Limits of and misconceptions about mediation confidentiality, Part 2

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by Robert E.L. Wright

Contiued from the July 31 Grand Rapids Legal News. The author has set out three scenarios of events that might occur after there is a potentially damaging disclosure during a mediation which ends without reaching agreement, considered from the point of view of the attorney whose side stands to be harmed.?In the first, the attorney’s opponent mentions the disclosure in a motion; in Scenario 2, the attorney receives discovery requests completely centered around the disclosure; and in Scenario 3, the attorneys for both sides engage in additional discussion about the disclosure and reach an agreement; but then a third party subpoenas the information for a different case.

Wright’s conclusion about the resolution of all three scenarios is that “it depends.”

Part 2 starts with a discussion of the second scenario:

Scenario 2
Discovery based on confidential disclosures. So no motion is filed, but you have received discovery requests solely focused on your client’s income tax returns for the period disclosed. Under both state and
federal rules, the discovery will likely be allowed if the income tax information is otherwise discoverable.

In Michigan state courts, MCR 2.412(E)(3) expressly states:  “Evidence or information that is otherwise admissible or subject to discovery does not become inadmissible or protected from discovery solely by
reason of its disclosure or use in a mediation.” So, it is likely the discovery would be allowed in state court, assuming the information was “otherwise discoverable.”

Similarly, in Michigan’s federal district courts, there is no exclusion for discovery of the underlying information, only the communications about the information are protected. For instance, FRE 408 only bars the introduction into evidence of an offer to compromise; it does not even mention discovery. Even where there is broad protection of mediation communications, there is no prohibition on discovery of the information contained in a mediation communication, only discovery of the communications concerning the information (USDC EDMI Local Rule 16.3(d); USBC EDMI Local Rule 7016-2(a)(5).) In fact, in many courts there is an explicit statement allowing the introduction of evidence which could have been discovered absent mediation:  “these rules do not require the exclusion of any evidence otherwise discoverable merely because it is presented in the course of a mediation conference.” (USBC WDMI Proposed Local Rule 9019-13(f).)

Practice tip for litigators. If you disclose something to an opponent in mediation, even though it may not be used directly, it could open your client to discovery about the subject of the disclosure. But if the disclosure was made only to the mediator in a private caucus, would it ever be disclosed if the mediator did not reveal it to the other side? Likely not, but can you trust your mediator to not disclose it, even inadvertently? This depends on the mediator. How well have they been trained to keep private disclosures confidential? How familiar are they with the Michigan Standards of Conduct for Mediators? Do they include a reference to those Standards in their contract to serve as your mediator? Answering these questions helps determine a mediator’s level of discretion.

Scenario 3

Now you can breathe a sigh of relief. The case is finally settled. Time to move on to other matters. Wait, what’s this IRS subpoena seeking your email records?

Here we reach the limitations of the court rules on third-party access to mediation communications. Even though the rules promise confidentiality, unless they also confer a privilege which will be upheld by a higher court, the disclosures in your post-mediation emails may not be protected:

•Because agreements to mediate and court rules in one court may not bind third parties in a different court.

•Because a court rule is not the same as a statutory privilege.

•Because there is a tension between the need to keep mediation communications confidential and the public’s right to know which can trump confidentiality. (E.g., consider the judicial maxim, “the public is entitled to every man’s evidence.” Branzburg v. Hayes, 408 U.S. 665, 667; 92 S.Ct. 2646, 33 L.Ed.2d 626 (U.S., 1972).)

The only refuge left is the federal common law. Does a federal mediation privilege protect the disclosures sought here? With apologies, it depends.

In 1993, the US Supreme Court proposed nine specific privileges, recognized in most of the 50 states, be incorporated into the federal evidentiary rule on privileges, FRE 501. Congress declined the proposal. Choosing a different path, they discarded all but one of the proposed privileges, the attorney/client privilege, in favor of this general statement which is now FRE 501:

The common law — as interpreted by United States courts in the light of reason and experience — governs a claim of privilege unless any of the following provides otherwise:

•the United States Constitution;

•a federal statute; or

•rules prescribed by the Supreme Court.

But in a civil case, state law governs privilege regarding a claim or defense for which state law supplies the rule of decision.

No codified federal privileges. Unfortunately, there is no mediation privilege in the Constitution, any applicable federal statute or rules prescribed by the Supreme Court generally applicable to civil disputes in the district courts. So now our hapless mediation participant must determine whether there is a state statute protecting the disclosures. The answer? Possibly, if another state’s laws provided the rule of decision and they have adopted a privilege statute, but sadly for our hero/ine, the answer is not in Michigan – at least not yet. And since FRE 501 only looks to state statutes in civil cases, if the subpoena was issued in a criminal case against our client, here too the last resort is a federal common law privilege.

Which brings us back to the Folb case, mentioned earlier. There, a federal district judge sitting in the Central District of California boldly found there is a federal mediation communications privilege. Briefly, here are the facts.

In case #1, Ms. Vasquez, a female employee sued her employer, MPIPHP, alleging that Folb, her male supervisor, had sexually harassed her. Case #1 went to mediation. No settlement agreement was reached during the mediation session, but the matter was settled shortly thereafter via communications solely between the attorneys for the employer and Ms. Vasquez. Although those communications followed upon the negotiations begun in mediation, the mediator was no longer involved in them.

Enter Case #2. Folb is suing MPIPHP for firing him over the alleged incidents with Ms. Vasquez in Case #1. Next comes the request for production to the employer. Mr. Folb wants a copy of the employer’s mediation brief in Case #1 and any correspondence related to settlement negotiations with Ms. Vasquez’s attorneys. MPIPHP objects; Mr. Folb files a motion to compel. Enter Judge Paez.

After deciding a complex choice of law issue, Judge Paez finds a federal common law privilege protects mediation communications! Citing language in a US Supreme Court decision, Jaffee v. Redmond, 518 US 1, 9 (1996), Judge Paez determined there is a “public good transcending the normally predominant principle of utilizing all rational means for ascertaining the truth.” The public good is the prompt resolution of disputes through mediation. Over the next 10 pages, the court found that: (1) the mediation privilege was “rooted in the imperative need for confidence and trust;” [in the mediation process and neutrality of the mediator]; (2) would serve public ends [settling lawsuits]; (3) the evidentiary detriment is not too great [without the protection mediation participants wouldn’t disclose the information anyway]; and (4) denial of the privilege would frustrate a parallel privilege adopted by the states [the court found court rules and statutory privileges protecting mediation communications in almost every state to be evidence of a parallel privilege]. Folb, 1171-1180. So our attorney is home free, right? Not quite.

First, this is only a district court opinion and it is from the “Left Coast.” Moreover, the inquiry did not end there. Examining the meaning of the term “mediation communications,” Judge Paez found the term only applied to communications made during a formal mediation session, not conversations in the parking lot afterwards or, in our hypothetical, post-mediation emails between attorneys without the mediator’s involvement. As such, Folb was denied access to the mediation brief and any communications made during the formal mediation, but he was allowed, subject to in camera review by the court, to pursue “production of communications that took place between counsel privy to the mediation after the mediation was formally concluded.” Id., 16 F.Supp.2d 1180.

Thus, even with a federal mediation communication privilege, whether the IRS can compel the production of the disclosures in our hypothetical depends on whether the disclosures fall within a court’s definition of “mediation communications.” Most definitions of the term do not include post-mediation negotiations without the mediator’s involvement. For example, see 2 UMA (2); MCR 2.412(B)(2); and USBC WDMI Proposed Local Rule 9019-12(a). For the same reason, the privilege would likely not extend to any offers made prior to mediation either.

So, until Michigan adopts a statute like the Uniform Mediation Act with a privilege protecting mediation communications, litigants going to a mediation and wishing to protect the confidentiality of their communications should contractually agree with the mediator and all participants to more expansive confidentiality protections than those provided in the court rules. In addition, for disclosures which could conceivably result in discovery attempts by a third party, only disclose them to the mediator.

Please notice I am not specifically advocating adoption of the UMA. Many of my colleagues have well-reasoned issues with some of it. But until Michigan adopts a privilege statute for mediation communications, I cannot promise mediation participants unconditional confidentiality beyond my promise that I won’t reveal anything they tell me absent their permission or a court order.

Even with a statutory mediation privilege, be aware that some disclosures will likely not be protected. For example, to support her claim of self-defense, a woman accused of murdering her allegedly abusive husband wants access to any confessions of physical abuse her husband may have made to the mediator during mediation. A criminal court will likely find her need for  information to defend herself outweighs the need for confidentiality.

In spite of uncertainty in certain settings, mediation is still the most useful tool around for resolving a dispute short of arbitration or litigation. Concerns can be alleviated with four potential safeguards: 

1. Always enter into a broad confidentiality agreement with all parties to the mediation;

2. Be careful who you choose as your mediator and what you tell them in mediation;

3. Clarify with the mediator whether the burden is on you to specifically identify what information can and cannot be shared with the other party that you disclose during private caucuses; and,

4. If you don’t settle during the initial mediation conference and you need to reveal additional information to settle after the mediation conference, keep the mediation open and have the mediator carry the water to the opposition.

Author Robert E. L. Wright is a pioneer in mediation and ADR in Michigan. In 2011, he left a large Michigan firm to develop his own arbitration and mediation practice, The Peace Talks, PLC and is a member of Professional Resolution Experts of Michigan (PREMi).