Originally from Dispute Resolution Journal

COMMERCIAL

Confidentiality in Mediation

The Supreme Court of California held that there are no judicially created exceptions to the statutory protections for the confidentiality of mediation communications or to the statutory limits on the contents of mediators’ reports. Thus, neither a mediator nor a party may reveal communications made during court-ordered mediation.

In this construction defects litigation the court appointed Judge Smith, retired, to act both as the mediator and as special master for rulings on discovery. The parties were ordered to make their best efforts to cooperate in the mediation process. The parties were notified that there would be a five-day round of mediation sessions and that they should bring their experts. The defendant’s attorney arrived late for the first session and did not bring any defense experts. The mediator concluded that the mediation could not proceed without them and cancelled the remaining sessions.

The plaintiff moved for sanctions against the defendant for failure to cooperate in the mediation. Two days later, Judge Smith filed a report with the court, which stated, inter alia, that the defendant’s attorney spent the “vast majority of his time trying to derail the mediation” and refused to bring any experts. The court denied the motion for sanctions without prejudice. Thereafter, one mediation session was held before a new mediator, who reported to the court that further sessions would be unproductive. The plaintiff responded with a second motion for sanctions. This motion, which relied on Judge Smith’s earlier report, was granted over the defendant’s objections that the Smith report violated state law making anything said during mediation inadmissible and undiscoverable.

The California Court of Appeal concluded that a literal interpretation of this statute would lead to an absurd result or fail to carry out the legislative purpose. Thus, it crafted an exception that permitted a mediator to report to the court only information reasonably necessary to describe sanctionable conduct and place it in context. Since Judge Smith’s report was not so limited, the appeals court reversed the sanctions order and remanded the case to the lower court.

California’s high court rejected the approach taken by the appeals court, saying there was no need for the court to craft an exception to the state’s mediation confidentiality laws. These laws makes confidential “all communications, negotiations, or settlement discussions” in the course of a mediation (Cal. Code. Civ. Proc. § 1119), bar a mediator from submitting to a court any report by the mediator about a mediation without the parties’ consent, and bar a court from considering such a report (Cal. Code. Civ. Proc. § 1121). The only exception is a report mandated by court rule or law that states only whether an agreement was reached. The court found that these statutes are clear and unambiguous. Thus, they were violated by the submission of Judge Smith’s report in support of the motion for sanctions, and by the court’s consideration of that report.

The Supreme Court of California noted that the state legislature decided that the policy of encouraging mediation was promoted by ensuring confidentiality and avoiding the threat that frank expression of viewpoints may subject a participant to a motion for sanctions, or lead the mediator to assert that those views constitute bad faith failure to participate in mediation. The court emphasized that the need for a frank exchange in mediation can be obtained only if confidentiality is protected. It distinguished two cases in which confidentiality was not protected.

Foxgate Homeowner’s Association v. Bramalea California, Inc., S087319 (Cal. July 9, 2001).