THE ROLE OF MEDIATORS AND “PARTICIPANT” CONFIDENTIALITY
Mediation places decision-making in the hands of the parties rather than with the mediator, a proposition strongly reaffirmed by Travelers Casualty and Surety Company, et al. v. Superior Court (2005) 126 Cal.App.4th 1131(Travelers Casualty).
In the Roman Catholic Diocese of Orange child sex abuse litigation, the Los Angeles Superior Court judge appointed by a stipulated order to mediate the multiple lawsuits, after listening to presentations from the plaintiffs regarding the issue of damages (counsel for the insurers chose not to participate in this part of the mediation), issued a written order setting forth his determination of the reasonable settlement value of the cases.
Other parts of the order precluded the insurers from declaring a forfeiture of coverage should the Church settle without their consent and allowed the order to be used as evidence of the insurers’ previous bad faith in any future court proceedings. On a petition by the insurers, the appellate court found that the order should be vacated and sealed because it contained binding factual findings, which a mediator can not issue.
Noting that mediation “is essentially a process where a neutral third party who has no authoritative decision-making power intervenes in a dispute to help the disputants voluntarily reach their own mutually acceptable agreement,” Travelers Casualty held that the judge’s order, no matter how well-intended or justified by the insurers’ misconduct, exceeded his authority and rendered the mediation process coercive. At the same time, the appellate court commended the judge for his “creative use of a mini-trial evidentiary proceeding to help him evaluate the worth of the cases” and found nothing “wrong with him sharing his frank assessment with the parties and the insurers.” (At n. 13.) In other words, mediators should focus on the power of persuasion and not coercion.
Travelers Casualty also considered the question whether the insurers’ failure to participate in the valuation hearing provided an exception to Evidence Code section 1119, which denies admissibility to or discovery of anything said or written in connection with a mediation. The court, however, found this issue to be premature because the Church had not raised it in its petition and had also asserted confidentiality over the disputed order. Nonetheless, in dictum, Travelers Casualty did find that Evidence Code section 1121, which states that no report by a mediator may be filed unless “all parties to the mediation” agree, includes all participants (and thereby insurers) in the mediation process and not just the parties.
It is my opinion, when and if the above confidentiality issue should ever be ripe for appeal, that the strong judicial and legislative preference for mediation confidentiality, as expressed in both the case law (see Foxgate Homeowners’ Assn. v. Bramalea California, Inc. (2001) 26 Cal.4th 1 and Rojas v. Superior Court (2004) 33 Cal.4th 407 as well as Travelers Casualty) and the Evidence Code, will result in a holding that the failure of one party or participant to take part in a mediation does not breach the confidentiality of the process as far as that non-cooperating party is concerned.
Judge Michael D. Marcus (Ret.)
Copyright, Michael D. Marcus, March 2005