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Mediation Confidentiality In Federal Court Revisited

by Phyllis Pollack
February 2010

From the Blog of Phyllis G. Pollack.

Phyllis  Pollack

       Recently, I  came across the unpublished decision in Benesch v. Green, 2009 WL 4885215, Case No. C-07-3784 EDL (N.D. Cal. Dec. 17, 2009) (“Benesch”)(Benesch v Green ) in which the Honorable Elizabeth D. La Porte, United States Magistrate Judge, relied wholly on the California statutes and case law in rendering a decision on mediation confidentiality. It caught my interest because, although a federal case, it applied California law on mediation confidentiality.

       In Benesch, plaintiff (Fritzi  Benesch) sued her former attorney, (Sharon Green) for legal malpractice arising  as a result of a two day mediation that occurred in April, 2006. Id. at *1.

      In that former state court action, plaintiff sued her daughter Valli  Benesch Tander, her son-in-law, Robert Tandler, her estate planning attorney William Hosisington and the law firm of Orrick, Herrington  & Sutcliffe. The mediation concluded with the parties signing a document entitled “Terms of Settlement” (“Term Sheet”). Thereafter, when the defendants moved to enforce the settlement, plaintiff argued in state court that the Term Sheet did not accurately reflect her intent with regard to provisions for her other daughter, Connie Benesch. The state trial court rejected this argument, and entered an order enforcing the settlement.   Id.

      Consequently, plaintiff filed this action in San Francisco County Superior Court in July 2007 (Case No. 07-462683). Alleging diversity jurisdiction (28 U.S.C. §1332(a)), the defendant removed it to federal court. There, the matter proceeded until 2009 when defendant moved to amend her Answer (originally filed in July 2007) to add the defense that plaintiff’s complaint is barred by California’s mediation confidentiality statutes (California Evidence Code §1115 et seq.).
 

      Defendant also moved for summary judgment on this same ground: that California’s mediation confidentiality statutes “. . .precludes plaintiff from establishing her malpractice claim and defendant from meaningful defending herself. Id.
 

      As plaintiff filed a non-opposition to defendant’s motion to amend her answer, the court granted the motion.

       With respect to defendant’s motion for summary judgment, the court denied it without prejudice based on its extensive discussion of California statutory and case law on mediation confidentiality.  

       Initially, the district court noted that mediation confidentiality is protected by California Evidence Code §§1115-1128. It then noted that California Evidence Code §1122  (Evid. C. 1122  ) sets out certain exceptions, thereby making such communications admissible in certain limited situations. However, the district court found no applicable exception: none of the parties to the mediation expressly waived mediation confidentiality. Id. at *3- *4.
 

      The district court also reviewed the California decisions including Foxgate Homeowners’ Ass’n v. Bramelea California, Inc., 26 Cal. 4th  1, 108 Cal. Rptr. 2d 642, 25 P.3d 1117 (2001) (Foxgate )and Simmons v. Ghaderi, 44 Cal. 4th 570, 80 Cal. Rptr. 3d 83, 187 P.3d 934 (2008) (Simmons v Ghaderi ) in which the Supreme Court of California strictly applied the mediation confidentiality statutes “. . .even when doing so may lead to an inequitable result.” Id. at *4.  For example, the district court cited the California appellate court decision in Wimsatt v. Superior Court, 152 Cal. App 4th 137, 61 Cal. Rptr. 3d 200 (2007) ( Wimsett) recognizing that the application of mediation confidentiality to a mediation may well mean that a party is forced to forego any claims for alleged legal malpractice. Id.

       The district court then discussed the most recent appellate decision, Cassel v. Superior Court, 179 Cal. App. 4th 152, 101 Cal. Rptr.3d 501, 2009 WL 3766430 (Cal. Ct. App. Nov. 12. 2009) ( cassell-opinion) in which the petitioner sued his former attorneys for malpractice arising from their representation  of petitioner in a lawsuit. Petitioner alleges that during the mediation of  that prior lawsuit, his attorney, now the defendant, forced him to accept a settlement for far less than was acceptable to him. The issue before the appellate court was whether communications between petitioner and his counsel which occurred during the two days prior to the actual mediation and at the actual mediation in which the two of them were the only ones present and participating ( that is, neither opposing counsel nor the mediator was present) were protected by mediation confidentiality.  The majority held that such conversations were not protected. The dissent strongly took issue, noting that this holding contravened both statutory and case law. Id. at *6-*7.    

      Finding that there is a strong policy in California to uphold mediation confidentiality and that the California Supreme Court has repeatedly disapproved of “judicially created exceptions” to the mediation confidentiality statutes (Id. at *4,*7), the district court concluded:

       It appears to the Court that the reasoning of the Cassel dissent, rather than the majority, is more persuasive and true to the statutory language and the California Supreme Court’s injunction not to create implied exceptions.  See Ticknor v. Choice Hotels Int’l, Inc. 265 F.3d 931, 939 (9th Cir. 2001). (“The task of a federal court in a diversity action is to approximate state law as closely as possible in order to make sure that the vindication of the state right is without discrimination because of the federal forum. In doing so, federal courts are bound by the pronouncements of the state’s highest court  on applicable state law”.) Id. at *7.( Emphasis original.)

 

      Notably, without any discussion, the district court adopted and applied California statutory and case law, following the unstated principle that as this was an action under its diversity jurisdiction, state law supplied the rule of decision.  Neither the parties nor the court discussed this assumption nor whether any sort of federal “mediation privilege” or common law privilege should apply pursuant to Rules 408 and 501 of the Federal Rules of Evidence.

       Thus, whereas this decision was meant to be enlightening, it actually leaves me in the dark as to the applicable rule for “mediation confidentiality” in federal court.

      . . . Just something to think about.

Biography


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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