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Mediate.com

The Next Chapter: Mediation Confidentiality

by Phyllis Pollack
August 2011

PGP Mediation Blog by Phyllis G. Pollack

Phyllis  Pollack

In January 2011, in Cassel v. Superior Court (2011) 51 Cal 4th 113 (“Cassel”), the California Supreme Court once again iterated that mediation confidentiality absolutely precludes the admission of anything that occurred during the mediation, in any subsequent litigation. Thus, as in Cassel, where a party alleges that his counsel committed legal malpractice during the mediation, that party is precluded under California’s mediation confidentiality statutes (Evidence Code §1119 et seq.) from seeking any sort of redress for the alleged professional negligence and/or breach of fiduciary duty purportedly committed by her counsel during the mediation.

Once again, this conclusion was emphasized in a recently unpublished California appellate court decision – Gossett v. St John, Wallace, Brennan & Folan, Second District Court of Appeals of California, Division Eight, Case No. B222502 (May 12, 2011). (Thank you to my colleague Alec Wisner for highlighting this case!). Plaintiff Charles Gossett is a 50 percent shareholder, Chief Official [sic] Officer and Chairman of the Board of CRG Marine Laboratories, Inc. (“CRG”). In 2007, CGR retained a law firm – St. John, Wallace, Brennan, & Folan (“SWBF”) – to advise CGR on employment issues.

In 2008, one of CRG’s employees, Mark Baker, claimed that CRG owed him unpaid commissions. The parties agreed to mediate.

At the mediation, CRG’s attorney John St. John took a very passive approach, remaining silent through most of the mediation. Eventually, the parties reached a settlement. St. John produced a settlement agreement that he had prepared in advance of the mediation but had not discussed with Gossett. After Baker modified the agreement and signed it, St. John looked it over and told Gossett to sign it. Gossett skimmed it and signed it. At the time, Gossett did not realize that, he, individually, would be liable for the payment to Baker if CRG did not pay the settlement amount. He realized this only after he requested another attorney review the agreement after the mediation.

Consequently, Gossett sued SWBF for legal malpractice alleging several alleged errors and omissions by SWBF during the mediation including failing to advise him of his individual liability. SWBF filed a motion to dismiss contending that all of the alleged errors and omissions occurred during the mediation and thus under Cassel v. Superior Court, supra, and California’s mediation confidentiality statutes – Evidence Code §1119 et. seq. – the case must be dismissed: any evidence of what occurred during the mediation is absolutely inadmissible.

The trial court agreed, granting the motion to dismiss, and the appellate court affirmed.

Cassel v. Superior Court, supra, is the latest in a long line of rulings from the California Supreme Court holding mediation confidentiality to be inviolate. In light of this latest ruling, efforts are being made to create an exception to mediation confidentiality that would allow for such legal malpractice actions to be brought. Recently, the Beverly Hills Bar Association (“BHBA”) adopted Resolution 10-06-2011 (RESOLUTION ) which would amend Evidence Code Section 1120 by creating an exception to mediation confidentiality by allowing for disclosure and permiting the use of attorney-client communications made during mediation in a subsequent State Bar Disciplinary action, an action for legal malpractice and/or an action for breach of fiduciary duty.

During the upcoming California State Bar Convention in September 2011, the Conference of California Bar Associations will discuss the BHBA resolution and vote whether to approve it. If approved, a legislative sponsor will then be sought for introduction into the California legislature for consideration.

In Cassel, the Court felt constrained to rule as it did stating:

“We express no view about whether the statutory language, thus applied ideally balances the competing concerns or represents the soundest public policy. Such is not our responsibility or our province. . . . 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.136.)

Many within California will watch the Conference of California Bar Associations to see if it adopts the Beverly Hills Bar Association’s Resolution. In all probability, I and many others suspect that it will do so. Assuming our collective suspicions are correct, the next issue is whether our legislature will take up the invitation of our Supreme Court to reconsider the issue. To state the obvious, it is a very topical, much debated issue full of complexities on both sides. (For example, while 11 jurisdictions have adopted the Uniform Mediation Act containing this exception (see, section 6(a)(5)) in varying forms (including District of Columbia, Idaho, Illinois, Iowa, Nebraska, New Jersey, Ohio, South Dakota, Utah, Vermont and Washington), others view it as a “slippery slope”.) Should the legislature take it up, there will be much in the press about it. Stay tuned for the next installment on mediation confidentiality in California.

. . .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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