MEDIATIONS ARE SUPPOSED TO BE CONFIDENTIAL… BUT ARE THEY REALLY?

Either as a participant in a mediation or as the mediator, we have all learned the cardinal rule that mediations are confidential both in terms of the statements and other communications made during the mediation and the information the mediator keeps to herself, not sharing it with the other parties. Many times a mediator has analogized mediation confidentiality to the television ad, "What happens in Vegas, stays in Vegas" to explain the sacrosanct nature of mediation confidentiality.

But, are mediations really confidential? While in legal theory, they are supposed to be, in court proceedings, they are not always so.

A review of both federal and state law on the topic seems to indicate that mediation confidentiality is to be strictly construed and applied. For example, with respect to the federal courts, Congress enacted the Alternative Dispute Resolution Act initially in 1988 to authorize arbitrations and then amended it in 1998 to include alternative dispute resolution processes in general. 28 USC §§ 651-658. (Public Law 105-315, 112 Stat 2993 (October 30, 1998).) Section 652(d) specifically states that, "... each district court shall, by local rule, provide for confidentiality of the alternative dispute resolution processes and to prohibit disclosure of confidential dispute resolution communications."

To accomplish this goal, the federal courts adopted local rules mandating mediation confidentiality. For example, the United States District Court for the Central District of California enacted Local Rule 16-15.8 stating that mediations conducted by a panel mediator are confidential. The court iterates this in paragraph 9 of its General Order 11-10 (August 15, 2011). Similarly, the Ninth Circuit Court of Appeals mandates mediation confidentiality in its Circuit Rule 33-1.

While some may dispute its existence, some federal courts have relied on a federal common law mediation privilege to uphold mediation confidentiality. Most recently, the Ninth Circuit Court of Appeals in Wilcox et al v. Arpaio et al, 753 F. 3d 872 (9th Cir. 2014) (Case no. 12-16418- June 2, 2014) recognized that a federal common law mediation confidentiality privilege exists but side-stepped the issue of applying it by arguing that the parties waived it as both sides argued only the application of Arizona's mediation privilege laws and did not reference this common law privilege.

Further, the Federal Rules of Evidence may also be applicable. In some instances, Rule 408 (regarding settlement discussions) will be the relevant rule while in other instances, Rule 501 (providing that in cases under the diversity jurisdiction of the court, as to claims and defenses, the state law supplies the rule on privilege) will be important.

With respect to state law, every state in the union has one or more statutes mandating mediation confidentiality; some more expansive than others. (See, California Law Review Commission Study, K-402, Memorandum 2014-35 (August 28, 2014) for an extensive discussion and exhibit listing most states' statute(s) and Memorandum 2014-24 (June 6, 2014) discussing the Uniform Mediation Act adopted in 11 states and the District of Columbia. Other Memoranda discuss the mediation confidentiality statutes of the remaining states.) In California, Evidence Code sections 1119- 1128 set out very stringent confidentiality rules that have been vigorously enforced by the California Supreme Court. (See, (See, Cassel v. Superior Court (2011) 51 Cal. 4th 113 (cassell opinion.pdf) and its progeny.)

In addition, the parties usually sign a mediation confidentiality agreement agreeing that all communications occurring within the mediation remain confidential.

So, with all of this statutory and contractual protection, mediations should be confidential. However, a yearly analysis of cases in court regarding mediations conducted by James R. Coben, Professor and Senior Fellow, Dispute Resolution Center at Hamline University School of Law shows quite the contrary. Both in a law review article and in a recent webinar sponsored by the Section of Dispute Resolution of the American Bar Association, Professor Coben

demonstrates that quite frequently, mediations have been the subject of hearings in court, and confidentiality has been ignored.

Professor Coben found that with each passing year, more and more cases have dealt with mediations. For example, in 2002, there were only 301 cases; by 2006 this number had more than doubled - there were 677 cases. In 2013, there were 802 cases.

At the same time, the trend has been a decrease in state court cases but an increase in federal court cases. In 2003, of the 335 cases, 87 of them or 26% of the cases were in federal court while 248 or 73% were in state court. Ten years later, in 2013-- of the 802 cases, 444 of them or 55% of the cases were in federal court and 358 or 45% were filed in state courts.

What were the issues raised in these cases? Out of the 735 cases filed in 2012-- 272 of them or 37% involved the enforcement of the settlement agreement, 103 cases or 14% involved mediator fees, 66 cases or 9% involved confidentiality, 37 cases or 5% involved sanctions, and 22 cases or 3% involved ethics. Again, in 2013-- 9% or 73 cases involved confidentiality.

With respect to confidentiality alone, between 1999 and 2005-- there were 601 cases filed in which oral mediation communications were offered into evidence. Notably, the idea of mediation confidentiality or privilege was not even raised in 462 of them or in 76%!

In addition, during this same time period, in 125 cases, the mediator testified and again, in 85 of them or 68% of them, the notion of privilege was not even raised.

The area that mediation confidentiality seems to be ignored quite a lot has been class action settlements. Mediators have quite frequently submitted declarations attesting to the quality of the bargaining process and fairness of the settlement. Quite frequently, the federal and state courts have relied on the reputation of the mediator as evidence that the mediation process was fair, and did not involve fraud or collusion, ignoring any objections of any class members who were not at the mediation. For example, in 2013-- there were 83 cases involving class action settlements in which the involvement of a private mediator, if not her affidavit submitted to the court, played a role in the court determining that the bargaining was at arm's-length and not collusive.

Professor Coben cites three examples of cases heard in the California U.S. District Courts in 2013:

•(1) In Re MRV Communications Inc Derivative Litig. , No. cv-08-03800 GAF (MANX), (a derivative action) arising in the Central District of California on June 6, 2013- the mediator's declaration was quoted in the process of approving the settlement; on page 11 of the Memorandum and Order approving attorney fees, the district court states:

"...And the mediator in the case concurs, urging that "the separately negotiated attorneys' fees and expenses agreement was negotiated in good faith and is fair and reasonable and within the range of fees paid in similar shareholder-derivative cases.""

•(2) Johansson-Dohrmann v. CBR Systems, Inc, 12 cv -1115- MMA (SD Cal. July 24, 2013) again quoting a mediator declaration in several different places in the process of approving the settlement;

"the settlement is . . . fair and reasonable to all parties and provides significant benefits to the Settlement Class." ( Page 8 of Order) and

"It was clear from the briefs and the discussions during the mediation that the parties and their counsel had a thorough understanding of the facts and law as well as the risks and uncertainties pertaining to the litigation." (Page 10 of Order)

That the parties "vigorously negotiated their respective positions," and that the settlement was the "product of arm's-length and good faith negotiations." (Page 10 of Order)

(3) Moore v. Verizon Communications, Inc. No. c-09-1823 SBA (ND Cal. August 28, 2013,) noting that the mediator "unreservedly" recommended the settlement. (Page 15 of Order) Here, the mediator submitted a 10 page declaration in support of the settlement.

While these cases do involve showing the fairness of class action settlements, there appears to be nothing in the mediation confidentiality statutes authorizing such as an exception. And while the parties may have waived confidentiality, many of the statutes require an express waiver in writing; rather than an implied waiver or simply ignoring the issue altogether as seems to have occurred here. See, for example California Evidence Code sections 1118 and 1122.

So... are mediations confidential? Not always- it depends on what's at stake!

... Just something to think about!

IS MEDIATING PRENUPS A FORM OF MARITAL MEDIATION?

My mediation practice during the past several years has taken a turn towards mediating prenuptial agreements. Here's how it happened:

At times being the "other" attorney reviewing the agreement sent by the lawyer of the more moneyed spouse-to-be, I noticed a trend: The first draft of these agreements generally sketched out a marriage with no guaranteed financial interplay.

The typical lawyer-proffered prenup says that no (or little) money or assets are to be shared with the other spouse unless the moneyed spouse wants to. Further, generally there is no guarantee or minimum of assets provided to the less-moneyed spouse if the parties are married at the death of the more moneyed spouse. And there are iron-clad provisions preventing a spouse from claiming rights to the deceased's estate.

Once the first barrage in the prenup wars is sent by the more-moneyed spouse's lawyer, it's an uphill battle to change the initial terms of the agreement. Generally the spouse-to-be's attorney has convinced him (or her) that it is a matter of "risk contol" in case of divorce and a restrictive prenup is necessary and proper to protect the client.

It doesn't take a rocket scientist to see the harm such a prenup can do to a marriage. During the negotiations, feelings are harmed, generally irreparably. I have seen people walk down the aisle with a marriage -- with all but the financial connection. The feeling of being abused and marginalized persists through the marriage. Having little or no vested martial rights weakens and harms the marital relationship. 

Of course, these concerns apply much less (and sometimes do not apply) to later-in-life marriages where the parties are financially secure and there are children of previous marriages. For these people, a prenup is often helpful to create family peace and provide for one's own children at death, often balancing this with the needs of the new spouse.

Mediation is an excellent way for people to resolve their differences and have clearcommunications. A mediator can help level the playing field, and elicit all thoughts and concerns of both parties in a non-confrontational setting. Mediating these conversations helps the clients discuss difficult issues without emotions, anger and hot speech overcoming them.

The discussion can be rational and productive. Ideas as to how to fairly and accurately balance and accommodate the parties' legitimate concerns can be proposed by the parties and the mediator. Some of the mediator-proposed ideas may be ones that the parties may not even have thought about or thought were possible.

So a number of years ago, I started suggesting to clients who approached me about prenuptial agreements to consider formulating them through mediation. It turns out it is a wonderful way to do a prenup. At the end, the parties almost invariably feel fairly treated, and the resulting prenup is not overreaching or over-restrictive.

How does mediating a prenuptial agreement relate to marital mediation? Marriage relies on generosity. (See "The Generous Marriage", by Tara Parker-Pope.) In this article, the author discusses a recent study by the University of Virginia's National Marriage Project (a marriage research think tank) that studied the role of generosity in marriage. Its conclusion: generosity is the glue that leads to increased "happiness quotients" for marriages. Significantly more of the couples in a "generous" marriage reported being "very happy" together.Cutting your spouse out of your earnings and financial wherewithal (which many standard-issue prenups do) is ungenerous. The old adage "money is love" is really true. It is an expression of love and caring. As the National Marriage Project's W. Bradford Wilcox (who led the "generosity" research) said, "Living that spirit of generosity in a marriage does foster a virtuous cycle that leads to both spouses on average being happier in the marriage."

So in essence, premarital agreement mediation is a form of marital mediation in several senses: it encourages generosity, truthfulness and clear communications. It's about money and security, which is a deep concern in marriages. It helps to train the couple in their ability to discuss and resolve difficult issues. This is identical to marital mediation where couples are struggling over difficult issues, often money issues, which are extremely common in marriages.

Facilitating a client-controlled prenuptial agreement with honesty and direct communication between the spouses-to-be, means that you are helping the couple embark on a stronger, clearer, more generous marriage. This bodes well for the health of the marriage.

So as I started, is mediating prenups a form of marital mediation? The resounding answer is "yes."

IS CONFLICT ALWAYS NEGATIVE (OR WHERE IS THE TIGER)?

Once upon a time, when we lived among the tigers, we wisely kept our threat detectors on sensitive.(1) With no time to think, when seconds might make the difference between having and being dinner, we reacted, and quickly. Knee-jerk made sense as time was usually on the tiger’s side. Walter Cannon captured it perfectly in 1932 when he named it “fight or flight.” No middle ground when the tiger snarls.

In the workplace, that knee-jerk has evolved, but only slightly: Push harder. Blame. Defend. These reactions feel right at the time as our brains prepare us for the quick response. And each would be appropriate—if there were an actual tiger/lion roaming free amongst the cubicles. Based on our history, family, culture, we act out the conflict dance with slightly different steps, but we’re still constrained by fear. Even non-real events like impending change and rumor, can trigger our threat detectors.

Where’s the tiger? is the first step I help my clients practice. It’s also the first step I learned when I began working in conflict management in the early ‘90s. I grew up in a family that didn’t have conflict. Ha! If you looked up ‘conflict avoidance’ in the dictionary, you’d find my picture. It cost me personally and professionally, as I let conflict manage me. I was completely at the mercy of a binary default setting (BDS) with no other possibilities. I pushed back, hard, or I withdrew. In the workplace the most damaging impact of the BDS is to curtail possibility. When we’re reacting, we narrow our choices and lose the capacity to generate options. Others are either for us or against us; ideas are only good or bad. In our increasingly diverse and ambiguous marketplace, that’s dangerous. Because innovation, growth, and collaboration don’t take root in ground watered by fear, we need to admit conflict.

Admitting conflict starts with one meaning of the verb: to acknowledge. When we learn to re-frame conflict as simply an unresolved difference, by acknowledging that differences are the norm because we are different, we remove the tiger and open options. Conflict is okay, it’s normal. Misunderstanding isn’t someone’s fault, it’s what we do. Once we accept that important insight, we have a starting point for a realistic conversation without blame. We can start listening away from defending and toward understanding.

Admitting conflict also includes the second meaning of the verb: to allow entry. Once we’ve accepted conflict—difference—without judgment, we can welcome the appearance of differences of preference (like sensing and intuiting), culture (like body language and nuance), and vision (goals and strategies) as springboards for innovative problem solving and decision making. As in Tuckman’s Team progress Performing II(2), which only has room to appear after storming, our differences can become our greatest asset—our fuel. Conflict is inevitable—who doesn’t have a snooze button? So why not take full advantage of the admission of conflict as a driving force toward better communication and performance?

1I am indebted to James Shreeve author of “The Genome War” and “The Neanderthal Enigma”: Beyond the Brain (National Geographic, March 2005) for the insights that led to this piece.

2The White-Fairhurst TPR model and Colin Carnall’s Comfort Zone Theory provide further insight into team development. Clifford Senf suggested the idea of Performing II, which appears after a second storming stage since most teams move to performing too quickly.

DO BARRISTERS AND MEDIATION MIX?

Some barristers risk perpetuating adversarial stereotypes. But there is still a place for counsel in the mediation process.

Are barristers a useful tool in mediation, or does too much time have to be spent calming their egos before the mediation can get going?

This question was touched on briefly at a mediation debate I attended a few weeks ago, and it sparked a bit of a storm at the time on Twitter.  

I tweeted a comment by Frances McCarthy, a hugely respected and experienced personal injury lawyer and mediator, that the problem with some mediations is actually the barristers.  

McCarthy said that while the parties go to a mediation with the mindset that they want to settle the case, sometimes the barrister’s attitude is that they are there for a fight; and valuable time has to be spent calming their egos before the process can really get started. She felt that some mediations would go better if the barristers weren’t actually there at all. 

Needless to say, the comments did not go down well on Twitter with the barristers, and some top PI counsel including Gordon Exall (@CivilLitTweet) and Gerard McDermott QC (@McDermottQC) used their 140 characters to make convincing arguments in support of their barrister brethren; the gist being that (claimant) barristers are very successful in increasing the value of settlements; settlement is a laudable aim but not at any cost; and barristers recognise that there is simply no room for ego in negotiations.  

Why, then, does this perception exist that barristers and mediation don’t mix? McCarthy’s comments were by no means the first time that I have heard criticism of the way barristers approach mediation. Is that criticism fair?  

I asked mediator Tim Wallis, who organised the debate event, what his view was on the topic. Wallis had some interesting examples of barristers behaving badly, such as one who spent 10 minutes arguing about the desirability of the rooms available and complaining that his opponents had unfairly ‘bagged’ the best room; and another who resorted to actual ‘fisticuffs’ quite early on in proceedings.

But these examples are from a good 10 years ago.  

These days, Wallis says, most barristers are quite mediation savvy - even if they have not had mediation training - and some are extremely skilful in knowing exactly how to get the most out of a mediation.  

But Wallis acknowledges that occasionally ‘I find that I am dealing with a barrister who will not settle down until they have asserted their authority in some way’, and sometimes where parties choose not to bring counsel, he hears solicitors and insurers citing a desire to avoid ‘grandstanding’ as the reason, or a belief that barristers ‘get in the way’.  

Another longstanding mediator, Philip Hesketh, tells me that when parties ask him whether they should bring counsel along to a mediation, he responds by asking whether their barrister is a skilled negotiator – if so, bring them along; but if not, then what will they be there for?  

Hesketh observes that counsel will often approach mediation in an ‘adversarial’ way that is not suited to the mediation methodology; and he has seen occasions where a barrister treats the mediation as if it were their own case, and rejects offers before the client has even had a chance to speak.  

The bar has come a long way in how it approaches mediation, and many barristers have become adept at moulding their traditional courtroom skills into a new shape that better serves their clients at mediation.

But some barristers out there are clearly still failing to adapt their approach; and they risk perpetuating the stereotypes that can sometimes make clients question whether they need to use barristers in mediation at all