Mediation Confidentiality: Misconceptions, Pitfalls and Best Practices

By Temitope Akande

CPR’s Mediation Committee presented Los Angeles mediator Jeff Kichaven on the limits of mediation confidentiality at a March 16 online program that provided attendees with cutting-edge and occasionally controversial practice guidance on confidentiality, and avoiding neutrals’ liability disclaimers, as well as ethics continuing legal education credits.

Kichaven began his presentation with a statement he attributed to the late U.S. Supreme Court Justice Antonin Scalia in 2003:

The principle of separation of powers is central to the American system of government. The framers of the American Constitution believe that that principle, as popularized by Montesquieu, was the single most important guarantee of freedom. No political truth, wrote James Madison in the Federalist Papers, is certainly of greater intrinsic value or is stamped with the authority of more enlightened patrons of liberty.

Kichaven continued, “For the separation of powers regime to work, we must have a robust and functioning judiciary, as well as executive and legislative branches to our government, and for that to happen it’s necessary for people to have confidence in the judiciary.”

That’s why we have the “basic rule of evidence everywhere–all relevant evidence is admissible,” Kichaven explained. If parties and advocates want courts to get things right, he said, the courts need to have the relevant evidence before them, and anytime court does not get a case right, it is eroding a key element of the law.

While evidence law recognizes certain privileges, which frustrate courts’ abilities to get relevant evidence, “those privileges serve important societal purposes,” he said, which is critical, for example, for the functioning of lawyers, doctors and clergy in their critical professions.

Kichaven explained that Wigmore’s attorney-client privilege—the prevailing standard in law and practice protecting communications—”construe[s] privileges narrowly, no more broadly than necessary to effectuate their purposes, because every time privileges are asserted, a court is deprived of relevant evidence, [and] it becomes less likely that a court will get a decision right.” So, a key element of the rule of law is eroded every time a court is unable to adjudicate a claim properly.

This led to the discussion of what Kichaven called “the mantra that confidentiality is necessary for effective mediation.” Kichaven emphasized the word “mantra” because he opined that there is no evidence to support the assertion the confidentiality is necessary for effective mediation.

He defined confidentiality for the purposes of the session in three ways–

  • Evidentiary confidentiality: “Can courts compel disclosure of what is said or done in mediation as part of discovery or trials?”;
  • Caucus confidentiality: “People say things to mediators in caucuses and mediators agree not to disclose those things to the opposing parties,” and
  • Societal confidentiality: “Are we allowed to talk to reporters, bartenders neighbors and various others about what people say or did in mediation?“

On caucus confidentiality, he said that it assumes people disclose secrets, and mediators keep them confidential. The two parts of the assumption are problematic in commercial cases, he said, because it is rare that parties volunteer weaknesses in their case of which the other side is not aware because “there is always a greater than zero percent chance that the mediator will leak” those secrets.

Kichaven said, “The best way to keep it a secret is not to tell the mediator in the first place.  . . . And also, let’s face it, mediators often leak. We can’t help it.” He discussed subconscious actions and words that result in mediator leaks.

Societal confidentiality is a problem in product liability and sexual harassment cases, among others, said Kichaven, because it is generally a subject to be covered by statutes. Still, legislatures haven’t imposed societal confidentiality as a condition of participating in settlement talks or mediation, he explained, but some mediators put it into their confidentiality agreements.

“In essence,” he said, “the mediators are conditioning their willingness to serve on people forfeiting rights that legislators wanted them to have, or at least allowed them to have. [T]hey are having people waive those rights, a condition of serving as mediator.”

Kichaven discussed at length evidentiary confidentiality, which was his key focus in the CPR seminar.  He stated that there is no evidence to prove that evidentiary confidentiality is necessary for effective mediation. In support of this assertion, he discussed the California Legislature’s request to the state’s Law Revision Commission to evaluate a possible exception to California’s mediation confidentiality law for legal malpractice that is alleged to have occurred at a mediation.

The exception—which is in the Uniform Mediation Act but which California has not adopted–would have allowed the introduction of mediation evidence from the session to back a legal malpractice claim. The mediation establishment, according to Kichaven, failed to produce any evidence to prove that evidentiary confidentiality actually is necessary to conduct effective mediation. If the evidence existed, he said, nobody was in a better position to deliver it.

He further stated that U.S. jurisdictions largely reject the need for evidentiary confidentiality in mediation, and compared the adoptions of the Uniform Mediation Act. The act is “kind of a failure,” he said, noting its adoption in only 11 states and the District of Columbia.

Neither has the act fostered “mediation tourism,” he said. If statutory confidentiality were necessary for effective mediation, there would be more mediation in states that have the statutory confidentiality, Kichaven maintained, adding, therefore, “this concern about confidentiality is just overblown.”

In In re MSTG Inc., 675 F.3d 1337 (Fed. Cir. 2012) (available at https://bit.ly/3tX8rP8), the appellate court was asked to adopt a settlement communication privilege as a matter of federal common law, which Kichaven said would far exceed the protections of Federal Rule of Evidence 408, Compromise Offers and Negotiations.  The circuit court, he reported, held that “while there is clearly an important public interest in favoring the compromise and settlement of disputes, disputes are routinely settled without the benefit of a settlement privilege. It is this thus clear that an across-the-board recognition of a broad settlement negotiation privilege is not necessary to achieve settlement.”

Kichaven repeated that parties do not conduct mediation “tourism” to take advantage of statutory confidentiality like litigators may do when the laws would be to their advantage. That is, litigators do not react to the statutory confidentiality, privilege, or rules in mediation like they might in other areas, like patents.

Kichaven discussed two cases, People v. PriceWaterhouseCoopers, 150 A.D.3d 578 (2017), and GE Company v. APR Energy (see discussion below). He noted that the first case is a complex financial matter, important to the mediation confidentiality issue, because the process and analysis has gotten much more complicated with many mediations conducted with interstate parties–with parties and advocates often living and practicing law in different states.

He focused on the PriceWaterhouseCoopers case in part because of its New York origin, noting that New York is important to commercial litigation and mediation, making it a likely site of problems.  And “New York law is kind of a mess, and it’s not a mess that favors mediation confidentiality,” he said.

In the case, the New York court applied the forum law—which does not include a statutory accountant-client privilege, in contrast to the law where the contract took place, Texas.

This led Kichaven to discuss of the 1934 and 1971 Restatement of Conflict of Laws. The 1934 restatement provides for the territoriality test–courts are to apply the law of the forum where discovery was sought in cases where there are conflicts regarding evidentiary privileges and confidentiality, regardless of where the communications took place.

But the American Law Institute’s second restatement in 1971 replaced the territoriality tests with the “significant relationship test,” where courts are supposed to apply the state privilege law with the most significant relationship to the communications at issue. Generally, said Kichaven, that’s thought to be the state where the communications took place.

Therefore, courts have a motivation to do justice in the case before them, and want to get relevant evidence to do their jobs, Kichaven explained.  That means, he said, they are inclined to pick the law of whatever state gives them the greatest ability to obtain evidence while conducting the mediation, which puts the mediation communications at risk.

The important point from General Electric Co. v. APR Energy PLC, 19-CV-3472 (VM) (KNF) (S.D.N.Y. Dec. 14, 2020) (available at https://bit.ly/2PdF9Nc), is territoriality. New York courts will not automatically apply the privilege or confidentiality law of the place where the mediation took place. That is, a written confidentiality agreement in a prior mediation may not protect a party even if the prior mediation took place in a state with stronger statutory protection for mediation confidentiality.

The result is that a New York court may compel production of materials from a prior mediation upon request in a New York matter, Kichaven said, potentially even using a general evidentiary relevance standard under FRE 26, rather than a heightened mediation “standard of need.” That could occur in New York, he said, even if the state the mediation occurred in had a higher standard of protection and even if there was a confidentiality agreement between the mediation parties.

Kichaven warned that when there is a breach of confidentiality, a mediator could be sued for ordinary negligence, negligent misrepresentation, or perhaps more severe claims on basis that the neutral induced or allowed clients to be more candid than they otherwise would have been.  So, since confidentiality may not protect mediators, it is problematic in terms of whether mediators should promise mediation confidentiality at all because they are not promises mediators have the power to keep, he said.

As an ethical issue, mediators and lawyers are not supposed to make guarantees to clients on the outcome of judicial proceedings. “But,” explained Kichaven, “when you make that airtight [mediation] confidentiality promise, is that not just precisely what you have done? . . . By so doing you’ve misled your clients as well and that’s a potential ethical issue, too.”

Advocates need to inform their party-clients on the potential persistent use of the territoriality test, said Kichaven, and decide on how candid they should be during the mediation. For these reasons, Kichaven disclosed that he does not use written mediation confidentiality agreements in order to avoid the appearance of making promises to mediation parties, or practicing law via the production of a contract that applies to the rights of both sides. “It’s up to the parties to have the kind of confidentiality agreements that suit them best,” said Kichaven.

Finally, Kichaven advised that the best practice is for mediators to ensure that they do not get sued based on a prospective waiver of liability.  He said to avoid the use of such clauses in confidentiality agreements—that is, the waivers are another reason not to provide a confidentiality agreement.

He noted that the typical clause says, “The mediator shall have no liability for any act or omission in connection with this mediation.”  Said Kichaven, “It’s a cowardly act,” something mediators would do to avoid the consequences of their conduct.  

He stated that the liability waiver is really saying that, as a mediator, “We are announcing to the world that we are lowering our ethical standards.  . . . We should be sending the message that we stand behind the quality of our work and that we want you to be compensated and treated fairly in the unlikely event something goes wrong.”

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CPR members can access the full video here after logging in.

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Akande, who received a Master of Laws in Alternative Dispute Resolution last May at the University of Southern California Gould School of Law in Los Angeles, is volunteering with the CPR Institute through Spring 2021.

Changes to Mediation Confidentiality to Be Considered by California Legislature

By Lyn Lawrence

The California Law Revision Commission, acting under the order of a resolution by the California Legislature, last month finalized a tentative recommendation that creates an exception in the state’s Evidence Code to mediation confidentiality.

If it is passed into law it will allow disgruntled clients to use information that is currently considered confidential as evidence in attorney malpractice suits.

The final version of the CLRC proposal is available at http://bit.ly/2rIuTvF.

This week, CPR and its monthly newsletter, Alternatives to the High Cost of Litigation, continue their coverage with two extensive examinations of the moves to change mediation confidentiality—a commentary by Los Angeles neutral Jeff Kichaven (see http://bit.ly/2snQUjF), and a compilation of key debate points submitted to the CLRC during its three years examining the issue, by CPR Summer 2017 intern Lyn Lawrence.

The new July/August issue of Alternatives can be found at http://bit.ly/1BUALop. CPR Institute members can access the issue when signed into CPR’s website at http://bit.ly/2kAakxH. Kichaven’s cover story will be available at altnewsletter.com later in July.

You can read last month’s “How California Intends to Recalibrate the Concept of Mediation Confidentiality,” 35 Alternatives 93 (June 2017) at http://bit.ly/2sWyqr1.

The CLRC’s recommendation for a mediation confidentiality exception for legal malpractice was sparked by California Supreme Court Justice Ming W. Chin’s concurring opinion in Cassel v. Superior Court (2011) 51 Cal. 4th 113, 117 (available at http://bit.ly/2tOHBgV). In the case, the client accused his attorneys of coercing him into accepting a mediation settlement that was not in his best interest.

The client was unsuccessful in his claim, but Chin wrote that the court had “to give effect to the literal statutory language” prohibiting disclosure of the mediation communications. “But,” he added, “I am not completely satisfied that the Legislature has fully considered whether attorneys should be shielded from accountability in this way. There may be better ways to balance the competing interests than simply providing that an attorney’s statements during mediation may never be disclosed.”

The exception contained in the CLRC’s tentative recommendation has received mixed reviews from ADR professionals, organizations and even California state departments operating in the mediation field.

Opponents of the CLRC efforts were dealt a blow when the tentative recommendation was approved by the commission on June 8. The approved tentative recommendation is available for public comment until Sept. 1, 2017.  A press release and instructions for commenting are available at http://bit.ly/2t0UyE8.

The creation and acceptance of the tentative recommendation come as a surprise to at least some practitioners, mainly due to California’s longstanding advocacy for the protection, support and growth of mediation. At the same time, some longtime practitioners viewed the preservation of a path to attorney malpractice cases as an enhancement to the integrity of mediation practice.

Confidentiality is a cornerstone of the mediation process, and it is unclear what the effect the exception would have if it is adopted into California law.  A legislative fight looms.

But exceptions to mediation confidentiality aren’t particularly new. For example, the Uniform Mediation Act (available at http://bit.ly/2tGNrRj) has been adopted by numerous states and contains exceptions to mediation confidentiality. Jeff Kichaven expands on these exceptions in his Alternatives commentary, which strongly backs the CLRC tentative proposal.

The CPR Institute will continue to follow the CLRC’s activity, including when the commission publishes the public comments, which it stated in an email would be after the Sept. 1 comment deadline.

The author is a CPR Institute Summer 2017 Intern.