Big Ticket: Mediation Confidentiality

In an earlier column, I discussed the growing list of exceptions to the "guarantee" of confidentiality in mediation as this bedrock to the process keeps getting whittled away with regularity. The example there was the recent case of Cassel v. Superior Court (Second Civil Number B215215; certified for publication Nov. 11, 2009, petition for review granted by California Supreme Court on Feb. 3, 2010).

In a split decision of apparent first impression, the Cassel court (Division Seven of the 2nd District) in effect held that lawyer-client communications do not come within the protection of mediation confidentiality unless it can be demonstrated that there was a sufficiently close link between the communications and the mediation. The majority reasoned that a client's communications with his own attorneys and conduct exhibited by him only in the presence of his own counsel, outside the presence of any opposing party or authorized representatives or the mediator, did not qualify as being "for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation" protected by the statutes. The dissent disagreed saying in effect that the test is simply whether the statements or conduct were "materially related to the mediation," and, while lawyers should not be able to use mediation confidentiality to shield themselves from malpractice actions, in the absence of legislation providing such an exception, it was not within the court's authority to do so.

On April 8, 2010, the 2nd Appellate District again entered the arena of mediation confidentiality. On this occasion it was Division Eight in Porter v. Wyner, et al. (Second Civil Number B211398) considering whether the attorney-client privilege constitutes a relationship that comes within the confidentiality component of mediation so that a privilege exists to prevent the client from disclosing communications between he and his lawyer in the course of a subsequent legal malpractice case against the lawyer. (I.e., are lawyer-client communications exempt from statutory protection under the rules of mediation confidentiality?)

The Porters alleged that their lawyers, Wyner Tiffany, failed to satisfy a promise they allegedly made to the Porters in mediation of the underlying case that the lawyers would pay the clients a portion of the attorney fees received by the lawyers. Although the lawyers initially raised objection to the admissibility of such mediation communications, they subsequently withdrew that opposition. The trial court admitted evidence of the challenged mediation, and as part of the jury verdict the Porters were awarded damages for breach of the attorney-client fee agreement. Shortly after judgment was entered, the trial court granted a motion for new trial on the ground that the then recently decided California Supreme Court case of Simmons v. Ghaderi (2008) 44 Cal.4th 570 required that it do so. The Porters argued that error was committed by the trial court in granting the motion for new trial because attorney-client communications "do not fall within the purview of mediation confidentiality."

In Simmons the California Supreme Court affirmed broad coverage of this state's mediation statutes dealing with confidentiality of the process. Subsequent to a settlement entered into by her insurance carrier with the plaintiff in the underlying action, but not specifically agreed to by Lida Ghaderi, she exercised her right to revoke the authority that she had previously given to the carrier to compromise the dispute. The court rejected the Simmons argument that Ghaderi was estopped from claiming mediation confidentiality because she presented her version of mediation events and did not raise objection to its use in pretrial motions. Noting that Ghaderi had not induced the plaintiffs to act on misrepresented facts, the court concluded that Ghaderi should have been allowed to invoke statutory mediation confidentiality to prevent introduction of the specified communications at trial, and held that there can be no implied waiver of the mediation confidentiality statutes and courts may not "craft judicial exceptions to the statutory rules."

Again in Porter, in a split decision, the holding was that mediation confidentiality statutes do not protect such communications. The dissent disagreed saying that settlement during mediation was the only reason for the conversations to have taken place. Furthermore, while there is no statutory "privilege" regarding communications concerning a breach of a lawyer-client relationship by either the client or the lawyer, "[m]ediation confidentiality is not a privilege." The dissent went on to say that this is confirmed by the fact that our state supreme court continually resists "attempts to narrow the scope of mediation confidentiality," indicating that even in cases of legal malpractice during mediation any such exception should be left for the legislature to address.

Hopefully, the California Supreme Court in Cassel will meet the issue head on and establish in detail the rule to be followed in cases where it appears that the mediation exception for confidentiality is being applied simply to avoid responsibility for alleged acts of legal malpractice. Although a strict construction of the statutes would lead one to agree with the dissent in both cases, when considering the reasoning behind the requirement of confidentiality in the first place, it is clear that the legislative intent is to make it safe for parties to put all their cards on the table without restriction, and absent any personal concern, in pursuit of a full and unfettered attempt to come to a resolution of the conflict and structure a settlement acceptable to all parties to the dispute.

The mediation statutes do not appear to be designed to provide this type of protection to lawyers who may be sued by their clients for legal malpractice. It is not reasonable to conclude that clients would exercise their right of self-determination to participate and remain in mediation if they thought that by doing so they will insulate their lawyers from subsequent responsibility for wrongful conduct. Nor does it seem reasonable to expect that mediation will continue to be the alternative dispute resolution process of choice so long as uncertainty as to interpretation and application of confidentiality statutes hangs in the air.