(2012/5773)

This week we conclude our series on financial litigation in Beit Din. We have highlighted some basic points about Beit Din that every Jew should find helpful. In an effort to enhance comprehension, last week we introduced a fictional case and this week we will explain how a Beit Din could resolve this situation.

In order to make matters simpler, we will forego our usual copious citations to the sources of the issues we discuss. Many sources for these issues appear in the second volume of Gray Matter where commercial litigation in Beit Din is discussed at great length. We will continue our presentation of seven introductory concepts that are essential for understanding how contemporary Batei Din function.

Our Fictional Case

The following dispute was brought to a Beit Din in Northern California in the winter of 2012. A musician hired a website designer (both of whom live in San Francisco) to help sell twelve of his recordings on the internet. The musician engaged the website designer to perform three tasks – edit the recordings, post them to his website, and add e-commerce capability to his website. In testimony before the Beit Din, the musician and website designer had no disagreement about this point.

They did, however, sharply disagree about the terms of payment. The plaintiff (the website designer) claimed he was hired to work for $120 per hour and that he worked for 200 hours to complete the assigned tasks. Thus, he claimed that he was owed $24,000. The defendant (the musician) claimed that the agreement was to pay 25% of the proceeds from the sale of the recordings. The defendant stated that he received a total of $400 for the recordings. Thus, he claimed that he owed only $100. The terms of payment were not recorded in a document nor were there any witnesses to testify what the parties agreed to pay.

Resolution According to Pure Din

If this case were to be resolved according to pure Din, strict Halachah, a Beit Din would obligate the musician to pay only $100. Beit Din would not obligate him to pay any more money, since there is no evidence that he owes anything above this amount. However, Beit Din would require the musician to take an oath that he owes no more than $100 (a Shevu’at Modeh BeMiktzat, as explained in last week’s issue). Nonetheless, as we noted in our previous issue, pure Din is rarely applied in contemporary Batei Din.

Resolution According to Pesharah Kerovah LeDin

We also noted last week that Pesharah Kerovah LeDin, a blend of pure Pesharah and Din, is the preferred method of conflict-resolution in Beit Din. In our fictional case, the litigants signed a Shetar Beirurin (binding arbitration agreement) in which they agreed that the Beit Din should adjudicate their dispute in a manner of Pesharah Kerovah LeDin.

Many Batei Din follow Rav Kook’s recommended course of how to arrive at a ruling in the manner of Pesharah Kerovah LeDin. The Beit Din first determines how to resolve the matter in accordance with pure Halachah. Then it considers the equities of the situation. In this situation, the website designer performed a considerable amount of work for the musician and thus fairness would dictate that he be paid considerably more than $100 for his efforts. We reemphasize that which we noted last week, that when Dayanim apply Pesharah Kerovah LeDin or Pesharah, they are acting well within their Torah mandate and not outside the boundaries of Halachic dispute resolution.

In this case a Beit Din could apply the Halachic manner of resolving of a somewhat similar, albeit not identical, situation. The Shach (Choshen Mishpat 333:44) and Ketzot HaChoshen (331:3) address a situation in which one hired a professional to perform a task related to his profession but did not specify the wages. Halachah assumes that professionals do not work for free unless they explicitly state that they are doing so and thus in the usual situation the professional must be compensated. However, since a wage was not specified the Shach and Ketzot rule that the employer pays only the lowest amount paid for such work in the locale in which it was performed. We cannot assume that the employer would have hired someone to work for more than the lowest rate in his area.

We must stress that the case of the Shach and Ketzot is not identical to the fictional case we are presenting. In our case the parties specified a wage but disagreed as to what was agreed to. Nonetheless, a Beit Din could apply this somewhat analogous case, since when there is a dispute as to the agreed wage it is as if no wage was agreed upon. Moreover, compensating the musician in accordance with the lowest amount paid for such work in his area is far more equitable than giving him only $100 for his time, efforts, and talent.

A Beit Din would have to consider in such a case as to what is the “locale” in such a situation. Such work could have been farmed out to anywhere in the world. For example, the musician could have hired people in parts of the world such as India, where they receive far lower wages than what is paid in the United States for performance of such tasks. A Beit Din would have to decide whether the payment should be the minimum paid for such work in Northern California or anywhere in the world.

A Beit Din would rule that the wage is determined by the lowest fee charged in Northern California since it is clear that the musician was interested in hiring someone who resides locally and not someone who lives on the other side of the globe. There are distinct advantages to working with someone who lives nearby and it is obvious that the musician was interested in these advantages since he in fact hired someone who lives close to him.

The Beit Din in our fictional case consulted with five experts and each reported that $5,000 was the minimal amount paid for such work in Northern California in 2012. Thus, the Beit Din obligated the musician to pay $5,000 in accordance with a blend of Pesharah and Din. In addition, the Shevu’at Modeh BeMiktzat which he was obligated to take according to strict Din was redeemed in a reasonable and fair manner in accordance with the contemporary Beit Din practice of Pidyon Shevu’ah (discussed last week).

Interestingly, in our fictional situation, the musician insisted on taking a Shevu’ah (oath) to bolster his claim and excuse him from paying more than $100. The Beit Din, however, declined to administer a Shevu’ah in accordance with contemporary practice.

Resolution According to Pure Pesharah

If the Beit Din were to have decided this issue based on pure Pesharah the Beit Din might have awarded compensation to the website designer in accordance with the average wage paid in Northern California. Thus, had the parties agreed to Pesharah, the website designer would have been granted another $1,000. Pesharah Kerovah LeDin, however, demands the Beit Din to remain near the bounds of Din which calls for paying only the lowest wage, in a somewhat similar situation.

Lessons to Learn from the Fictional Case

Had the parties to our fictional Din Torah committed their agreement to writing, the dispute would not have emerged from their interaction. In fact, the Gemara (Bava Metzi’a 75b) urges loans to be issued in writing and before witnesses to avoid problems. Interestingly, a very experienced Dayan, Rav Chaim Cohen, once commented that Dinei Torah usually arise amongst people who are not organized in their affairs and expose to themselves ambiguity created by a lack of clarity in their business dealings. Carefully clarifying the terms of a business interaction greatly reduces the likelihood of dispute and the need for litigation.

Another lesson is that the litigants in our case should have settled their dispute amongst themselves without resorting to Beit Din resolution. The parties in our fictional case were fighting bitterly over this matter and each side hired attorneys to represent them in Beit Din. In addition, a full Beit Din of three Dayanim was absolutely necessary in this hotly contested situation. Had the musician offered to give the website designer $7,500 and had the website designer agreed to accept payment of even $2,500, they would have each saved money considering the costs of their lawyers and the costs of the Dayanim.

One wonders what psychological forces drive people to pursue litigation even though they would save money if they compromise. It is possible that the mistake is the pursuit of victory rather than fairness. However, this is usually a counterproductive activity since in most situations it is in the interest of both parties to settle their differences amongst themselves without having to pay lawyers and Dayanim. One should also consider the psychological costs of the stress and time that is expended in the course of the pursuit of an intense litigation. The health benefits of settling a dispute should not be dismissed as trivial.

Conclusion

In our fictional case, the plaintiff acted correctly and went to civil court to confirm the Beit Din’s award. The civil court, seeing the reasoned decision offered by the Beit Din (see our discussion of this issue in Gray Matter volume three) and recognizing its fairness, upheld the rabbinic court award. The parties learned their lessons and took care to record their business transactions in writing and sought to settle any disputes they had without resorting to litigation.