Deal or No Deal

The game show "Deal or No Deal" at first seems incredibly cheesy and simple-minded, but in fact can be seen as a fairly sophisticated experiment in the psychology of decision-making. In addition to serving as a psychology experiment, the show also makes a useful analogy to settlement negotiations.

There is some discussion of the show in the book How We Decide, by Jonah Lehrer. Lehrer discusses how the emotional part of the brain complicates what should be a simple rational calculation of the average value of the remaining briefcases vs. the offer by the "bank." One example went something like this: a contestant was offered about $110,000 for a briefcase which could have had a value of either $10 or $5000 or $10,000 or $500,000. The contestant rejected the offer, based on the not-entirely irrational hope (odds were 3 out of 4 in his favor) that one of the low-value briefcases would be eliminated in the next round, and the bank would then increase the offer. What was interesting was that after the next round, when the $500,000 case was sadly eliminated, the contestant could not bring himself to accept any of the bank's subsequent offers, even though the bank was offering much more than the average of the remaining cases. His mind was instead completely focused on the "loss" of $100,000 he had just suffered.

Parties do not act rationally in settlement negotiations either. They bring a lot of considerations to the table that have little to do with the actual options available to them, and these considerations must be addressed before they can make an intelligent settlement decision. Plaintiffs tend to focus on the best case scenario. They discount the cost of getting to trial, and the possibility of getting less than they feel they deserve. Defendants tend to think that any amount paid to the plaintiff is more than the plaintiff deserves. So the plaintiff might think that the amount in his "case" should be $1 million, while the defendant thinks that the amount in the case should be zero. Neither party correctly perceives the values and the odds of the other possible cases.

The process of mediation is designed to enable parties to correctly assess the probabilities of all possible outcomes, so as to enable both parties to achieve a result that is better than the costs and risks of trial. I don't agree with those mediators who say that the test of a good settlement is that it should make both sides equally unhappy. A good settlement should make the parties as happy and relieved as the game show contestant who is jumping up and down with excitement at the six figure offer made by the bank. The reason that contestant is so satisfied is that he finally understands that while his case might be worth $1 million, there is an equally good chance that his case is actually worth almost nothing. The only unsatisfying part of settling a lawsuit is that, unlike the game show, the participants in the lawsuit never get to find out what was in their case.

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The Century Plaza Hotel

We have reached that point in history when we must start thinking about 1960's architecture as historic. The difficulty this presents is that we also think of 1960's architecture as ugly and shoddy. Much of it was not built to last, and much of it should probably be torn down, and good riddance to it. But the 60's era still produced some memorable works. Some are monumental despite being somewhat bland (e.g., the downtown Music Center); some are fun and whimsical (coffee shops and fast food restaurants); and some spectacular in their "space age" beauty (think of the LAX Theme Building, or a number of cliff-hanging houses). I was active in representing the Los Angeles Conservancy in the fight to save the Cinerama Dome, a unique and fabulous 1960's structure, and as a result, that building is now the centerpiece of a thriving, state of the art, theatre complex.

The current owners of the Century Plaza Hotel, another iconic 1960's masterpiece, are now considering tearing it down and replacing it with two new towers. (Click on the title of this post for a link to the Los Angeles Conservancy issues page discussing the threat to this piece of history.) Designed by the same architect who designed the World Trade Center towers and LA's own twin towers across the street from the hotel, here is a building that symbolizes an era, that stands as one of the centerpieces of an important 1960's new downtown, Century City, and that hosted numerous important events, including being thought of as Ronald Reagan's "Western White House." Not only that, the structure, in contrast to much 1960's architecture, is undeniably beautiful. If we are thoughtless enough to allow this landmark to be torn down, we would be destroying yet another prominent marker of our time and place.

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Fair Pay

Trying to explain the significance of the Lilly Ledbetter Fair Pay Act passed by Congress this past week made me realize there must still be quite a bit of confusion out there about the meaning of this legislation. Most informed people seem to know it was passed to overturn a recent Supreme Court decision that denied a claim by a female employee that she was not paid as well as her male counterparts. Less well known is that the Supreme Court case was based on an interpretation of the statute of limitations as it applies in statutory sex discrimination cases under Title VII of the Civil Rights Act of 1964. More specifically, the issue was whether the employer's act of discrimination was the negative evaluations Lilly Ledbetter received in the past (which she had proved resulted in part from discrimination). These evaluations caused her to receive lower pay than similarly-situated men. Alternatively, the act of discrimination could be viewed as the ongoing practice of paying her less than those men, i.e., as ongoing discriminatory treatment. The Supreme Court held that it was the former, and therefore her claim was barred because it was brought outside the limitations period applicable to the act of discrimination at issue.



It is interesting that this issue was never resolved at the Supreme Court level before 2007, even though it has potentially been around since 1964. That suggests that the problem confronted by Ledbetter, while significant, does not arise that often. In Ledbetter's case, it may have arisen because her case was only allowed to proceed under Title VII instead of the Equal Pay Act, which would ordinarily provide a remedy for pay disparities based on sex. What is also interesting is that this case, even though its effect seems quite limited, became something of a cause celebre. The new Congress and the new administration made it one of their first priorities to reverse this case. That suggests that the new Congress, while interested in broader civil rights enforcement, is also interested in asserting its power and sending a sharp message to the Supreme Court. No more messing around with commonly-accepted interpretations of legislation in a way that seems to defeat their remedial purposes! The Supreme Court can now expect to be slapped down whenever that occurs again.

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