Patent Law

Von Dutch Tradename Settlement Gives Rise to Legal Malpractice Action and Questionable Mediation Confidentiality Decision

By Les Weinstein, Michael Young, John Leo Wagner, Eric van Ginkel, and Victoria Pynchon

by Michael D. Young

Here we go again.  A California appellate court has judicially created another exception to mediation confidentiality -- this one for alleged attorney malpractice occurring during the mediation but outside the presence of the mediator or opposing parties. Cassel v. Superior Court (.pdf). 

Essentially, the court (in a 2-1 vote) holds that a communication with one's attorneys only -- one that does not involve the mediator or the opposing party -- is not part of the mediation process, does not fall within the policy reasons supporting confidentiality, and hence is not protected by California's mediation confidentiality statutes.

For those who are interested, I go through the case  in a little more detail below.  However, at this point, I have  a question:  

Is there a public policy reason to protect communications  between an attorney and a client (and only between them) during the mediation  process?  In other words, do we need to protect those private  communications in order to reap the benefit of mediation?  Or are the  policies behind confidentiality amply supported if we only protect  communications with the mediator and opposing parties?  I had always  thought of confidentiality as being necessary to encourage frank and candid  discourse between the disputants.  Is it also necessary to encourage frank and candid discourse between a client and his or her own  counsel?

SUMMARY OF OPINION

In this new case, Cassel v. Superior Court, the client alleged that his attorneys bullied and coerced him into signing a settlement agreement in mediation that was for less money than the client wanted.

He wanted to introduce evidence of things his attorneys said and did during the private time in the mediation when neither the mediator nor opposing party were present.

The debate was:  (a) were these communications simply privileged under the attorney-client privilege (and thus waived in a subsequent malpractice claim); or (b) were they also covered by the mediation confidentiality statute (not a privilege), and thus inadmissible even in a subsequent malpractice claim.

The trial court held the communications inadmissible under the mediation confidentiality statutes, and then stayed the proceedings to allow the parties to take a writ.

The appellate court looked at the policy behind confidentiality and decided it did not apply to communications between a party and his or her own counsel:  

Legislative intent and policy behind mediation  confidentiality are to facilitate communication by a party that  otherwise the party would not provide, given the potential for another party  to the mediation to use the information against the revealing party;  they are not to facilitate communication between a party and his own  attorney.

The court quoted language from other cases describing the purpose of confidentiality to encourage frank discussions with "the mediator" and "the opposing party.The court acknowledged the Wimsatt case (familiar to our California brethren) which upheld confidentiality in the face of malpractice claims.

That court reluctantly stated:

[t]he stringent result we reach here means that  when clients ... participate in mediation they are, in effect, relinquishing  all claims for new and independent torts arising from mediation, including  legal malpractice causes of action against their own counsel.

The Cassel court sidestepped this by saying the quoted language was not the Wimsatt court's holding and thus was not binding authority.  Instead, the Cassel court determined that the attorney/client communication, despite being held during a mediation process and addressing issues such as whether the client should settle and for how much, was not "linked" to the mediation:  "there is no readily identifiable link to the mediation in the communications."  ["Huh?" says Mike.]

As another example of why the communications were "tenuous," and were "more related to the civil litigation process as a whole rather than to the mediation:" 

For example, according to the record, Cassel[] expressed in his  deposition that, during the course of Wasserman Comden's conference with  their client that occurred after the mediation process had begun, he was  evaluating the value of the case as he always does when it appears that the case will go to trial.

[Can I say HUH? a third time?  Of course one values a case when it appears it will go to trial.  One values a case before it is filed and at every stage thereafter.  One also values a case in mediation; and indeed, one uses the mediation process to refine and test that valuation.  According to this court, simply because the communication was of a type that occurs as part of the trial process, it is not sufficiently "linked" to the mediation to enjoy confidentiality protection.]

After all this wind-up, the court finally got to what I think is the main point:

That  is, as we previously concluded, they were not  communications between 'disputants' and the 'mediator,' as required to come within the  definition of a 'mediation' or 'mediation  consultation' and, therefore, to qualify for  protection under mediation  confidentiality.

In other words, if the communication does not involve the mediator or the opposing party, it is not part of the mediation process, and hence is not covered by the mediation confidentiality statutes.  The attorneys were not part of the class of persons who confidentiality was designed to protect.

 One thought that comes from this -- the discussion between counsel and client during the mediation process regarding the wisdom of settlement will inevitably include an analysis of information and communications from the mediator and opposing party.  If these private attorney/client communications are admissible, won't that necessarily result in the disclosure of the mediator's and opposition's thoughts and actions?  Would this exception swallow the rule?  The Court anticipated this argument, and sidestepped it, with the following:

Neither Cassel nor Wasserman Comden assert that  the communications contained information which the opposing party (or its  representatives) or the mediator provided during mediation or otherwise  contained any information of anything said or done or any admission by a  party made in the course of  the mediation.

The dissent noted that the confidentiality statute covers all communications in mediation, and that the court should not judicially create new exceptions.  That's the legislature's job.

[Ed. note:  I reached the same conclusion over at the Negotiation Law Blog and also raised some questions about the recent Carrie Prejean/Larry King Dustup at the same time here]

Full post as published by IP ADR Blog on November 14, 2009 (boomark / email).