Mediation/Confidentiality/Settlement Agreement: Second District, Division 6 Affirms Judgment Enforcing Mediation Settlement Agreement – Statements Made During Mediation Are Inadmissible
Evidence Code Section 1119 Makes Anything Said During Mediation Inadmissible And Undiscoverable
We have posted from time to time on mediation and confidentiality, noting how difficult it is to set aside a settlement agreement based on statements made during the mediation process: statements made during mediation, even to one’s own attorneys, are inadmissible. Cassel v. Superior Court, 51, Cal. 4th 113, 123 (2011). And so in Cruz v. Bank of America, No. B247763 (2nd Dist. Div. 6 Jan. 6, 2014) ((Yegan, J., author) (unpublished), the trial court denied plaintiffs’ motion to set aside the settlement agreement, ruling that statements made during mediation are inadmissible. The Court of Appeal affirmed the order enforcing a mediation settlement agreement with this comment: “Appellants had their mediation, settled the matter, and had their day in court.”
Arbitration/Disclosures: Fifth District Rules That Plaintiff/Appellant Forfeited His Objections To The Arbitrator’s Initial Disclosure Statement
Once Plaintiff Knew of Arbitrator’s Relationship With Defendant, Plaintiff Was On Inquiry Notice To Ask About Details
An arbitrator must make certain disclosures within 10 days of receiving notice of his or her nomination to serve as a neutral arbitrator. See CCP section 1281.9. Once the arbitrator makes those disclosures, a party has 15 days to serve a “notice” for disqualification that is akin to a peremptory challenge, or may serve a “demand” for disqualification outside the 15-day deadline, akin to a challenge for cause.
Here, the arbitrator served disclosures describing his relationship with defendant State Farm, but left out additional details required by statute – the amounts of awards in matters he had handled. Plaintiff appealed the judgment confirming the arbitration award, seeking to set it aside because of inadequate disclosures by the arbitrator. Avedikian v. State Farm, Case No. F063595 (5th Dist. Dec. 18, 2013) (Gomes, J., author) (unpublished).
The dispositive authority on failure to timely object to an arbitrator’s disclosures is Dornbirer v. Kaiser Foundation Health Plan, Inc., 166 Cal.App.4th 831 (2008). Dornbirer holds that “the words ‘failed to disclose within the time required for disclosure a ground for disqualification of which the arbitrator was then aware’ in section 1286.2 refer to a failure to disclose the existence and nature of any relationship between the arbitrator and the parties or the parties’ attorneys, not the specifics of each such relationship.”
Justice Gomes explains that once the party is “informed of the arbitrator’s connection to other participants in the arbitration,” the party is on inquiry notice and can seek additional information or exercise rights to serve a notice of disqualification. What the party “cannot do is passively reserve the issue for consideration in subsequent court proceedings.” That’s what happened here, resulting in waiver of objections.
The judgment confirming the arbitration award was affirmed.
TIP: When you receive the arbitrator’s disclosures, check out the procedures for disqualifying an arbitrator set forth in section 1281.91.
Arbitration/Settlement/CCP 664.6: Fourth District, Division 2 Affirms Judgments, Finding Settlement Agreement Is Not Too Uncertain To Enforce
A Roadmap For Drafting An Enforceable Settlement Agreement
In our next case, the factors supporting enforceability of a settlement agreement provide a roadmap for drafting an enforceable agreement.
Defendants appealed two identical judgments entered in related lawsuits, arguing that the trial court should have not enforced a settlement agreement because, among other things, it was too uncertain. Hiatt v. Elite Leather Company and Huntington Industries, Inc. v. Elite Leather Company, Case No. G047980 consolidated with G047980 (4th Dist. Div. 3 Dec. 19, 2013) (Rylaarsdam, Acting P.J., author) (unpublished).
A settlement agreement is enforceable under CCP section 664.6 only if the parties agreed to all material settlement terms. Plaintiffs argued the settlement agreement was not uncertain as to material terms, whereas defendants argued that the agreement was uncertain and just an “agreement to agree” that was never sufficiently nailed down.
Here, the agreement contained a procedure for choosing a forensic accounting expert; a methodology; a provision for what would happen if either party disputed the finding on what was owed under an asset purchase agreement; binding arbitration if a party rejected the accountant’s conclusion; an agreement to confer with the mediator concerning selection of an accountant; and a provision that the agreement was enforceable even without further written provisions. That was sufficient to concluded the agreement was not void for uncertainty as to material settlement terms.
Additional points weighed in favor of enforceability: the parties had signed the agreement; counsel had approved the agreement as to form; an insurance company’s signature was not necessary, as the insurer was not a party; plaintiffs timely submitted the names of three experts, but defendants failed to do so; both parties participated equally in the drafting; the terms were read aloud by plaintiff’s counsel with plaintiff’s co-counsel and defense counsel and the mediator present; and, the agreement explicitly stated, “this document is intended to be fully enforceable . . . .”
The opinion is particularly helpful for a discussion of cases in which an agreement has failed or succeeded to be enforced under 664.6.
Both judgments were affirmed.
Mediation/Confidentiality: Court Of Appeal Upholds Denial Of JNOV Because Motion To Overturn JNOV Relied Heavily On Inadmissible Evidence Subject To Mediation Privilege
Parties’ Agreement To Extend Mediation Beyond Ten-Day Period Following Communication With Mediator Made Evidence Inadmissible
Boy, does this case, involving a dispute between client (Porter) and attorneys (Wyner) have a history. After the California Supreme Court ruled in Simmons v. Ghaderi, 44 Cal.4th 570 (2008) that waivers of mediation confidentiality by either implication or estoppel were not permitted because the applicable statute allowed only express waivers by all (or in some cases fewer than all) mediation participants, Wyner moved for a new trial, on the grounds that the jury had improperly relied on inadmissible evidence subject to the mediation privilege, which privilege could not be orally waived. The trial court agreed, granting a new trial.
Porter appealed, resulting in a first appellate decision holding Simmons v. Ghaderi did not apply to implied waivers of mediation confidentiality as to communications between a party and its own attorney. Porter v. Wyner, 183 Cal.App.4th 989 (Porter I).
However, the narrow interpretation of the mediation privilege in Porter I was rejected in Cassel v. Superior Court, 51 Cal.4th 113 (2011), holding that mediation confidentiality applies to all communications during or pursuant to a mediation, even those between a client and his or her attorney. That led to Porter II, in which the Court of Appeal affirmed the order granting Wyner a new trial and remanded the matter with directions that the trial court rule on Wyner’s JNOV motion. Porter v. Wyner, B211398 (July 27, 2011) (nonpublished). The trial court denied Wyner’s JNOV, prompting the present appeal. Wyner v. Porter, B242025 (2nd Dist. Div. 8 Dec. 18, 2013) (unpublished).
While the exclusion of information properly subject to mediation confidentiality, but improperly admitted at trial, helped Wyner obtain a new trial, the exclusion of evidence did not help Wyner with its JNOV motion, because the motion relied on evidence eventually determined to be inadmissible.
A threshold issue for the Court of Appeal was determining when mediation ended, and thus, when mediation confidentiality ended. Wyner took the position that mediation ended ten days after the last communication with the parties, pursuant to Evid. Code section 1125(a). However, as I have explained in a post dated March 26, 2012, mediation confidentiality may be extended if the parties agree to extend the 10-day period set out in Evidence Code section 1125(a)(5). Porter took the position that the parties had agreed in writing to extend the 10-day period, at least until settlement. If Porter was right, then evidence relied upon by Wyner in its JNOV motion was inadmissible.
To answer the threshold question, the Court had to address the admissibility of the mediation confidentiality agreement in which the parties waived section 1125, subdivision (a)(5). In other words, was the agreement to extend the mediation period, and hence, confidentiality, itself confidential? Here, the Court pragmatically ruled that “[i]t would stand the mediation confidentiality scheme on its head to prohibit the trial court from examining a written agreement that arguably contained such a waiver. . . . the trial court could examine the confidentiality agreement for the sole purpose of making a finding as to when mediation ended in order to consider the applicable time period of confidentiality.”
The Court affirmed the order denying Wyner’s JNOV motion, and affirmed the order granting a new trial.
DRAFTING TIP: Make sure all the parties and the mediator sign the mediation confidentiality agreement, and if the ground rules set by a mediation confidentiality agreement may become relevant in the future, include a provision expressly making the confidentiality agreement admissible.
Wishing A Happy Holiday To All The Readers Of California Mediation And Arbitration
2012. Carol M. Highsmith Collection. Library of Congress.
Arbitration/Appealability/Vacatur/FAA/Class Action: Ninth Circuit Holds Non-Appealability Clause Relating To Arbitration Award Allocating Fees Among Class Counsel Attorneys Runs Afoul Of the Federal Arbitration Act
At Stake: Allocation of $28M in Attorney’s Fees Among Plaintiffs’ Attorneys in Wal-Mart Wage and Hour Litigation
The scenario: Plaintiffs’ class counsel prosecute wage and hour class action against Wal-Mart, plaintiffs’ counsel quarrel concerning proper allocation of $28M fee award, and the fee dispute is submitted to “binding, non-appealable arbitration” before an eminent arbitrator, the Hon. Layn Phillips (Ret.).
“This appeal presents a question of first impression in this circuit,” writes the author of the Ninth Circuit opinion, Judge Milan Smith. “Is a non-appealability clause in an arbitration agreement that eliminates all federal court review of arbitration awards, including review under section 10 of the FAA, enforceable?” The conclusion: it is not. In re: Wal-Mart, Case No. 11-17718 (9th Cir. Dec. 17, 2013).
To be sure, the grounds of review are quite limited – those enumerated in section 10 of the Federal Arbitration Act (just as the grounds for vacatur in California are limited in Cal. Code of Civ. Proc. section 1286.2). The grounds for vacatur under the FAA are serious indeed, such as “where the award was produced by corruption, fraud, or undue means.” Permitting parties to contractually eliminate all judicial review of arbitration awards would “frustrate Congress’s attempt to ensure a minimum level of due process for parties to an arbitration.”
Having found in a published opinion that it had jurisdiction to review, the Court in an unpublished Memorandum then concluded that the district court properly confirmed the award.
Affirmed.