A California appellate court concluded that a mediator was shielded by absolute quasi-judicial immunity regardless of whether he was mediating or arbitrating in Phillips v. JAMS (Cal. App. 2d Dist.). The mediator had agreed in a previous mediation settlement to make a binding decision for the parties if future disputes arose. The mediator tried to mediate a subsequent dispute, in the midst of which he felt he was being abused by aggressive counsel and announced he could no longer be impartial and was not going to make a binding decision, even if the parties could not reach a mediated resolution. Litigation followed, but the appellate court affirmed summary judgment dismissing claims against the mediator and his sponsoring organization, concluding that litigation is not allowable against those providing dispute resolution services which are connected to the judicial process. The court held that, “[a]ll functions integral to the dispute resolution process are shielded by absolute immunity.”

Phillips v. JAMS (Cal. App. 2d Dist. January 28, 2010)

Mediators are concerned over provisions in new Texas legislation which would require them to report parties who act in “bad faith” in mediations involving balance billing. The new legislation allows insured patients to mediate whenever they would have to pay over $1,000 for services of out-of-network doctors received at in-network hospitals. In an effort to compel serious mediation efforts, the law includes a requirement for reporting bad faith conduct, without providing standards. The Texas Department of Insurance is drafting rules to implement the statute, which is to take effect in September 2010. Mediators hope to get the bad faith reporting requirement adjusted in the regulations in order to maintain neutrality.

Dallas Morning News (January 26, 2010)

Sanctions against a doctor for refusing to waive a “consent to settle” provision in court-ordered mediation of a medical malpractice case were overturned by an Ohio appellate court based on mediation confidentiality. The court concluded that a statement by the doctor’s counsel that the doctor had never given consent to settle the case was a privileged mediation communication which could not be used to determine bad faith. None of the exceptions to the privilege applied. A concurring opinion added that a doctor refusing to waive a consent to settle provision is no different than any party refusing to make a monetary offer of settlement, which is permissible. Nor is there any obligation on a party to inform the other side at the beginning of mediation that they have no intention to make an offer, as positions may well shift during the course of the mediation.

Anthony v. Andrews, No. 2008-P-0091 (Ohio App. 11 Dist., December 7, 2009)

Despite assertions of mediation confidentiality, an Indiana appellate court affirmed the trial court’s order requiring disclosure of the amount of a mediated settlement agreement in a related case. The court simply focused on the evidentiary rule that compromising a claim is not admissible to prove liability, but is admissible for other purposes, such as determining the amount to garnish in the case before the court.

Buchanan v. Consolidated Brokers Corp., 2009 WL 3518003 (Ind. App., October 30, 2009)

The Ethics Committee of the North Carolina State Bar is proposing to amend Rule 8.3 of the Rules of Professional Conduct to expressly exempt lawyer-mediators from the general duty to report questions about another lawyer's “honesty, trustworthiness or fitness as a lawyer” during mediation. Concerns have been raised about the potential conflict between requiring lawyer-mediators to report such questions and also to maintain the confidentiality of all information obtained in the mediation process. The Ethics Committee plans to publish the proposed rule change, receive comments on the proposal and possibly recommend to the State Bar Council that it adopt the change in January.

North Carolina Lawyers Weekly (November 2, 2009); Rule 8.3

A split California appellate court established a judicial exception to the state’s mediation confidentiality statute by permitting a party to use evidence from his private communications with his attorneys during a mediation in a later action for legal malpractice. The court concluded that private conversations during the mediation between the attorneys and client that did not involve the mediator or other party and did not reveal anything said or done in mediation discussions with the mediator or other party should not be shielded by mediation confidentiality. The alleged malpractice involved claims that the client’s counsel forced him to settle for too little; the terms of the signed settlement agreement were thus available. The dissent objected to any judicial exception to the confidentiality statute, regardless of its desirability.

Cassel v. Superior Court, 2009 WL 3766430 (Cal. App. 2 Dist. November 12, 2009)

The federal district court in Oregon granted summary judgment to a lawyer against claims by his clients that he had committed malpractice by advising them against settling a case in mediation that they subsequently lost in court, because the evidence against the lawyer was inadmissible due to the state’s mediation confidentiality statute. The court did not determine whether private conversations between the attorney and his clients were covered by the confidentiality requirements, but concluded that the clients had no case where they could not reveal the proposed settlement terms.

Fehr v. Kennedy, 2009 WL 2244193 (D. Ore. July 24, 2009) (Subscription Required)

Six years after mediation resulted in a settlement, the parties sought testimony from the mediator about whether the settlement had been achieved through economic duress. The mediator objected, but the U.K.’s Technology and Construction Court ruled that the mediator must testify in Farm Assist Limited v. Secretary of State for Environment, Food and Rural Affairs (No. 2), [2009] EWHC 1102 (TCC). The court concluded that mediation confidentiality can be waived by the court in the interests of justice. The court analyzed other applicable privileges and concluded that even if there is a mediation privilege, it may be waived by the parties without the consent of the mediator. The court sidestepped the mediation agreement, which provided that the mediator could not be called as a witness in any litigation relating to the dispute, reasoning that the issue of economic duress was distinct from the underlying dispute.

Farm Assist Limited v. Secretary of State for Environment, Food and Rural Affairs (No. 2), [2009] EWHC 1102 (TCC); Mondaq (July 8, 2009) (Subscription Required)

The legislature in Maine is considering the Uniform Mediation Act (UMA) in order to establish confidentiality for mediation communications, with specified exceptions. The legislation is intended to encourage greater use of mediation and generally follows the UMA language of the National Conference of Commissioners on Uniform State Laws. The UMA has been adopted thus far in the District of Columbia and ten states: Idaho, Illinois, Iowa, Nebraska, New Jersey, Ohio, South Dakota, Utah, Vermont and Washington state. Legislation to adopt the UMA is also currently being considered in Hawaii and Rhode Island.

Maine H.B. 968; LegAlert (April 2, 2009) (Subscription Required)

The federal district court in McNeil Sampson v. Lancaster School Board, (E. D. Pa.), found persuasive the reasoning of federal courts which have adopted a federal mediation privilege, which is discussed in detail, but based its decision on other grounds. In the underlying dispute, a mediation over discrimination allegations against a school system was attended by the school’s attorney who then prepared a memorandum to the school board about the mediation and the claimant’s perception of conspiracy and aggressive stance in the mediation, after which the claimant was fired. In the ensuing litigation, the claimant asserted that her termination was retaliation for participating in mediation and sought discovery related to the mediation. However, the court concluded that the claimant could not depose the school’s attorney and that the memorandum drafted about the mediation was protected under the attorney-client privilege. The court also noted that a state mediation privilege is not applicable in a federal case involving both state and federal claims.

McNeil Sampson v. Lancaster School Board, No. 05-6414 (E. D. Pa. Nov. 5, 2008); The Legal Intelligencer (March 11, 2009) (Subscription Required)

The Utah appellate court concluded in Moss v. Parr Waddoups Brown Gee & Loveless that the terms of a mediation confidentiality agreement were unambiguous and so required summary judgment in litigation seeking to enforce an alleged oral settlement agreement. While the confidentiality agreement was signed for mediation in one case, the parties also negotiated a second case during the mediation session, which plaintiffs argued was not covered by the confidentiality agreement. The appellate court found the broad language of the confidentiality clause to be unambiguous and reversed the district court’s denial of summary judgment, without reaching the provisions for mediation confidentiality offered by state statutes. Negotiations in the second case involved an additional plaintiff contacted by telephone who did not sign the confidentiality agreement, but the appellate court concluded that her testimony about the defendants’ alleged agreement to settle could not avoid the hearsay rule because the mediator was not an agent conveying a party-opponent’s admission.

Moss v. Parr Waddoups Brown Gee & Loveless, 2008 UT App 405 (Utah App., Nov. 6, 2008)

A West Virginia family law judge’s complaints against a Virginia mediator and an anti-divorce activist were dismissed by a West Virginia Bar committee. The non-lawyer activist had written a letter to the editor offering “friendly advice” about divorce, with which the judge disagreed, that may have been the basis for the judge’s complaint. The mediator is a former Virginia attorney who mediates in Virginia with West Virginia clients who come to him, noting that as a mediator he cannot give legal advice and they should seek legal advice from an attorney in their state. The mediator did not know any reason for the complaint, especially since the West Virginia Family Court has approved his clients’ mediated agreements.

West Virginia Record (November 14, 2008)