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A Loss For Mediation Confidentiality

by Phyllis Pollack

From the Blog of Phyllis G. Pollack.

Phyllis  Pollack

       An interesting decision was issued the other week by the Second District of the California Court of Appeal on mediation confidentiality. Reading it left me with the impression that the appellate panel was result oriented or using “legal realism” rather than simply applying the governing law to the facts to lead it to the logical, mechanical and deliberative conclusion. (“formalist approach”.) (See “Blinking On The Bench: How Judges Decide Cases” – February 28, 2008 blog.)

       In the Estate of Thottam (Case No. B196933 – August 13, 2008), three siblings engaged in mediation to determine how to distribute the estate and certain assets from a trust created by their mother, Thresiamma Thottam. The siblings were co-trustees and beneficiaries of the trust.

       At the commencement of the mediation, the siblings signed a mediation and facilitation confidentiality agreement by which, in part, they agreed that:

      “all matters discussed, agreed to, admitted to, or resulting from” the mediation would “(1) be kept confidential, and not disclosed to any outside person (excluding spouses), (2) shall not be used in any current or future litigation between us (except as may be necessary to enforce any agreements resulting from the Meeting), and (3) shall be considered privileged and, as a settlement conference, non-admissible under the California Evidence Code in any current or future litigation between us.” (Id. at 3.)

      All three siblings and the mediator signed the agreement.

       During the mediation, a chart was prepared containing three columns. Along the left-hand side margin each asset was listed – be it real estate or otherwise. Across the top were three columns; one for each sibling, identified by his/her first initial. As the negotiations progressed, the chart was then filled in to show which sibling received which asset. At the end of the session, each sibling signed and dated the top of the chart in the column bearing his/her initial and also initialed each entry in the column.

       Well . . . as may be expected, when one of the siblings – Peter – sought to draft a more formal agreement to memorialize the chart, he was met with resistance. Eventually, the matter ended up in litigation (and eventually at trial).

       During a deposition, Peter sought to use the chart to which his sister Elizabeth, the deponent, objected urging that mediation confidentiality precluded its use. The then trial judge agreed with Peter, finding that mediation confidentiality did not apply to the chart.

       But, it was another judge who actually tried the case. When Peter sought to use the chart during trial, Elizabeth again objected based on mediation confidentiality. This time, the judge agreed with Elizabeth ruling that it was inadmissible. Unlike the previous judge, the trial judge did not accept the argument that any mediation confidentiality was waived pursuant to the provision in the agreement stating that confidentiality would apply “. . . except as may be necessary to enforce any agreements resulting from the Meeting.” (Emphasis added.)

      Given the recent pronouncement of the California Supreme Court that once again strictly enforced mediation confidentiality and applied it quite broadly - in Simmons v. Ghaderi (August 8, 2008 blog) - one might well speculate that the appellate court panel would agree with the trial judge. Surprisingly, it did not – it reversed and remanded.

       The appellate panel determined that the agreement between the siblings that all matters discussed or agreed to in mediation “(2) shall not be used in any current or future litigation between us (except as may be necessary to enforce any agreements resulting from the Meeting”) was an enforceable agreement even though made prior to any settlement being reached. The appellate court decided that California Evidence Code §1123(c) requires neither that the express agreement in writing permitting disclosure be contained in the settlement agreement itself nor that it even be made at or after the time the settlement agreement is entered into. According to this appellate panel, there is no timing requirement in terms of allowing disclosure vis-à-vis entering into a settlement as a result of mediation.

      Consequently, the appellate court determined that Peter should have been able to use the chart at trial to prove his case. As the chart was crucial to his case, he suffered a miscarriage of justice and a different result would have been probable had this error not occurred. That is, without the use of the chart, Peter lost at trial; if he could have used the chart, he probably would have won. Thus, the appellate court reversed and remanded for a new trial. Peter would now have his “day in court.”

       As I said, this is a strange decision: it places more importance or a higher priority on Peter having his “day in court” and “fairness” to Peter than on mediation confidentiality. The appellate court makes this a priority even in the face of the Supreme Court’s recent (July 21, 2008) recognition in Simmons v. Ghaderi that “the legislature chose to promote mediation by ensuring confidentiality rather than adopt a scheme to ensure good behavior in the mediation and litigation process. . . .” (Id. at 22.)

      Courts sure are strange and unpredictable! But I am not telling you anything new. I won’t be surprised if this decision is appealed and/or engenders more litigation. This is why it is always better to settle!

       . . . Just something to think about.         


Phyllis Pollack with PGP Mediation uses a facilitative, interest-based approach. Her preferred mediation style is facilitative in the belief that the best and most durable resolutions are those achieved by the parties themselves. The parties generally know the business issues and priorities, personalities and obstacles to a successful resolution as well as their own needs better than any mediator or arbitrator. She does not impose her views or make decisions for the parties. Rather, Phyllis assists the parties in creating options that meet the needs and desires of both sides.  When appropriate, visual aids are used in preparing discussions and illustrating possible solutions. On the other hand, she is not averse to being proactive and offering a generous dose of reality, particularly when the process may have stalled due to unrealistic expectations of attorney or client, a failure to focus on needs rather than demands, or when one or more parties need to be reminded of the potential consequences of their failure to reach an agreement.

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