Once again, a California appellate court has upheld the sanctity, if not impermeability, of mediation confidentiality. But, not with any gusto or enthusiasm; rather, it clearly did so out of duty. In Wimsatt v. Superior Court (Corey Kausch – Real Party in Interest), Case No. B 196903, Division Three of the Second Appellate District of the California Court of Appeal held that all mediation briefs and all e-mails sent the day before mediation that quoted from a mediation brief could not be discovered in a subsequent legal malpractice action between Corey Kausch, the former client and his counsel, Magaña, Cathcart & McCarthy.
In the original action, Kausch was injured in an airplane crash. Kausch hired the Magaña law firm and also hired another attorney. Eventually, the matter went to mediation. At a second session, the matter was resolved.
Soon thereafter, Kausch sued his prior counsel claiming that the firm lowered his settlement demand by 50% without his knowledge, permission and consent and that as a consequence, the second mediation concluded at a much lower settlement amount then it could have otherwise if the Magaña firm had not made the unauthorized demand.
To assist in proving this point, Kausch sought the mediation brief of Magaña and the related e-mails. Magaña sought a protective order that these documents were protected by “mediation confidentiality” and thus need not be disclosed. The court denied the application because it did not believe that the legislative intended ““. . . confidentiality of mediation proceedings to be so complete as to shield perjury or inconsistent statements.”” (Id. at 10). The trial court also refused Magaña’s ex parte request to seal the documents. As a consequence, Magaña filed a writ of mandate with the appellate court. In response, the court agreed to hear the matter.
After a lengthy discussion of the legislative history, statutes and case law on mediation confidentiality in California, the appellate court determined that the trial court could not craft exceptions. It could not except these documents from the privilege in order to prevent perjury or to protect inconsistent statements. (Id. at 28). Rather, since the “California Supreme Court has declared that exceptions to mediation confidentiality must be expressly stated in the statutes” (Id. at 28) and no such applicable exception exists, the trial court erred. Mediation confidentiality must be enforced even if it means that Kausch must forgo his legal malpractice action against his own counsel.
The appellate court pointed out:
“The stringent result we reach here means that when clients, such as Kausch, participate in mediation, they are, in effect, relinquishing claims for new and independent torts arising from mediation, including legal malpractice causes of action against their own counsel.” (Id. at 30).
Clearly, the appellate court was not happy with the result it was constrained to reach:
“Given the number of cases in which the fair and equitable administration of justice has been thwarted, perhaps it is time for the Legislature to reconsider California’s broad and expansive mediation confidentiality statutes and to craft ones that would permit countervailing public policies to be considered.”
“In light of the harsh and inequitable results of the mediation confidentiality statutes . . . the parties and their attorneys should be warned of the unintended consequences of agreeing to mediate a dispute. If they do not intend to be bound by the mediation confidentiality statutes, then they should “make [it] clear at the outset that something other than mediation is intended. (Citation omitted).” (Id. at 31-32).
Without doubt, mediation confidentiality does more good than harm. It has helped to resolve many a dispute and save time and expense to all involved. But, as this case points out, like everything else in life, it can also be abused. And because the California Legislature believed that only “good” could come out of mediation. . . it made no provision for neither the abusers nor the abuses. Is it now time for the Legislature to heed the Appellate Court’s entreaty and craft exceptions to this privilege? I do not know. But this court certainly raises some interesting points.
. . . Just something to think about.