A PricewaterhouseCoopers Déjà Vu: Mediation, Then Trial, Then Settlement During Trial

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Mediator’s report to the Court

By: Donald L. Swanson

The case is MF Global Holdings LTD. v. PricewaterhouseCoopers LLP, Case No. 14-cv-2197 in the U.S. District Court for the Southern District of New York.  Hon. Victor Marrero is the presiding Judge.

This case concludes by settlement, last week, in the middle of trial.

Claims Asserted

Plaintiff asserts in this lawsuit that PricewaterhouseCoopers, as auditor, failed to detect and report a financial scheme that ruined the business of MF Global.

The case begins on March 28, 2014, with the filing of a Complaint asserting three separate claims against PricewaterhouseCoopers and requesting the following relief: “a money judgment” in amounts “to be determined at trial but not less than,” (i) $1 billion on a professional malpractice claim, (ii) $1 billion on a breach of contract claim, (iii) $10.9 million on an unjust enrichment claim, plus (iv) related costs and expenses, including attorney fees.

Mediation, Trial and Settlement

On February 6, 2017, Judge Marrero reschedules the start of trial from February 13, 2017, to March 6, 2017 (Doc. 136), so the parties can engage in mediation.

The mediation fails to achieve a settlement.  And the mediator’s letter to the Court dated February 21, 2017, (a photo of this letter is above) says:

“I write to inform the Court that the parties have engaged in private mediation.  The mediation was unsuccessful.  At this time, the parties are planning to proceed with trial as scheduled on March 6, 2017.”

Trial begins on March 6, 2017.

On Thursday, March 23, 2017, as trial is still in process, the parties announce a settlement of this lawsuit on undisclosed terms that are to “the mutual satisfaction of the parties.”

Déjà Vu

Last year, PricewaterhouseCoopers is being sued in a State Court in Miami, Florida.

This Florida lawsuit alleges that PricewaterhouseCoopers provided clean audit opinions to a company for six years until that company collapsed, and the lawsuit claims $5.5 billion in damages plus punitives.  This suit is reported to be “the biggest accounting negligence lawsuit ever to go to trial.”

As in MF Global, this lawsuit settles in the middle of trial for a confidential sum that is “to the mutual satisfaction of the parties.”  The settlement occurs on August 26, 2016.

Although I can’t access records in a Florida State Court, I’m confident this Florida case went through mediation before trial began.

Summary

Accordingly, we see a two-in-a-row déjà vu, where PricewaterhouseCoopers settles the same types of cases in the same way: through a mediation that fails to achieve a settlement, then trial begins and progresses for a time, with settlement occurring in the middle of trial.

Fundamental Proposition

I suggest that these two déjà vu cases illustrate a fundamental proposition: that mediation can provide meaningful progress toward a consensual resolution of a lawsuit, even when the settlement comes after mediation concludes and while the parties are battling-it-out in trial.

What do you think about this proposition?

Note: Information in the déjà vu section of this article is from a Financial Times news report dated August 26, 2016..

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