The evidence is in. After 43 years of federal practice under Rule 408 of the Federal Rules of Evidence (1975); 19 years of New York practice under CPLR 4547 (1998); and 16 years of practice in various states under the Uniform Mediation Act (2001), we can conclude: Statutory confidentiality is not necessary for effective mediation.
The UMA provides limited confidentiality for mediation; FRE 408 and CPLR 4547 provide almost none. In jurisdictions governed by them all, there is no evidence of adverse effects on the use or effectiveness of mediation.
California remains the big outlier, and its stance has had a significant impact on proving a case of attorney malpractice. The state’s so-called “absolute confidentiality” rules (Cal. Ev. C. 1115, et seq.) stymie consumer protection and spit in the eye of the Rule of Law. All for no good reason.
There is no evidence that this regime is necessary for mediation to be effective. Fortunately, the California Law Revision Commission in June recommended that the legislature change this.
Such a move—which has been in the works since the California Legislature tasked the commission with studying whether a change was needed in 2013 (see “How California Intends to Recalibrate the Concept of Mediation Confidentiality,” 35 Alternatives 93 (June 2017)
(available here —would be an adjustment in the right direction. Here’s why:
The heart of California’s so-called absolute confidentiality rule is Evidence Code Section 1119, which provides:
“Except as otherwise provided in this chapter:
“(a) No evidence of anything said or any admission made for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation is admissible or subject to discovery, and disclosure of the evidence shall not be compelled, in any arbitration, administrative adjudication, civil action, or other noncriminal proceeding in which, pursuant to law, testimony can be compelled to be given.
“(b) No writing, as defined in Section 250, that is prepared for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation, is admissible or subject to discovery, and disclosure of the writing shall not be compelled, in any arbitration, administrative adjudication, civil action, or other noncriminal proceeding in which, pursuant to law, testimony can be compelled to be given.
“(c) All communications, negotiations, or settlement discussions by and between participants in the course of a mediation or a mediation consultation shall remain confidential.”
This causes problems. In particular, if a consumer feels that her lawyer committed malpractice against her in a mediation, she cannot have her claim heard on the merits.
All of the evidence, oral and written, in support of her claim was “made for the purpose of, in the course of, or pursuant to, a mediation” within the meaning of Evidence Code Section 1119, and is therefore inadmissible.
And without admissible evidence to support her claim, no matter how righteous that claim might be, it will be dismissed without a court ever considering its merits.
Michael Cassel’s search for justice in the face of this statute reached the California Supreme Court in Cassel v. Superior Court, 51 Cal.4th 113 (2011) (available here). Here’s the court’s summary of what he tried to prove in a malpractice action against his former lawyers, in language worth quoting at length:
A pretrial mediation of the [underlying trademark infringement] suit began at 10:00 a.m. on August 4, 2004. Petitioner attended the mediation, accompanied by his assistant, Michael Paradise, and by … lawyers Steve Wasserman, David Casselman, and Thomas Speiss. Petitioner and his attorneys had previously agreed he would take no less than $2 million to resolve the … suit by assigning his [“global master license”] rights to [a company the petitioner founded, but later engaged the lawyers’ representation to dispute the company’s ownership,] VDO. However, after hours of mediation negotiations, petitioner was finally told VDO would pay no more than $1.25 million. Though he felt increasingly tired, hungry, and ill, his attorneys insisted he remain until the mediation was concluded, and they pressed him to accept the offer, telling him he was “greedy” to insist on more. At one point, petitioner left to eat, rest, and consult with his family, but Speiss called and told petitioner he had to come back. Upon his return, his lawyers continued to harass and coerce him to accept a $1.25 million settlement. They threatened to abandon him at the imminently pending trial, misrepresented certain significant terms of the proposed settlement, and falsely assured him they could and would negotiate a side deal that would recoup deficits in the VDO settlement itself. They also falsely said they would waive or discount a large portion of his $188,000 legal bill if he accepted VDO’s offer. They even insisted on accompanying him to the bathroom, where they continued to “hammer” him to settle. Finally, at midnight, after 14 hours of mediation, when he was exhausted and unable to think clearly, the attorneys presented a written draft settlement agreement and evaded his questions about its complicated terms. Seeing no way to find new counsel before trial, and believing he had no other choice, he signed the agreement.”
The trial court ruled evidence of all this inadmissible, based on a “plain meaning” construction of Evidence Code section 1119. The California Supreme Court affirmed.
And Michael Cassel was left without admissible evidence to support his cause. He never got his claim heard on its merits. Was his cause just? We’ll never know. An opportunity to be heard on the merits was denied him.
California Supreme Court Justice Ming Chin was moved to write separately:
I concur in the result, but reluctantly.
The court holds today that private communications between an attorney and a client related to mediation remain confidential even in a lawsuit between the two. This holding will effectively shield an attorney’s actions during mediation, including advising the client, from a malpractice action even if those actions are incompetent or even deceptive. Attorneys participating in mediation will not be held accountable for any incompetent or fraudulent actions during that mediation unless the actions are so extreme as to engender a criminal prosecution against the attorney. This is a high price to pay to preserve total confidentiality in the mediation process.” [Footnote and internal reference omitted.]
Commentators noticed. This author was among them. See Jeff Kichaven, “Mediation, Confidentiality and Anarchy: The California Nightmare,” Daily Journal (Los Angeles) at p. 4 (Feb. 17, 2011).
The California Legislature also noticed, and asked the California Law Revision Commission to study the issue and make recommendations as appropriate. It is called Study K-402 (available at www.clrc.ca.gov/K402.html).
After years of careful work, the commission on June 8 concluded Study K-402 by recommending to the legislature that it amend the California Evidence Code. See the final version of the tentative recommendation at http://bit.ly/2rIuTvF; a press release with instructions for commenting on the proposal is available at http://bit.ly/2t0UyE8. A comment period was set to run this summer and conclude in September.
The amendments would allow consumers like Michael Cassel, who claim legal malpractice in a mediation, to introduce the evidence they need to prove their claims. Or, at least, most of that evidence.
While the commission’s work gets almost all the way to the cause of justice, and deserves praise for that reason, it needs to take one more step.
The commission’s tentative recommendation on Study K-402, in Memorandum 2017-18 Calif. L. Rev. Comm’n (April 13, 2017) (available at http://bit.ly/2s7qYMs) the commission’s staff included the text of a proposed Section 1120.5 to the California Evidence Code, which would provide in part as follows:
(a) A communication or a writing that is made or prepared for the purpose of, or in the course of, or pursuant to, a mediation or a mediation consultation, is not made inadmissible, or protected from disclosure, by provisions of this chapter if both of the following requirements are satisfied:
(1) The evidence is relevant to prove or disprove an allegation that a lawyer breached a professional requirement when representing a client in the context of a mediation or a mediation consultation.
(2) The evidence is sought or proffered in connection with, and is used solely in resolving, one of the following:
(A) A complaint against the lawyer under the State Bar Act, Chapter 4 (commencing with Section 6000) of the Business and Professions Code, or a rule or regulation promulgated pursuant to the State Bar Act.
(B) A cause of action for damages against the lawyer based upon alleged malpractice.
(C) A dispute between a lawyer and client concerning fees, costs, or both including a proceeding under the State Bar Act, Chapter 4, Article 13-Arbitration of Attorneys’ Fees, Business & Professions Code Sections 6200-6206.
The final recommended version added a third paragraph, which must be satisfied along with (1) and (2) above:
(3) The evidence does not constitute or disclose a writing of the mediator relating to a mediation conducted by the mediator.
The final proposal included additional sections mostly on its operational procedures. (See proposed 1120.5(b)-(e) at the link above.) But the key provisions highlighted above, if enacted, would go a long way toward protecting consumers such as Michael Cassel and promoting the rule of law. It would allow Cassel to have a hearing on the merits. Or, at least, most of the merits. There’s one gap left which the commission should recommend that the legislature fill.
ONE MORE CHANGE
The California Law Revision Commission has not yet included in its recommendation any proposed changes to California Evidence Code Section 703.5. If it would do so, consumers would be more completely protected and the rule of law would be more completely promoted, all without doing any harm to the efficacy of mediation.
The commission should take this step.
California Evidence Code Section 703.5 provides, in pertinent part:
No person presiding at any judicial or quasi-judicial proceeding, and no arbitrator or mediator, shall be competent to testify, in any subsequent civil proceeding, as to any statement, conduct, decision, or ruling, occurring at or in conjunction with the prior proceeding, except as to a statement or conduct that could (a) give rise to civil or criminal contempt, (b) constitute a crime, (c) be the subject of investigation by the State Bar or Commission on Judicial Performance, or (d) give rise to disqualification proceedings under paragraph (1) or (6) of subdivision (a) of Section 170.1 of the Code of Civil Procedure. …
So, under the commission’s draft tentative recommendation, the Cassels of the future could testify. They could subpoena their former lawyers to testify. But they could not obtain the testimony of their mediators, even if their mediators volunteered to come forward.
Their mediators would not be competent to testify. This could frustrate the administration of justice in at least two situations.
First, consider the classic “he said/she said” scenario. A future Cassel testifies, truthfully, that his lawyer gave him negligent advice “X” at a mediation. His lawyer denies it. The mediator heard the advice given, and would so testify, if given the chance.
For the plaintiff, this is an anxious situation. He has the burden of proof. His evidence must preponderate. While a jury might find his testimony more persuasive than that of his former lawyer, it also might not.
How dearly this plaintiff wants, indeed needs, the mediator to testify. But California Evidence Code Section 703.5 denies the plaintiff that proof. There’s a need to amend Evidence Code Section 703.5 to help make sure that all relevant evidence is admissible so that cases are correctly decided, consumers are protected, and the rule of law promoted.
And, on the flip side of this same coin, a defendant might need a mediator’s testimony to rebut incorrect or opportunistic testimony given by a former client who is now suing her. Due process has to work in both directions.
Second, consider the situation where an opportunistic defendant throws a mediator under the bus. Assume that our future Cassel testifies that his lawyer gave him advice “X” and that the advice was negligent. The lawyer testifies that advice “X” was indeed given, and goes on to testify that the advice was not negligent, but rather was reasonable.
Why? Because, in a private conversation with the mediator during the mediation, the mediator told him to give that very advice. Is this lawyer lying? Can this lawyer get away with it if he is? Maybe.
Section 703.5 bars our future Cassel from calling that mediator as a witness to test the veracity of the lawyer’s defense. A future Cassel might well find justice denied as a result.
Particularly in the second situation, one would think that mediators would want, even insist on, the chance to testify and set the record straight. Otherwise, opportunistic witnesses could offer (imaginary) hearsay testimony of all sorts of foolishness attributed to mediators.
This could damage a mediator’s reputation for wisdom and integrity, with the mediator defenseless to respond. Unable to testify in the proceeding in which the hearsay is offered, what is the mediator to do to protect herself and her reputation?
Instead, the commission proposes building a fence around 703.5, so that mediators will participate in these follow-on legal malpractice cases even less than they otherwise might. (See proposed Evidence Code sections 1120(5)(a)(3) and 120.5(e).) This is supposedly “to safeguard perceptions of mediator impartiality and protect[ ] a mediator from burdensome requests for testimony.” (Tentative Recommendation at p. 137.) But there is no evidence from other jurisdictions with lesser confidentiality that, without this fence, California mediators, or mediation, would suffer in these regards, either.
EFFECTIVENESS “WILL CONTINUE”
Importantly, when the California Evidence Code is amended, mediation will continue to be an effective process in California, as it is elsewhere.
In states governed by the Uniform Mediation Act, the mediation privilege gives way so that a consumer can bring a legal malpractice action against their lawyer—UMA Sec. 6(a)(6)—and all relevant evidence is admissible in those malpractice actions, even the testimony of mediators. UMA Sec. 7(b)(2).
The UMA is the law in several jurisdictions with major urban, commercial centers, including, from west to east, Washington, Illinois, Ohio, New Jersey and the District of Columbia. There is no evidence that mediation is used less often, or less effectively, in these jurisdictions as a result.
In New York, there is even less protection of mediation confidentiality, with no evidence of adverse effects on the use or effectiveness of mediation. In New York, CPLR 4547 protects only this:
Evidence of (a) furnishing, or offering or promising to furnish, or (b) accepting, or offering or promising to accept, any valuable consideration in compromising or attempting to compromise a claim which is disputed as to either validity or amount of damages, shall be inadmissible as proof of liability for or invalidity of the claim or the amount of damages. …
There is no evidence that this minimal statutory level of confidentiality has inhibited the use of mediation, or harmed its effectiveness, in New York. Neither is there any such evidence from the federal system, which has the same minimal statutory confidentiality standard, set forth in Rule 408 of the Federal Rules of Evidence.
The history of New York’s experience proves even more clearly that mediation can thrive under the minimal levels of confidentiality which CPLR 4547 and FRE 408 provide.
The Uniform Mediation Act was approved by the National Conference of Commissioners on Uniform State Laws in August 2001.
In 2002, the New York Legislature considered the UMA. It was controversial. While the New York City Bar Association supported the UMA (see the association’s ADR Committee’s February 2002 report at http://bit.ly/2rAyZqg), the New York State Bar Association opposed it. (See the NYSBA’s Committee on Alternative Dispute Resolution Nov. 1, 2002, report at http://bit.ly/2rrpmf3.) The New York Legislature did not enact the UMA, and CPLR 4547, with its minimal protection of mediation confidentiality, remained the law.
Then, a case called Hauzinger v. Hauzinger, 43 A.D.3d 1289 (N.Y.A.D. 2007) (available at http://bit.ly/2rAzDEc), attracted quite a bit of attention. In that divorce action, attorney Carl Vahl served as mediator. After the mediation, Mrs. Hauzinger subpoenaed Vahl to produce records and to testify in a proceeding to determine whether the terms of the Hauzingers’ separation agreement “were fair and reasonable at the time of the making of the agreement.”
Vahl moved to quash the subpoena on grounds, among others, that the Hauzingers had signed a confidentiality agreement. The trial court refused to quash the subpoena, and the Appellate Division affirmed, notwithstanding the confidentiality agreement which the Hauzingers had signed.
The Appellate Division’s opinion in Hauzinger provoked dire, dire Jeremiads from New York’s mediation establishment. One sample screed can be found at Abby Tolchinsky & Ellie Wertheim, “‘Hauzinger’ Calls Into Doubt Confidentiality Agreements,” N.Y. Law J. (Nov. 13, 2007) (available at http://bit.ly/2rr8kOq).
The immediate issues arising from the Appellate Division’s Hauzinger opinion were resolved by New York’s highest court, the Court of Appeals, in June 2008, when it issued its Memorandum Opinion noting that both spouses had expressly waived whatever confidentiality attended their mediation. Hauzinger v. Hauzinger, 10 N.Y.3d 923 (2008) (available at http://bit.ly/2rAtmZc); see also “New York’s Top Court Backs Mediator Subpoena in a Divorce Case,” 26 Alternatives 154 (September 2008) (available at http://bit.ly/2sG4xug).
Therefore, Mediator Vahl was permitted to produce documents and testify without objection. But the larger issue of the extent of mediation confidentiality in New York remained.
Despite the entreaties of New York’s mediation establishment, the legislature did not act. Neither the UMA, nor any other new statute, was enacted. The minimally-protective CPLR 4547 remained, and remains, the law of the Empire State.
The sky has not fallen.
New York remains a robust and dynamic mediation marketplace. Private ADR provider JAMS lists 85 New York City-based neutrals on its website at http://bit.ly/2suqSfd. In the federal courts, New York’s Eastern District, based in Brooklyn, N.Y., lists 206 mediators practicing on its panel. See list at http://bit.ly/2rUYplA. In the Manhattan-based Southern District, the number is 301! See list at http://bit.ly/2qWkhrF.
There is no evidence that in streetwise New York, with the minimal mediation confidentiality which CPLR 4547 and FRE 408 provide, people have been scared off using mediation, or that legal malpractice actions arising out of mediations have mushroomed.
How much less does California have to fear those horribles, with only the slight modification to mediation confidentiality now under consideration?
Month after month, the California mediation establishment has been challenged to show the state’s Law Revision Commission some actual evidence that lesser standards of mediation confidentiality have caused problems—in New York, in UMA states, or anywhere else. Month after month, the establishment has shown not even a peppercorn’s worth of actual proof.
THE BIG PICTURE
At heart, the rule of law is simply the principle that for every wrong—every breach of contract, violation of statute and tort—the legal system provides a remedy.
Our basic U.S. values have always emphasized the rule of law. Indeed, on Jan. 21, 2009, his first full day in office, President Barack Obama announced that “Transparency and the Rule of Law will be the touchstones of this Presidency.”
To enforce the rule of law, courts must be able to determine the truth. That’s why, “Except as otherwise provided by statute, all relevant evidence is admissible.” California Evidence Code Section 351. See also, Rule 402, Federal Rules of Evidence.
That is also why it has always been the case, since Prof. John Henry Wigmore first set down the analysis, that “all privileges of exemption from this duty [to give relevant evidence] are exceptional, and are therefore to be discountenanced. There must be good reason, plainly shown, for their existence…. The investigation of truth and the enforcement of testimonial duty demand the restriction, not the expansion, of these privileges. They should be recognized only within the narrowest limits required by principle. Every step beyond these limits helps to provide, without any real necessity, an obstacle to the administration of justice.” 8 Wigmore on Evidence Section 2192 (McNaughton ed. 1961).
Plainly, California’s mediation confidentiality statute provides just such an “obstacle to the administration of justice.” If we care about the rule of law, we must ask: Is there “good reason, plainly shown,” for this degree of mediation confidentiality?
The empirical evidence does not support the California Legislature’s outdated assumption that the encouragement of mediation requires broad statutory confidentiality. To adopt Wigmore’s classic test: Do we have the rules of mediation confidentiality “within the narrowest limits required by (the) principle,” of encouraging mediation?
Based on the experience of New York, the federal system and the UMA states, the answer is clearly “no.”
It’s time to applaud the California Law Revision Commission for its work to date, which promises to move California law in the right direction, toward consumer protection and the promotion of the rule of law. The commission should continue its good work, and add to it by proposing amendments to California Evidence Code Section 703.5.
* * *
Alternatives’ most recent examination of mediation confidentiality trends is Richard Ziegler’s “Where Are the Risks? An Assessment of Recent Developments in Mediation Confidentiality,” 34 Alternatives 161 (December 2016) (available at http://bit.ly/2qYLUEO). For more background on the Cassel controversy, see Eric Van Ginkel, “Another Look at Mediation Confidentiality: Does It Serve Its Intended Purpose?” 32 Alternatives 119 (September 2014), as well as “Where Mediation Hurts Clients: How ADR Is Shielding Legal Malpractice,” 30 Alternatives 195 (November 2012) (available at http://bit.ly/2ejgcKy).
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