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Possible New Mediation Confidentiality Legislation

Mediation and other forms of ADR are an important part of the litigation process. Colleague and friend, Kevin Coleman, wrote an article recently regarding possible new mediation confidentiality legislation. Like most things Kevin produces, I found the article interesting and helpful. Kevin allowed me to reprint the article for your consideration. Without further ado, here it is:

Mediation Confidentiality Proposed Tentative New Legislation

The California Law Revision Commission (CLRC) has made a tentative recommendation to the legislature to create an exception to mediation confidentiality that will allow communication from a mediation to be admitted into evidence in an attorney malpractice case.  The CLRC has written proposed legislation upon which it is accepting public comment.

By way of background for those not familiar with the issue, in Cassell v. Superior Court 51 Cal. 4th 113 (2011) the Court upheld mediation confidentiality, disallowing testimony in a legal malpractice action of conversations between client and attorney that took place during the course of a mediation.

Thereafter, the legislature tasked the CLRC with analyzing “the relationship under current law between mediation confidentiality and attorney malpractice and other misconduct….” 2012 Cal. Stat. res. ch. 108 (ACR 98 (Wagner & Gorrell)).

After much research, many hearings and public comment, the CLRC has “tentatively concluded that existing California law does not place enough weight on the interest in holding an attorney accountable for malpractice or other professional misconduct in a mediation context.”

Importantly, the CLRC’s tentative proposed exception will still allow for open communication among the parties without fear that what they say during mediation will come back to bite them during a later proceeding.  The proposed evidence code section 1120.5, is narrowly written to only allow communication that took place during mediation in very limited circumstances related to attorney misconduct.

Also, the exception to mediation confidentiality cannot used be to void a settlement.

The exception can only be used it in 3 instances:  a State Bar disciplinary action, a cause of action seeking damages from a lawyer based on alleged malpractice, and, in an attorney-client fee dispute.  The exception to mediation confidentiality is limited to only apply to an allegation that an attorney breached a “professional requirement,” basically when acting as an attorney in a professional capacity, and only when doing so in a mediation context.

It won’t apply to a lawyer who is acting as the mediator.  A mediator still won’t be compelled to testify or provide documentary evidence.  So, Evidence Code 703.5 won’t be affected.

If the above criteria are met then only the portion of the communication necessary for the application of the exception could be admitted but not for any other purpose.

A precaution is built in – mediation participants would receive notice so that they can try to prevent improper disclosure of mediation communications.

The CLRC’s tentative recommendation can be found here, and the actual proposed legislation begins at page 145.

The CLRC is seeking comment on any aspect of its tentative recommendation.  Its next meeting is September 28 but would like comments by September 1.

Kevin C. Coleman has been settling cases as a professional mediator since 1996.  Contact Kevin here, or by calling 415-488-7609.   Kevin mediates throughout the San Francisco Bay Area, including San Francisco, Marin, Alameda, Contra Costa, Sonoma counties, and throughout California. I hope my newsletter provided you some insight.

Class Action Waiver Unenforceable

In Garrido v. Air Liquide Industrial U.S. LP (CA2/2  B254490 on rehearing 10/26/15) the court held the employer’s class action waiver unenforceable for non-FAA arbitration.

Mario Garrido signed a written employment agreement with his employer, American Air Liquide, Inc. (Air Liquide).  The agreement required all disputes arising out of Garrido’s employment with Air Liquide to be resolved by arbitration, and the agreement prohibited class arbitration.

After being terminated, Garrido filed a class action complaint against Air Liquide, alleging various Labor Code violations and unfair business practices.  The trial court denied a motion to compel arbitration brought by Air Liquide, finding that the agreement’s class waiver provision was improper under the test laid out in Gentry v. Superior Court (2007) 42 Cal.4th 443 (Gentry).  Following the trial court’s ruling, our Supreme Court held, in Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 364 (Iskanian), that Gentry’s rule against employment class waivers was preempted by the Federal Arbitration Act (9 U.S.C. § 1 et seq.) (FAA).

Class Action Waiver Unenforceable

The court determined that if the case were governed by the FAA, arbitration (on an individual basis) would likely be required. Because Garrido’s lawsuit was not subject to the FAA, and Gentry’s holding has not been overturned under California law in situations where the FAA does not apply, the court found that the agreement’s class waiver unenforceable.  Neither party claimed that class arbitration was appropriate.

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.

Your use of this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and Nuddleman Law Firm, P.C. cannot guarantee the confidentiality of anything posted to this blog.

The Nuddleman Law Firm, P.C. represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Pleasanton, Oakland, Berkeley, San Ramon, Concord, Hayward, Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

What is Alternative Dispute Resolution?

What is Alternative Dispute Resolution?

California and federal courts typically require all litigants to conduct some type of Alternative Dispute Resolution (ADR). ADR is a process in which a neutral person helps people who cannot agree, so that they can resolve their case.  ADR is designed to take place as early as possible in the life of a case, to provide an opportunity to settle all or part of the case and keep litigation expense to a minimum.  Parties in a civil case can use a mediator, neutral evaluator, arbitrator, or settlement conference neutral for assistance in resolving a case. In some programs, ADR providers determine their own fee for their services.

Types of Civil ADR available:

Mediation:

Mediation is an informal, confidential, flexible and non-binding process in which the mediator helps the parties to understand the interests of everyone involved, and their practical and legal choices. The mediator helps the parties to:

• Communicate better,

• Explore legal and practical settlement options, and

• Reach an acceptable solution of the problem.

The mediator does not decide the solution to the dispute; the parties do. The mediator does not have the power to force either party to accept any particular result, and does not render a decision regarding who will or who will not prevail in the case.  Rather, the mediator helps the parties facilitate a resolution of the case.

Mediators are allowed to charge for their time. The cost of mediation can vary depending on the mediator and the parties usually split the mediator’s fee. Some mediators charge an hourly rate, and others charge a daily rate.  Some programs offer free mediations in particular situations.

Neutral evaluation

Neutral evaluation, sometimes called “early neutral evaluation” or “ENE”, is an informal process in which the evaluator, an experienced neutral lawyer:

• Hears a compact presentation of the case from both sides,

• Gives a non-binding assessment of the strengths and weaknesses on each side, and

• Predicts the likely outcome.

The evaluator can help parties to identify issues, prepare stipulations, and draft discovery plans. The parties may use the evaluation to discuss settlement. Evaluators are allowed to charge for their time.

Like mediation, the evaluator does not have the authority to decide who wins or loses the case.  The evaluator discusses the strengths and weaknesses of the parties’ case and can offer his/her opinion as to the likelihood of prevailing.  Oftentimes, ENE will lead to settlement discussions after the parties receive feedback regarding the merits and weaknesses of their claims and defenses.

The court oftentimes provides free ENE services, but the parties can also hire a private evaluator.

Private Arbitration

Arbitration is less formal than a trial. The arbitrator:

• Hears the evidence and arguments of the parties, and then

• Makes a written decision.

The parties can agree to binding or non-binding arbitration:

• In binding arbitration the arbitrator’s decision is final and completely resolves the case, without the opportunity for appeal.

• In non-binding arbitration, the arbitrator’s decision could resolve the case, without the opportunity of appeal, unless a party timely rejects the arbitrator’s decision within 30 days and requests a trial.

Many private arbitrations are BINDING; if there is an arbitration clause in a contract, that clause may state whether or not arbitration will be binding.

Some agreements require arbitration before or in lieu of filing a lawsuit.

Civil Judge ADR

The Civil Judges ADR program allows parties to have a mediation or settlement conference with an experienced judge of the Superior Court.

Judicially supervised mediation is an informal, confidential, flexible and non-binding process in which the judge helps the parties to understand the interests of everyone involved, and their practical and legal choices, and to hopefully resolve their disputes.

A settlement conference is an informal process in which the judge:

• Meets with the parties or their attorneys,

• Hears the facts of the dispute,

• Helps identify issues to be resolved, and

• Normally suggests a resolution that the parties may accept or use as a basis for further negotiations.

Judicial Arbitration

Judicial Arbitration is like a trial, but it is less formal and there is no jury. Each side presents its case to an arbitrator. The arbitrator is either a lawyer or a retired judge, and does not take sides or give advice.

Judicial arbitration is usually free for the parties. (If your arbitration takes more than 5 hours, the arbitrator may charge you a fee, but most arbitrations take 3 hours or less.) The parties can agree to binding or non-binding arbitration:

• In binding arbitration the arbitrator’s decision is final and completely resolves the case, without the opportunity for appeal.

• In non-binding arbitration, the arbitrator’s decision could resolve the case, without the opportunity of appeal, unless a party timely rejects the arbitrator’s decision within 30 days and requests a trial.

If the parties cannot agree on a particular form of ADR, the court’s default ADR process is non-binding judicial arbitration. If the parties use non-binding judicial arbitration, then oftentimes the losing party will simply reject the arbitrator’s decision. Although this can effect the recovery of costs should the matter proceed to litigation, it does not necessarily facilitate a resolution of the claims.

Civil Early Settlement Conference

A settlement conference is an information process in which the neutral (a judge or an experienced attorney):

• Meets with the parties or their attorneys,

• Hears the facts of the dispute,

• Helps identify issues to be resolved, and

• Normally suggests a resolution that the parties may accept or use as a basis for further negotiations.

Some courts offer this service at no additional charge.

When is the right time to engage in ADR?

That depends on a number of factors.  Sometimes early ADR efforts can help the parties resolve their differences without litigation, or early in the litigation process.  Early ADR may allow the parties to resolve their differences without incurring substantial costs and before the parties become too entrenched in their positions.  If ADR occurs too early, the parties may not have sufficient time to develop the evidence and therefore may make incorrect assumptions about what the evidence will or will not show.  The inability to examine the evidence that will come out at trial may help the parties resolve their case, but it can also cause one side or the other to over-value the strengths of their position.

Given the significant costs of litigating a case, the Nuddleman Law Firm believes exploring ADR options early makes sense for most clients, but early ADR is not appropriate for every case.  If one side or the other is too entrenched in their position or has an unrealistic expectation of what will occur during the litigation, the parties may need to litigate the case until their positions become clearer or they have a better understanding of what may happen at trial.