Mediator Disclosure Standards: Same as Judge??

The Court of Appeals for the Federal Circuit has held that “mediators have disclosure obligations which are similar to the recusal requirements imposed on judges.”  This is so despite the acknowledgement that mediators have no authority whatsoever over the parties they are assisting, and despite the fact that a bad mediator can cause very little harm.

The dispute giving rise to this peculiar result is Ceats, Inc., v. Continental Airlines Inc., a patent dispute brought before the District Court for the Eastern District of Texas and appealed to the Federal Circuit.   The claimant sought review of a denial of its motion pursuant to F.R.C.P. 60(b) for relief from a judgment that its patents were invalid.  The basis for that motion had been that the court-appointed mediator had failed to disclose his close business and professional relationship with counsel for the defendants.  This nondisclosure was also the basis for a state court’s vacating an arbitration award issued by the same neutral (in an unrelated proceeding) in which he had failed to disclose that same relationship.

The Court of Appeals “recognize[d] that mediators perform different functions than judges and arbitrators,” but also noted that “mediators still serve a vital role in our litigation process.”

Because parties arguably have a more intimate relationship with mediators than with judges, it is critical that potential mediators not project any reasonable hint of bias or partiality.  Indeed, all mediation standards require the mediator to disclose any facts or circumstances that even reasonably create a presumption of bias.

Reviewing the ABA Model Standards, the court noted a similarity with the recusal requirements imposed on judges pursuant to 28 U.S.C. 455(a).  It then reasoned that “parties must have absolute trust that their confidential disclosures [in mediation] will be preserved.”  Partiality, reasoned the court, eroded that trust and mediators’ disclosure requirements were therefore similar to judges’ recusal requirements.

A good-old Texas mediator of my acquaintance, Jeff Abrams, always says that “the worst thing that can happen in a mediation is that you have a bad day.”  The very prospect that mediators share any professional attribute to judges is difficult to entertain.  Yes, of course mediators should disclose relationships before accepting an engagement.  But different from judges, mediators are often sought out because they have relationships with the parties.  Franchisees may seek a mediator who has worked with the franchisor.  A Chinese friend once explained that an arbitrator who was the cousin of a party is often chosen by the adversary because he has guanxi with her.  Certainly the intentional disclosure of confidential information is disreputable, but seems to have no logical connection with partiality.

What would happen if a partial mediator slipped into the process?  Would she try to persuade the other side that it has no case?  That there were no damages?  That it is likely they will lose summary judgment?  So what?  A competent attorney in mediation makes her own assessments and agrees only to agreeable options.  It really is quite difficult to imagine what harm even the most biased mediator could do.  The same could hardly be said for a biased judge.

Disclosure requirements for mediators are found where they belong — in bar association “standards” and mediator provider organization “rules.”  To enshrine them in the law seems to reflect an inaccurate understanding of how mediations really work, and why litigants settle.

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