By John MassonJuly 24, 2012
A couple of dozen Michigan Law Summer Starters got a practical lesson in handling a civil matter this week when Prof. Phil Frost shared a case from his days as a litigator.
The case was presented at one of the law school's periodic brown bag lunches, typically held in an inner courtyard in Hutchins Hall.
"It's never too early to start introducing new students to the everyday practice of law," said Assistant Dean for Student Affairs David Baum, who introduced Frost to the students by describing Frost's more than 20 years of practice with the prominent Detroit-based firm Dickinson Wright.
The example involved a dispute between a tool distributor and one of its dealers, said Frost, the director of the Law School's Legal Practice Program and a 1973 Michigan Law graduate.
Dealer disputes can be ticklish things, Frost added, especially in light of their antitrust implications. Distributors can't discriminate between their dealers, for example, by giving one preferential pricing. Similarly, dealers can't communicate amongst themselves to set prices, and generally have to be able to document why they've provided large discounts to individual customers.
Most dealership agreements, Frost added, contain provisions that allow for audits, just to keep both sides honest.
In the case Frost was referring to, the distributor and the dealer got along well for about five years. Then what had been a steady level of about 30 percent of the dealer's customers receiving a discount suddenly jumped to about 75 percent of customers. Something wasn't right, Frost's client decided, and they asked for an audit.
The dealer stalled, Frost said. First, there was a computer crash. Then there was a fire.
"They finally produced a few documents, but they appeared altered," Frost said.
Ultimately, about a year after the initial request, Frost's clients got a letter that refused the audit and accused the distributor of violating antitrust law. The case appeared to be heading for court, despite a provision in the dealer agreement that called for arbitration.
In the end, Frost said, the case went to arbitration—which for the defendants is often preferable to a trial, he added, because those hearing the case have professional expertise and tend to be less volatile than a jury.
The day the case was heard, in New York City, a blizzard practically shut down the city.
"Believe me, it was a great opportunity to develop rapport with your client," he said of the weather conditions.
In the end, Frost said, the arbitrator sided with his client. In addition to a cash payment and return of unsold inventory, the distributor could savor a victory.
Frost fished inside his bag and fished out a small Lucite block—one last practical tip for the students. Suspended inside the block was a tiny piece of paper—a copy of the arbitrator's decision.
"To help the client remember which lawyers to call next time."
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