ADR Case Updates
California Supreme Court Upholds Mediation Confidentiality, 08/06/08
Effective mediation depends on candid and confidential communication between the parties and mediator, which is less likely to occur if parties fear that their statements may be used against them in subsequent litigation. To that end, in the recent case of Simmons v. Ghaderi, 2008 WL 2789224 (July 21, 2008), the California Supreme Court held that mediation confidentiality statutes apply to prevent introduction of evidence of an oral settlement agreement reached at mediation.
Plaintiffs brought a medical malpractice wrongful death action against Dr. Ghaderi. The parties attended mediation. Dr. Ghaderi had given her malpractice carrier written authority to settle for up to $125,000. The carrier settled the case for that amount. When informed of the settlement in the other room, Dr. Ghaderi said, "Good, because I am revoking my consent," and left the mediation. Plaintiff then amended the complaint to allege the oral agreement. The trial court severed the breach of contract claim, allowed Plaintiff to introduce evidence of the oral settlement agreement reached at mediation over Defendant's confidentiality objections, and entered a $125,000 judgment for Plaintiff.
A split Court of Appeal affirmed the judgment on estoppel grounds. Dr. Ghaderi had not raised the confidentiality objections until the trial when she realized the facts were unfavorable to her position (she had not disputed the events at mediation in pre-trial motions).
The California Supreme Court reversed and remanded. Mediation confidentiality prohibits the admission into evidence of statements made at mediation unless specific statutory exceptions are met, none of which were established. Estoppel principals do not apply here.
While Dr. Ghaderi was allowed to thwart the settlement in this case (although plaintiffs may still pursue their medical malpractice case against her), making exceptions to mediation confidentiality would encourage a flexible approach to the statutes and erode the confidentiality protections that are crucial to successful mediations. The California Legislature has made the policy choice of ensuring mediation confidentiality and the effective settlement process it fosters, �rather than adopt a scheme to ensure good behavior in the mediation and litigation process.�
This case may be viewed at: http://www.courts.ca.gov/opinions.htm.
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