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Mediation Confidentiality Strikes Again

by Phyllis Pollack
March 2015

PGP Mediation Blog by Phyllis G. Pollack

Phyllis  Pollack

Once again, an appellate court in California has confirmed the “…near categorical prohibition against judicially crafted exceptions to mediation confidentiality.” In Amis v Greenberg Traurig, LLP et al, (Issued March 18, 2015, Case No. BC 426815) (Id. at 8.), the Court of Appeal for the Second Appellate District held that mediation confidentiality precluded an attorney malpractice action from going forward.

Plaintiff John Amis was a minority shareholder and officer in Pacific Marketing Works, Inc. (“Pacific”). In 2006, Pacific sued Path Productions, LLC and its principals for breach of contract. Path counter-sued Pacific, Amis and other shareholders alleging, among other things, alter ego liability or that the corporation and the shareholders were, essentially, one and the same.

In June 2007, while this litigation was pending, another corporation, Sojitz Corporation (“Sojitz”) proposed purchasing Pacific’s assets. The defendant law firm Greenberg Traurig (“GT”) represented Sojitz in this proposed deal. One of the terms of the proposal was a “… favorable settlement or resolution” to the litigation. (Id. at 3.)
In September 2007, Amis’ then lawyers withdrew from representing him (as well as Pacific and the other shareholders). Consequently, GT, after obtaining a written waiver of any potential conflict, began representing Amis and the others.

The litigation went to mediation in October and November 2007. At the latter session, the matter settled. As part of the settlement, Amis agreed to be jointly and severally liable with the corporate defendant and other shareholders for $2.4 million to be paid in installments, in exchange for mutual releases and a dismissal of the action with prejudice. The parties agreed that should a default occur in making the installment payments, Path could obtain a stipulated judgment for the full $2.4 million less credit for any payments made.

Soon thereafter, Sojitz decided not to purchase Pacific’s assets, thereby leaving Amis and the other shareholders of Pacific without sufficient funds with which to pay the settlement. In January 2008, Path declared a default and obtained entry of a default judgment. When Path attempted to enforce the judgment, Amis and the other shareholders filed bankruptcy.

Amis then sued GT claiming that GT failed to advise him that if the matter went to trial, the chances of a judge/jury imposing liability against him individually were very small if nonexistent. Thus, Amis alleged that GT failed to advise him of the risks involved in agreeing to become personally liable, and failed to negotiate a settlement contingent on Sojitz’s purchase of Pacific’s assets.

After deposing Amis in which Amis testified that all of the facts arose out of and during the mediation sessions, GT moved for summary judgment on the grounds that mediation confidentiality precluded the admission of all of Amis’ evidence.

Amis opposed the motion claiming that mediation confidentiality did not preclude him from using indirect or inferential evidence to prove his claims.

The trial court disagreed, granting the motion for summary judgment.

The appellate court affirmed noting that the California Supreme Court has,

“… broadly applied the mediation confidentiality statutes and all but categorically prohibited judicially crafted exceptions, even in situations where justice seems to call for a different result. (Citation omitted)… ‘Judicial constructions, 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….’” (Id. at 8.)

Thus, the appellate court held that mediation confidentiality prevented Amis from doing indirectly that which he cannot do directly- offer evidence to show that his attorneys committed malpractice during mediation.

Repeatedly, the appellate courts and the California Supreme Court have stated that if there is to be a change, it is for the Legislature to make it. Currently, at the request of the Legislature, the California Law Review Commission is studying the Relationship Between Mediation Confidentiality and Attorney Malpractice and Other Misconduct (Study K-402). Whether it will recommend a change is not known. But, interestingly, in those states that have adopted the Uniform Mediation Act and thus allow for malpractice actions to be brought against attorneys, no such cases could be found. (Memo 2014-24 –Relationship Between Mediation Confidentiality and Attorney Malpractice and Other Misconduct: Implementation of the Uniform Mediation Act (06/06/2014) at page 8.) So, will a change in the law really make a difference?

… Stay Tuned!

…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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