Anne’s attorney Robert had been having a tough time prosecuting Anne’s
corporate waste claims against John. Despite his repeated requests, Robert
could not convince the Court to schedule a trial. The Court’s response:
“too much discovery to complete,” and “you have not even started your expert
depositions.”
Robert at least was able to convince the Court to send the case to
mediation. Even John and his attorney agreed that mediation could be
productive. Before starting the mediation process, the mediator did what
all mediators do; she sent mediation ground rules to the lawyers. Robert
had been at enough mediation sessions to know what they said. It was the
usual stuff – confidentiality and all that. One ground rule said that
“anything said and any documents produced at any mediation session shall not be
(a) admitted in evidence or otherwise referred to in any proceeding or action;
(b) disclosed or divulged to any third party; or (c) used as an admission, for
impeachment, or for any other reason in any other proceeding or action.”
At the mediation, Robert and John agreed on very little, perhaps because they
did not let their clients do any talking and determine whether they had
any common ground. After talking deep into the night, the mediator threw
up her hands and yelled “impasse.” Back to litigation.
In looking back, Robert decided that the mediation was not a total
bust. He had sized up John; learned more about John’s theories; and
received John’s expert’s initial report regarding Anne’s claimed lost
profits. Because it would form the basis of Anne’s expert’s final report,
Robert wanted Anne’s expert to take this report into account and rebut every
point in it. Robert’s strategy worked. Anne’s expert prepared a
bulletproof report that answered all of the tough questions regarding lost
profits. No wonder that Robert was feeling so confident that he decided
that his settlement demand was now double the demand that he had made at the
mediation session.
Robert therefore was thrown for a loop when he received John’s motion that
sought “to strike Anne’s expert due to Anne’s violation of the mediation ground
rules.” The basis: Robert had improperly given to Anne’s testifying expert
the confidential mediation statements and exhibits that John had provided during
the mediation.
Robert had given Anne’s expert the mediation statement and supporting
exhibits that John provided at the mediation. But those papers contained
important facts that Anne’s expert needed to know. Anne’s expert otherwise
would have been ill-prepared to withstand John’s cross examination. Plus,
Anne’s expert already had reached her conclusions about Anne’s lost
profits. These confidential papers were “merely foundational materials
that Anne’s expert had read to get a better understanding of what the matter was
all about. Nothing more and nothing less.”
Imagine Robert’s dismay when he received the Court’s order that
granted John’s motion; directed Robert to get a brand new expert; and
assessed attorney’s fees against Robert. What is going on here? Two
words: mediation confidentiality.
John’s mediation papers and supporting documents constituted mediation
communications. In giving them to Anne’s expert, Robert therefore flouted
the directions of the mediator, and the common understanding of the purpose for
which the mediation documents were to be used. Although Anne’s expert
might otherwise have been able to see the documents supporting John’s mediation
presentation, Anne’s expert was not entitled to see John’s mediation memorandum
and the markings on the documents that John had attached to his
memorandum.
In dealing with a situation remarkably similar to Robert’s gaffe and in
striking the offending party’s expert’s, a federal court in
Michigan recently concluded as
follows:
The court need not find a bad intent on the part of [Robert] in furnishing
all of these materials to their experts. What the court does find,
whatever the intent, was that these documents were furnished on purpose for the
experts to review, and they were in fact reviewed. .
. . Nor does the problem end here since these reports are now
a part of the record used by the plaintiff's experts, and the experts are
subject to cross-examination on them. . .
. Moreover, and perhaps more significantly, there is no adequate way to
assess the impact the mediation briefs had on the experts, and how the experts
may have shaped their evaluations consciously or unconsciously in response to
the claims made and positions taken by defendants in their mediation
briefs.
The Court’s decision seems draconian at first glance. However, any
other decision would undermine mediation confidentiality. It would allow
the Roberts of the litigation world (and there are lots of them) to take
advantage of mediation confidentiality – the very thing that makes the mediation
process so powerful – by using anything and everything learned during the
mediation. This is not only a violation of the promise of confidentiality
that both sides make before the mediation starts. (Remember the mediation
ground rules that Robert received?) Even more importantly, if they knew
that that the other side later could use their mediation statements and
documents, mediation participants would hold their cards close to their vest and
reveal nothing during the mediation. As the Second Circuit has
stated:
The guarantee of confidentiality permits and encourages counsel to discuss
matters in an uninhibited fashion. . .
. If participants cannot rely on the confidential treatment of
everything that transpires during these sessions then counsel of necessity will
feel constrained to conduct themselves in a cautious, tight-lipped,
non-committal manner more suitable to poker players in a high-stakes game than
to adversaries attempting to arrive at a just resolution of a civil
dispute.
At his next mediation, Robert surely will leave the poker game highlights in
the mediation room and not give them to his experts to review and
evaluate. You can bet on that.
