Mediation Confidentiality

One of the first things I do in a mediation is to explain to the parties that everything that happens in the mediation is confidential unless there is a written signed settlement agreement or other signed forms that will be filed with the court from the divorce mediation case. Before the mediation even gets started, the parties sign my Agreement to Mediate, which explains more about the confidentiality of mediation and what it means.

The California Supreme Court has just issued a ruling which strengthens the laws which already protect everything said, done or prepared in mediation from being used in any type of proceeding unless everyone agrees in writing to its use.

Here is an article from the Metropolitan News Enterprise (www.metnews.com), which provides the background of the mediated dispute in that case and the actions of the mediator and the parties. The California Supreme Court held
that it didn't matter that in the court proceedings following a terminated mediation, a party had not previously objected to the use of otherwise confidential statements in the proceedings to enforce the unsigned settlement. The court held that there is no exception to the rule of mediation confidentiality unless the parties signed the settlement agreement, thereby making the agreement no longer confidential.

Here is the article and the link:

No Estoppel Exception to Mediation Confidentiality, S.C. Rules

By KENNETH OFGANG, Staff Writer

The California Supreme Court took a strict view of mediation confidentiality yesterday, unanimously ruling that statements made during the process could not be used to bind a party to a settlement agreement she did not sign.

Reversing a Los Angeles Superior Court judge and Div. Three of this district’s Court of Appeal, the high court overturned a breach-of-contract judgment against Dr. Lida Ghaderi, a Santa Monica physician.

The judgment grew out of a malpractice claim by the family of Ghaderi’s patient, Kintausha Clemmons, who was being treated by a nephrologist, who was treating her with dialysis for renal failure. Without consulting with Clemmons’ nephrologist, Ghaderi allegedly took Clemmons off dialysis, resulting in her death from severe renal failure.

Consent Form

During mediation before retired Los Angeles Superior Court Judge Robert T. Altman, Obi Amanugi—a claims specialist from Ghaderi’s malpractice insurer—obtained Ghaderi’s written consent to settle the case for no more than $125,000. The consent form provided that the consent could only be revoked in writing.

By statute, a claim against a health care professional covered by a professional liability policy can only be settled with the insured’s written consent.

During the mediation, while Ghaderi was in another room with her Cumis counsel, Robert C. Reback, the claims specialist and the insurer’s attorney, Kent T. Brandmeyer, told Altman the carrier would pay the plaintiffs $125,000 to settle. The plaintiffs accepted.

But when Altman was reducing the settlement to writing and Amanugi reported the settlement to Ghaderi, she responded, “Good, because I am revoking my consent.” Soon thereafter Ghaderi left the building, ending the mediation.

Altman, the plaintiffs, and their counsel signed the settlement agreement. No one signed on behalf of Ghaderi or her insurer.

During the next 15 months, the parties litigated the legal effect of the events that had taken place at the mediation. Ghaderi’s attorneys voluntarily turned over to plaintiffs’ counsel a copy of the consent form signed by Ghaderi, and did not object to a declaration by Altman concerning the events at the mediation filed in support of a motion by plaintiffs to enforce the settlement.

In her opposition to that motion, and in her own summary judgment motion, Ghaderi acknowledged having authorized the insurer to settle within the $125,000 limit, then revoking her consent only after being told that the settlement was orally agreed to by her insurer.

Bifurcated Trial

Los Angeles Superior Court Judge Richard Fruin denied Ghaderi’s motion for summary judgment, allowed the plaintiffs to amend their complaint to state a cause of action for breach of oral agreement, and bifurcated the trial to hear that claim first.

Ghaderi filed a trial brief, in which she objected to the admission of any evidence relating to the mediation, and argued for the first time that “[a]ny attempt to introduce evidence of discussions, purported agreements, or any form of communication at mediation or thereafter” was barred by the mediation confidentiality provisions of the Evidence Code.

Following a bench trial, however, Fruin entered judgment in favor of the plaintiffs in the amount of $125,000, reasoning that Ghaderi had given her attorneys, her authorized agents, authority to communicate a $125,000 offer to plaintiffs, and the offer had been accepted prior to any withdrawal of consent.

On appeal, Ghaderi argued that her revocation of consent was sufficient to prevent the settlement from becoming effective, and that no evidence of the events occurring at the mediation was admissible due to the principles of mediation confidentiality.

A divided panel of the Court of Appeal affirmed, saying Ghaderi was estopped to argue mediation confidentiality, since she had presented evidence of the mediation proceedings herself and had not objected to the plaintiffs’ evidence.

But Justice Ming Chin, writing yesterday for the court, said that neither estoppel nor implied waiver is an exception to mediation confidentiality because any such exception must be authorized by the statutory scheme commencing at Evidence Code Sec. 1115.

Under those provisions, Chin explained, exceptions to confidentiality are “narrowly delineated.”

He cited Sec. 1122, which says that a settlement agreement or other written document prepared as part of the proceedings, may be disclosed only if “[a]ll persons...who participate in the mediation expressly agreed in writing, or orally in accordance with Section 1118, to disclosure.”

Sec. 1118 permits disclosure of an oral settlement if the agreement is recorded, all parties agree in the presence of the mediator that the agreement shall be binding, and the agreement is reduced to writing and signed by the parties within 72 hours.

Chin also noted that under Sec. 1123, a written agreement entered into during mediation may be disclosed only if the parties expressly agree or the document is used to show fraud, duress, or illegality.

The current statutes, Chin added, were adopted in 1997 on the recommendation of the California Law Revision Commission. Both the unambiguous statutory language and the commission comments, he wrote, show that the Legislature did not intend to permit “judicially created exceptions” to confidentiality.

“[B]y creating fixed procedures that allow only certain evidence produced at mediation to be admitted in later civil proceedings, the Legislature was undeniably aware that some agreements made during mediation would not be enforceable,” Chin wrote. “The statutes thus reflect a policy judgment made by the Legislature when weighing the value of confidentiality. Creating exceptions to admit evidence that does not meet statutory requirements would run contrary to legislative intent.”

The case was argued in the Supreme Court by Shirley M. Hufstedler of Morrison & Foerster for Gharderi, who was backed by the Southern California Mediation Association and California Dispute Resolution Council as amici, and by Martin R. Berman of the Law Office of James Aaron Pflaster for the plaintiffs.

The case is Simmons v. Ghaderi, 08 S.O.S. 4283.