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The Trouble with Thottam: Mediation Confidentiality At Risk

by Victoria Pynchon

From Settle It Now Negotiation Blog

Victoria Pynchon

UPDATE:  See the analysis of Thottam at May it Please the Court, noting that the "big print giveth and the small print taketh away."

Before further discussing the problems created by the Thottam holding, I'm providing a "brief" of the case about which I ranted and raved earlier here today.  

  • THE FACTS
    • A mediation confidentiality agreement entered into by the parties in Thottam provided that “all matters discussed, agreed to, admitted to, or resulting from ... [the mediation meeting]...
      • "shall be kept confidential and not disclosed to any outside person . . . ;
      • "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,
      • "shall be considered privileged and, as a settlement conference, non-admissible under the California Evidence Code in any current or future litigation between us.”  
    • One of the parties contended that a chart drawn up and signed by the parties during the mediation, 
      • was sufficiently certain to be enforced according to its terms; and,
      • was admissble into evidence under section 1123(c) despite its failure to satisfy any of 1123(c)'s requirements.
    • THE RULES:
      • Evidence Code section 1123(c) provides that a "written settlement agreement prepared in the course of, or pursuant to, a mediation, is not made inadmissible, or protected from disclosure . . . if
        • "the agreement is signed by the settling parties and any of the following conditions are satisfied . . .
        • "(c) all parties to the agreement expressly agree in writing . . . to its disclosure."Id. (emphasis added).
    • PROCEEDINGS IN THE TRIAL COURT
      • Without finding that the settlement "chart" constituted a "written settlement agreement" under section 1123, the Thottam trial court required one of the parties to testify about otherwise confidential mediation communications because the Confidentiality Agreement required the disclosure of mediation confidences "necessary to enforce any agreements resulting from the [mediation.]"
      • Apparently before Elizabeth could testify, the civil action to enforce the alleged settlement agreement was consolidated with other proceedings in the Probate Court,
      • at the trial of the consolidated matters, the Probate Judge refused to accept the settlement chart into evidence because it did not comply with the provisions of section 1123(c).
    • THE APPELLATE DECISION
      • the appellate court reversed the Probate Court's decision.
    • THE HOLDINGS
      • Section 1123(c)'s requirement that all parties to a mediated settlement agreement "expressly agree in writing . . . to its disclosure,"
        • may be satisfied by terms contained in a writing other than the alleged settlement agreement itself; and,
        • may be satisfied by terms contained in a writing executed before any alleged settlement agreement has purportedly been entered into.
      • Here, the Confidentiality Agreement satisfied those requirements; and,
      • The skeletal written settlement chart was enforceable because its material terms were, or could be made, certain. 
    • RATIONALE
      • Because the proceeding in which Appellant attempted to introduce the alleged settlement agreement was an action "to enforce what he claims is a settlement agreement reached in mediation," and,
      • the parties carved out of the Confidentiality Agreement any discussions that were "necessary to enforce any agreements resulting from the [mediation]"
      • the Confidentiality Agreement satisfied the requirements of section 1123(c); and,
      • the skeletal Settlement Chart was therefore admissible in evidence under that subsection.

This opinion threatens to blow a hole in sections 1119 and 1123 large enough to obliterate their protections -- protections that have been repeatedly enforced to the letter of the law by the Supreme Court in its fairly recent Fair v. Bahktiari opinion -- holding that parties to a mediated settlement agreement must include in it an express provision that they intend to be bound thereby -- and Simmons v. Ghaderi  in which the Court held that parties cannot impliedly waive confidentiality nor be estopped from asserting it.

Most Confidentiality Agreements I've seen (and used) naturally carve out an exception for the enforcement of a settlement agreement.  If you sign such an agreement after Thottam, you risk the enforcement of a non-1123-compliant "settlement agreement" and risk being required to disclose otherwise confidential mediation communications on the sole ground that one of the parties alleges that the opposition entered into an enforceable settlement agreement during the mediation.    

Were I attempting to resist the disclosure of mediation confidences my adversary claimed should be fair game under Thottam, I'd contend that the Thottam Confidentiality agreement, and hence its carve-out, was unusually broad and that the Court's holding should therefore be read narrowly and limited to its facts.  

As California lawyers know, the Second Appellate District has jurisdiction over matters litigated in the Los Angeles Superior Court.  It is therefore particularly important to take a look at the impact this decision might have upon matters mediated by the neutrals on that Court's pro bono or party pay panels.  All such parties are required to sign a Confidentiality Agreement that protects from disclosure all mediation-related "written" and "oral communication[s] made by any party, attorney, neutral, or other participant in any ADR session" except  "written settlement agreement[s] reached as a result of this ADR proceeding in an action to enforce that settlement."

Under Thottam, a colorable argument could be made that the mandatory Superior Court Agreement's confidentiality "carve-out" should be treated as either:

  • an express agreement by the parties to waive confidentiality for the purpose of enforcing "written settlement agreement[s]" even if they do not satisfy the requirements of section 1123(c); and/or,
  • a part of the alleged settlement agreement so that the two agreements together (confidentiality carve-out + non-compliant settlement agreement) satisfy the requirements of section 1123(c).

What to do?  Don't sign any Confidentiality agreement that could possibly be interpreted in a manner similar to the one subject of Thottam unless you want to risk the disclosure of mediation confidences arising from a writing that does not comply with section 1123(c).    

You can certainly refuse to sign the Superior Court's agreement in light of the Thottam holding.  I don't know as a matter of Court policy whether that limits parties' ability to use the Court's pro bono or party pay mediators. 

I'd have to say that this case puts confidences made in mediation sessions controlled by the Superior Court's Confidentiality Agreement at risk whenever one party is contending that the other entered into an agreement pursuant to a signed term sheet.

Biography


Attorney-mediator Victoria Pynchon is a panelist with ADR Services, Inc. Ms. Pynchon was awarded her LL.M Degree in Dispute Resolution from the Straus Institute in May of 2006, after 25 years of complex commercial litigation practice, with sub-specialties in intellectual property, securities fraud, antitrust, insurance coverage, consumer class actions and all types of business torts and contract disputes.  During her two years of full-time neutral practice, she has co-mediated both mandatory and voluntary settlement conferences with Los Angeles Superior Court Judges Alexander Williams, III and Victoria Chaney.  As a result of her work with Judge Chaney in the Complex Court at Central Civil West, Ms. Pynchon has gained significant experience mediating construction defect litigation.  Ms. Pynchon received her J.D., Order of the Coif, from the U.C. Davis School of Law. 



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