Court documents show Miyoko Schinner and the board of the plant-based dairy company she founded have agreed to go through an Alternative Dispute Resolution (ADR) process, although legal experts say it doesn’t necessarily mean that their very public dispute is simmering down.
While Schinner was removed from her post in June 2022, news that she was no longer CEO did not become public until February 2023, when the company issued a press release announcing an ‘executive transition.’
Miyoko’s immediately followed up with a lawsuit* accusing Schinner of “hatching a plot to steal company property, trade secrets, and confidential information“. Schinner responded with a countersuit alleging she was forced out of her own company after complaining to HR about male executives who “openly denigrated women.”
ADR may lead to resolutions that are ‘faster, less expensive, and more creative’
According to documents filed with the US District Court in the Northern District of California on April 27, the warring parties “intend to stipulate to an ADR process.”
An informal, non-binding process in which a neutral person works with the parties and their counsel to help resolve a case without the expense and stress of ongoing litigation, ADR options include mediation, early neutral evaluation, and judicial settlement conferences.
Shuttle diplomacy: ‘A good mediator will almost always keep the parties apart’
Dale Giali, partner at law firm King & Spalding (which is not representing either party), told AFN: “This is a requirement under the court. What the parties are basically saying is we will opt to stipulate to an ADR process instead of discussing it at the case management conference with the assigned judge.”
Of the three ADR options above, he added: “Mediation before a private mediator is by far and away the most popular ADR form for business disputes.”
But that doesn’t mean that all parties sit in the same room together and thrash out their differences, he explained. “It almost assuredly means they sit in separate rooms, and the mediator does shuttle diplomacy, back and forth. And nowadays it’s usually virtual, so the mediator pops into your zoom room and then pops into the other party’s room.”
He added: “A good mediator will almost always keep the parties apart. Whenever the parties get together for opening statements or something like that, it’s almost always a disaster because it takes half the mediation just to overcome the fact that both sides now have bad blood from hearing the other side beat up on them.”
Attorney: ‘99.9% of civil business litigation ends up in a settlement’
So what happens next?
According to Giali, there is almost no chance the case will go to trial. “99.9% of civil business litigation ends up in a settlement. So the question you must ask is, is this in the 0.1%? Any professional gambler would take the odds with the 99.9%.”
The question now is how much more pain and expense the parties are prepared to go through before they reach a settlement, he said.
“Oftentimes, both because they need some cover or they need further information, they’re going to make sure that the litigation proceeds through a few steps. Maybe it’s a motion to dismiss. Maybe it’s a couple of key depositions. Maybe it is getting the other sides’ documents. Maybe it’s just inflicting pain on the other side.
“Usually they need to go through a few steps before they are prepared to settle. If they were ready to settle at the outset, they [Miyoko’s] would have never filed a lawsuit in the first place. And now there’s a cross complaint. Both sides are obviously, for lack of a better word, p***ed off.”
But it’s hard to see the upside of prolonged litigation for either party, particularly the company, he observed: “They don’t want to air their dirty laundry and undermine their brand. It makes very little sense, which goes to show there is just bad blood.”
AFN has contacted Miyoko Schinner and Miyoko’s Creamery for comment. A spokesperson at The Bloom Firm, which is representing Schinner in her countersuit vs Miyoko’s, declined to comment.
*The case is Miyoko’s, PBC v Miyoko Schinner 4:23-cv-00711, filed in the Northern District of California February 16. Schinner is accused of breaching a confidential information and invention assignment agreement she signed in July 2021; violating the Defend Trade Secrets Act; and violating the Uniform Trade Secrets Act.