January 22, 2015 Practice Points

What Is the Remedy for Breaching a Mediation Confidentiality Clause?

By Jonah Orlofsky

Most mediation contracts include a confidentiality clause providing that all statements made and information exchanged during the mediation cannot be used for any purpose outside of the mediation. But what happens if someone violates that clause? This question was raised before the Federal Circuit in Higbie v. U.S., 2015 WL 162660 (Fed.Cir. 2015), when, after a failed mediation, the government submitted affidavits to the court citing statements made in mediation. It was undisputed that this violated the contractual confidentiality clause, but the plaintiff sought money damages and the government argued that no monetary damages could be awarded.

The language of the mediation contract was standard issue: “Any documents submitted to the mediator(s) and statements made during the mediation are for settlement purposes only.” A two-judge majority ruled that this language provided only one remedy—exclusion of the material from the court proceeding. They ruled there was no evidence of an intent to provide a monetary remedy. A dissenting judge, however, said that there was no reason to depart from the default rule that contract provisions implicitly carry a monetary remedy. Since the confidentiality clause did not, in this judge’s view, exclude monetary damages, such a remedy should be available.

Keywords: alternative dispute resolution, litigation, mediation, confidentiality, privilege, breach, exclusion, monetary, remedy

Jonah Orlofsky is the founder of The Law Offices of Jonah Orlofsky in Chicago, Illinois.

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