There are many factors that will influence the success or failure of a mediation. As a neutral, my role entails objectively viewing both sides of the case as a matter of first impression. In that role, I often observe repeated, consistent indicators that a case is not yet positioned for a successful mediation. The purpose of this article is to identify and discuss some timing factors which may significantly influence the success of a mediation.
An estimated 97% of civil cases filed in the California court system settle prior to trial. A vast majority of these cases will be settled through mediation, all too often on the proverbial courthouse steps, even though the contours of the case have been evolving for some time. The timing of mediation is crucial: a well-timed mediation will present the best opportunity to resolve the case on the way to the courthouse steps. Conversely, an ill-timed mediation can sometimes lead to frustration and potentially even escalation of the conflict.
Why cases settle
Cases settle when both parties agree to a settlement value for the case. I often remind parties that the settlement number will rarely reflect what each party sees as the value of the case. It will instead be a compromised figure reflecting the chances of a potential upside for the plaintiff (and potential downside for a defendant), balanced against the inherent risks and costs of continued litigation. Some of these calculations will be affected by the nature of the case itself - an expert-heavy personal injury case requiring a substantial outlay of costs will typically be litigated quite differently to a breach of contract or employment case. However, regardless of how the case is being litigated, the same rule applies: at some point along the litigation continuum, in those 97% of cases, both parties will find themselves approaching the same ballpark in terms of settlement value - and that is the sweet spot for mediation. At the end of the day, the determination of settlement value is a subjective one - what do you think the jury will do with this case? When counsel for the parties' viewpoints come into alignment, the case will settle. Until then, something more will have to happen before a mediated settlement can be achieved.
It is important to be aware that just because a counterparty suggests mediation does not necessarily mean that they believe the timing is optimal; the suggestion could be driven by broader strategic considerations. For example, the suggestion could be a stalling tactic or fishing expedition without any serious intention of settlement despite all protestations to the contrary. Likewise, mediation could be suggested early to avoid a key piece of evidence coming to light that could materially affect the value of the case. If the motivation is in fact a stalling tactic or fishing expedition, then the mediation is unlikely to resolve the case. The true cost of a failed mediation may be more than the mediator's fees. It may erode your client's confidence in their claim, or in mediation, or even your representation, making future mediation more challenging.
By recognizing these potential strategies and realistically evaluating whether both parties have sufficient information to agree on a settlement value for the case, you can protect yourself and your client from disappointment and incurring unnecessary costs.
Issues affecting ripeness for mediation:
The two big issues at play are liability and damages. Where the development of these issues sit at any given time will influence what further steps need to be taken before a mediated settlement could potentially be achieved. For the clearest view of whether your case is ripe for mediation, it is necessary to consider liability and damages separately.
I. Liability issues
Some key factors to consider that will influence the timing of when mediation might be appropriate include:
A. Facts of the Case: Are the facts of the case generally known to the parties, or are claims being made based on facts that have yet to be developed? If a car rear-ends another car that was stopped at a traffic light, both parties will generally be aware of the basic fact pattern. If a boss is recorded making a racist remark to an employee, that too will be a fact pattern that both sides are aware of at the outset. In cases such as this, while some discovery will still be necessary in order to properly assess the settlement value of the case, that discovery will generally be easier to identify and more efficient to obtain making an early mediation more feasible. Defense is likely to at least want to investigate and depose the plaintiff and that may or may not prove fruitful for them, but early mediation could still be the best course, especially in a case where fees are recoverable.
If the allegations being made involve facts that are not evident at the beginning of the case, such as allegations that a defendant has engaged in company-wide discriminatory practices, then more extensive discovery will likely be needed before the case is ripe for mediation. Until facts are clarified through discovery, it will be difficult for the parties to arrive at an agreed upon settlement value for the case and mediation may not be productive.
B. Pleadings and Law and Motion Practice: The status of the pleadings may have a significant effect on the settlement valuation calculus. Claims based on novel or untested legal theories (most commonly involving interpretation of a new law, or extension of the application of an existing law) would likely need to survive demurrer and perhaps even summary judgment before the parties' views of the value of the case may begin to align and make settlement feasible. Likewise, punitive damage claims and claims for intentional infliction of emotional distress will have more value if they survive demurrer and significantly more value if they survive an MSJ or MSA.
C. Evidentiary Issues: Where the admissibility of certain evidence is key to the case, the parties may need to wait until a motion in limine is decided, or the court gives the parties some preliminary indication of how it might rule. For example, in a situation where there is evidence such as a prior felony conviction that might materially impact the credibility or character of one of the parties, lawyers on either side may convince themselves of the likely outcome of an MIL being favorable to them, and until proven wrong by the trial judge, this misplaced confidence may be an impediment to a mediated settlement.
D. Cases Involving Multiple Eyewitnesses: One would think that where multiple eyewitnesses observe an incident, this would result in clarity as to how events unfolded. In fact, usually the opposite is true. Multiple eyewitnesses usually means the parties will be confronted with multiple versions of what happened. Additionally, with a recent de-emphasis by law enforcement on accident investigation, witness statements are less helpful in clarifying events than they used to be. It is not uncommon for the deposition of an eyewitness to yield a different version of events than might have been previously suggested to an investigating officer. The point at which a prior helpful or unhelpful witness statement has just been debunked or reversed may provide the parties with an opportunity to re-evaluate the case, creating a good opportunity for a mediated settlement.
E. The Type of Claim at Issue
1. Complicated Product Liability Case: A product liability case may involve a product with a failure history or a product with no failure history.
Where there is a failure history, resolution of issues precedent to mediation may be related mostly to product misuse, abuse or comparative fault of the plaintiff, but so long as the core claims focus on a product with a failure history, there should be enough of a basis to mediate a resolution without the need for extensive discovery.
If, however, the product has little or no failure history, the parties will likely need to retain experts and complete expert depositions before these cases have a chance to be successfully mediated. In the most highly contested cases, the cases may even need to proceed through Kelly-Frye or Daubert hearings before mediation can be productive (Frye v. United States (D.C. Cir. 1923) 293 F. 1013) (Daubert v. Merrell Dow Pharm., Inc. ((1993) 509 U.S. 579).
2. Public Entity Cases: Cases against public entities are unique in that approval is usually required by a board or committee, which can take some period of time. In my experience, usually settlements recommended to boards are eventually approved, but most will require that certain measures have been taken in the litigation before a settlement can be approved. It is usually beneficial to have at least some key discovery completed before moving one of these types of cases to mediation.
II. Types of Damages
The types of damages claimed and the need for substantiating information can also impact when mediation might have the best chance of success.
A. Traumatic Brain Injury (TBI): Cases involving claims of TBI can vary widely. In a case of severe TBI, it is possible that an early mediation can be productive because like a known bad facts case, the harm is evident to both parties. With moderate or mild TBI claims, mediation may need to wait until experts for both sides have evaluated the plaintiff and exchanged reports.
B. Amputation: An amputation can range from a lost finger-tip to a lost arm or leg. Amputation cases have the benefit of clarity - it is going to be obvious what the injury is and how it is likely to affect the plaintiff moving forward. There will be a wealth of available public data regarding the challenges that type of amputation will present to the amputee and what rehabilitation possibilities exist, and this may make early mediation feasible.
C. Non-economic damage case: Non-economic damages cases defined in CACI No. 3905A may include claims for past and future physical pain, mental suffering, loss of enjoyment of life, disfigurement, physical impairment, inconvenience, grief, anxiety, humiliation, and/or emotional distress. In a case where non-economic damages comprise the majority or totality of plaintiff's claim, then the case may be difficult to truly evaluate without deposing plaintiff, plaintiff's spouse and some of plaintiff's treating physicians (and potentially experts if the claim involves a psychiatric or psychological disorder alleged to have been created or exacerbated by defendant's actions). Even with all these steps completed, mediating these cases could be challenging. CACI 3905A notes that a jury is invested with vast discretion in determining the damages to be awarded in these types of cases, which therefore contain the potential for a large verdict. Because of this, the skill and track record of the plaintiff's lawyer handling the case at the time may also become a factor in identifying cases presenting an opportunity to mediate, because the defense's appetite to settle may increase or decrease commensurately as trial approaches.
D. Speculative damages: Cases where a significant aspect of the damage claims are susceptible to legal challenges may also present a potential stumbling block when it comes to mediation. For example, a Sargon challenge case (Sargon Enterprises, Inc. v. University of Southern Cal. (2012) 55 Cal.4th 747) is a challenge to not just to the nature and extent of damages but whether the damages are actually recoverable as a matter of law (for example, if the damages being claimed are potentially speculative). Expert reports or at least expert analyses will likely need to be obtained and exchanged before a productive mediation can occur. Similarly, a case may need to survive a Kelly-Frye or Daubert motion as to anticipated expert testimony in order for the parties to develop a shared viewpoint in terms of the valuation of the case.
E. Fee-shifting cases: Certain types of cases involving fee-shifting statutes, such as employment cases, may provide incentive to the parties to go to early mediation. These cases are atypical in that the more work a plaintiff's attorney is required to put into the case, the higher the defendant's potential exposure will be, regardless of the value of the damage the plaintiff incurred.
F. Yardsticks for damages: Sometimes cases will follow recent verdicts or settlements in similar cases, which may give the parties something to measure the damages in their cases against (the many diocese/abuse cases come to mind). If such a yardstick is available and there are no significant distinguishing factors, this should facilitate early mediation. One variable will be the skill, and track record of both the lawyers who prosecuted and defended the yardstick case(s), and the lawyers prosecuting and defending the current case. There is, therefore, some potential for optimistic overconfidence of counsel on either side to interfere with a settlement opportunity.
I. Injuries in excess of what would be anticipated: In some cases, the damages claimed by a plaintiff are worse than could be reasonably anticipated from the subject incident. For example, a driver whose vehicle is rear-ended at very low speed by a similarly sized vehicle may claim life-changing injuries. In this circumstance, the issue of causation will be central to both parties' evaluation of the case and expert testimony in the form of accident reconstruction, bio-mechanics and medical opinions may be needed before the parties can start to develop a similar view of the value of the case.
A word about pre-litigation mediation
Pre-filing mediation could be especially beneficial in situations where both parties are prepared to acknowledge the existence of an obviously bad fact pattern without the need for discovery. California law precludes the use of confidentiality and non-disparagement agreements in settling claims of harassment or discrimination based on the Fair Employment and Housing Act. While by no means settled law, the prevalent view amongst many leading practitioners is that settlements would be exempt from this legislation so long as no formal action has occurred. In sensitive matters such as those involving #metoo allegations, this can present an incentive for parties to mediate at the pre-litigation stage, preserving confidentiality.
A well-timed mediation can be a powerful tool in settling your case; however, at the wrong time, it is typically not a case of "no harm, no foul." A failed mediation involves time, effort, and expense and can affect your client's confidence in the process. Realistic consideration of the information available to both parties and what discovery might still be needed by both parties is essential to determining the correct time to mediate your case.