Cal Ap Defines What Conversations Between Attorneys Are, and Are Not, Protected By Mediation Confidentiality
Edited by Judith Stalk
In this very significant opinion from the California Court of Appeal, William H. Wimsatt et Al., Petitioners, V. the Superior Court of Los Angeles County, Respondent; Corey Kausch, Real Party in Interest, Court of Appeal of California, Second Appellate District, Division Three, 2007 Cal. App. LEXIS 996, filed June 18, 2007, mediation confidentiality has been further defined with respect to what conversations between attorneys are, and are not, protected by mediation confidentiality. The route the Court takes is a journey through the recent leading California cases that establish precedent in all areas of mediation confidentiality and is therefore an outstanding primer. For the sake of brevity in this article that history is provided in end notes. Along the journey the Court highlights leading cases that have also lead to an inequity to one of the parties as a result of strict interpretation of mediation confidentiality. The Court therefore recommends the legislature revise the mediation confidentiality statutory scheme to consider countervailing public policies. The Court concludes this extraordinary expedition with a warning to attorneys and parties to mediation. The opinion of the court, responding to a writ of mandate of a case in which discovery is ongoing, is written in a style of depth and breadth in anticipation of future appeal. The opinion opens many ethical issues which remain to be answered. What’s next?
Summary of Facts and Contentions
Plaintiff and real party in interest Kausch filed a legal malpractice case against defendants and petitioners, including Wimsatt, concerning legal representation rendered in a personal injury lawsuit. Kausch alleged Wimsatt breached his fiduciary duty by submitting an unauthorized settlement demand to the opposing party. Kausch learned of this potentially unauthorized act from a “confidential mediation brief” submitted to a mediator in the personal injury lawsuit. The brief was prepared by Brontzen, a defense counsel in the personal injury action and stated in part, “The attorneys for [Kausch] have purportedly recently communicated a settlement demand in the sum of $1.5 million.”
On April 27, 2006, the morning before the mediation, Goldstein, the other attorney representing Kausch, sent an email to Brontzen. The subject of the email was “mediation” and stated in part, “Your brief suggests that plaintiffs’ lawyers have communicated a $1.5 million settlement demand. That has not occurred to my knowledge. Brontzen responded by email to Goldstein, “Bill [Wimsatt] said to him [directly] and also Bill [Wimsatt] made that remark during one of our telephone conference calls scheduling the expert depos and touching on whether a second mediation conf[erence] would be worthwhile.” (Wimsatt, supra, p. 5)
Goldstein also emailed his co-counsel Wimsatt and stated, “I read in Brontzen’s mediation brief that the plaintiffs’ lawyers have reduced our settlement demand to $1.5 million. Did you have any discussion with them regarding numbers? If so, please fill me in.” Wimsatt responded to Goldstein: “I did have a discussion with him about a month ago. I did not make a demand. I did, however, tell him that I had reevaluated the damages; and, that I thought a demand for half of plaintiff’s original demand was more in order. I, also, told him that I had no authority to reduce the original demand.” (Id.)
The underlying personal injury case was resolved at the mediation in April 2006. In June 2006 Kausch filed a complaint against Wimsatt and his firm for breach of fiduciary duty by reducing Kausch’s demand from $3.5 million to $1.5 million without Kausch’s knowledge or consent.
During Wimsatt’s deposition he denied that he had ever lowered the settlement demand. When Wimsatt was shown the confidential mediation brief which contained the following, “The attorneys for [Kausch] have purportedly recently communicated a settlement demand in the sum of $1.5 million”, Wimsatt stated “I didn’t make such a demand, and I wouldn’t without authority from Mr. Kausch.” When Wimsatt was shown the emails noted above, Wimsatt stated “I did have a conversation with Brontzen. I specifically said I have no authority to make a demand on behalf of Corey Kausch or to reduce this demand. I simply told him what the evidence I had collected had showed.”
Wimsatt sought a protective order to prevent Kausch from obtaining certain discovery. Wimsatt sought to preclude discovery of three categories of items: (1) statements made in the “confidential mediation brief;” (2) the contents of the April 27, 2006, e-mails; and (3) a conversation between Wimsatt and Brotzen in which Bill Wimsatt allegedly lowered plaintiff’s settlement demand ‘on the eve of the second mediation’ held on April 28, 2006 … .” (Wimsatt, supra, p. 37)
The trial court denied Wimsatt’s motion for a protective order. In issuing its ruling, the trial court stated the following: “the [L]egislature did not intend confidentiality of mediation proceedings to be so complete as to shield perjury or inconsistent statements.” 2 Wimsatt filed a petition for writ of mandate. This opinion is the ruling on that petition.
Court of Appeal Found the Mediation Briefs and April 27, 2006 Emails Are Protected from Disclosure
The Court of Appeal opinion includes an outstanding and thorough primer of leading California cases in mediation confidentiality. In the interest of ease of readability a summary of the primer is provided in the end note that follows. 3
The Court of Appeal concluded, “Mediation briefs are designed to facilitate an open and frank dialogue with the hope that the case can be resolved in the mediation. When written, the authors expect the briefs will always be kept confidential and used only in mediation by the mediator and the parties. Thus, mediation briefs are an integral part of the mediation process and are “prepared for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation,” and are to remain confidential. (Evid. Code, § 1119, subd. (b).)” (Wimsatt, supra, p. 38)
“The April 27, 2006, e-mails were written the day before the second mediation. They quoted from, and referenced, the confidential mediation brief. . . .They were materially related to the mediation that was to be held the next day. (Citation omitted.) Thus, the e-mails are protected and not subject to discovery. Accordingly, the e-mails were “made for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation” (Evid. Code, § 1119, subd. (b).) and are not subject to disclosure. (Id.)
Court of Appeal Found Contents of the Conversation in Which Wimsatt Purportedly Lowered Kausch’s Settlement Demand Are Not Protected by Mediation Confidentiality
Of all the issues discussed in the opinion, this is by far the narrowest. Here the Court defines what is or is not protected by mediation confidentiality. “Mediation confidentiality is to be applied where the writing or statement would not have existed but for a mediation communication, negotiation, or settlement discussion. (Cf. Rojas, supra, 33 Cal.4th at p. 417, fn. 5.) . . . [Wimsatt] has not brought forth any evidence to demonstrate that the conversation is linked to the second mediation or that it is anything other than expected negotiation posturing that occurs in most civil litigation. All conversations between the parties are not protected by mediation confidentiality simply because the conversations might have occurred temporally before a scheduled mediation. . . . [Wimsatt] has not shown that the purported conversation was made for the purpose of, or pursuant to, the mediation. Rather, there is evidence that it was made during a telephone call “scheduling the expert depos and touching on whether a second mediation conf[erence] would be worthwhile.” This evidence suggests the conversation occurred during a “discovery” conversation. Thus, the conversation may have occurred, and the statement could have been made, even if there was to be no mediation. If so, the statements were communications, negotiations, and settlements made in the regular course of the litigation, not for the purpose of, in the course of, or pursuant to a mediation.” (Wimsatt, supra, p. 43)
This reasoning by the Court may create more issues than it seeks to conclude. The conversation in question occurred after one mediation and before another mediation. The conversation may have had several purposes including, discovery scheduling, posturing and negotiating. Conversations and writings between parties and their attorneys are confidential pursuant to Evid. Code 1152. Will attorneys now be required to designate during their conversations that this portion is non-confidential and concerns discovery, and that portion is confidential and concerns negotiation toward settlement preceding or following a mediation? How should attorneys characterize those portions of their conversations or written communications that are posturing?
Public Policy Conflicts and Inequities Created by California’s Mediation Confidentiality Statutory Scheme
The Court of Appeal found that the trial court had attempted to create an exception to mediation confidentiality by ruling “that the [L]egislature did not intend confidentiality of mediation proceedings to be so complete as to shield perjury or inconsistent statements.” The trial court’s ruling was based upon Kausch’s argument that Wimsatt’s deposition testimony was perjurious because it was inconsistent with, and contrary to, other statements made by him. The Court of Appeal struggled with this issue. “We appreciate the trial court’s desire to avoid the strict limitations of mediation confidentiality in this case. Preventing Kausch from accessing mediation-related communications may mean he must forgo his legal malpractice lawsuit against his own attorneys. However, the Supreme Court has declared that exceptions to mediation confidentiality must be expressly stated in the statutes. (Wimsatt, supra, 45) 4
“Our Supreme Court has clearly and unequivocally stated that [courts] may not craft exceptions to mediation confidentiality. The Court has also stated that if an exception is to be made for legal misconduct, it is for the Legislature to do, and not the courts.
In an extraordinary observation the Court concluded “The stringent result we reach here means that when clients, such as Kausch, 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. Certainly clients, who have a fiduciary relationship with their lawyers, do not understand that this result is a by-product of an agreement to mediate. We believe that the purpose of mediation is not enhanced by such a result because wrongs will go unpunished and the administration of justice is not served.” (Wimsatt, supra, p. 48)
Court of Appeal Recommends the Legislature Revise the Mediation Confidentiality Statutory Scheme to Consider Countervailing Public Policies
Does the current mediation confidentiality statutory scheme not serve justice by causing harm in some cases? The Court concludes that in many cases the strict application of mediation confidentiality creates inequities. 5 The Court reviewed a study by Peter Robinson, Managing Director of the Straus Institute for Dispute Resolution and Assistant Professor of Law at Pepperdine University School of Law. As Professor Robinson notes, a strict approach to mediation confidentiality often prevents courts from “exploring and justly deciding controversies that might arise out of mediated agreements.” (Robinson, Centuries of Contract Common Law Can’t Be All Wrong: Why the UMA’s Exception to Mediation Confidentiality in Enforcement Proceedings Should Be Embraced and Broadened, 2003 J.Disp. Res., 135, at p. 138) 6
“Given the number of cases in which the fair and equitable administration of justice has been thwarted, perhaps it is time for the Legislature to reconsider California’s broad and expansive mediation confidentiality statutes and to craft ones that would permit countervailing public policies be considered.” (Wimsatt, supra, p. 52)
Court of Appeal Warns Attorneys and Parties to Mediation
“In light of the harsh and inequitable results of the mediation confidentiality statutes (Evid. Code, § 1115 et seq.) . . . the parties and their attorneys should be warned of the unintended consequences of agreeing to mediate a dispute. If they do not intend to be bound by the mediation confidentiality statutes, then they should “make [it] clear at the outset that something other than a mediation is intended.” (Citation omitted.)(Id.)
The Court has clearly stated that one of the unintended group of beneficiaries of the confidential nature of the mediation process are the attorneys who have negligently or intentionally committed acts that have harmed their clients. By these comments, is the Court suggesting that before mediating, attorneys counsel their clients to decide whether to participate in a traditional mediation in which most (Evid. C. Sec, 1120, Rojas, end note 2, supra.) communications, written and oral, are considered confidential; or, to participate in a process which is purposefully not a mediation so that the communications are not confidential and not protected from discovery or the subject of examination during subsequent proceedings? What ethical requirement does this case place upon attorneys? If mediation protects attorneys from claims by their clients for wrongs possibly committed by the attorney during the mediation process, is failure of an attorney to have this dialog with their client a breach of an ethical requirement? Because of possible added exposure to claims by clients, will attorneys decline to take cases to non-mediation/non-confidential settlement meetings? Will this case cause attorneys to carefully frame their communications intended to be included within mediation confidentiality or not, depending on the content and timing of the communication? Will this case have a chilling effect on attorney communications outside the mediation process?
1. Copyright by Paul R. Fisher.
2. The court observed that in Foxgate Homeowners’ Assn. v. Bramalea California, Inc. (2001) 26 Cal.4th 1 [108 Cal.Rptr.2d 642, 25 P.3d 1117] (Foxgate) the Supreme Court acknowledged there were some situations in which the privilege did not make inadmissible all mediation related information, such as in Rinaker v. Superior Court (1998) 62 Cal.App.4th 155 [74 Cal. Rptr. 2d 464] (Rinaker). (Wimsatt, supra, p. 15) For further analysis of Foxgate and Rinaker, see “Changes in Mediation Confidentiality“, Fisher.
3. Mediation confidentiality is codified in Evidence Code section 1115 et seq. This evidentiary restriction is not limited to those communications made ” ‘in the course of … mediation. [Citation.]‘ ” (Rojas v. Superior Court (2004), 33 Cal.4th, 407, at p. 417; 15 Cal. Rptr 3rd 643.) Rather, as delineated in Evidence Code section 1119, the restriction applies to any written or oral communication made “for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation,” as well as all “communications, negotiations, or settlement discussions by and between participants in the course of a mediation or a mediation consultation … .” (§ 1119.) Section 1119 also makes such evidence not subject to discovery.
Some mediation communications and writings are admissible, if the statutory requirements are met. For example, the statutory scheme specifies when written settlements and oral settlements resulting from the mediation process are admissible. (Evid. Code, §§ 1118, 1122, 1123, 1124.) Additionally, communications or writings otherwise protected may be disclosed if there is consent for disclosure, according to the parameters of section 1122.(Wimsatt, supra, p. 20)
Subject to a limitation not relevant here, mediators are expressly prohibited from testifying in civil proceedings about mediations over which they presided, except as to conduct that would give rise to civil or criminal contempt, constitute a crime, be the subject of investigation by the State Bar or Commission on Judicial performance, or give rise to disqualification proceedings. (Evid. Code, § 703.5.)
Evidence Code section 1121 also places restrictions on the use of a mediator’s reports, assessments, evaluations, recommendations, or findings by the mediator. These items may not be submitted to a court or other adjudicative body absent consent of the parties to the mediation, or unless disclosure is mandated by court rules or other laws. Even after mediation ends, communications and writings protected by the statutes are to remain confidential. (Evid. Code, § 1126; cf. Id., § 1128 [reference to mediation in subsequent trial is grounds for new trial].) (Wimsatt, supra, p. 21)
If parties use facts in mediation, mediation confidentiality does not necessarily preclude disclosure of those facts. As Rojas stated: “Of course, that witness statements ‘prepared for the purpose of, in the course of, or pursuant to, a mediation’ are protected from discovery under [Evidence Code] section 1119 does not mean that the facts set forth in those statements are so protected. Under section 1120, subdivision (a), because facts known to percipient witnesses constitute ‘[e]vidence otherwise admissible or subject to discovery outside of a mediation,’ those facts do not ‘become inadmissible or protected from disclosure solely by reason of [their] introduction or use in a mediation’ through witness statements prepared for the purpose of, in the course of, or pursuant to, the mediation.” (Rojas, supra, 33 Cal.4th at p. 423, fn. 8.) (Wimsatt, supra, p. 36)
4. (Foxgate, supra, 26 Cal.4th at p. 15; Rojas, supra, 33 Cal.4th at p. 416; Fair v. Bakhtiari, supra, 40 Cal.4th at p. 194.) Further, cases have shielded evidence of sanctionable conduct (Foxgate, supra, 26 Cal.4th 1), criminal conduct (Doe 1 v. Superior Court (2005) 132 Cal.App.4th 1160; 34 Cal. Rptr. 3rd 248), and statements that purportedly were inconsistent with those made in a mediation (Eisendrath, supra, 109 Cal.App.4th at p. 351). Cases have rejected a good cause exception (Rojas, supra, at pp. 423-424), refused to find implied waivers to mediation confidentiality Eisendrath v. Superior Court (2003) 109 Cal.App.4th 351, 362-363 [134 Cal. Rptr. 2d 716 ), and acknowledged that in doing so, the mediation participants accused of misconduct might be protected. Even though in each of these cases strong reasons existed to permit the introduction of the evidence, the results were dictated by the comprehensive statutory scheme devised by the Legislature. (Wimsatt, supra, p. 45)
5. The Supreme Court has repeatedly resisted attempts to narrow the scope of mediation confidentiality. The court has refused to judicially create exceptions to the statutory scheme, even in situations where justice seems to call for a different result. Rather, the Supreme Court has broadly applied the mediation confidentiality statutes and has severely curtailed courts' ability to formulate exceptions. The court has stated that "[t]o carry out the purpose of encouraging mediation by ensuring confidentiality, the statutory scheme … unqualifiedly bars disclosure of communications [and writings] made during mediation absent an express statutory exception.” (Foxgate, supra, 26 Cal.4th at p. 15, fn. omitted; accord, Rojas, supra, 33 Cal.4th at p. 416; Fair v. Bakhtiari, supra, 40 Cal.4th at p. 194.)
In Foxgate, supra, 26 Cal.4th 1, a mediator’s report indicated the attorney for one party had engaged in a pattern of tactics that were in bad faith and intended solely to delay. The report and the declarations of the opposing counsel were submitted in support of a motion for sanctions. (Id. at pp. 5-7.) By crafting a nonstatutory exception to mediation confidentiality, the Court of Appeal held that the report was admissible. The Court of Appeal reasoned that disclosure was necessary because the Legislature did not intend to statutorily mandate confidentiality to shield parties who obstructed the mediation process. (Id. at p. 9.) The Supreme Court disagreed. It held that the motion and the trial court’s consideration of the motion and attached documents violated the Evidence Code. (Id. at p. 17.) Foxgate reasoned that the mediation confidentiality statutes “are clear. [Evidence Code] section 1119 prohibits any person, mediator and participants alike, from revealing any written or oral communication made during mediation.” (Foxgate, supra, at p. 13.)(Wimsatt, supra, p. 22)
Foxgate recognized its conclusion left unpunished sanctionable conduct–conduct that obstructed the mediation process–and in effect, undermined the entire purpose of mediation. However, Foxgate deferred to the Legislature to balance competing public policies and to create exceptions to the statutory scheme. Foxgate stated: “The mediator and the Court of Appeal here were troubled by what they perceived to be a failure of [the defendant] to participate in good faith in the mediation process. Nonetheless, the Legislature has weighed and balanced the policy that promotes effective mediation by requiring confidentiality against a policy that might better encourage good faith participation in the process. Whether a mediator in addition to participants should be allowed to report conduct during mediation that the mediator believes is taken in bad faith and therefore might be sanctionable under Code of Civil Procedure section 128.5, subdivision (a), is a policy question to be resolved by the Legislature. (Wimsatt, supra, p. 24)
Foxgate also recognized that there were additional public policies that the Legislature had balanced: “The conflict between the policy of preserving confidentiality of mediation in order to encourage resolution of disputes and the interest of the state in enforcing professional responsibility to protect the integrity of the judiciary and to protect the public against incompetent and/or unscrupulous attorneys has not gone unrecognized. As noted, however, any resolution of the competing policies is a matter for legislative, not judicial, action.” (Foxgate, supra, 26 Cal.4th at p. 17, fn. 13.)
6. The nonexhaustive list of cases includes situations raising arguments about whether a mediated agreement was reached, whether there was fraud, duress or mistake, and whether the agreement violated public policy. The situations include cases where a party was lied to by her own attorney, the mediator, and a third party; a scrivener’s error in a mediated settlement lead to a $600,000 windfall to one party; parties claimed their own attorney coerced them into signing a settlement agreement; a mother waived parental rights; and the parties agreed to perform an illegal act in the mediated agreement. (Robinson, Centuries of Contract Common Law Can’t Be All Wrong: Why the UMA’s Exception to Mediation Confidentiality in Enforcement Proceedings Should be Embraced and Broadened, 2003 J.Disp. Res. 135.) (Wimsatt, supra, p. 50)