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Once Again: Confidential Means Confidential

by Phyllis Pollack
January 2011

From the Blog of Phyllis G. Pollack.

Phyllis  Pollack
Once again, the California Supreme Court has held that the California statutes declaring that mediations are confidential proceedings mean exactly that: mediations are confidential, even at the expense of a potential legal malpractice action.

In the latest of its decisions on this topic, on January 13, 2011, the California Supreme Court issued its opinion in Cassel v. Superior Court, Case No. S178914, (Cassel v. Superior Court) in which it reversed the appellate court that had crafted a judicial exception to the rule of mediation confidentiality embodied in California’s Evidence Code. Noting that the appellate court “. . .had crafted an unwarranted judicial exception to the clear and absolute provisions of the mediation confidentiality statutes (Id. at p. 3), the Supreme Court held that “. . .the statutes’ terms must govern, even though they may compromise petitioner’s ability to prove his claim of legal malpractice.” (Id.)

In February 2005, Michael Cassel (petitioner) sued his former attorneys, Wasserman, Comden, Casselman & Pearson, LLP, a law firm, and certain of its members for breach of their professional, fiduciary and contractual duties (i.e. legal malpractice) while representing him in a dispute over the rights to the Von Dutch clothing label. (Id. at p. 4).

In that underlying dispute, Von Dutch Originals, LLC (“VDO”) had sued Cassel for trademark infringement contending that Cassel did not have the rights to use the Von Dutch mark abroad under the global master license. At a certain point, this litigation was scheduled for mediation. Prior to the mediation, Cassel and his attorneys discussed what position they would take: to give up the global master license to the Von Dutch label, Cassel would accept no less than $2 million. However, Cassel claimed that during the mediation, his counsel harassed and coerced him, even threatening to abandon him at trial, into accepting $1.25 million. After 14 hours of mediation ending around at midnight, Cassel, unable to think clearly and exhausted, accepted this sum. (Id. at pp. 4-6).

Not at all happy about being coerced into this settlement, Cassel then sued his attorneys for legal malpractice. On the eve of trial, the defendant attorneys moved to exclude from coming into evidence at trial, all communications between Cassel and his attorneys that occurred during or related to the mediation pursuant to California’s Evidence Code Sections on mediation confidentiality. The trial court granted the motion.

Cassel appealed the ruling. The appellate court reversed, holding that California’s statutes on mediation confidentiality “. . .do not extend to communications between a mediation participant and his or her own attorneys outside the presence of other participants in the mediation.” (Id. at p. 7). The appellate court, in crafting this judicial exception to mediation confidentiality, reasoned:

“The purpose of mediation confidentiality is to allow the disputing parties in a mediation to engage in candid discussions with each other about their respective positions, and the strengths and weaknesses of their respective cases, without fear that the matters thereby disclosed will later be used against them. This protection was not intended to prevent a client from proving, through private communications outside the presence of all other mediation participants, a case of legal malpractice against the client’s own lawyers. . .” (Id. at p. 7).

The California Supreme Court disagreed:

“Judicial construction and judicially crafted exceptions, are permitted only where due process is implicated, or where literal construction would produce absurd results, thus clearly violating the Legislature’s presumed intent. Otherwise, the mediation confidentiality statutes must be applied in strict accordance with their plain terms. Where competing policy concerns are present, it is for the Legislature to resolve them.” (Citations omitted). (Id. at p. 11).

Adhering to is previous decisions on this topic – Simmons v. Ghaderi (2008) 44 Cal 4th, 570, 580 (simmons_v_ghaderi); Fair v. Bakhtari (2006) 40 Cal 4th 189, 194; Rojas v. Superior Court (2004) 33 Cal 4th 407, 415-416; and Foxgate Homeowners’ Ass’n v. Bramalea California, Inc. (2001) 26 Cal 4th 1, 13-14 ( Foxgate)- the Supreme Court held that the confidentiality provisions must be strictly construed and applied; no judicially crafted exceptions are permitted, even in the face of competing public policy concerns (Id. at p. 2) such as a client’s ability to sue his former attorneys for malpractice. Once again, the court noted that if this strict policy is to change, it must be with the legislature:

“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.” (Id. at p. 29).

So, once again, the court has made it clear that any communications that is made “for the purpose of, in the course of, or pursuant to, a mediation. . .” (California Evidence Code §1119) is confidential and remains so even for the purpose of proving a claim for legal malpractice. (Id. at p. 31).

While this ruling was expected (given the court’s prior rulings on the subject), is it a good thing for mediation confidentiality to trump claims of alleged legal malpractice? I don’t know as I can readily see both sides of the issue. But, I do agree with the court that it is an issue that the Legislature should address. But given California’s budget crisis, I doubt it will be anytime soon. California must first get its fiscal house in order.

. . .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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