. There is also the prospect of some hybrid proceedings—perhaps virtual jury selection but in-person trial, or some combination of both. With time, good trial attorneys will adapt (and judges will learn to remember to unmute themselves).

Securing and Protecting Home-Field Advantage in Construction Litigation

Christopher Sexton and Lisa Wampler | Cohen Seglias Pallas Greenhall & Furman

In construction litigation, home-field advantage is a concept that arises quite frequently. Certainly, in the sports world where we are used to hearing this term, home-field advantage is a controversial phenomenon. But, in the legal realm, the concept is a bit more intuitive: it is much more cost-effective for a party to send witnesses, perform depositions, and otherwise try a case in a geographically convenient location than it would be to do so elsewhere. Likewise, it can be advantageous to have attorneys and courts that are more familiar with the substantive law, procedures, and judges of their respective “home” jurisdiction.

Large construction disputes often involve geographically diverse parties with multiple contracts and entities involved. As a result, it is not uncommon for issues to arise concerning where a legal action should be filed or which state’s law will apply. It may seem natural to assume that litigation should take place in the same locale as the project at issue, but that is not always the case. Oftentimes, out-of-state parties contractually require other parties to waive that right—understandably, and for the reasons explained above, they want to litigate in a convenient location. That said, it does not always make sense for parties to litigate a dispute in New York City for a project that occurred in Philadelphia simply because a contractor required that venue in its contract.

State legislatures have recognized that issue and, in response, have enacted prompt payment statutes. Among other things, prompt payment statutes in a number of jurisdictions invalidate contract terms that require disputes on in-state projects to be litigated in other states. That certainly holds true in the Commonwealth of Pennsylvania, which has a private prompt pay statute known as the Contractor and Subcontractor Payment Act (CASPA) and a public prompt pay statute in the Commonwealth Procurement Code. Both of these statutes require that all disputes arising out of construction projects performed in the Commonwealth be litigated in Pennsylvania and that Pennsylvania law applies.

Although those may seem like simple and straightforward rules, like many legal principles, there are pitfalls involved in their application. In actions brought in Pennsylvania at the state-court level, the statutory language of CASPA or the Procurement Code controls. If litigation arises in connection with an in-state construction project, and one party asserts that the parties contractually agreed to litigate the matter outside of the Commonwealth, such a contractual provision will be held unenforceable as against statutory law and will not be given effect. In essence, the action will stay with that state court and the dispute will be litigated in Pennsylvania.

But, in actions brought in or removed to federal court, the analysis changes in a major way. As some brief background information, federal courts differentiate between substantive law and procedural law for purposes of determining what law to apply to a given case. Typically, unless a federal statute is involved, a federal court must apply state substantive law. An example of a substantive law would be state law on fraud, which may vary widely in composition depending on the jurisdiction. The law on fraud in Pennsylvania may differ from the law on fraud in New York. However, when it comes to procedural questions in federal court, federal law controls. This concept, known to keep first-year law students up at night, is called the “Erie Doctrine.”

As that applies here, it is well-settled that forum selection and choice of law issues are not substantive in nature; rather, they govern the procedure that litigation will follow. Federal law views such contractual provisions favorably and, absent extraordinary circumstances, federal courts will give such provisions full effect. As a result, state contractor payment statutes such as CASPA or the Procurement Code, which prohibit certain forum selection clauses, are in direct conflict with federal procedural law. In other words, federal law is in favor of these provisions, while state prompt payment statutes often prohibit these provisions.

Though the Erie Doctrine may seem unfair or something that was not contemplated by the contracting parties, it is grounded in the Constitution’s Supremacy Clause. Federal law is the “supreme Law of the Land,” and, as such, takes priority over any conflicting state laws, including state-enacted prompt payment statutes. Thus, if litigation is filed in or removed to federal court in connection with an in-state construction project, and the parties agreed to litigate the matter elsewhere, absent extraordinary circumstances, such a contractual provision will be enforced and neither CASPA nor the Procurement Code will have any effect. This is likely the case with other state prompt payment statutes as well.

This is an important issue in construction litigation, and something that contractors and subcontractors should be cognizant of. As detailed above, it is much more difficult and costly for a party to litigate in a far-away jurisdiction than it would be in a convenient location. Contractual language and even state law will not always be applied in the way it is written and it can substantially impact bargaining power during the course of a dispute. If you want to hang on to that home-field advantage in Pennsylvania, contractors and subcontractors alike should insist that their agreements either specify Pennsylvania or the place where the project is located as the jurisdiction for litigation over any disputes.

Yet ANOTHER Reminder to Always Respond

Christopher G. Hill | Construction Law Musings

You would think I wouldn’t have to discuss the absolute need to respond to any served pleadings, particularly after some of the prior examples of what can happen if you fail to respond.  Of course, I wouldn’t be starting a post like this if those that were sued contacted an experienced attorney in a timely fashion and followed this advice.

Yet another example of the disastrous results that can occur simply from failing to file responsive pleadings occurred last year in the Eastern District of Virginia federal court in Alexandria, VA.  In Pro-Telligent, LLC v. Amex Int’l, Inc. the Court considered a claim for breach of contract (among other causes of action) by Pro-Telligent against Amex.  The operative facts are that Pro-Telligent was a subcontractor to Amex that claimed it was unpaid in the amount of $279,660.27, its Complaint was served on January 7, 2021, and Amex did not respond within the required 21-day window.  The Court then held a hearing on February 28, 2020, regarding the validity of the Clerk of Court’s entry of default per the rules of court.

After a fully noticed hearing, the Court determined that (1) Amex was properly served, (2) that Amex failed to respond in a timely fashion, and (3) that Amex had full notice of the default judgment motion and hearing.  Once these three facts were determined, the remainder of the opinion was practically inevitable.  The magistrate recommended liability on all counts.  The magistrate further found that Amex was liable for all damages requested ($267,660.27) but did not award attorney fees because the contract between the parties did not allow for such an award.  All of this was without the ability for Amex to defend itself due to the lack of a response.

On review of the magistrate’s recommendation, the District Court adopted the report and recommendation of the magistrate on all aspects of its findings except that of unjust enrichment (and this count was only denied because of the existence of the written contract).

Did Amex have valid defenses? We may never know because Amex did not respond in a timely fashion.  What is the best way to avoid losing your ability to defend your position?  SHOW UP FOR COURT IN THE FORM OF PLEADINGS.  Why am I capitalizing this answer? Because it is very important.

The takeaway from this and all of the other default judgment-related cases I’ve “mused” about is to always provide a response.  If you do not respond, bad things happen.

Surviving the Construction Law Backlog: Nontraditional Approaches to Resolution

Jeffrey Kozek | Construction Executive

Across the construction industry, COVID-19’s impact has caused a range of problems for contractors and projects—prolonged or intermittent work shutdowns, supply chain delays, pricing increases on materials and funding shortfalls. It has also led to court closures. The legal backlog for claims and disputes means that owners and contractors are facing the option of waiting until the courts are functioning the way they were previously or utilizing alternative approaches to resolution to keep projects and businesses running. 

Though courts across the country reopened to some extent in the latter half of 2020, many state and federal facilities were shut down or working with a limited capability for weeks or months. The closures not only froze the progress of numerous disputes already underway, but caused new schedule, cost and COVID-19-related claims to also be held up in the same backlog that is slowly being addressed under current restricted operations. New safety measures to reduce viral transmission, including reduced usage of courtrooms, restrictions on personnel and increased cleaning and sanitizing measures, have limited the number of cases courts can handle on a daily basis and lengthened legal timelines in ways many parties had not anticipated and cannot afford. 

That many small businesses have continued to struggle financially through the pandemic period further complicates payments and work completions on projects that have been disrupted. Before filing or proceeding with a claim, contractors and construction owners will have to take a harder look at the significance of the claim they’re filing, the likelihood of success and potential for recovery, and the added risks of prolonged litigation. These deliberations are certainly familiar, but their potential outcomes take on a greater significance now. Having to wait longer for discovery and a trial to occur, for a judge to rule on motions or to decide a case, could ultimately determine whether moving forward with litigation should even be considered versus reaching an alternative settlement. 

With parties on all sides looking to recoup the lost time and cost from the pandemic, as well as resolving their prolonged matters in dispute, some parties may opt to instead settle more quickly and for less money. Though nonbinding, dispute resolution options like mediation can offer the chance to reach an agreement without going through arbitration or litigation. After both sides select a neutral mediator or review board, schedule time and prepare statements, they may be able to come to an agreement based on the mediator’s determination. On the other hand, if not satisfied with the nonbinding decision, the matter can still be re-mediated and/or litigated. It’s important to note that while this process is typically quicker than legally binding routes, it is not an overnight answer to resolution either. 

The best option to resolve each project’s disputes will vary as there’s still a lot of uncertainty in the pandemic environment, including how it is impacting options for construction litigation. For better or worse, these delays have already altered how contractors and owners approach contracts and cases. No one yet knows what the new normal looks like, what expectations should be about legal timelines and costs due to the limited operations of the court system, but parties should expect to face similar extended circumstances regarding claims and disputes for the foreseeable future and be prepared to adapt. 

Statutory Offer to Compromise – A Potential Pitfall for CA Contractors, With a Way Out

Ian Williamson | Gordon Rees Scully Mansukhani

A statutory offer to compromise a case is a common tool in litigation in California. Under CCP section 998, a party can make an offer to the opposing party. If that offer is not accepted, the case goes to trial, and the recipient does not do better at trial than the offer, the code imposes penalties. Conversely, if you get a better outcome, the code provides benefits in the form of enhanced costs (notably including the costs of experts). It is a useful tool. However, on its face, the code contemplates that a judgment be entered against the party making payment.

For many entities, this is a non-issue. However, for contractors and professional license holders in California, that judgment can have potentially severe unintended consequences that go far beyond the litigation. Judgments arising from your work can (and in some cases must) be reported to licensing agency. Discipline can result. In addition, bonding companies look negatively at the judgments. Additionally, many bidding packages require the bidder to disclose any job-related judgments. In sum, a contractor whose attorney utilizes a 998 offer can end up with a long-lingering smear on their license and professional reputation.

For years, savvy lawyers have worked around this outcome with terms in the 998 offer that offered a settlement agreement instead of a judgment. This was an accepted practice for years, and then some appellate decisions called it into question. Good news for our licensed clients came from the Third District Court of Appeals in late May. In the case of Arriagarazo v BMW of North America, LLC (to be published, formal citation not yet available), the court specifically and unequivocally approved the offer of a settlement agreement rather than a judgment in an effective 998 offer of compromise.

The parties in the Arriagarazo case still did not get it quite right, but the court gave us a clear road map of what will be acceptable. Any doubt about the effectiveness of a 998 offer that suggests a settlement agreement instead of a judgment should be resolved. Whether other conditions can be imposed is still questionable – but this question is resolved.