{"id":616,"date":"2010-06-28T21:19:15","date_gmt":"2010-06-29T01:19:15","guid":{"rendered":"http:\/\/businessconflictmanagement.com\/blog\/?p=616"},"modified":"2010-06-28T21:19:15","modified_gmt":"2010-06-29T01:19:15","slug":"mediation-confidentiality-collides-with-accountability-in-court-ordered-mediation","status":"publish","type":"post","link":"http:\/\/www.businessconflictmanagement.com\/blog\/2010\/06\/mediation-confidentiality-collides-with-accountability-in-court-ordered-mediation\/","title":{"rendered":"Mediation Confidentiality Collides with Accountability in Court-Ordered Mediation"},"content":{"rendered":"

In the Bankruptcy Court for the Southern District of New York,\u00a0a judge held a hearing upon Order to Show Cause why\u00a0Wells Fargo,\u00a0which had been required to participate in a mediation, should not be sanctioned for\u00a0the conduct of its counsel in that mediation.\u00a0 The mediator testified, Wells Fargo’s counsel testified, and at least one other counsel for a participating party testified — all concerning\u00a0Wells Fargo’s\u00a0conduct during the mediation.\u00a0 The court held that there had been a failure to mediate, held Wells Fargo in contempt of the mediation order, and sanctioned them.<\/p>\n

The case is In re A.T. Reynolds and Sons, Inc.<\/a><\/em>, 424 B.R. 76 (Bnkr. S.D. NY\u00a0 2010).\u00a0 The parties were ordered to mediation by order dated August 27, 2009.\u00a0 On November 17, 2009, the mediator reported to the court that one of the parties failed to participate in good faith, and that a report would be submitted.\u00a0 That report alleged that (a) Wells Fargo was unclear about the issues to be mediated, and sought a mediation statement identifying them; (b) Wells Fargo demanded to know the names of the individuals who would attend the mediation; (c) Wells Fargo sent a “junior” counsel to the mediation; (d) Wells Fargo’s counsel “repeat[ed] a pre-conceived mantra that indicated that Wells Fargo was not open to any compromise”; and (e) when the mediator threatened to report his conduct to the court, Wells Fargo’s counsel replied that his “client would never agree to my acting as mediator in the future in which Wells Fargo might be a party.”<\/p>\n

For its part, Wells Fargo replied that its counsel was a senior attorney with 10 years’ experience; that the client representative at the mediation had full settlement authority; that Wells Fargo could not prepare for the mediation when the mediator said that the issues would be determined at the proceeding itself, and they “will go where the river takes us”; and that parties to mediations are fully entitled to take “no-pay” positions.<\/p>\n

At the hearing the court called the mediator to testify.\u00a0 He reported that Wells Fargo’s counsel interrupted his adversary and \u00a0“did not go through risk analysis.”\u00a0 Counsel for the opposing party testified that the mediation ended “because we weren’t even getting past square one.”\u00a0<\/p>\n

The court, in its opinion,\u00a0engaged in a legal analysis of what constitutes “good faith” in mediation and noted that the case law “cannot be construed to mean that a party can decide ahead of the mediation that it will accept a single, preconceived settlement, then refuse to engage in the risk analysis that is fundamental to mediation.”\u00a0 While a party can’t be forced to settle, concluded the court, it must participate in the process “beyond insisting that it won’t settle.”\u00a0<\/p>\n

Moreover, the court found that “counsel to Wells Fargo sought to control the procedural aspects of the mediation by resisting filing a mediation statement and demanding to know the identities of the other party representatives.”<\/p>\n

Wells Fargo and its counsel were\u00a0therefore required to pay the mediator and the other parties their costs in preparing for and attending the mediation.\u00a0 “The Court concludes that attendance at a mediation without participation in the discussion and risk analysis that are fundamental practices\u00a0in mediation constitutes failure to participate in good faith.”<\/p>\n

Now, I’m still learning.\u00a0 But so are we all (I hope) and there’s enough in this opinion that’s contrary to my practices as a mediator that I need a reality check.\u00a0 Or maybe a reality slap<\/a>.<\/p>\n

A.\u00a0 My mediation agreement requires the parties to inform each other of the identities of their representatives a week ahead of time, and vests in me the power to exclude people.<\/p>\n

B.\u00a0 I tell the parties at the start of a court-annexed mediation that I will tell the court only whether it settled or whether it didn’t, and will maintain every other aspect of every communication in confidence.<\/p>\n

C.\u00a0 I also ask them to sign a confidentiality agreement that they will not testify or present evidence as to what happened in the mediation, and that they acknowledge such information and statements are both privileged and inadmissible.<\/p>\n

D.\u00a0 I tell parties that if I’m subpoenaed I will oppose it, and that I have insurance to cover the cost.<\/p>\n

E.\u00a0 I try to conduct the mediation so that the parties control the process as much as possible (this is called party autonomy<\/a>), and certainly if a party wants to know who is coming and what issues are going to be discussed I will make every effort to get that information to that party (this is called not ambushing<\/a> a negotiator).<\/p>\n

F.\u00a0 When a party tells me they’ve moved for summary judgment and want to wait for the motion before mediating, I tell them to come on along anyway and explain to the other side why they have a slam-dunk; better we should try to assess the merits than have a judge do so, who knows the law but doesn’t know either of your businesses.<\/p>\n

G.\u00a0 Maybe I’m dealing with a lot of dumb folks, but when I suggest risk analysis, or walk a party through a simple decision tree, most of them are unfamiliar with the technique.\u00a0 Indeed, the very\u00a0idea that a 100% win three years from now means a present-value discount for payment today is news to a lot of litigants and often changes their thinking.\u00a0 Failure to engage in risk analysis is contempt?\u00a0 Who knew?<\/p>\n

\"\"<\/a><\/a><\/p>\n

H.\u00a0 If I heard that any mediator threatened a party or its counsel with reporting its mediation conduct to\u00a0a court, not only would I agree that the counsel should never again engage that mediator — I would never do so either.<\/p>\n

Am I nuts here?\u00a0 Are mediators who practice as I practice making a big big mistake?\u00a0 Most important,\u00a0is a party’s\u00a0clear statement of an unwillingness to pay, accompanied by the facts and law supporting that view, now sanctionable?<\/p>\n","protected":false},"excerpt":{"rendered":"

A court-appointed mediator reports to the court that a party failed to participate in good faith, and testifies as to chapter and verse of the offending conduct. So does the other party’s counsel. The court orders sanctions. Good or bad for increasing the effectiveness of court-ordered mediation? <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[39,15],"class_list":["post-616","post","type-post","status-publish","format-standard","hentry","category-mediation","tag-courts","tag-mediation"],"aioseo_notices":[],"_links":{"self":[{"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/posts\/616","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/comments?post=616"}],"version-history":[{"count":0,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/posts\/616\/revisions"}],"wp:attachment":[{"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/media?parent=616"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/categories?post=616"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/tags?post=616"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}