Lionel and MTH Sign Agreement for Mediation by Erol Gurcan
On January 30, 2007, the attorneys for both Lionel and MTH signed a stipulation (legalese for agreement) agreeing to mediate MTH’s separate trade secrets and patent infringement claims against Lionel. Bankruptcy Judge Burton Lifland "so-ordered" (approved) the stipulation on February 1, 2007. When the parties were last in the bankruptcy court on January 9, 2007, Lionel’s attorney suggested mediation, MTH’s lawyer agreed, and Judge Lifland directed the parties to do it.
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The stipulation names and approves United States Bankruptcy Judge for the Southern District of New York, Cecelia J.Morris as the mediator. It calls for the parties to mediate MTH’s trade secrets case against Lionel. This is the case where a Detroit jury awarded MTH $40.7 million dollars on June 7, 2004. Lionel later filed for bankruptcy and appealed the jury’s verdict. On December 14, 2006, the appeals court vacated the jury’s verdict and remanded the proceeding for another trial.
The stipulation also requires the parties to mediate MTH’s $17.5 million smoke patent infringement claim against Lionel. MTH originally filed a claim with the bankruptcy court in August 2005 concerning this matter. When Lionel attempted to obtain discovery regarding the claim in May 2006, MTH filed a lawsuit on June 12, 2006, to stop the discovery proceedings. Lawyers for both sides then agreed to stay the case until the appeals court decided the trade secrets case, which occurred on December 14. The stay is currently still in effect.
The agreement states the mediation is not binding on the parties. Mediation differs from (binding) arbitration in that the mediator attempts to bring the parties together and resolve their differences. Sometimes it is successful, and sometimes it is not. During an arbitration, an arbitrator acts like a judge, takes testimony, reviews legal documents, listens to the attorney’s arguments, and issues a decision which is binding on the parties. Arbitration is like an informal trial.
The agreement also states upon the completion of mediation, Judge Morris will report to Judge Lifland whether the parties conducted the mediation in good faith.
The stipulation does not state a date, time or location for the mediation. The next date in the Bankruptcy Court is February 15, 2007. At that time, we may have a better idea if the mediation was held, and if was successful or not.
Erol Gurcan
Erol B. Gurcan, an O Gauge industry legal expert, is a regular contributor to OGaugeWatch.com
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