Confidentiality in Mediation

The rule is simple: What's said in mediation stays in mediation. Despite its simplicity, though, this principle has spawned rulings in difficult cases that have profound consequences for lawyers and clients alike.

Of course, a well-established statutory framework governs the privacy of mediation (see Cal. Evid. Code §§ 1115-1127); but a string of appellate decisions also affirms the Legislature's declaration that "all communications ... in the course of a mediation ... shall remain confidential." (§ 1119.) The California Supreme Court recently ruled that communication between lawyers and their clients during mediation cannot be introduced in subsequent attorney-client litigation - even if it involves a claim that the lawyer committed malpractice during the mediation at issue (Cassel v. Superior Court, 51 Cal. 4th 113 (2011)). The same approach also applies in federal court (Benesch v. Green, 2009 WL 4885215 (N.D. Cal. 2009)).

It is crucial for attorneys to fully understand that if the parties sign a mediation confidentiality agreement it will be enforced, and that mediation confidentiality by statute applies from the first contact with the mediator through the enforcement of a mediated settlement agreement or court order. Indeed, in May the Ninth Circuit relied on just such an agreement when it barred a party from introducing mediation communications to support a motion to set aside a settlement reached during court-ordered negotiations (Facebook Inc. v. Pacific Northwest Software Inc., 604 F.3d 1034, 1040-1042 (9th Cir. 2011)).

The Benefits of Mediation
One of mediation's key benefits is its ability to protect the privacy and confidentiality of the participants. Confidentiality is the foundation for other benefits as well, especially when it leads to resolution of a legal dispute. As cases are diverted to alternative dispute resolution (ADR), court efficiency improves. Reduced caseloads, in turn, increase the public's satisfaction with the judicial branch as other matters move through the system more efficiently.

Whether mediation takes place at the courthouse or in a private office, litigants have more control over the subject dispute and in many instances can minimize harm to important relationships. They may also lower their legal bills (not to mention risk) if a complex and expensive case is resolved short of trial.

Key Statutes
In California, mediation confidentiality is firmly embedded in sections 1115 through 1127 of the Evidence Code. The state supreme court has described this statutory framework as "extensive" (Fair v. Bakhtiari, 40 Cal. 4th 189, 194-196 (2006)). But the use and effectiveness of mediation depends on the candor of the participants. As the court has noted, the purpose of the statute is to promote "a candid and informal exchange regarding events in the past. ... This frank exchange is achieved only if the participants know that what is said in the mediation will not be used to their detriment through later court proceedings and other adjudicatory processes." (Cassel, 51 Cal. 4th at 123.)

In order to fully understand the parameters of mediation confidentiality, it is crucial to appreciate precisely what mediation is, when the process begins, and when it ends.

Statutory Definitions
Evidence Code section 1115 defines exactly what constitutes mediation, who qualifies as a mediator, and the nature of a mediation consultation - all of which receive confidentiality protection under the law.

Mediation is a process in which a neutral person or persons facilitate communication between the disputants to help them reach a mutually acceptable agreement (§ 1115(a)).

A mediator is a neutral person who conducts a mediation and includes any person designated by a mediator either to assist in the mediation or to communicate with the participants in preparation for a mediation (§ 1115(b)).

A mediation consultation is a communication between a person and a mediator for the purpose of initiating, considering, or reconvening a mediation or retaining the mediator (§ 1115(c)).

These critical definitions are at the heart of a legal scheme that affords arguably the broadest and strongest mediation confidentiality in the world - California's is even more protective than the Uniform Mediation Act adopted by the National Conference of Commissioners on Uniform State Laws in 2003 [www.tba.org/Sections/Dispute Resolution/uma.pdf].

Confidentiality begins with the first call to a mediation office, even if the caller speaks to a staff member, intern, or independent contractor used by the mediator to assist with the intake of new matters.

By statute, a mediation ends with written or oral settlement agreements that fully or partially resolve the dispute. Even if no settlement agreement has been reached, any party can terminate a mediation by providing written notification to the mediator and the other participants. All that is required is a statement that the mediation is terminated or words to that effect. A mediator may terminate the process by doing the same thing, but then the parties have the option to continue the mediation, provided all participants agree. (See Cal. Evid. Code § 1125.)

However, relatively few attorneys are aware that there is yet another way for mediation to end: If no communication occurs between the mediator and the parties for ten calendar days, the mediation is automatically terminated. The parties can, at their option, agree to shorten this period (§ 1125(a)(5)).

The termination of a mediation does not destroy the confidentially of conversations and mediation-generated documents - they remain confidential and generally inadmissible as evidence. (See Cal. Evid. Code § 1126.)

Implications of Confidentiality
Mediation confidentiality means that no evidence of anything said, any writing, 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 such evidence cannot be compelled except in a criminal proceeding (§ 1119) or in a federal civil or administrative matter, including a dispute with the IRS.

Family Court Exceptions
A strange anomaly exists with respect to the mediation of child custody and visitation cases. (See Cal. Fam. Code § 3170.) More than half of the counties in California have court rules authorizing a mediator to make recommendations to a judge if settlement discussions do not resolve all issues in a child custody matter. This authority was affirmed in legislation prompted by the Elkins Report (AB 939). However, because a mediator's testimony and written recommendations to the court run directly contrary to the published appellate decisions cited above, court mediators are now designated as "counselors" to preserve the practice of providing admissible recommendations to family court judicial officers (see Cal. Fam. Code § 3183). Effective next January, the Family Code will require that a counselor's recommendations be provided in writing in advance of any hearing, and that before considering such recommendations the judicial officer must inquire whether the parties, their attorneys, and any minor's counsel have received them.

Inadmissible Evidence
Evidence that a party obtains prior to mediation does not become inadmissible simply because it was utilized during the mediation itself. However, materials that were specially prepared for a mediation session cannot be used in other proceedings without all the parties' consent. (See Cal. Evid. Code § 1120; and Rojas v. Superior Court, 33 Cal. 4th 407 (2007).) In the Rojas case, during mediation one of the parties utilized a written report of structural defects that had been prepared by the party's expert prior to (and independently of) the mediation. When the report was later offered into evidence, it was not barred by section 1120. The common-sense rule is that evidence that is otherwise admissible does not lose that quality solely because it was used in a mediation.

In addition, certain evidence can always be introduced in subsequent proceedings, regardless of whether it was used during mediation. Section 1120(b) of the Evidence Code identifies this information as:

- an agreement to mediate a dispute

- any agreement not to take a default or to extend the deadline for acting or refraining from acting in a pending civil action

- the fact that a mediator has served, is serving, will serve, or was contacted about serving as a mediator in a dispute.

Limits on Testimony
Some clients assume that if they persuade a mediator of the strength of their position, the mediator might be a powerful witness for them at trial. Conversely, other clients might be reluctant to speak to a mediator for fear that the mediator might later testify against them. For these reasons, the code strictly prohibits mediators from testifying unless both parties and the mediator agree. (See §1122; Marriage of Kieturakis, 138 Cal. App. 4th 56 (2006); Eisendrath v. Superior Court, 109 Cal. App. 4th 351 (2003).)

When parties seek to obtain mediation-related evidence and fail, there are consequences. For example, if a party attempts to subpoena a mediator to testify and the motion is denied, the unsuccessful party will be liable for paying attorneys fees to the mediator. (See Cal. Evid. Code § 1127.)

Settlement Agreements
What happens if a settlement is reached during mediation? Can a party introduce the settlement agreement in a court proceeding to enforce the agreement? The answer is: It depends.

Although there is strong policy protecting mediation confidentiality, an equally strong policy promotes the enforcement of settlement agreements. The Evidence Code reconciles these policies in section 1123, which provides that if a settlement agreement is signed by the parties during mediation, it is admissible under any of the following conditions:

- The agreement itself provides that it is admissible or subject to disclosure, or words to that effect.

- The agreement provides that it is enforceable or binding, or words to that effect.

- All parties expressly agree in writing, or orally in accordance with section 1118, to its disclosure.

- The agreement is needed to show fraud, duress, or illegality that is relevant to an issue in dispute.

Courts are so committed to enforcing mediated agreements that even a bare chart initialed by the parties (there being no separate written document) has been considered an enforceable and admissible settlement agreement. (See Estate of Thottam, 165 Cal. App. 4th 1331 (2008).)

Settlement remorse is common in litigation, so clients should be advised that it is very difficult to revoke a signed settlement agreement after the fact - especially when the deal was brokered during mediation (Kieturakis, 138 Cal. App. 4th 56, 8588 (2006)). Equally important is an understanding that unless the strictures of section 1123 are followed to the letter, a mediated settlement agreement will not be admissible in subsequent enforcement proceedings (Fair v. Bakhtiari, 40 Cal. 4th 189 (2006)).

Legal Malpractice
What happens if a lawyer commits malpractice during mediation? Can a client testify in a subsequent litigation about what the lawyer said during the mediation session? The answer is no. In Cassel, the California Supreme Court restated its policy favoring complete mediation confidentiality and prohibited a client from testifying in a follow-up malpractice case about the legal advice given by his lawyer during mediation - advice that the client contended breached the standard of care. The court's holding is strong indeed: The justices affirmed that "these confidentiality provisions are clear and absolute. Except in rare circumstances, they must be strictly applied and do not permit judicially crafted exceptions or limitations, even where competing public policies may be affected." (Cassel, 51 Cal. 4th at 118.)

The court went on to state that "such attorney-client communications, like any other communications, were confidential, and therefore were neither discoverable nor admissible - even for purposes of proving a claim of legal malpractice - insofar as they were 'for the purpose of, in the course of, or pursuant to mediation. ...' " (Cassel, 51 Cal. 4th at 138.)

The Cassel decision does not stand alone. In fact, in another malpractice case the court of appeal barred a mediator's testimony about mere procedural issues, such as the number of pages contained in a settlement agreement and who received copies (Radford v. Shehorn, 187 Cal. App. 4th 852 (2010)). A related line of cases establishes that statements made during mediation cannot be used to support a motion for sanctions based on allegedly bad faith negotiations (Foxgate Homeowners Ass'n Inc. v. Bramlea California Inc., 26 Cal. 4th 1 (2001)).

Beyond the Courtroom
Mediation confidentiality does have its limits. The statutory scheme contained in Evidence Code sections 1115-1127 applies only to legal proceedings. This is an important limitation, for no law prohibits a party from talking to the press about what took place during mediation. Nor is there a bar that stops someone from talking about such matters with business or professional colleagues, extended family members, or friends and others in the neighborhood or religious community.

The best approach to prevent such disclosure is to sign a confidentiality agreement at the outset of mediation; or else negotiate a confidentiality clause in a final settlement agreement (perhaps specifying monetary damages for a breach). Be sure to honor the mandate of Fair v. Bahktiari by expressly stating in the agreement that it may be admitted to enforce the confidentially clause, should there be a breach. For maximum enforceability of a settlement agreement, make explicit reference to section 664.6 of the Code of Civil Procedure, including the actual text of that statute. (See Blix Street Records Inc. v. Cassidy, 191 Cal. App. 4th 39 (2010).).

A generation ago, lawyers tended to view mediation as an alternative to litigation. Today, mediation is an important procedural component of virtually every litigated case. Learning the contours of mediation confidentiality is an essential requirement for competent lawyering in any area of practice.

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Forrest S. Mosten is a certified family law specialist and mediator in Los Angeles who handles marital and business dissolutions, teaches law at UCLA, and serves as an expert witness.

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