Absolute Confidentiality—Is It Wise?

August 2004

In California and elsewhere, it is said that confidentiality is key to the success of the mediation process. But is it really? Does it instead protect the parties from claims in tort? It is important to review state legislation and case law to determine what protections are available to the mediator and those involved in mediation, and then assess whether these are counterproductive.

by Jeff Kichaven *
Jeff Kichaven, A Professional Corporation

First, the good news. The California Legislature wants to encourage mediation. Rojas v Superior Court, 2004 Cal LEXIS 6281 at p. 14. (July 12, 2004). Now the bad news. Rojas itself shows that the current legislation, California Evidence Code section 1115 et seq., fails to get the job done. The current legislation, as construed in Rojas, exalts the policy of absolute confidentiality—and absolute confidentiality alone—as the key to the encouragement and effectiveness of mediation.

But other policies can encourage the use of mediation, too. The current legislation, though, fails to take those other policies into account, much less strike an appropriate balance between those other policies and the policy of confidentiality when those policies conflict. For now, "absolute confidentiality" reigns supreme. And it may kill mediation.

Quality Is Key

One particular policy stands in the most stark conflict with absolute-confidentiality, and must (I repeat, must) be taken into account if mediation is to survive. When parties bring their disputes to mediation, they must be assured that they will receive quality service. Why would anybody come to mediation—much less pay for the privilege of participating—if quality of service is not assured?

In the American economy, a principal way to regulate and assure the quality of service in any professional activity is to subject that activity to the law of torts:

• Negligence rules both regulate misconduct and protect against harm caused by that misconduct. For example, tort liability for negligence has the effect, and to a degree the purpose, of regulating a defendant's future conduct.

• It is a policy of negligence law to allow a person to recover for an injury that was proximately caused by another's duty of reasonable care.

• Observation: The policy reason supporting a cause of action for negligence is to discourage or encourage specific types of behavior by one party for the benefit of another party.... [57A Am.Jur.2d, Negligence section 1.]

An Illustration from the Dentist's Chair

A simple example of what would happen absent the law of torts proves the point. Suppose you visit your dentist for root canal therapy. Just before she plunges the needle into you and asks you to count backward from 100 by threes, she says, "Oh, by the way, the Legislature just amended the Evidence Code to provide that no evidence of anything that happens in the course of this treatment is admissible in any judicial or other proceeding."

You ask, "So, even if you drill a hole in my face, I can't introduce evidence of that in court if I sue you for malpractice?"

• "Right!" the dentist replies. "Now, don't worry, you'll hardly feel this...."

I don't care how bad the pain is at that point, my bet is that you'd get out of that chair and cross the nearest state line before you next lean back and open wide. The regime of absolute confidentiality would drive your dentist out of business. That's because absolute confidentiality, an evidentiary rule, in effect suspends the operation of tort law wherever it applies. Absent the quality that tort law encourages and regulates, the service is just not in demand.

Four Hypothetical Problems

This is just the corner into which we have painted ourselves with the current absolute-confidentiality regime of the Evidence Code. Mediation customers are robbed of an important assurance of quality service. Once litigators and other users and stakeholders think about it, there is a serious question regarding whether mediation services will continue to be in demand. The following four hypothetical situations define the parameters of the immediate problems.

1. Suppose an attorney attends a mediation and engages in misconduct that would warrant professional discipline. His client complains to the State Bar, and a disciplinary proceeding ensues. The errant lawyer defends on the grounds that, under Section 1119, the State Bar may not consider the evidence of what he said at the mediation. The "plain meaning" of Section 1119 would seem to support the lawyer's argument. Section 1119(a) states, in relevant part, that "No evidence of anything said ... 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 evidence seems to be material to what was "said in the course of a mediation." The State Bar disciplinary proceeding seems to be an "administrative adjudication." Can this lawyer use Section 1119(a) to "Get Out of Jail Free?"

2. Same client sues same lawyer for legal malpractice in state court. Lawyer moves in limine to exclude all evidence of what was said at the mediation. Does the lawyer get out of this jail free, too?

3. Same client notices that its liability insurance carrier, which is providing him a defense, has sent a claims representative to the mediation. Claims representative improperly threatens to pull the defense and otherwise engages in conduct that deserves to be called "bad faith" in order to get client to use its own money to fund the settlement. Client, scared, uses its own money and settles the case.

   Client sues insurer for bad faith. Here comes another motion in limine. Another jail escape?

4. Mediator screws up to a fare-thee-well. Mediator gives manifestly incorrect legal advice, bullies, and coerces a settlement, drafts a release that subjects the parties to horrendous and avoidable tax consequences, includes his "standard" onerous confidentiality provision without allowing the parties the time to read it.

   One party sues the mediator for malpractice. Mediator, too, moves in limine to exclude all evidence of what he said at the mediation. The plain meaning of Section 1119 seems to guarantee that this mediator walks, too. After all, is it not the case that everything a mediator does in his professional capacity is "in the course of" a mediation?

Four Possible Solutions

Of these problems, the first is relatively easy to solve. The other three require more work. With respect to State Bar disciplinary proceedings, the template is Business and Professions Code section 6090.6, brought to my attention by my friend Paul Dubow, which provides, in part:

• In a disciplinary proceeding, the State Bar shall have access, on an ex parte basis, to all nonpublic court records relevant to the competence or performance of its members, provided that these records shall remain confidential.

If the State Bar has access to evidence of what is said in a mediation on the same confidential basis, the State Bar will still be able to serve its important consumer-protection role of regulating the legal profession.

But problems 2-4 are not so easy to solve. Civil malpractice and bad faith actions cannot be pursued with the same degree of confidentiality as State Bar disciplinary proceedings. Trials are public. So the challenge is to fashion a rule that would allow these civil actions to go forward on the merits and also maintain appropriate confidentiality for other mediation participants, those who are not parties to the malpractice or bad faith claims. After all, the evidence of the alleged misconduct would often involve evidence of what opposing parties said and did, and whether or not an attorney, mediator, or insurance carrier responded appropriately.

Those opposing parties, though, came to mediation with an expectation of confidentiality, and have a legitimate interest in keeping their mediation disclosures confidential. And they presumably have no interest in the malpractice action against their opponent's lawyer or insurer, or in the particular malpractice claim against the mediator. They could be expected to object to the proffered disclosures, and their objections must be taken seriously.

Notwithstanding these complexities, we have to engage these issues on their merits. And, we need to question some of our assumptions. I do not believe that absolute confidentiality is necessary for effective mediation. Theory tells us that absolute confidentiality is necessary for candor, so that parties will talk about their weaknesses as well as their strengths. But let's face it: the gaming of mediation has evolved far beyond such naiveté. Nobody confesses their weaknesses in mediations. Why should they? If the other side already knows, there's no need to confess anything. If the other side does not know, it would be downright stupid to disclose, voluntarily, something that would weaken your bargaining position.

This reality is reflected in the leading text on the subject, Harold I. Abramson's Mediation Representation at pp. 248-49 (NITA, 2004). According to Professor Abramson, one discloses only advantageous evidence. With respect to "Acknowledging Harmful Evidence and Legal Weaknesses" (p. 249), Professor Abramson teaches only that "(y)ou should be prepared to respond intelligently and honestly to any evidence and law harmful to your client's case that may be known to the other side." There's no mention of confession or any candor that requires confidentiality for its expression. Nobody goes out of their way to set out a petard on which they know they will be hoisted. It is senseless to design a mediation confidentiality law as if protecting someone's right to do so is important.

Conclusion

I don't know what answers the coming debate will yield. I doubt that the answer will be that the current confidentiality statute is beyond improvement. I do know that the time for the debate is upon us.

In California, one organization in the ADR community is facing the task with an open mind. The Consumer Attorneys of California have already indicated that revising the mediation confidentiality statute will be a significant legislative priority for them next year. SCMA will engage with them, defense counsel, the State Bar, the Judicial Branch, and others to work through these tough issues. We want to change those parts of the statute that need to be changed, and preserve those parts that need to be preserved. The fruit of this effort will be a better statute, one which promotes and encourages quality mediation even better than the legislation we now have. We can't wait to begin.

---

*Jeff Kichaven is an independent mediator in Los Angeles and President-Elect of the Southern California Mediation Association. The views expressed in this article are his own.

---

Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.