January 2014 | Earn one hour of MCLE Credit in Legal Ethics
So you think you know the “mediation privilege?”
Ask most lawyers about the “mediation privilege,” set forth in California Evidence Code sections 1115-1128, and you will hear the well-worn idiom that anything said “for the purpose of, in the course of, or pursuant to” a mediation is confidential and inadmissible beyond the scope of the mediation. Several years ago, the California Supreme Court in Cassel v. Superior Court, 51 Cal. 4th 113, 117-118 (2011) (“Cassel”), characterized the mediation privilege as “clear and absolute” and stated that it “broadly provid[es] for the confidentiality of things spoken or written in connection with a mediation proceeding.” However, is the application of the mediation privilege really so "clear and absolute?" What is considered "a mediation proceeding?" What triggers the application of the mediation privilege? More importantly, why do these questions matter for lawyers and their clients?
Consider the following scenarios:
- A client brings an action against her former lawyers for malpractice arising from advice given during a mediation that resulted in the settlement of her case. The client alleges that her lawyers gave incompetent advice, deceived her, and coerced her into a settlement for less than her case was worth. The client seeks to introduce evidence of communications between her and her attorneys during and related to the mediation.
- Tenants bring an action alleging that a building owner and builder conspired to conceal construction defects from them. The tenants seek to introduce into evidence construction defect reports, photographs and witness interview statements prepared for mediation in an earlier action between the owner and the builder.
- A party moves for sanctions against another for alleged bad faith and dilatory conduct during a mediation session and seeks to use the mediator’s report of counsel’s conduct as evidence supporting the motion. The party facing sanctions contends that any evidence of statements made or conduct during mediation is inadmissible under the mediation privilege statutes.
These are not hypotheticals, but based on actual cases: Cassel, 51 Cal. 4th 113; Rojas v. Superior Court, 33 Cal. 4th 407 (2004) ("Rojas"); and Foxgate Homeowners’ Assoc. v. Bramalea California, Inc., 26 Cal. 4th 1 (2001) ("Foxgate"). The California Supreme Court held in each case that communications between a lawyer and a client in the course of mediation, writings prepared for mediation and a mediator’s account of a proceeding are confidential and absolutely inadmissible in any subsequent proceedings on the grounds that the material relates to or is the product of a mediation. Application of the mediation privilege results in the abandonment of potential claims based on conduct in connection with the mediation, including malpractice against the lawyers, or claims that the settlement should be voided for the parties’ conduct. One court described such abrogation as “harsh and inequitable" consequences, which a party should accept only after fair warning. Wimsatt v. Superior Court, 152 Cal. App. 4th 137, 164 (2007). Nevertheless, the California Supreme Court has proven willing to draw a clear line of inadmissibility for mediation conduct and statements.
Would the results have been the same had these conversations and documents been made in connection with a different alternative dispute resolution proceeding such as a settlement conference, a court-ordered mediation, or a neutral evaluation? As lawyers, we encounter each of those contexts frequently, and in most instances would prefer for many reasons that the communications relating to these various settlement-related forums remain strictly confidential, inadmissible and buried deeply — never to see the light of day. Surprisingly, the mediation privilege does not protect those communications unless all parties agree that it should.
Evidence Code section 1115(a) defines mediation as “a process in which a neutral person or persons facilitate communication between the disputants to assist them in reaching a mutually acceptable agreement.” In Travelers Casualty and Surety Co. v. Superior Court, 126 Cal. App. 4th 1131, 1138-1139 (2005) (“Travelers”), citing, Saeta v. Superior Court, 117 Cal. App. 4th 261, 269 (2004), the court noted that “[a]lthough mediation takes many forms and has been defined in many ways, it is essentially a process where a neutral third party who has no authoritative decision-making power intervenes in a dispute to help the disputants voluntarily reach their own mutually acceptable agreement.” In theory, what qualifies as a mediation is to be determined by “the nature of the proceeding, not its label.” Seemingly then, when a neutral third person is involved in any settlement discussion — whether a mandatory settlement conference at the courthouse, a voluntary settlement discussion offered through the local bar association, or a voluntary mediation — the mediation privilege is triggered, right? Well . . . not so fast.
The most explicit (yet perhaps not widely known) exception to the expansive definition of “mediation” is set forth in Evidence Code section 1117(b)(2). That statute provides that the mediation privilege does not apply to “[a] settlement conference pursuant to Rule 3.1380 of the California Rules of Court[,]” e.g., a mandatory settlement conference. As discussed in Jeld-Wen, Inc. v. Superior Court, 146 Cal. App. 4th 536, 540 (2007), voluntary participation is a fundamental principle of mediation. A court order requiring civil litigants to attempt to settle their dispute is incongruent with the voluntary nature of mediation and it follows that the mediation privilege would not apply. So, as long as the parties are not ordered to attempt to resolve their dispute and are participating voluntarily, the mediation privilege is triggered, right? Again … perhaps not.
Although fast-disappearing in the wake of California’s budget woes, voluntary settlement conferences offered through local courts are a useful resource for civil litigants to consider long before being ordered to a mandatory settlement conference and before a case may be at a point where the parties are ready for private mediation. By its name the parties are voluntarily agreeing to attend a settlement conference; therefore, there should be no question that the mediation privilege applies, right? Not necessarily. At least one California court has left the issue open to debate.
In Travelers, the parties stipulated to the appointment of an active judge to serve as a settlement judge. Travelers, supra, 126 Cal. App. 4th at 1135. The settlement judge held a “Valuation Hearing” after which he issued a report rendering an opinion on the verdict potential and reasonable settlement value of the underlying cases for use in later proceedings in the case. Id., at 1135-1138. Understandably, several parties objected to the use of the report in later proceedings on the grounds that the judge’s issuance of the report exceeded the powers of a settlement judge and violated the mediation privilege’s confidentiality provisions. Id., at 1138.
The Second District Court of Appeal began its analysis by noting that “[m]ediation generally falls into two categories. The first is traditional or classic mediation, where attorneys are not present, the mediator meets directly with the parties to facilitate negotiations and the mediator is passive, expressing neither judgment nor opinion on the merits. The second is the type of mediation conducted as part of voluntary settlement conferences. In that form, lawyers are present and the mediator takes a more active role, often expressing an opinion on the merits, but without authority to reach a decision.” Id., at 1139 (emphasis added).
The court believed the settlement discussions in Travelers fell into the second category of mediation. Id., at 1147, fn. 8. However, despite finding that this proceeding was a “mediation” within a voluntary settlement conference, the court declined the opportunity to clarify whether the mediation privilege set forth in Evidence Code sections 1115-1128 applies to voluntary settlement conferences:
We expressly decline to consider or clarify any differences that might exist between a mediation and voluntary settlement conference. Therefore, our decision should not be construed as holding that all voluntary settlement conferences are mediations which are subject to the rules concerning the conduct of mediation proceedings. Id., at 1147, fn. 8.
The take-away from Travelers seems to be that mediations are a type of voluntary settlement conference; yet, not all voluntary settlement conferences are mediations subject to the mediation privilege.
What would a court do in the case of a court-ordered mediation before a panel of unpaid volunteers? Is that a mediation in which the parties are required to participate? What about an early neutral evaluation at which a judge — or volunteer attorney — presides? Like a voluntary settlement conference in Travelers, a neutral evaluator will express an opinion on the merits of the case, but is without authority to render a decision. Further, Rule of Court Rule 3.727(6) provides that in connection with the initial case management conference in Superior Court cases:
[T]he parties must address, if applicable, and the court may take appropriate action with respect to . . . (6) Whether the parties have stipulated to, or the case should be referred to, judicial arbitration in courts having a judicial arbitration program or to any other form of alternative dispute resolution (ADR) process and, if so, the date by which the judicial arbitration or other ADR process must be completed.
Does the court’s order pursuant to Rule 3.727(6) prevent application of the mediation privilege? Some might argue that the Rule 3.727(6) is merely a facility for organizing and promoting voluntary mediation and that a court’s order reflecting the parties’ agreement to participate in mediation does not vitiate the mediation privilege. Yet, questions and confusion remain. How can one be certain outside the context of a process that all parties expressly denote as a mediation that the mediation privilege will apply?
This issue is important because without a definitive answer, there is a risk that statements made in mediation will be held admissible in later proceedings, creating uncertainty and risk for lawyers and their clients. Lawyers may be second-guessed if their clients suffer some form of buyer’s remorse after a settlement is executed; parties may seek to void settlements based upon statements made at mediation that were later determined to have been inaccurate; or, or some other issue may arise that places the participants’ settlement conference-related conduct or statements under scrutiny.
Outside of the context in which the mediation privilege clearly applies, statements and conduct in negotiation of settlement are protected, if at all, by Evidence Code section 1152. The protection of Evidence Code section 1152 falls far short of the broad coverage of the mediation privilege. That provision, in sum, makes inadmissible evidence of negotiation statements and conduct to prove liability or damages, unless otherwise admissible. Thus, such statements or conduct can be admissible for other purposes, including, but not limited to, proof of truth, knowledge or bias. See Carney v. Santa Cruz Women Against Rape, 221 Cal. App. 3d. 1009, 1023-1024 (1990); Moreno v. Sayre, 162 Cal. App. 3d 116, 126 (1984).
The simple way to avoid uncertainty about the application of the mediation privilege is for parties to a settlement discussion to stipulate that the mediation privilege applies. Before settlement discussions occur — whether with opposing counsel over coffee, in judge’s chambers, or in counsel’s private office — it is advisable to request that all parties agree in writing that the mediation privilege and consequent rules set forth in Evidence Code sections 1115-1128 will fully and without question apply to their proceeding. This simple request, perhaps redundant in many formally arranged mediations, can alleviate the risk that the broad scope of the mediation privilege’s confidentiality will not apply to a given ADR proceeding.
It is common among ADR services organizations throughout the state to obtain a stipulation at the outset of any mediation proceeding. Those stipulations assure that each participant confirm the proceeding is a voluntary mediation to which the mediation privilege specifically applies. A party's refusal to sign that stipulation would bring a quick and resounding halt to the process and would indicate that the reneging party is not serious about or interested in mediation. Suggesting the use of a stipulation like that in connection with other forms of settlement discussion would provide similarly useful information — and protection, once signed.
There can be little doubt that California courts are extremely protective of the mediation privilege. State courts consistently refuse to create exceptions to the mediation privilege when, arguably, the facts of a case result in an unfair result. “[I]n banning any court-created exceptions to the statutory confidentiality protections, the Supreme Court emphasized that the Legislature had weighed the possibility of some unfair results against the strong public policy supporting mediation and come down on the side of mediation.” Provost v. Regents of University of Cal., 201 Cal. App. 4th 1289, 1303 (2011); See also, Rojas, supra, 33 Cal. 4th at 423-424 (holding that there is no good cause exception to the privilege); Eisendrath v. Superior Court, 109 Cal. App. 4th 351, 362-363 (2003) (holding that no exception to the privilege can be implied); Foxgate, supra, 26 Cal. 4th 1, 4 (holding that there are no judicial exceptions to the confidentiality requirements of Evidence Code sections 1119 & 1121 [regarding confidentiality of a mediator’s reports and findings]). The fact, extended by Cassel, that the mediation privilege is broad and inclusive, has and will continue to promote a false sense of security that other types of settlement negotiations will be protected by the privilege in the same way as mediations. However, despite the breadth of the mediation privilege, in other types of proceedings, caution must be exercised to assure that the mediation privilege will protect counsel and their clients from later proceedings based upon what happens at mediation.
The confidentiality assured by the mediation privilege is an essential and integral part of mediation. It encourages the frank exchange of information between the parties and promotes candor-based problem solving that leads to more settlements than would otherwise occur. Doubts about the application or scope of the mediation privilege in any given ADR forum results in less information sharing, less willingness to investigate material information and more indirect communications among the parties and neutrals. Indeed, the prospect of “dispute resolution” changes dramatically depending on the level of confidentiality that is assured to a given proceeding. Accordingly, the first step in any dispute resolution process should be to avoid assumption and assure that the parties and counsel agree (and memorialize in writing) that California’s expansive mediation privilege applies to their settlement-related discussions.
William K. Mills is a partner at Parker Shumaker Mills LLP, Los Angeles. Associates Justin D. Denlinger and Jason J. Rudolph and law clerk Earle Benjamin Seagle IV also contributed to this article. Mills is a certified specialist in legal malpractice by The State Bar of California Board of Legal Specialization and a member of the State Bar Standing Committee on Professional Responsibility and Conduct (COPRAC). This article appears in the California Bar Journal as part of COPRAC’s outreach and educational efforts. For more information on COPRAC go to calbar.ca.gov/ethics. The views expressed herein are his own.
 Evidence Code section 1115(a) cmt. (a proceeding might qualify as a mediation for purposes of the confidentiality protections “even though it is denominated differently.”).