Lest I make it abundantly clear that I have no technical expertise whatsoever, I’ll describe the dispute as one of rules interpretation.  Chevrolet disagrees with a technical ruling made by the IndyCar Series in favor of Honda.  If you want a really good explanation of the technical details around the dispute, check out this story by Speed.com’s Marshall Pruett.

This process (not the dispute itself, but the way it is being handled) is interesting and widely applicable from a legal standpoint.  Here is how it works.

As engine manufacturers competing in the IndyCar Series, Chevrolet and Honda have no doubt signed many agreements and agreed to do many things with and for the Series and the teams competing in the Series.  Part of this agreement inevitably involves abiding by the IndyCar rulebook which contains private dispute resolution procedures.

These types of dispute resolution requirements are in tons of contracts.  Your credit card agreement and the terms you accept when you buy something from Amazon very likely require that you submit to private dispute resolution if you have a problem.

The purpose of this resolution procedure is to avoid court litigation.  Why?  Because litigation in court is really expensive, really laborious and very much public. 

Many private dispute resolution procedures take the shape of what we’ve seen happen with Turbogate thus far:

1.  A period of discussion/private mediation: Although there is no independent confirmation of this in the media, it appears that this may have occurred between the Long Beach Grand Prix and the time that the IndyCar Series officially approved the turbocharger change before the Brazil race.  

2.  First bite at the apple: Chevrolet, Honda and the IndyCar Series had a one-day hearing on this issue, with each one choosing a representative.   The result was confirmation of the Series’ prior ruling against Chevrolet.

 3. Second bite at the apple: Now, Chevrolet is going to a more formal arbitration.  A third party arbitration service is being used, and it’s likely that there are some more formal rules of evidence and procedure than in the first hearing. 

 4. Litigation: After the second appeal, if Chevrolet loses again it might resort to litigation in court.  This would be a tough row to hoe because courts respect arbitration rulings.  The only caveat here is that IndyCar must give Chevrolet “due process” in this matter.  This could mean two things.  First, that IndyCar must follow the dispute resolution procedure set forth in the rulebook to a T which appears to have been done.   Second, and more substantively, if Chevrolet could somehow prove that IndyCar’s initial decision was based on favoritism or otherwise was in bad faith, it might be able to get around a negative arbitration hearing.  Both are very tough arguments.

So there you have it…if you ever want to sue your credit card issuer or airline or change your turbocharger, you will benefit from understanding Turbogate.

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1. Chicago Lawsuits: Anatomy of a Litigation (from a transactional point of view)

The ultimate goal is to use unpaid interns to help the enterprise drive revenue so that the unpaid interns become paid employees.  In the interim, using unpaid interns can open the business up to some serious legal risks. 

The US Department of Labor (as well as the Departments of Labor for every state) follow very strict rules when it comes to using unpaid interns.  The consequence of failing to follow these rules could be fines by governmental authorities or lawsuits by unhappy former interns.

When thinking about using unpaid interns for your business, consider the following:

1. Educate: The primary idea behind unpaid internships is for interns to receive critical on-the-job education and experience.  Make it a priority to educate your interns.  If business is slow in a certain area, build in a case study that allows interns to explore all of the facets of the business.       
2. Provide a good overall experience: This could mean a lot of things.  Maybe it’s a Friday night happy hour or maybe it’s some company swag.  You might help your interns by opening up your network or providing experiences outside of work.  Whatever you decide, boosting intern morale can be your ounce of prevention to avoid needing a pound of cure.
3. Pay interns if you can: By far, the safest way to go with interns is to pay them.  Even paying minimum wage will alleviate all of the potential pitfalls.  If your business can afford to pay, then do it.

The legal risks involved in using unpaid interns are both technical and practical.  There is no perfect answer, but structuring an intern program carefully and actually following the structure devised can mitigate the risk and bring valuable talent in the door.

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1. Piss and Moan Stage: Litigation is begun far before any court filing. Your business receives a nasty letter from someone (or their attorney if they’re really serious) outlining some wrong and demanding some action…and we’re off to the races. Such a letter could begin a several month-long process during which the two sides threaten each other like the Jets and the Sharks …maybe things get resolved at this stage, maybe they don’t.

2. I’m Really Serious Stage: If the problem isn’t solved at the Piss and Moan Stage, then one of the parties files a Complaint and serves it on the other party. I’ll dispell a myth right here: you’re not going to dodge service. Yes, it’s true that if the parties aren’t served with the Complaint, they can’t be dragged into court. Guess what…you’re not the first person to think of this. There are Private Investigators out there who specialize in tracking people down and putting a Complaint in their hands…you can’t avoid it. The Complaint will state some basic facts and legal theories. Note: Anyone can file a complaint and sue another for any reason…whether the suit will be upheld or not is another story, but the mere filing of a complaint really means nothing and does not speak to the merits of the case.

3. Nitpick Stage: After the filing of the complaint, the lawyers metaphorically chase after each other like drugged monkeys with axes. Generally, the fights during this stage are procedural: “You didn’t use 10 point font / You didn’t reply by Monday / etc.” If the complaint has any merit, it will move forward. If not, case closed.

4. I’m for Real Stage: Once it has been determined what meritorious claims the parties have, each side gets into the nitty gritty. The facts underlying each claim are determined. At this stage, just about everything is “find-out-able” (or “discoverable” in legalese). This doesn’t mean that everything that can be found out can be used in court. At this stage, the parties are trying to size up each other’s cases and figure out if they should proceed. The parties may settle here, or they may proceed.

5. Choking Stage: If the parties don’t choose to settle (which occurs about 95% of the time) then it’s full steam ahead to trial. Don’t get me wrong…sometimes proceeding to trial is a smoke and mirrors game in which the parties fake willingness to go to trial but don’t really have the heart for it. But, other times, both sides are pig-headed enough to go for the gusto. This is the point at which each case is laid out…prior to trial. There are no surprises. Each side knows what the other side will do and how they will do it…the wildcard here is the jury and the bet that one side will be victorious. The parties here basically try to choke each other to see who is left standing at the end.

6. Show me the Money Stage: Somebody wins at trial, and the judge orders a money judgment against the losing party (or, for you new-agers “the party that was not victorious”). At this point, the winning party has to try to get money out of the losing party. This is where asset protection planning can really be helpful. The loser can either pony up the dough (or make arrangements for payment) willingly, or he/she/it can try to avoid making payment. If the avoidance route is taken, a whole new set of court procedures begins.

7. I’m Really Tired of this Game Stage: The winner now has to go back to court and have the judge approve orders for the loser’s assets to be discovered…this results in the issuance of a “Citation to Discover” which requires third parties to show the winner what the loser has in terms of assets. The winner would serve these on the bank, stock broker, wife, brother, business partner, etc. of the loser until its clear what the loser has. This can be a never-ending process that can take as long as the litigation itself.

8. Finally…Collection Stage: The winner brings information about the loser’s assets back to court, and the court decides if those assets are subject to “garnishment” (this has nothing to do with sprigs of parsley or tomato rosettes). If assets are subject to garnishment, the court will order the assets seized by the Sheriff or otherwise and sold at public auction or possibly delivered to the winner in satisfaction of the judgment. This process continues until the judgment is paid in full, or the winner gives up trying.

So there you go…litigation in 800 words. Best course of action usually: settle.

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