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Mediation Confidentiality in California

[March, 2013] By Andy Bartlett. Filed under: Ethics,law,mediation

The statutory rules for mediation confidentiality in California are in Sections 1115-1128 of the California Evidence Code. And they have been clarified in a few recent California Supreme Court decisions. Cassel v. Superior Court in 2011 is a must read. Also Foxgate Homeowners Assn. v. Bramalea (2001).

But where does the mediator fit in these rules? The answer is murky, and leads to another question. Whatever it says in the CEC, what might happen to confidentiality if a case ends up in Federal court.

Let’s start at the beginning.

I

When does mediation confidentiality start?

CEC § 1119 (c) says:

All communications, negotiations, or settlement discussions by and between participants in the course of a mediation or a mediation consultation shall remain confidential.

The moment you start to talk with someone about the possibility of a involvement in a mediation, the curtain falls. Conversations with a court mediation program administrator about whether to go into mediation are confidential. The mediation questionnaire you have to complete as you take your case to the 9th Circuit may also be part of an initial ‘mediation consultation.’

II

And when does confidentiality end?

Mediation confidentiality ends, according to CEC § 1125(a), when:

(1) The parties execute a written settlement agreement that fully resolves the dispute.

(2) An oral agreement that fully resolves the dispute is reached in accordance with Section 1118.

and 1125(b) says that the same is true if the settlement agreement, written or oral, only partially resolves the dispute.

Of course, a mediation can fail, and the mediator can end it all early in writing – § 1225(a)(3)

(3) The mediator provides the mediation participants with a writing signed by the mediator that states that the mediation is terminated, or words to that effect, which shall be consistent with Section 1121.

And so can any party

(4) A party provides the mediator and the other mediation participants with a writing stating that the mediation is terminated, or words to that effect, which shall be consistent with Section 1121.

[Keep note of the phrase 'the mediator and the other mediation participants.' We'll come back to it.  One rule in statutory construction is that words are there for a reason. Nothing is superflous. You could make a case - if you ever want to sue the mediator - that "[a] party provides the mediator and the other mediation participants” implies that the mediator is not a mediation participant for the purposes of this section.]

§ 1125(a)(4) goes on to say that “[i]n a mediation involving more than two parties, the mediation may continue as to the remaining parties or be terminated in accordance with this section.” Which means that if you (and your lawyer) leave the mediation at this point, you are now outside of the mediation.

And if the talking stops – the mediation ends. §1125(a)(5) says

(5) For 10 calendar days, there is no communication between the mediator and any of the parties to the mediation relating to the dispute. The mediator and the parties may shorten or extend this time by agreement.

This isn’t about when a mediation ends. It’s about when the special mediation confidentiality protections end. You don’t have to put anything in writing to leave a mediation. But walking out doesn’t end the confidentiality. Maybe the other parties will call you to persuade you to come back to the table. Those conversations stay privileged. And even if they happen after the 10 calendar days, they are likely to be seen as a mediation consultation for the start of a new round of talks.

III

So What?

Or to paraphrase, why should we care?

I mentioned Cassel v. Superior Court at the beginning of this post. Here’s what happened. Cassel, the petitioner, was suing his lawyers for malpractice during a mediation:

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 [one of his lawyers] called and told petitioner he had to come back. Upon his return, his lawyers continued to harass and coerce him

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.

Cassel loses. His lawyers win.

***

The rules are not about individuals, instead:

they serve the public policy of encouraging the resolution of disputes by means short of litigation. The mediation confidentiality statutes govern only the narrow category of mediation-related communications, but they apply broadly within that category, and are designed to provide maximum protection for the privacy of communications in the mediation context. (Cassel at 132)

The “rules” are in § 1119, adopted in 1997, which broadened the scope of mediation confidentiality so that it

extends to oral communications made for the purpose of or pursuant to a mediation, not just to oral communications made in the course of the mediation.

This is what the section says:

§ 1119: Except as otherwise provided in this chapter:

Except for a few exceptions there are no exceptions. In other words, there is no wriggle room. Judges can’t look for loopholes, or equitable or fair ways of handling specific cases. Malpractice insurance rates for anyone working 100% of their time in mediation just dropped through the floor.

No evidence:

(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.

No writings:

(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.

All communications throughout the process, not just on the day of the mediation:

(c) All communications, negotiations, or settlement discussions by and between participants in the course of a mediation or a mediation consultation shall remain confidential.

And that is Cassel. Watertight?

Almost.

***

You can waive confidentiality. Or rather, everyone can waive confidentiality. § 1122(a) says:

A communication or a writing, as defined in Section 250, 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 either of the following conditions is satisfied:

(1) All persons who conduct or otherwise participate in the mediation expressly agree in writing, or orally in accordance with Section 1118, to disclosure of the communication, document, or writing.

Justice Chin, in his concurrence says:

This case does not present the question of what happens if every participant in the mediation except the attorney waives confidentiality. Could the attorney even then prevent disclosure so as to be immune from a malpractice action? I can imagine no valid policy reason for the Legislature to shield attorneys even in that situation. I doubt greatly that one of the Legislature’s purposes in mandating confidentiality was to permit attorneys to commit malpractice without accountability.

So an amendment to the statute was proposed.

AB 2025 would add this clause to § 1120

The admissibility in an action for legal malpractice, an action for breach of fiduciary duty, or both, or in a State Bar disciplinary action, of communications directly between the client and his or her attorney during mediation if professional negligence or misconduct forms the basis of the client’s allegations against the attorney.

The amendment did not receive the enthusiastic approval that Justice Chin might have expected. It was withdrawn, and the matter “referred” to the California Law Revision Commission. Cassel has survived. But  malpractice insurance rates didn’t drop to zero because there is room for another case to reach the Court. Just because the legislature wasn’t prepared to write an exception into the statute doesn’t mean  that Justice Chin’s scenario won’t ever arise and be considered de novo.

IV

So What? (for the mediator)

In fact, there may be room for two more cases, one against an attorney, and another against a mediator. § 1122(a)(1) said

All persons who conduct or otherwise participate in the mediation expressly agree in writing

The Cassel court went to the Law Commission comments for clarification:

The California Law Revision Commission comment following section 1122 states, in its analysis of subdivision (a)(1), that “mediation documents and communications may be admitted or disclosed only upon agreement of all participants, including not only parties but also the mediator and other nonparties attending the mediation (e.g., a disputant not involved in litigation, a spouse, an accountant, an insurance representative, or an employee of a corporate affiliate).” (Cal. Law Revision Com. com., 29B pt. 3B West’s Ann. Evid. Code, supra, foll. § 1122, p. 409, italics added.)

They were looking to see how far confidentiality might reach, and observed:

[t]here is no persuasive basis to equate mediation “parties” or “disputants” with mediation “participants,” and thus to restrict confidentiality to potentially damaging mediation-related exchanges between disputing parties.

And they went further:

“Participants” are not defined in the statutory text, but they are mentioned at several points in the statutory scheme, under circumstances making clear that the term “participants” includes more than the mediation parties or disputants.

And read “persons who conduct or otherwise participate” as “mediation participants.”

***

Participants is an inclusive term.

Observers, advisors, experts, parties, attorneys are participants. But what about the mediator? The comment clearly says that’s what the drafters intended, but is that what the statute says? 1125 suggests otherwise. You may remember § 1225(a)(3) and (4) – when mediation confidentiality ends.

(3) The mediator provides the mediation participants with a writing signed by the mediator

and

(4) A party provides the mediator and the other mediation participants with a writing stating that the mediation is terminated

Clause (4) could be read two ways. One is that the mediator is not a mediation participant. There is the party and the other mediation participants, and then there is the mediator. The other reading is that the party must give the writing to the other mediation participants, including the mediator. And that the legislature had some other reason for mentioning the mediator separately.

But taken together with clause (3), the statute narrows the definition of who is a mediation participant. It does not say “the mediator provides the other mediation participants with a writing.” It says that there is a mediator, and there are all the others – who are the mediation participants. The neutral third party is not participating in the mediation. The mediator is facilitating.

It may seem bizarre to ask if the person who conducts the mediation is the mediator, but the wording of the statute says that the person who conducts also participates. And elsewhere, it suggests that the mediator is not a participant. The wording is consistent if the mediation is seen as being conducted among the participants and facilitated by the mediator. And “those that otherwise participate” are other non-parties that contribute.

***

And it may not be completely bizarre. The phrase “All persons who conduct or otherwise participate in the mediation” comes directly from the earlier section 1152.5 of the code, which was replaced by the current chapter. And the Law Commission is not consistent in its interpretation of that phrase.  They define “mediator” as a “neutral person who conducts a mediation” and they include the mediator in the comments to 1122 above. However, they summarize their recommendations as:

This recommendation resolves these ambiguities by adding a statute specifically addressing consent to disclosure. It would establish a general rule that consent of all mediation participants is necessary to waive the statutory protection for mediation confidentiality

And as we have seen, the statute does not regard the mediator as a mediation participant.

And there is case law, mentioned in Cassel, that suggests the mediator is in a different class, and not covered by the definition mediation participant.

The Court discusses the limits of mediation confidentiality (Cassel at 125) – except in cases where due process is implicated, or where there is express waiver mediation confidentiality must be strictly enforced. And they cite a 1999 case, Olam v. Congress Mortgage Co. where the “parties expressly waived confidentiality.”

If the mediator can be required to testify through express waiver from everyone in the proceeding except the mediator, then the mediator cannot be a mediation participant. The mediator is bound by confidentiality, since § 1119 covers all evidence writings and communications used in the process. But the mediator is not a participant for the purpose of express waiver.

***

And there is one further wrinkle. Olam was in Federal Court. And under FRE 501, the Court was required to consider State privilege statutes, but  in the context of  pre-emption issues. § 652(d) of the Federal ADA Act  required use of the Court’s local ADR rules to preserve mediation confidentiality.  For a California case it’s not just a question of privilege. The evidence code treats mediators differently. They are like judges and arbitrators. The questions in Olam, of whether there was an enforceable settlement agreement, and whether one of the parties was mentally competent are not obviously among the exceptions to CEC § 703.5. Which we haven’t mentioned yet.

CEC § 703.5. says that a mediator isn’t (usually) competent to testify.

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,

with exceptions:

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.

Exception (d) relates to judges and arbitrators.  Disqualification isn’t appropriate for mediators.  (b) is probably not relevant to mediation confidentiality – criminal matters or confidential material that is necessary for a criminal defense are the non-statutory “due-process” exceptions anyway. That leaves (a) for court-ordered mediations (and sanctions) and (c) for most private ADR mediations. A mediator would be competent to give testimony about what happened in a mediation in a subsequent proceeding if it is about a statement or conduct that could result in court sanctions or a disciplinary investigation.

Sanctions were the issue in Foxgate Homeowners Assn. v. Bramalea. Sanctions is an area where a mediator is competent. But § 1121 lays out how mediation confidentiality limits what a mediator can report to a court:

Neither a mediator nor anyone else may submit to a court or other adjudicative body, and a court or other adjudicative body may not consider, any report, assessment, evaluation, recommendation, or finding of any kind by the mediator concerning a mediation conducted by the mediator, other than a report that is mandated by court rule or other law and that states only whether an agreement was reached, unless all parties to the mediation expressly agree otherwise in writing, or orally in accordance with Section 1118.

Foxgate failed because it was a question of attorney sanctions. The only sanctions on which a mediator can report (or testify about) are sanctions against the mediator herself.

What is curious about clause (c) is that mediators in California are not required to be lawyers (or judges). For a non-lawyer mediator, clause (c) would not be available. But for those of us who are lawyers, any action in the mediation that might trigger a disciplinary action could lead to a lawsuit if all of the participants agreed to waive confidentiality.

***

Attorneys acting as mediation advocates are probably bullet-proof after Cassel. Unless they become a test case for  Justice Chin’s scenario of every participant except the offending attorney waiving the protections of mediation confidentiality. But the mediator does not appear to have the same protection. This is only an argument. Only a reading of the statute. It is untested. But mediators might be wise not to drop their malpractice insurance completely, or spend their malpractice fund on a vacation in Hawaii until they have been retired long enough for the statute of limitations to toll. Or be even more neutral and careful when mediating cases that might end up in Federal court.

 

 



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