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Legal Mediation News - May 2013

by Keith Seat
May 2013 Keith Seat
This is another in a series of updates on legal mediation news by News Editor, Keith Seat. See our related Newsletter Service for your clients and referral sources.

Mediated Settlement in Class Action Upheld Based on Term Sheet, After Determining Inapplicability of California’s Confidentiality Law
Mediation in California resulted in the parties reaching an agreement, signing a term sheet and reporting success to the federal court in Utah where class action litigation was pending.  But the parties were unable to agree on a detailed settlement agreement and defendants withdrew their intention to settle.  The Utah court: applied conflict of laws principles to determine that California’s strict mediation confidentiality law was trumped by Utah’s statute; determined that the mediation confidentiality agreement making inadmissible all statements prior to “complete settlement” did not apply to the term sheet, even though the parties intended to prepare a more detailed settlement agreement; and applied contract law principles to conclude that the essential terms of the contract were present in the term sheet.  Thus, the Utah court concluded that the mediation agreement was enforceable. 
Miller v. Basic Research, LLC, No. 2:07-CV-871 TS (U.S.D.C. D. Utah, March 22, 2013)

Indiana Supreme Court Rejects Exception to Mediation Confidentiality
In a strongly worded opinion in support of mediation confidentiality, the Indiana Supreme Court vacated the appellate court’s opinion and reversed the exception to mediation confidentiality that the appellate court allowed by permitting evidence from mediation to be admitted for “another purpose,” such as determining whether a mediated settlement agreement should be modified due to mistake.  The Supreme Court clarified that admissibility for other purposes was limited to collateral matters unrelated to the mediated dispute.  The Supreme Court was unmoved by the appellate court’s assertion that its holding was consistent with the Uniform Mediation Act because Indiana has not adopted the UMA.
Horner v. Carter, No. 34S02-1210-DR-582 (Ind., February 12, 2013)

Refusal to Make Offer at Mediation Not Bad Faith
Plaintiffs sought sanctions against defendant for refusing to make any offer in mediation while its motion for summary judgment was pending, arguing that defendant should have provided notice that the mediation would be futile.  The court denied sanctions, noting that defendant had sent an out-of-state representative to the mediation with full settlement authority, so there was no bad faith.  Defendant was helped by the facts that plaintiffs were also mediating an underlying state case with another party in the same mediation, so it was not a wasted process, and that defendant prevailed on its motion for summary judgment.  The court noted in passing that what transpired in the mediation was not supposed to be revealed under the confidentiality agreement signed by the parties.
Kline v. State Farm Fire and Casualty Co., No. 12-CV-00955WJ/RHS (U.S.D.C. D.N.M., April 19, 2013)

After Blocking Mediation, Party Cannot Use Lack of Mediation to Prevent Arbitration
In confirming a foreign arbitral award, a federal court concluded that the question whether the parties’ dispute resolution clause required mediation prior to arbitration was a procedural one for the arbitrator.  The court found that the arbitrator properly decided that mediation did not need to actually occur, since the clause merely stated that the parties “would seek” to mediate prior to arbitration.  That obligation was satisfied by the prevailing party sending a letter requesting mediation, which the other side prevented by obstacles and stalling tactics, so that moving on to arbitration was appropriate.
Universal Forum of Cultures Barcelona 2004 v. Council for a Parliament of the World’s Religions, No. 12-CV-3542 (U.S.D.C. N.D. Ill., March 21, 2013)

Congress and Justice Department Ordered to Mediate
A federal judge ordered mediation in litigation by the House Oversight and Government Reform Committee to obtain records from the Department of Justice relating to Operation Fast and Furious, the flawed gun-tracking operation in Phoenix.  The Attorney General was found in contempt by the House for refusing to turn over documents from the program.
Washington Post (March 18, 2013)

Bankruptcy Court Adopts Loss Mitigation Mediation Program
The U.S. Bankruptcy Court for the South District of Florida adopted a loss mitigation mediation program to minimize litigation, reduce costs for participants and allow debtors to reorganize their debts involving real property.  Loss mitigation options include mortgage modification and surrender of real property.  Mediations are limited to two sessions of no more than one hour each, but may be extended with agreement of the parties.  Mediation fees are divided between the debtor (unless a pro bono case) and lender.  The effective date of the mediation program is April 1, 2013.
In re Implementation of Loss Mitigation Mediation Program, Admin. Order 13-01 (U.S. Bankr. Ct. S.D. Fla., February 26, 2013)

Landmark Survey of Fortune 1000 Counsel Reveals Shift from Arbitration to Mediation
A detailed survey of ADR usage by Fortune 1000 in-house counsel reveals, among many other things, that while binding arbitration has declined for most kinds of disputes, corporate counsel are increasingly relying on mediation and other approaches to maintain control in achieving mutually satisfactory settlements.  Comparing results with a similar survey 15 years ago, corporate counsel are increasingly sophisticated in managing conflict, especially in its early stages, and have reduced expectations about outcomes. 
Living with ADR: Evolving Perceptions and Use of Mediation, Arbitration and Conflict Management in Fortune 1,000 Corporations, Thomas J. Stipanowich & J. Ryan Lamare (February 19, 2013); (April 2, 2013)

Corporate Counsel and Managers Surveyed on Mediation Views
The International Mediation Institute (IMI) addressed selected mediation issues in a recent survey of in-house counsel and senior managers in North America and Europe.  Among other results, most respondents prefer both arbitrators and judges to encourage parties to use mediation during arbitration or litigation, with nearly half agreeing that mediation should be a mandatory step in commercial disputes, in both arbitration and litigation.  A large proportion of respondents prefer mediators to be proactive in proposing solutions and settlement options, rather than purely facilitative.  Respondents also favor independent assessment of mediator competence, which would help them in mediator selection. 
Lexology (April 16, 2013); IMI Survey

AAA Launches
The American Arbitration Association is increasing its focus on mediation with a new division called, seeking to be a comprehensive mediation resource for both mediators and users of mediation. plans a broad educational module, along with a database of best mediation practices.  In addition to having a robust directory and helping parties find the right mediator, intends to be a resource for non-legal matters, including social work and family disputes.  Online dispute resolution is available for a flat $200 fee for cases in which claims or counterclaims do not exceed $10,000. services will be offered worldwide.  
Fort Mill Times (April 4, 2013); Website

Proposal to End Compulsory Mediation in U.S. and Adopt English Approach
Noting that party self-determination has suffered from the spread of court-connected mediation and the pressure to settle, a law professor proposes that mandatory mediation should be changed to require consent to mediate, but with economic incentives like the English system, in which an unreasonable refusal to mediate during litigation can result in the imposition of costs and attorneys’ fees. 
Fordham University (April 2013)

English Court of Appeal Suggests Need for Mandatory Mediation
In pro se dispute between former business partners, the England and Wales Court of Appeal notes the great value of mediation, expresses regret that mediation cannot be imposed on parties too stubborn to voluntarily agree to it, and suggests that it may be time to shift to mandatory mediation. 
Wright v. Michael Wright Supplies, Ltd., [2013] EWCA Civ 234 (March 27, 2013)


Keith L. Seat is a full-time mediator and arbitrator who can effectively assist parties in resolving a wide range of telecommunications, antitrust and other commercial disputes. With over twenty years of legal experience as a mediator, arbitrator, litigator, advocate before executive branch agencies, and key staffer in the legislative and judicial branches, Mr. Seat brings a wealth of experience to his work as a mediator and arbitrator to help parties reach successful resolutions of complex disputes.

Mr. Seat began his legal career in a federal clerkship with U.S. District Judge William H. Becker, and then litigated antitrust and commercial disputes for many years at a major Washington law firm, Howrey, Simon, Arnold & White, where he first worked on telecom and technology issues. In 1993, Mr. Seat was named General Counsel of the Antitrust, Business Rights and Competition Subcommittee of the U.S. Senate Judiciary Committee, where he served for four years, playing a significant role in the enactment of the Telecommunications Act of 1996. Returning to the private sector in 1997, Mr. Seat rounded out his experience with a senior in-house counsel position at MCI, one of the nation’s largest telecommunications firms. At MCI, he gained a first-hand appreciation for the important perspective brought to issues and disputes by in-house decision-makers. Mr. Seat also deepened his knowledge of telecom issues and gained experience addressing competition-related issues in the corporate setting, as well as helping resolve disputes among large organizations.

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