Deconstructing Confidentiality

Previously published in California Lawyer,
January 2000

The first federal judicial decision construing California’s still-young mediation confidentiality law has sent a shock wave through the state’s mediation community, and it lays out a clear challenge for mediators concerned about confidentiality. In Olam v Congress Mortage Co. (ND Cal) 1999 WL 909731,U.S. Magistrate Judge Wayne D. Brazil of Oakland forced a mediator to testify despite California’s categorical exclusion of evidence arising from mediations. The opinion is lengthy and the facts complicated, but it is well worth taking the time to read carefully. The case concerns Donna C. Olam, who had taken out a loan with Congress Mortgage Co. in 1992, securing the loan’ with her interest in two properties. She eventually defaulted on the note, and Congress Mortgage moved to foreclose. To stop the company from forcing a sale of the collateral, Olam sued in state court for various state law claims, including fraud, and also brought a federal Truth in Lending Act claim. The company removed the case to federal court, where the parties agreed to mediate through a voluntary court program.

After a lengthy single session, they reached an early morning agreement. Olam later disavowed the agreement, claiming, among other things, that it was invalid because she was physically, intellectually, and emotionally incapable of giving consent, citing prior illness. The best evidence of Olam’s capacity was the mediator’s perceptions other capacity to contract during the mediation. So both parties agreed to waive their confidentiality rights for that purpose and asked the court to compel the mediators testimony. Brazil assumed the mediator would raise his statutory protections (Evid C §§703.5, 1119), so he ordered the mediator to testify in a sealed proceeding to find out what he would say. Then Brazil balanced the benefits of hearing the evidence against the burden on the mediator and the mediation process. Although Brazil acknowledged that compelling testimony ‘could have a chilling effect on future mediation participants and take an economic and psychic toll on mediators, these factors did not outweigh the need for individual justice.

The decision has shocked California mediators, who appear ready to dismiss it as off-the-wall–not something that could happen in a California state court. The reaction is understandable. After all, mediators pushed for and got strong protections in Evidence Code section 1119, which bars the admissibility and discovery of mediation communications in subsequent proceedings. The law is simple and straightforward, and, unfortunately, it may well promise more than it can deliver. Indeed, the statute has now been tested at least twice in the courts, and
in both cases-one state and one federal-the mediator was forced to testify, despite the specific statutory bar on such testimony, and despite the unavailability of an applicable exception.

So what’s going on here? It seems to me judges are merely
meeting their sworn obligations to uphold justice in individual cases, at least as they see it. In Rinaker v Superior Court (1998) 62 CA4th 155 the court declined to let the statute trump a juvenile’s constitutional right to confront adverse witnesses in a delinquency hearing. In Olam the court refused to let the statute interfere with an evidentiary need that was critical to the case and that it determined only the mediator could provide.

Tempting as it might be, it would be dangerous to dismiss
these cases as aberrations. Brazil is a highly respected jurist and is also one of the best friends mediators have had on the federal bench-in any jurisdiction. His thorough analysis will likely be respected by other judges on the state and federal benches. The challenge ahead
is clear. Fundamentally, mediators need to be aware that the bench may not share their absolutist understanding of section 1119. This awareness is necessary if mediators want to successfullv argue for confidentiality protection. Brazil’s opinion repeatedly stresses that Olam presented a situation in which both parties agreed to waive the protection and the court determined it needed the evidence. Thus the question became. Why should a mediator be able to withhold testimony over the objections of the parties and, ultimately, the court? Mediators who value their own ability to keep mediations confidential would be well advised to spend their time answering that question rather than disparaging the cases that raise it.

                       

Richard C. Reuben

Richard C. Reuben is Associate Professor of Law at the University of Missouri-Columbia School of Law, a Senior Fellow at the law school's Center for the Study of Dispute Resolution, and Vice-Chair of the Ombuds Committee of the ABA Section of Administrative Law and Regulatory Practice. He also served as… MORE >