Mediation’s Confidentiality Controversy

      California has one of the most comprehensive mediation-confidentiality schemes in the country. Its provisions preclude introducing evidence in a wide variety of proceedings. And the controlling statutes provide very few exceptions to the broad and nearly absolute confidentiality rules. Recent California Supreme Court cases have confirmed the sweeping nature of mediation confidentiality. However, the cloak of confidentiality, while necessary to encourage information sharing, can also serve to encourage abuse of the process by those who view confidentiality as carte blanche to engage in sharp tactics.
     
      During the past 30 years mediation has become an increasingly popular method of resolving disputes in the United States. It is generally touted as being more economical than litigation, and as allowing the parties greater latitude to craft creative solutions that are not circumscribed by litigation?s win-lose model.
     
      In California, mediation has been embraced by the Legislature and courts alike. And state statutes foster its popularity. For example, section 465 of California?s Business and Professions Code expressly states that mediation should be encouraged to achieve ?more effective and efficient dispute resolution in a complex society.? It is also common for trial courts to order or encourage parties to mediate in the early stages of proceedings. The Ninth Circuit and the California courts of appeal now have well-established mediation programs.
     
      Most practitioners agree that some degree of confidentiality is an essential part of the mediation process. As the Uniform Mediation Act (UMA) emphasizes, the frank exchange of information ?can be 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.? (UMA, Prefatory Note.)
     
      However, there has also been a rising concern, particularly in California, that mediation confidentiality may have gone too far?that the rules protecting it may prevent introducing evidence of mediation misconduct, fostering a public view of mediation as a lawless process.
     
      California Statutes
      Even before 2001, when the UMA underscoring the importance of confidentiality took effect, California had passed its own mediation-confidentiality scheme. In 1998 the Legislature consolidated most of the state?s mediation-confidentiality rules into one chapter to provide a standard, comprehensive set of rules applicable to most court-ordered and voluntary mediations. Certain mediations, for example, those pursuant to the Family Code, are exempt from the scope of the 1998 statutory scheme. (Cal. Evid. Code § 1117.)
     
      California defines mediation broadly, to encompass all processes involving a neutral person who ?facilitates communication? between the parties to help them reach an agreed resolution. (Cal. Evid. Code § 1115.) Once parties engage in settlement discussions facilitated by a neutral, the process is likely to be deemed a ?mediation??and the confidentiality statutes are likely to apply.
     
      The statutes also make confidential virtually everything communicated in connection with a mediation and exclude such communications from evidence in most proceedings. The core confidentiality provision, section 1119(a) of the California Evidence Code, broadly specifies: ?No evidence of anything said 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 the evidence shall not be compelled in any arbitration, administrative action, civil action, or other noncriminal proceeding in which, pursuant to law, testimony can be compelled to be given.? Section 1119(b) also makes all writings emanating from the mediation processes described above confidential and inadmissible. Even outside of adjudicatory proceedings, parties must maintain the confidentiality of all mediation communications, negotiations, and settlement discussions. (Cal. Evid. Code § 1119(c).)
     
      To clarify that this broad confidentiality extends to all future proceedings, the Legislature expressly stated that protected materials ?remain inadmissible, protected from disclosure, and confidential to the same extent after the mediation ends.? (Cal. Evid. Code § 1126.) And a mediation?and the confidentiality protection that attaches to it?continues until: the parties enter a written settlement agreement resolving the dispute, the parties record and memorialize an agreement resolving the dispute, the mediator notifies the participants that the process is terminated, a party terminates the mediation in writing, or either ten days or some other agreed length of time pass with no communication between the parties. (Cal. Evid. Code 1125(b).)
     
      Even mediators are generally precluded from submitting to a court or other adjudicative body ?any report, assessment, evaluation, recommendation, or finding of any kind? unless mandated by law or all parties expressly agree to waive the prohibition as discussed below. (Cal. Evid. Code § 1121.) This requirement was designed to prevent mediators from ?bullying? the parties into settling.
     
      Furthermore, no mediator ?shall be competent to testify? in any civil proceeding about statements or conduct in a mediation, except when they could give rise to contempt or disqualification proceedings or could constitute a crime or be subject to investigation by the State Bar or Commission on Judicial Performance. (Cal. Evid. Code § 703.5.)
     
      Potentially severe consequences exist for violating these sweeping confidentiality provisions. If any mention of the mediation is made in a subsequent trial or other noncriminal proceeding, the verdict may be vacated or the decision in the subsequent proceeding may be modified, if the mention ?materially affected the substantial rights of the party requesting relief.? (Cal. Evid. Code § 1128.)
     
      Finally, the statutes provide special protection to mediators. If a person seeks to compel a mediator to testify or produce a writing that is determined to be inadmissible under the confidentiality provisions, the court or adjudicative body making the determination must award reasonable attorneys fees and costs to the mediator against the person seeking that evidence. (Cal. Evid. Code § 1127.)
     
      Statutory Exceptions
      There are only a few statutory exceptions to mediation confidentiality, generally aimed at protecting against its misuse or abuse. One exception specifies: ?Evidence otherwise admissible or subject to discovery outside of a mediation or a mediation consultation shall not be or become inadmissible or protected from disclosure solely by reason of its introduction or use in a mediation or mediation consultation.? (Cal. Evid. Code § 1120.) According to the Law Revision Commission?s comments, this clause is designed to prevent parties from ?using a mediation as a pretext to shield materials from disclosure.?
     
      Additionally, California Evidence Code sections 1118 and 1122 provide for waiving confidentiality of mediation communications or writings, either in writing or orally?subject to stringent limitations that also require an oral waiver to be reduced to writing. For the waiver to be effective, all participants?including the mediator?must agree to disclosure, unless the communication or document was prepared by fewer than all the participants; in such cases, all of the participants must agree.
     
      Even a written settlement agreement reached through mediation is admissible only when it states that it is admissible or subject to disclosure, or provides that it is enforceable or binding?unless the agreement is being used to show fraud, duress, or illegality relevant to a disputed issue. (Cal. Evid. Code § 1123.)
     
      Judicial Exceptions
      Recognizing that precluding evidence because of mediation confidentiality may sometimes violate significant competing public policies, California courts have crafted a few exceptions.
     
      For example, in Rinaker v. Superior Court (62 Cal. App. 4th 155 (1998)), two minors were charged with vandalism after allegedly throwing rocks at a car while standing on an overpass. The incident was the basis of a civil harassment action that was mediated. During the mediation, the plaintiff admitted that he did not actually see who threw the rocks. The minors later subpoenaed the mediator to testify at a separate juvenile delinquency hearing, with the goal of impeaching the plaintiff with his prior inconsistent statements about identity. The trial court ordered the mediator to testify.
     
      The appellate court, while recognizing that the juvenile delinquency proceeding was a ?civil action? covered by the statutory confidentiality strictures, also recognized due process concerns that might outweigh the statute?s preclusive effect. Though acknowledging that the statute serves the important public purpose of promoting mediation, the court concluded that this could not justify breaching the minors? competing constitutional right to impeach an adverse witness. Accordingly, it determined that an in camera hearing should be conducted to evaluate the claim of need against the statutory restrictions.
     
      In Olam v. Congress Mortgage Company a federal court similarly allowed an in camera assessment of a mediator?s testimony regarding the mental fitness of one of the parties to the mediation. In that case, the plaintiff claimed that a memorandum of understanding reached after midnight at a mediation of her civil fraud suit was unenforceable because she was compelled to sign it when she was in a weakened physical and mental state and incapable of consenting to a legally binding contract.
     
      The Olam court observed that section 1119 was not absolute, pointing to Rinaker?s recognition of the need for the confidentiality protection to give way to significant competing public-policy concerns. It then expressed the concern that refusing to compel the mediator to testify could deprive the court of evidence needed to assess the plaintiff?s competency contentions.
     
      However, although all the parties other than the mediator had waived confidentiality, the court declined to find this sufficient, without the mediator?s consent, to warrant ordering the mediator to testify. It also concluded that California Evidence Code section 703.5 imposed an ?independent duty? on the courts to determine whether a mediator?s testimony can be justified by ?protecting or advancing a competing interest of comparable or greater magnitude.? (68 F. Supp. 2d at 1132.)
     
      After weighing the interests that would be harmed if the mediator were compelled to testify against the interests that would be jeopardized if the testimony were not available, the federal court compelled the mediator to testify under seal, reviewed the sealed testimony, and allowed the testimony to be disclosed, finding that approach was justified by an ?overriding fairness interest.? (68 F. Supp. 2d at 1138.)
     
      In reaching this conclusion, the court was careful to point out that the most consequential testimony from the mediator would focus on how the plaintiff acted and the mediator?s perceptions of her physical, emotional, and mental condition, rather than the substance of what any individual said during the mediation, preserving the confidentiality of the mediation communications.
     
      Strict Construction
      Several years after Rinaker and Olam were decided, the California Supreme Court took a different path when considering yet another circumstance in which the parties urged a public-policy exception to mediation confidentiality. In Foxgate Homeowners? Association v. Bramalea California, Inc. (26 Cal. 4th 1 (2001)) the court evaluated whether evidence supporting allegations of dilatory and obstructionist conduct during a mediation should be allowed. The superior court had sanctioned the allegedly dilatory party and its counsel based on a mediator?s declaration that counsel had used bad faith tactics. The supreme court reversed and held that, on remand, evidence of communications made during the mediation should not be admitted or considered.
     
      Announcing a strict-constructionist view of the mediation-confidentiality statutes, the court noted that the statutory provisions on mediation confidentiality are clear and unambiguous, and that no judicially crafted exception was necessary in the case, either to carry out the legislative intent or to avoid an absurd result.
     
      Similarly, in Rojas v. Superior Court (33 Cal. 4th 407 (2004)) the California Supreme Court rejected importing a ?good cause? exception from the work product doctrine to the mediation-confidentiality statutes.
     
      In that case, tenants of an apartment complex sued entities involved in developing and constructing it. An earlier lawsuit brought by the owner of the complex against the contractors and subcontractors had been settled in mediation. During the mediation, consultants had provided construction-defect reports, photographs, and witness interview statements that appeared to have been prepared for the mediation.
     
      The supreme court concluded that statements and other documents prepared for or during a mediation are protected from disclosure by the confidentiality statutes.
     
      However, notwithstanding its strict construction of the statutes, the supreme court expressly declined to disapprove or question either Rinaker or Olam. On the contrary, the court noted that Rinaker was consistent with its past precedents. (Foxgate, 26 Cal. 4th at 16.) Similarly, the court did not voice disapproval of the Olam court?s weighing process. Subsequent court of appeal cases have followed the supreme court?s strict-constructionist view. (See, Paul v. Friedman, 95 Cal. App. 4th 853, 869 (2002); Eisendrath v. Superior Court, 109 Cal. App. 4th 351, 363 (2003).)
     
      Lessons to Be Learned
      Recent decisions confirm the nearly absolute nature of California?s mediation-confidentiality statutes. They also caution sympathetic courts against crafting exceptions?even when mediation participants? misconduct goes unpunished and key evidence may be unavailable. These decisions could be read to preclude litigants from suing their attorneys or the mediator for malpractice connected with a mediation. They could also be viewed as precluding discovery of evidence of unethical conduct during a mediation, even in State Bar proceedings, because section 1119 expressly applies to them.
     
      It?s still possible that public-policy concerns could override the mediation-confidentiality provisions in limited circumstances. However, current law provides little certainty regarding how and when.
     
      To protect themselves, mediation participants should be aware that factual materials used in a mediation may be excluded from evidence unless they can establish that the materials were prepared for some other purpose. Participants should be especially alert to potential abuses and formally end the mediation if they perceive that the process is being misused. Of course, there is no guarantee that factual materials prepared for a purpose other than a mediation will be deemed admissible once used during a mediation. And it is often difficult to assess whether a party is abusing the process until after the abuse has occurred. Perhaps it is time for the Legislature to reconsider the nearly absolute confidentiality that mediation proceedings are allowed.
     
      Cassandra Franklin (FranklinC@dicksteinshapiro.com) is of counsel with Dickstein Shapiro in Los Angeles, concentrating on litigation and dispute resolution.