What Happens at JAMS, Stays at JAMS

In an opinion that is based on a literal reading of California’s mediation confidentiality statute (Evidence Code §§1115 et seq.), the State Supreme Court unanimously held in Cassel v. Superior Court (1-13-2011) __ Cal 4th __ that a client cannot use his attorney’s bad advice during a mediation as evidence in a subsequent suit for malpractice.

The mediation statute means what it says that “[a]ll communications, negotiations, or settlement discussions by and between participants in the course of a mediation . . . shall remain confidential.”  “Participants” means everyone, lawyers included.  Nothing in the statute, the Court holds, provides that communications must involve the actual parties or the other side of the dispute.

The alleged facts present a reasonably compelling case for disclosure.  In a mediation of a business dispute, Michael Cassel, a fashion clothing distributor, told his attorneys that he would not settle for less than $2 million.  However, he alleges, his attorneys improperly induced him to settle for only $1.25 million.  While not on a par with the sleep deprivation and other persuasive measures allegedly used on terrorist suspects, the following description from the opinion sets out the measures, including following Cassel into the bathroom, that he alleges were sufficient to cause him to do something he did not want to do:

“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 the attorneys] called and told petitioner he had to come back.  Upon his return, his lawyers continued to harass and coerce him to accept a $1.25 million settlement.  They threatened to abandon him at the imminently pending trial, misrepresented certain significant terms of the proposed settlement, and falsely assured him they could and would negotiate a side deal that would recoup deficits in the . . . settlement itself.  They also falsely said they would waive or discount a large portion of his $188,000 legal bill if he accepted [the[ offer.  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 6 complicated terms.  Seeing no way to find new counsel before trial, and believing he had no other choice, he signed the agreement.”

The opinion, which overrules a contrary decision in the case by the Court of Appeal, but is consistent with an intervening U.S. District Court case authored by Magistrate Judge Elizabeth Laporte (Benesch v. Green (N.D.Cal. 2009) 2009 WL 4885215), spends most of its thirty two typed pages parsing the language of the statute to fend off various constructions offered by Cassel’s attorneys to allow admission of private communications between a client and his attorney.  Although the attorney-client privilege has an exception for litigation between attorney and client, the Court finds no basis to adopt an analogous exception for mediation confidentiality.  The attorney is a “participant,” who is as entitled to confidentiality as the client.

The Court cites its past decisions that established a strong mediation privilege without court-made exceptions, unless a parties due process rights were threatened.  In previous cases, the Court has refused to allow mediators to report that parties had not participated in good faith (Foxgate Homeowners’ Assn. v. Bramalea California, Inc. (2001) 26 Cal.4th 1.), refused to allow a “good cause” exception for writings prepared for a mediation (Rojas v. Superior Court (2004) 33 Cal.4th 407) and required that a settlement agreement reached at a mediation contain specific words that it was intended to be binding and enforceable before it can be used in an enforcement proceeding (Fair v. Bakhtiari (2006) 40 Cal.4th 189.  Although there are exceptions provided in the statute when all of the participants agree to waive confidentiality, judicial principles such as equitable estoppel and implied waiver do not apply to mediation confidentiality (Simmons v. Ghaderi (2008) 44 Cal.4th 570).

In all of these cases, as here, the Court read the statute quite literally.  The only recognized exceptions are waiver by all parties and to avoid a due process violation.  The due process exception, does not apply when the evidence is needed in civil litigation.  The Court distinguishes Rinaker v. Superior Court (1998) 62 Cal.App.4th 155, where mediation confidentiality gave way to juvenile court criminal defendants’ right to confront witnesses and present exculpatory evidence.

What policy, other than protection of attorneys, could possibly justify this result?  Toward the end, the Court offers three possibilities.  It would not have been unreasonable for the legislature to believe that (1) total privilege “gives maximum assurance that disclosure of an ancillary mediation related communication will not, perhaps inadvertently, breach the confidentiality of the mediation proceedings themselves, to the damage of one of the mediation disputants,” (2) that “protecting attorney-client conversations in this context facilitates the use of mediation as a means of dispute resolution by allowing frank discussions between a mediation disputant and the disputant’s counsel about the strengths and weaknesses of the case, the progress of negotiations, and the terms of a fair settlement, without concern that the things said by either the client or the lawyers will become the subjects of later litigation against either.” or (3)  that “it would not be fair to allow a client to support a malpractice claim with excerpts from private discussions with counsel concerning the mediation, while barring the attorneys from placing such discussions in context by citing communications within the mediation proceedings themselves.”

The legislature, the Court counsels, is free to amend the law if it believes a change is warranted or that it has been misunderstood.  Until then, clients are well advised to be well rested and bring granola bars and water to any mediation.


~ by skaus on January 15, 2011.

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