Posts Tagged ‘mediation confidentiality’

Mediation Message No. 108

MICHAEL D. MARCUS’S MEDIATION MESSAGE NO. 108

CASSEL IS STILL THE LAW

Cassel v. Superior Court (2011) 51 Cal.4th 113 holds that mediation confidentiality includes all communications at or in preparation for mediation between clients and their attorneys and, as a consequence, clients cannot sue their counsel for alleged acts of malpractice committed during mediation. Amis v. Greenberg Traurig LLP (March 18, 2015) B248447; 2015 Cal. App. LEXIS 247 reminds that Cassel is still very much the law regarding the impact of mediation confidentiality.

Amis sued Greenberg Traurig, his attorney, for malpractice after a settlement Amis entered into mediation that fell apart because he was unable to make scheduled settlement payments with the result that the opposing party moved for entry of a stipulated judgment, which caused Amis to declare bankruptcy.

Amis admitted that his alleged damages stemmed entirely from entering into the settlement agreement and that any communications he had with Greenberg Traurig regarding the settlement agreement occurred during mediation. Based on these undisputed facts, the trial court granted summary judgment for the law firm because, it concluded, the mediation confidentiality statutes preclude Amis from proving that his attorney’s acts or omissions caused his damages. Although the appellate court agreed that “[m]ediation confidentiality was never intended to protect attorneys from malpractice claims,” it affirmed the trial court’s order under the compulsion of Cassel and repeated Cassel’s advice that it is the legislature, and not the courts, which must fix this unintended consequence.

The only novel aspect of Amis is it rejected appellant’s attempt to circumvent mediation confidentiality by advancing inferences about his former attorney’s supposed acts or omissions during the underlying mediation. The appellate court reasoned that “To permit such an inference would allow Amis to attempt to accomplish indirectly what the statutes prohibit him from doing directly—namely, proving (Greenberg Traurig) advised him to execute the settlement agreement during the mediation. Further, insofar as there is no statutory exception to mediation confidentiality that permits (the law firm) to rebut the inference by showing what advice it actually gave Amis during mediation, the relevant authorities all counsel against permitting the inference to be drawn.”

Judge Michael D. Marcus (Ret.)
ADR Services, Inc.
1900 Avenue of the Stars, Suite 250
Los Angeles, California 90067
(310) 201-0010

Copyright Michael D. Marcus, March 2015

Mediation Message No. 101

MICHAEL D. MARCUS’S MEDIATION MESSAGE NO. 101

ADMISSIBILITY OF MEDIATION SETTLEMENT AGREEMENTS

In re Marriage of Daly and Oyster (2014) 228 Cal.App.4th 505 is a reminder that settlement agreements at mediation, if they contain the appropriate language, can be admissible in subsequent proceedings, notwithstanding Evidence Code section 1119, subd. (b), which states, in substance, that no writing prepared for, in the course of  or pursuant to a mediation is admissible or subject to discovery.

Daly and Oyster found that a stipulated judgment, entered into at mediation, regarding a marital settlement agreement (MSA), was admissible at a trial to enforce the judgment because it had been signed by the parties and expressed their agreement to be bound by the stipulated judgment. “Here, the parties characterized the stipulated judgment as a ‘marital settlement agreement,’ agreed it would ‘be the operable court judgment with relation to the Stipulated Judgment for Dissolution,’ and agreed the court would ‘reserve[] jurisdiction to supervise the payment of any obligation ordered paid or allocated in this Stipulated Judgment; supervise the execution of any documents required or reasonably necessary to carry out the terms of this Judgment; and supervise the overall enforcement of this Judgment.’” (Id. at p. 511) The above imprecise language, according to the appellate court, provided for the MSA’s admissibility under Evidence Code section 1123 because, in effect, it “reflected the parties’ agreement that the stipulated judgment be subject to disclosure and be enforceable.” (Ibid.) Section 1123 provides, in part, that “A written settlement agreement prepared in the course of, or pursuant to, a mediation, is not made inadmissible, or protected from disclosure, by provisions of this chapter if the agreement is signed by the settling parties and any of the following conditions are satisfied: (a) The agreement provides that it is admissible or subject to disclosure, or words to that effect. (b) The agreement provides that it is enforceable or binding or words to that effect.” (Emphasis added.)

MDM’s helpful hint: A settlement agreement created and executed at mediation by all of the parties (and not just some of them) is admissible at a subsequent proceeding if the agreement provides either that it is admissible or subject to disclosure, or enforceable or binding, or words to that effect. Rather than risk a court fight about their respective intents concerning the prospective admissibility of a mediated agreement, parties should expressly state in the agreement that it is both “admissible or subject to disclosure and enforceable and binding” rather than hope that a court will later find that the agreement’s ambiguous terms “in effect” reflect that intent.

Judge Michael D. Marcus (Ret.)
ADR Services, Inc.
1900 Avenue of the Stars, Suite 250
Los Angeles, California 90067
(310) 201-0010

Copyright Michael D. Marcus, August 2014

Mediation Message No. 69

MEDIATION CONFIDENTIALITY OVERVIEW

Because of the recent Cassell v. Superior Court (2011) 51 Cal.4th 113 decision, it is timely and appropriate to review all of the Supreme Court’s rulings on mediation confidentiality.

Mediators, pursuant to Evidence Code sections 1119 and 1121, may not report attorney misconduct or bad faith to jurists who have the underlying cases on their calendars. (Foxgate Homeowners’ Association, Inc. v. Bramalea California, Inc. (2001) 26 Cal.4th 1.) Foxgate was the first of the Court’s cases which held that mediation confidentiality is to be strictly interpreted.

Mediation confidentiality extends to all writings, including exhibits, prepared for mediation. (Rojas v. Superior Court (2003) 33 Cal.4th 407.) For example, a document made for mediation that summarizes a plaintiff’s damages is protected while a summary of the same damages prepared by a company bookkeeper during the course of the business’s operation is not.

To be enforceable, a mediation settlement must include a “direct statement to the effect that it is enforceable or binding”; in other words, the writing “must directly express the parties’ agreement to be bound by the document they sign.” (Fair v. Bakhtiari (2006) 40 Cal.4th 189.)

A potential due process violation is the only judicially crafted exception to confidentiality in the absence of legislative action. (Simmons v. Ghaderi (2008) 44 Cal.4th 570.)

All mediation discussions are confidential; thus, clients cannot sue their attorneys for anything said or done in or pursuant to mediation, even if no one else was present during that communication or act. (Cassel v. Superior Court, supra, 51 Cal.4th 113.) Again, the Court reminded that only the Legislature can create inroads to mediation confidentiality, the only exception being when strict interpretation would produce an absurd result.

Judge Michael D. Marcus (Ret.)

ADR Services, Inc.

1900 Avenue of the Stars, Suite 250

Los Angeles, California 90067

(310) 201-0010

 

Copyright Michael D. Marcus, May 2011

 

Please visit my website at www.marcusmediation.com for information about my mediation and arbitration background and experience. Copies of my previous Mediation Messages and Arbitration Insights are available by going to the articles link on the website.

 

 

 

Mediation Message No. 68

FACEBOOK AND FEDERAL MEDIATION CONFIDENTIALITY

If you saw “The Social Network,” skip this introduction; if not, and you’ve been hiding in a cave for the last few years, be advised that the Winklevoss twins and a third party sued Mark Zuckerberg, the Facebook founder, for allegedly stealing the concept from them. In turn, Facebook sued the Winklevosses. A California Northern District Court judge ordered everyone into mediation, during which the participants signed a confidentiality agreement stipulating that all statements made during the process were privileged, non-discoverable and inadmissible “in any arbitral, judicial, or other proceeding.” During that mediation, the parties entered into a settlement with the Winklevosses agreeing to give up their competing company for cash and a piece of Facebook. Facebook filed a motion seeking to enforce the settlement after negotiations over the form of the final deal documents fell apart. The Winklevosses argued that the settlement agreement was unenforceable because it lacked certain material terms and had been procured by fraud.

The district court found the settlement agreement enforceable, in part, because what was said and not said during the mediation was excluded under the Northern District Court’s Alternative Dispute Resolution local rule 6-11, which it read to create a “privilege” for “evidence regarding the details of the parties’ negotiations in their mediation.” The resulting appeal in Facebook v. Winklevoss (9th Cir. 2011) nos. 08-16745, 08-16873, 09-15021, 2011 U.S. App. LEXIS 7430 provides an opportunity to compare the status of mediation confidentiality in California’s state courts and the Ninth Circuit.

Chief Judge Alex Kozinski, writing for the unanimous court in Facebook, affirmed the exclusion of the alleged mediation misrepresentations but with reasoning that differs from the California Supreme Court’s approach to the situation. Because there are no federal rules or statutes concerning mediation confidentiality, each of California’s four district courts have adopted their own approaches to the matter. Facebook undercuts the effectiveness of those rules by finding It’s doubtful that a district court can augment the list of (federally created) privileges by local rule.” Having created this ambiguity, the Court then sidestepped the issue it had just created and held, in any event, that the local rules did not apply because a private mediator had been used.

Facebook then found that the district court had been right to exclude the proffered evidence because the parties’ confidentiality agreement provided that all statements made during the course of the mediation were privileged settlement discussions and inadmissible for any purpose, including in any legal proceeding. Accordingly, Facebook affirmed that the Winklevosses had been properly prohibited from introducing evidence of any alleged mediation misrepresentations.

Facebook unambiguously holds that parties in federal proceedings, when involved in private mediations, can negotiate for the total confidentiality of mediation communications. Less clear is the status of confidentiality where the mediation has been conducted by a court-appointed person. Added to this confusion is that each of California’s four district courts has its own approach to confidentiality. (For example, in commentary 6-12 to its local rules, the Northern federal district court notes that absolute confidentiality, regardless of the circumstances, may be excused in “limited circumstances in which the need for disclosure outweighs the confidentiality of a mediation,” such as threats of death or substantial bodily injury; use of the mediation to commit a felony and the right to cross-examination in a quasi-criminal proceeding.) In contrast,  the mediation communications in Facebook would be absolutely confidential in a California state court whether the mediator had been privately retained or court appointed and whether or not the parties had agreed in writing to apply confidentiality to all court proceedings. For the moment, therefore, the California courts are well ahead of their federal counterparts.

Judge Michael D. Marcus (Ret.)

ADR Services, Inc.

1900 Avenue of the Stars, Suite 250

Los Angeles, California 90067

(310) 201-0010

 

Copyright Michael D. Marcus, April 2011

 

Please visit my website at www.marcusmediation.com for information about my mediation and arbitration background and experience. Copies of my previous Mediation Messages and Arbitration Insights are available by going to the articles link on the website.

Mediation Message No. 66

THE COURT STAYS THE COURSE ON MEDIATION CONFIDENTIALITY

In Cassel v. Superior Court (2011) S178914, 2011 DJDAR 658, the California Supreme Court was faced with two clear options – continue to hold that mediation confidentiality is to be liberally construed despite the surrounding circumstances or find that confidentiality should not be used to shield negligent attorneys from malpractice suits. The Court chose to stay the course and held that mediation confidentiality has few exceptions.

In Cassel, the petitioner filed a complaint against his former attorneys for breaching their professional, fiduciary and contractual duties because they had used allegedly bad advice, deception and coercion at a mediation to force him to settle the case. Petitioner wanted to use his conversations with the attorneys immediately preceding and at the mediation to prove his case. The trial court ruled that discussions between petitioner and the lawyers two days and one day before the mediation, in which mediation strategy and settlement amounts had been discussed, and all communications and conduct at the mediation between petitioner and the lawyers, were inadmissible. A majority of the Court of Appeal granted mandamus relief, reasoning that mediation confidentiality statutes are not intended to prevent a client from using communications with his or her lawyer outside the presence of all other mediation participants in a legal malpractice case against that lawyer.

Cassel began with a reminder that the Legislature had provided only express waiver by the participants as an exception to mediation confidentiality and that the only judicially crafted exceptions were where “due process is implicated” and “literal construction would produce absurd results, thus clearly violating the legislature’s presumed intent.” The Court also reviewed Foxgate Homeowners’ Association, Inc. v. Bramalea California, Inc. (2001) 26 Cal.4th 1; Rojas v. Superior Court (2003) 33 Cal.4th 407; Fair v. Bakhtiari (2006) 40 Cal.4th 189 and Simmons v. Ghaderi (2008) 44 Cal.4th 570 which held, in their entirety, that confidentiality  has been broadly applied.

With Foxgate, Rojas, Fair and Simmons as a foundation, Cassel held that the purpose of Evidence Code section 1119, subdivision (a), which provides that “[n]o evidence of anything said or any admission made for the purpose of, in the course of, or pursuant to, a mediation … is admissible or subject to discovery …” extends to all oral communications at a mediation, even if they only take place between parties and their own attorneys.

Cassel further holds that petitioner’s discussions with his attorneys before the mediation concerning mediation strategy and settlement were confidential because section 1119, subds. (a) and (b) apply to all utterances and writings  “for the purpose of, in the course of, or pursuant to, a mediation.” Instead of attempting to create a bright line test for establishing when a pre or post-mediation utterance or writing is mediation related, and thus confidential, Cassel simply found that petitioner’s discussions with his attorneys came within the statute because they “concerned the settlement strategy to be pursued at an immediately pending mediation … (and) were closely related to the mediation in time, context, and subject matter …”

Cassel noted that the mediation confidentiality statutes, unlike Evidence Code section 958, which eliminates confidentiality protections otherwise afforded by the attorney-client privilege in suits between clients and their lawyers, have no exception for legal malpractice actions. The Court reasoned that the attorney-client and mediation confidentiality statutes achieve separate and unrelated purposes; the former “allows the client to consult frankly with counsel on any matter, without fear that others” may use these confidences whereas the latter “serve[s] the public policy of encouraging the resolution of disputes by means short of litigation.”

The Supreme Court then discussed the non-applicability of the two judicially crafted exceptions to mediation confidentiality to the instant facts. Due process was not a factor because “the mere loss of evidence” in a lawsuit for civil damages does not implicate a fundamental interest. Nor did the result produced by applying the plain terms of the statutes to the facts of the case create a result that was absurd or clearly contrary to legislative intent.

In sum, Cassel reversed the Appellate Court judgment and left petitioner with the inability to introduce evidence of his attorneys’ alleged misconduct immediately prior to and at the mediation. For the short term, Cassell’s extensive analysis of mediation confidentiality should foreclose further lower court attempts to carve exceptions to such confidentiality. Its impact, however, may not be lengthy because, while the Court chose not to take the fork in the road that would allow clients to use communications with their attorneys at mediations in subsequent malpractice actions, it unambiguously invited the Legislature to reconsider that issue. “Of course, the Legislature is free to reconsider whether the mediation confidentiality statutes should preclude the use of mediation-related attorney-client discussions to support a client’s civil claims of malpractice against his or her attorneys.” The Court’s less than subtle invitation may be hard for the Legislature to ignore; especially, if it also considers Justice Ming Chin’s reluctant concurrence that shielding attorneys from being held accountable for their incompetent or fraudulent actions during mediation “is a high price to pay to preserve total confidentiality in the mediation process.”

Judge Michael D. Marcus (Ret.)

ADR Services, Inc.
1900 Avenue of the Stars, Suite 250
Los Angeles, California 90067
(310) 201-0010

Copyright Michael D. Marcus, January 2011

Mediation Message No. 60

SUPREME COURT MAY SHAKE UP MEDIATION CONFIDENTIALITY

On the heels of Cassel v. Superior Court (2009) 179 Cal.App.4th 152, which held that communications just before and during mediation between a client and his attorneys are not confidential (see Mediation Message no. 57 for a discussion of Cassel), comes Porter v. Wyner (2010) 183 Cal.App.4th 949, modified May 10, 2010, with a similar holding. The California Supreme Court granted a hearing in Cassel and it is almost a certainty that it shall also grant a hearing in Porter and consolidate the two cases for argument.

In Porter v. Wyner, clients sued their attorneys for, inter alia, breach of fiduciary duty, constructive fraud and negligent misrepresentation. These parties had been involved in a mediation in the underlying matter. In the instant matter, the lawyers’  motion in limine to bar the admission of evidence at the former mediation and to strike statements from the complaint made at that mediation were denied.

At the subsequent trial, the Porters testified to communications with the defendant lawyers during the mediation and also introduced documentary evidence of mediation communications. The lawyers, as both adverse witnesses and in rebuttal, discussed their mediation communications with the Porters.

Shortly after the jury returned a partial verdict for the Porters, the California Supreme Court issued Simmons v. Ghaderi (2008) 44 Cal.4th 570, which holds that the only exceptions to mediation confidentiality are express waiver by the parties and where due process rights may be violated. (See Mediation Message no. 45 for a discussion of Ghaderi.) The trial court misinterpreted Ghaderi and granted the defendants’ motion for a new trial. An appeal from that ruling led to the (2-1) decision in Porter v. Wyner which reversed the trial court’s order and instructed it to consider all of the mediation statements in ruling on the motion because that evidence should not have been excluded.

The core rationale of the majority in Porter v. Wyner is that mediation confidentiality is intended to “protect the free flow of communication and ideas” rather than “protect communications or agreements between a client and his own counsel should a conflict arise between them.” (Id. at p. 960.) The majority  reasoned that “A mediation is not conducted to resolve a dispute between a lawyer and the client the attorney represents. The communications in the attorney-client relationship like the ones at issue in this case fall outside those to which the confidentiality applies.” (Id. at p. 961.) The majority was also concerned that mediation confidentiality could be used as a shield “against (an) attorney for any breached side agreements, representations and deficiencies  that might take place or come to light during the mediation.” (Id. at p. 962.)

In discussing Cassel v. Superior Court, I speculated that the Supreme Court, even if it chose to protect consumers, will most likely hold that conferences between clients and their attorneys during, rather than before, mediation shall remain confidential. Porter v. Wyner’s subsequent assault on mediation confidentiality, which is better written than Cassel, causes me to re-evaluate that opinion. Although the Supreme Court has continually supported the concept of mediation and related mediation confidentiality, it must come to grips with the tension between a broad application of such confidentiality and its potentially negative impact on consumer protection. I am no longer going to hazard what the Court will do in resolving that conflict; I can opine only that the result, whichever way it goes, will have a major impact on the mediation process.

Judge Michael D. Marcus (Ret.)
ADR Services, Inc.
1900 Avenue of the Stars, Suite 250
Los Angeles, California 90067
(310) 201-0010

Copyright Michael D. Marcus, May 2010

Mediation Message No. 57

MEDIATION CONFIDENTIALITY – ANOTHER SUPREME COURT CASE IS COMING

In granting review this month in Cassel v. Superior Court (2009) 179 Cal.App.4th 152, the California Supreme Court has another opportunity to either solidify its position that mediation confidentiality should be rarely breached (see Foxgate Homeowners’ Assn. v. Bramalea California, Inc. (2001) 26 Cal.4th 1; Rojas v. Superior Court (2004) 33 Cal.4th 407; Simmons v. Ghaderi (2008) 44 Cal.4th 570) or take the opposite tact that consumer protection should be an exception to such confidentiality.

In Cassel, a 2-1 decision, the appellate court majority held that discussions between Cassel and his attorneys two consecutive days immediately before and again on the day of a scheduled mediation, at which the case settled for $1.25 million, were not confidential and thus could be used by Cassel in a subsequent legal malpractice action against the attorneys for forcing him to accept the settlement rather than a higher amount that he had previously told the attorneys was what he wanted. The majority reasoned that the three meetings between Cassel and his attorneys outside the presence of opposing counsel and the mediator are not protected by mediation confidentiality because they “do not constitute oral and written communications made ‘for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation’ protected by section 1119, subdivisions (a) and (b) or communications by “participants” protected by section 1119, subdivision (c).” Id. at p. 164.

The Cassel majority relied on Wimsatt v. Superior Court (2007) 152 Cal.App.4th 137 which held, in part, that a conversation between opposing counsel prior to a mediation was not protected from disclosure by mediation confidentiality. (See Mediation Message no. 39 for a discussion of Wimsatt.) The majority also noted that, unlike the facts in Wimsatt, the communications at issue were made by the client to his own attorneys and not to an opposing party or the mediator. Id. at p. 162. The majority found as well that the attorneys were “not within the class of persons which mediation confidentiality was intended to protect from each other—the ‘disputants,’ i.e., the litigants—in order to encourage candor in the mediation process.” Id. at p. 163. Finally, the majority reasoned that the meetings between Cassel and his attorneys were for trial strategy purposes and not just to prepare for the mediation. Id. at p. 164.

The dissent in Cassel said that the majority position was inconsistent with well-established Supreme Court cases holding that exceptions to mediation confidentiality should be created only by the legislature;that Evidence Code section 1119, subdivision (a) covers statements that were made for the purpose of a mediation, even if not communicated to an opposing party or a mediator and had not been made during the course of a mediation (id. at pp. 165-166) and that it is the legislature’s and not the court’s role to protect clients from unscrupulous lawyers where the fundamental policies favoring mediation are not affected. Id. at p. 167.

The Supreme Court must now decide whether it shall continue its policy that mediation confidentiality allows for only rare exceptions (Simmons v. Ghaderi, supra, notes that there are only two: express waiver and where due process rights may be violated) or that the need to protect consumers is an additional reason for deviating from that policy. If the Court does not alter its position, it will adopt the approach of the dissent in the appellate court opinion and also probably disapprove Wimsatt to the extent that it is inconsistent. If the Court wants to protect clients from “unscrupulous attorneys,” it will probably hold that pre-mediation conferences between clients and their attorneys do not promote the purpose of mediation and, as a result, are covered only by the attorney-client privilege. Even if it adopts this latter position, the Court will most likely hold that similar conferences that take place during the mediation process are still confidential.

Judge Michael D. Marcus (Ret.)
ADR Services, Inc.
1900 Avenue of the Stars, Suite 250
Los Angeles, California 90067
(310) 201-0010

Copyright Michael D. Marcus, February 2010

Mediation Message No. 55

FEDERAL MEDIATION RULES REGARDING CONFIDENTIALITY

Since I’ve written extensively about the impact of mediation confidentiality on California state court proceedings (see Mediation Messages 11, 17, 21, 34, 37, 39, 45 and 49), it’s only appropriate that I also discuss that principle as applied by the three California federal districts in their respective local rules.

The Northern District, which has the most elaborate guidelines of the three California federal districts regarding the conduct of mediations, applies confidentiality to anything that was written for or said in connection with a mediation, including “any position taken, and any view of the merits of the case expressed by any participant in connection with any mediation.” (Local rule 6-12(a).) That rule does not prohibit a report to or inquiry by the ADR Magistrate Judge regarding a possible violation of the ADR local rules. (Local rule 6-12(b)(3).) These local rules do not include a requirement that the parties negotiate in good faith.

In a commentary to local rule 6-12, the Northern Federal District, while observing the general confidentiality of mediation proceedings and relying, in part, on Foxgate Homeowners’ Association v. Bramalea California, Inc. (2001) 26 Cal.4th 1 (a mediator may not report a participating attorney’s misconduct to the trial court), Rojas v. Superior Court (2004) 33 Cal.4th 403 (all writings prepared for mediation are not discoverable) and Simmons v. Ghaderi (2008) 44 Cal.4th 570 (neither estoppel nor implied waiver are exceptions to mediation confidentiality) for the proposition of confidentiality, notes that the concept of absolute confidentiality may be excused in “limited circumstances in which the need for disclosure outweighs the importance of protecting the confidentiality of a mediation.” Those circumstances include threats of death or substantial bodily injury, use of mediation to commit a felony and the right to cross-examination in a quasi-criminal proceeding. (Unlike the Northern District, the California Supreme Court recognizes only an express waiver by the parties and the need to uphold due process rights as exceptions to mediation confidentiality. (Id.).)

The Central Federal District, regarding mediation confidentiality, notes only that “All settlement proceedings shall be confidential. No part of a settlement proceeding shall be reported, or otherwise recorded, without the consent of the parties, except for any memorialization of a settlement and the Clerk’s minutes of the proceeding.” (Local Rule 16-15.8.)

The Southern Federal District provides that no “statement … by any party, attorney or other participant” shall be “made known to (inter alia) the trial court or jury…” (Local Rule 600-7(d).) Also, sanctions can be imposed for the failure of counsel or a party to act in good faith in the course of a mediation. (Local Rule 600-7(g).) Thus, the Southern Federal District, unlike the other two federal districts and the state of California, allows a mediator or a party to report an opposing party’s bad faith conduct during a mediation as long as that information has not been “made known to the trial court.”

Judge Michael D. Marcus (Ret.)
ADR Services, Inc.
1900 Avenue of the Stars, Suite 250
Los Angeles, California 90067
(310) 201-0010

Copyright Michael D. Marcus, December 2009

Mediation Message No. 39

Mediation Confidentiality Applies to any Writing or Statement that would not have Existed but for a Mediation Communication

Wimsatt v. Superior Court (June 20, 2007) no. B196903, 2007 DJDAR 8961, which not surprisingly upholds the concept of mediation confidentiality, is an interesting case nonetheless for the breadth given such confidentiality and, at the same time, its invitation to the legislature that it create exceptions to the concept.

Wimsatt and his law firm, Magaña, Cathcart & McCarthy, were sued for legal malpractice by a former client who claimed that they had breached their fiduciary duty to the client by submitting an unauthorized settlement demand to the defense. In the underlying matter, a defense attorney had written in a confidential mediation brief for a second mediation that Wimsatt had purportedly communicated a settlement demand for $1.5 million, which was $2 million less than the authorized demand at the first mediation. The case settled at the second mediation for an undisclosed amount.

The client’s co-counsel in the underlying case, who was not associated with the Magaña firm, was told by the defense attorney that he had obtained the $1.5 million figure second-hand from another defense attorney who had talked directly to Wimsatt and that Wimsatt had made the same remark during a conference call in which the scheduling of expert depositions and the utility of a second mediation had also been discussed.

Wimsatt and Magaña denied the allegation and sought a protective order in the trial court against the discovery of the plaintiff’s two mediation briefs and the defendant’s second brief; the contents of e-mails between Wimsatt, the defense attorney who had written the mediation brief and plaintiff’s co-counsel the day before the second mediation in which the defense attorney and Wimsatt responded to co-counsel’s question about the origin of the $1.5 million demand and, finally, the contents of a conversation between Wimsatt and the two defense attorneys “on the eve of the second mediation session.”

The appellate court, in reversing in part the trial court’s denial of the protective order, held that the plaintiff’s and defendant’s mediation briefs are protected from disclosure. The e-mails are also protected because their “purpose was to clarify statements made in the mediation briefs as such statements would significantly affect the mediation negotiation to be held the next day. The e-mails would not have existed had the mediation briefs not been written.” Protection, however, was not given to the telephonic statements between Wimsatt and the defense attorneys because Wimsatt and Magaña, as the moving parties, had not satisfied their burden of showing that the conversation, which could have been made a few days or a month before the mediation, was linked to the second mediation or was “anything other than expected negotiation posturing that occurs in most civil litigation.” Thus, they failed to show that “the statement would not have existed but for a mediation communication, negotiation or settlement discussion.”

The above “would not have existed” standard is a creative extrapolation. While Wimsatt relied on Rojas v. Superior Court (2004) 33 Cal.4th 407, 417 n. 5; Eisendrath v. Superior Court (2003) 109 Cal.4th 351, 364 and Doe I v. Superior Court (2005) 132 Cal.App.4th 1160, 1166-1167 for this pronouncement, neither the facts nor language in these three decisions specifically support this holding. Footnote 5 in Rojas discusses the principle in Federal Rule of Evidence 408 that the simple use of evidence in mediations does not immunize it from being discovered. Eisendrath, which is concerned about the discovery of statements made by a divorcing couple in a mediation, provides confidentiality to “any communications between mediation participants before the end of mediation that occur outside the mediator’s presence, provided that these communications are materially related to the mediation.” Doe I prohibits the release of written summaries of the personnel records of priests accused of sexually molesting minors, which summaries had been prepared for an ongoing mediation.

Wimsatt is more interesting (and ultimately important) for acknowledging the clear language in Foxgate Homeowners’ Association, Inc. v. Bramalea California, Inc. (2001) 26 Cal.4th 1 that exceptions to mediation confidentiality must be created by statute (fn. 1) and then asking the legislature, because of “the number of cases in which the fair and equitable administration of justice has been thwarted (by mediation confidentiality) … to reconsider California’s broad and expansive mediation confidentiality statutes and to craft ones that would permit countervailing public policies be considered.” (Fn. 2.) Whether the legislature produces anything meaningful in response to this request will be influenced in part by the probable lobbying efforts of the plaintiffs’ and defendants’ bars, neither of which is expected to favor inroads to mediation confidentiality.

(Fn. 1.) “The conflict between the policy of preserving confidentiality of mediation in order to encourage resolution of disputes and the interest of the state in enforcing professional responsibility to protect the integrity of the judiciary and to protect the public against incompetent and/or unscrupulous attorneys has not gone unrecognized. (Citations omitted.) As noted, however, any resolution of the competing policies is a matter for legislative, not judicial, action.” (Id. at p. 17, n. 13; emphasis included.)

(Fn. 2.) Wimsatt relies upon a scholarly article by Peter Robinson, the Managing Director of the Straus Institute for Dispute Resolution at Pepperdine University School of Law, to establish that California’s mediation statutes have created inequities.

Copyright, Michael D. Marcus, July 2007

Mediation Message No. 37

Enforcing Mediation Agreements (Part IV)

Not surprisingly, the California Supreme Court held on December 15, 2006 in Fair v. Bakhtiari, no. S129220, 2006 DJDAR 16184, 2006 WL 3627208, that a settlement agreement reached through mediation is enforceable and not confidential if it incorporates the language of Evidence Code section 1123(b). (I predicted this result November 2005 in message no. 28.)

In Fair, the parties concluded a mediation with a document captioned “Settlement Terms.” The final paragraph of that agreement provided that “Any and all disputes (are)subject to JAMS arbitration rules.” When the parties were unable to finalize the settlement, the plaintiff moved to compel arbitration, contending that he and the defendants had agreed to be bound by the settlement document. The appellate court held that the memorandum was admissible because the above quoted arbitration provision constituted “words to [the] effect” that the settlement terms were “enforceable or binding” under section 1123(b).

The Supreme Court, noting a conflict between the legislature’s desire to provide some flexibility to the enforcement of mediation settlements and the importance of maintaining mediation confidentiality (see Foxgate Homeowners’ Assn. v. Bramalea California, Inc. (2001) 26 Cal.4th 1 and Rojas v Superior Court (2004) 33 Cal.4th 407), opted for the latter policy and reversed the appellate court, finding that its reading was “unduly expansive” since the settlement language did not “include a direct statement to the effect that it is enforceable or binding.” The Court also held that the use of such language negates the need for the trial court to examine extrinsic language to rule on the admissibility of a settlement agreement.

Those whom I have mediated with know that I already provide the parties with a stipulation for settlement that includes enforcement language more specific and broader than that required by Fair because it not only unambiguously states that the agreement “shall be enforceable and binding” but also refers to Code of Civil Procedure section 664.6, which permits the parties to stipulate in writing that the trial court may enter judgment pursuant to the settlement terms. I shall continue to recommend that language because of its specificity and breadth.

Copyright, Michael D. Marcus, December 2006