On Professional Practice—Mediation Confidentiality: California Update

Confidentiality is such an essential element in mediation that we think, talk, and write about it often. The Uniform Law Commission, an organization that aims to provide US states with legislation to bring clarity and stability to statutory laws across jurisdictions, acknowledged the importance of this when it drafted the Uniform Mediation Act (UMA) in the early 2000s "to provide a privilege for the mediation process that assures confidentiality." Although only 12 jurisdictions have adopted the UMA, many states have adopted their own statutes and rules governing mediation privileges, confidentiality of mediation communications, and whether mediators may testify. So when the state of California which has the most expansive statute covering confidentiality in mediation, amends its confidentiality rules, the details are worth discussing.

Section 1119 of the California Evidence Code states that, except as otherwise provided,

No evidence of anything said or any admission made for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation is admissible or subject to discovery, and disclosure of the evidence shall not be compelled, in any arbitration, administrative adjudication, civil action, or other noncriminal proceeding in which, pursuant to law, testimony can be compelled to be given.

The law extends this prohibition to "writings" and explicitly states that "all communications, negotiations, or settlement discussions by and between participants in the course of a mediation or a mediation consultation shall remain confidential." 

Over the years, the California state courts have regularly held that these mediation confidentiality provisions were absolute.

The Cassel case is one oft-cited example of the inviolability of protections in Section 1119. In 2011, Michael Cassel participated in a mediation at which he had attorney representation. After the mediation, he sued his attorneys for malpractice, breach of fiduciary duty, fraud, and breach of contract. His complaint alleged that his attorneys deceived and coerced him during the14-hour mediation. The attorneys moved to exclude all evidence of attorney-client discussions that took place immediately preceding and during the mediation regarding mediation settlement strategies and the attorneys' efforts to persuade their client to reach a settlement in mediation. Even though the specific allegations of what took place were shocking, the California Supreme Court (reversing the Court of Appeals) held that the statute restricts the use of any communication in any future court proceeding, unless waived, and this restriction includes communications between mediation participants during a mediation as well as communications mediation participants have with their attorneys.  

In a "reluctant" concurrence, Justice Ming Chin stated:

[The court's] holding will effectively shield an attorney's actions during mediation, including advising a client, from a malpractice action even if those actions are incompetent or even deceptive. Attorneys participating in mediation will not be held accountable for any incompetent or fraudulent actions during the mediation unless the actions are so extreme as to engender a criminal prosecution against the attorney. This is a high price to pay to preserve total confidentiality in the mediation process.

The concerns arising from the Cassel case prompted a 2012 study by the California Law Revision Commission to analyze the confidentiality statute specifically in connection with the law's impact on "public protection, professional ethics, attorney discipline, client rights, the willingness of parties to participate in voluntary and mandatory mediation, and the effectiveness of mediation" when attorney malpractice or misconduct has been alleged.

In 2017 the Commission recommended an exception to mediation confidentiality when the evidence would be used to prove or disprove an allegation a lawyer "breached a professional obligation when representing a client in the context of a mediation or a mediation consultation." The legal and the judicial communities opposed the recommendation, and no legislation was proposed for consideration.

Instead, during this past 2017-18 California legislative session, the state legislature adopted an amendment to the California Evidence Code requiring attorneys representing clients in a mediation or a mediation consultation to provide the clients with a written disclosure explaining the confidentiality restriction. The disclosure must be signed by the client. 

The critical portion of the Mediation Disclosure Notification and Acknowledgement reads as follows:

I, [Name of Client], understand that, unless all participants agree otherwise, no oral or written communication made during a mediation, or in preparation for a mediation, including communications between me and my attorney can be used as evidence in any subsequent noncriminal legal action including an action against my attorney for malpractice or an ethical violation.

The disclosure goes on to note that the disclosure does not limit an attorney's potential liability for professional malpractice or prevent reporting any professional misconduct to the State Bar of California or cooperating with any disciplinary investigation or criminal prosecution of an attorney; however, parties are restricted from disclosing anything that was said or done during the mediation.

Does this disclosure fix the problem?

If this law had been in place when Michael Cassel mediated, his attorneys would have been required to disclose to him in advance that Cassel would be prohibited from using any of the attorneys' communications as evidence in a lawsuit for malpractice, and Cassel would have had to sign an acknowledgment that he had been told this. 

Nothing in this law would prevent Cassel's attorneys from breaching their fiduciary duty or committing fraud or breach of contract. Further, if they did behave in the same manner and Cassel had been provided with the information in advance and signed the acknowledgment, Cassel would have no legal recourse against his attorneys.  The only possible benefit to Cassel of this revision is that he might have saved himself some legal fees by recognizing in advance that pursuing a legal malpractice claim would be fruitless.

Justice Chin, in his concurrence in Cassel, stated:

There may be better ways to balance the competing interests than simply providing that an attorney's statements during mediation may never be disclosed. For example, it may be appropriate to provide that communication during mediation may be used in a malpractice action between an attorney and a client to the extent they are relevant to that action, but they may not be used by anyone for any other purpose. Such a provision might sufficiently protect other participants in the mediation and also make attorneys accountable for their actions.

Several jurisdictions have already created the kind of specific accountability and protection that Justice Chin described. For example, Florida's Mediation Confidentiality and Privilege Act contains clear statements providing both confidentiality of all mediation communications and a mediation party's privilege to refuse to testify and prevent disclosure by any other person. These are followed by six limited-scope exceptions for when there is no confidentiality or privilege, including when a mediation communication is offered to report, prove, or disprove professional malpractice or professional misconduct occurring during the mediation. These exceptions require that the disclosure is "solely" for the internal use of the body investigating reviewing the alleged misconduct or solely for the purpose of the professional malpractice proceeding.

Time will tell whether the revision to the evidence code in California fixes the problem. But after years of watching the restrictive reading of the California confidentiality statute, observers may be forgiven some skepticism.