ADR Case Updates
Attorney-Client Communications Not Protected By Mediation Confidentiality, 06/02/2010
California and Federal Courts have rendered the following recent decisions regarding Alternative Dispute Resolution:
A more detailed summary and analysis is below.
In Porter v. Wyner, (Apr. 8, 2010, Second District, Div. Eight), 107 Cal. Rptr. 3d 653, Defendant attorneys represented Plaintiffs in a lawsuit to obtain special education services for Plaintiffs' son. After the underlying case settled at mediation, Plaintiffs sued Defendants for breach of an attorney fee agreement, claiming the attorneys promised during mediation to pay Plaintiffs certain proceeds from their attorney fees.
During trial, the court admitted into evidence those conversations to support Plaintiffs' claim for breach of the fee agreement. After the jury rendered a verdict in favor of Plaintiffs, the trial court granted Defendants motion for new trial based upon the California Supreme Court holding in Simmons v. Ghaderi (2008) 44 Cal. 4th 570.
Reversed and remanded. A divided Court of Appeal panel held that communications between attorney and client cannot be considered "for the purpose of, in the course of, or pursuant to ..." a mediation under Evidence Code § 1119, subd. (a). Only communications between the disputants and a mediator are covered by the mediation privilege. Since the communications at issue are not within the purview of § 1119, their admission into evidence did not create an exception to mediation confidentiality because they were not contrary to the holding in Simmons v. Ghaderi.
A well-written dissent points out that: (1) the purpose of the subject communications was to foster settlement; (2) they were made in the course of the mediation; and (3) were pursuant to the mediation because that was the only reason the conversations took place. Indeed, Plaintiffs claim they would not have settled but for their attorneys' promise to pay certain proceeds from the attorney fees. As such, the statements fall directly within the purview of mediation confidentiality and were inadmissible in subsequent litigation.
Two policies conflict in this case — a client's interest in proving malpractice claims against his attorney, and the need to protect communications made in mediation. In enacting § 1119, the Legislature has made the policy choice of ensuring mediation confidentiality and the effective settlement process it fosters. Any change to that framework must be made by the Legislature "under carefully crafted statutory standards."
For the reasons articulated in the dissent, I predict that we will see this case again when the California Supreme Court grants review.
THE FOLLOWING CASES INVOLVE ARBITRATION:
Stolt-Nielsen S.A. v. Animal Feeds International Corp., ___ U.S. ___, 130 S. Ct. 1758 (Apr. 27, 2008), (arbitration panel exceeded its powers by imposing its own policy choice instead of identifying and applying applicable law);
Pearson Dental Supplies, Inc., v. Superior Court (Turcios), (Apr. 26, 2010), 48 Cal. 4th 665, (trial court properly vacated an arbitration award where the arbitrator's error deprived an employee with a mandatory arbitration agreement of a hearing on an unwaivable statutory claim under FEHA);
Pokorny v. Quixtar, Inc., 601 F. 3d 987 (Ninth Cir., Apr. 20, 2010), (a company's dispute resolution provisions are unconscionable because its unilateral rules governing disputes were not attached to the agreement);
Adolph v. Coastal Auto Sales, Inc., (May 26, 2010, Fourth District, Div. Three), __ Cal. Rptr. 3d __, 2010 WL 2089482, (party waives the right to compel arbitration where actions taken are inconsistent with the intent to arbitrate, and cause prejudice to the opposing party); and
Villa Vicenza Homeowners Association v. Nobel Court, LLC, (May. 27, 2010, Fourth District, Div. One), __ Cal. Rptr. 3d __, 2010 WL 2109385, (Condominium Developer may not compel arbitration against HOA under arbitration provision contained in CC&Rs because the arbitration clause is not a binding contract term).
The California opinions are posted at: http://www.courts.ca.gov/opinions.htm; the Ninth Circuit case at: http://www.ca9.uscourts.gov/opinions/; the U.S. Supreme Court case at http://www.supremecourtus.gov/opinions/07slipopinion.html.
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