Confidentiality: Is It or Isn't It?

The bedrock of mediation is confidentiality. That is what mediators are continually assuring parties will be zealously guarded no matter what. However, in actuality, there is no such thing as absolute confidentiality in this alternative dispute resolution process. And this is something that rarely, if ever, is conveyed and fully explained to the parties who are under a different impression. With the full information, many parties may not be willing to use mediation and, if anything, might prefer to elect the traditional settlement conference approach where there is no such thing as confidentiality and parties generally play it "close to the vest" as they jockey for bargaining position.

There are several exceptions to the "guarantee" of confidentiality. While the California mediation statutes have provided for "strict confidentiality," thereby preventing introduction of evidence in the underlying case, as well as issues arising from the mediation process and the resulting agreements, the list of exclusions seems to be growing. The most recent example is Cassel v. Superior Court (Second Civil Number B215215; certified for publication Nov. 11, 2009).

Cassel filed a lawsuit against his former attorneys for malpractice. Two days before and on the day of the mediation in the lawsuit that was the subject of the malpractice action, Cassel had met with his former attorneys regarding the earlier lawsuit. Cassel (directly and through his then attorneys) and the opposing party (directly through his counsel) participated in a mediation on the third day that resulted in an agreed settlement. Subsequently, Cassel brought the malpractice action claiming that his former lawyers had forced him to execute the settlement agreement for a lower amount than what Cassel claimed he told those lawyers was acceptable.

In the legal malpractice action, Cassel's former lawyers attempted to exclude evidence of certain conversations and conduct between them and Cassel over that three-day period during meetings only among themselves. Cassel's former lawyers argued that the mediation confidentiality provisions of Evidence Code Sections 1115 et seq. prevented disclosure of those conversations and conduct in the legal malpractice case. Cassel disagreed, claiming that mediation confidentiality did not apply because the conversations and conduct in question were governed by the lawyer-client privilege under Evidence Code Section 950 et seq.

The California Court of Appeal (2nd Appellate District, Division Seven) in a split decision of apparent first impression (citing Wimsatt v. Superior Court (2007) 152 Cal. App. 4th 137), held that communications between a client and his or her lawyer do not constitute oral and written communications made "'for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation'" protected by California Evidence Code Section 1119, subdivisions (a) and (b) or communications by "'participants'" protected by Section 1119(c), where there is a failure to demonstrate a sufficiently close link between the communications and the mediation to require application of mediation confidentiality to the communications. The majority, consisting of Justices Frank Y. Jackson and Laurie Zelon, felt that it was inappropriate to exclude evidence of Cassel's communications with his own attorneys and evidence of conduct by him only in the presence of his own counsel, all of which occurred outside the presence of any opposing party (or its authorized representatives) or any mediator (as defined in Section 1115(b).

The dissent by Presiding Justice Dennis M. Perluss noted that the majority ignored the statutory language because "private, unilateral statements that are materially related to the mediation are inadmissible and protected from disclosure, even if they are not communicated to another party or the mediator and do not otherwise reveal anything said or done in the course of the mediation itself." The fact that the majority seemed to be saying that lawyers should not be able to use the mediation statutes to shield themselves from malpractice actions was something the dissent categorized as a policy issue best left for the legislature to deal with, not the courts.

For several years, there have been numerous efforts to monitor conduct of mediators and lawyers during mediation, all to no avail because of the mantra of confidentiality. How do we enforce codes of conduct or evaluate mediator performance if we cannot pierce the veil of confidentiality? No one has come up with a satisfactory way to accomplish that goal. The Cassel case would seem to fit into that conundrum. As distasteful as it might seem to benefit lawyers accused of malpractice under these circumstances, and while the conversations and conduct in that case occurred outside opposing counsel, parties and the mediator, it would nevertheless seem that this is something for the legislature to correct if in fact they are of such a mind.

In Foxgate Homeowners Assn. v. Bramalea California, Inc. (2001) 26 Cal. 4th 1, 14, the California Supreme Court made it clear that narrowing the scope of mediation confidentiality is the province of the legislative and not the judicial branch of government. In their petition for rehearing, Cassel's former lawyers argued that the designated conversations and conduct were not required to have taken place in front of the mediator or the other side in order to be protected by the confidentiality statutes; no California case prior to this one had so held nor had the majority opinion cited any authority for that conclusion; the provisions of Evidence Code Section 1119(a) are clear that the protection of confidentiality applies to communications that were made "for the purpose of, in the course of, or pursuant to, a mediation;" the Wimsatt case held that "communications pertaining to a mediation shall remain confidential if those communications 'would not have existed but for a mediation communication, negotiation, or settlement discussion;'" and, nowhere is it required that the communication in question be made in a mediation session or before the mediator or the other side.

The appellate court did not rule on the petition before the decision of the majority was final so it was deemed denied by operation of law. Petition for review was granted by the California Supreme Court on February 3.

What do you think?