Madison Med Review 06 California Dispute Resolution Council

2005 DEVELOPMENTS IN THE LAW AFFECTING MEDIATION

James R. Madison

With one exception, the six California appellate decisions in 2005 affecting mediation are pretty thin gruel. The administrative developments affecting lawyer-mediators in general and those mediating court-connected cases in particular are more significant.

The cases reflect ongoing confusion in the Los Angeles court system between mediations and settlement conferences, the need for detail in regard to settlements and the need to read the rules. With one exception, the cases involved sitting judges. However, we all can profit from the holdings. The lesson to be learned from the exception applies not only to mediators, but also to arbitrators and referees.

The administrative or regulatory developments include:

1. New rules for mediators in court-connected mediations that will become effective January 1, 2006 and January 1, 2007.

2. A revised proposal to require that members of the State Bar who act as dispute resolution neutrals be active members.

3. A proposal to embody in the Rules of Professional Conduct most of the ethical standards for lawyers in court-connected mediations.

A. The cases:

1. Travelers Cas. & Sur. Co. v. Superior Court, 126 Cal. App. 4th 1131 (2d Dist. Feb. 15, 2005).

A case by some 90 plaintiffs against the Roman Catholic Archdiocese of Los Angeles alleging childhood sexual abuse by priests in the archdiocese was referred by stipulated order to a sitting judge “for settlement purposes.” The order referred to the process as a mediation, and the parties

characterized the process throughout as a mediation.

On petition for a writ of mandamus seeking vacatur of an order purporting, upon the basis of evidence, (i) to determine the good faith settlement value of the case, (ii) to preclude claims of forfeiture of coverage and (iii) to provide evidence of insurer bad faith, held, writ granted. A mediator cannot make factual determinations. The conduct constituted improper coercion. And use of the order outside the mediation would violate mediation confidentiality.

The appellate court observed in footnote 8 that “we expressly decline to consider or clarify any differences that might exist between a mediation and a voluntary settlement conference.”

Moral. There are limits to mediator creativity even when, as in this case, the mediator is frustrated by the obdurate approach of a party, the insurers in this case, to settlement.

2. Hartford Cas. Ins. Co. v. Superior Court, 125 Adv. Cal. App. 4th 250 (2d Dist. Dec. 22, 2004), review granted, March 23, 2005.

On January 8, 2004, while a defense motion for summary adjudication was pending before him, the trial judge agreed to a suggestion by defendants to refer a case to mediation. (The opinion did not make clear whether plaintiffs stipulated to the referral). On February 5, one defendant filed a motion to appoint a referee for a particular issue. On the same day, the judge heard argument on the defense summary motion and denied it. On March 15, when the referee motion came on for hearing, the judge recused himself from further participation in the case based on CCP 170.1(a)(8)(B). “Multiple” ADR provider organizations had contacted him within the preceding two years regarding prospective employment as a neutral, and he had had “superficial” contacts with them. The successor trial judge refused to reconsider the decision on the summary motion absent “good cause shown.”

On petition for writ of mandamus, held, the judge should have recused himself on January 8. The denial of the summary motion was vacated. Good cause is not required.

In today’s world, when almost every case likely include ADR issues, judges who have discussed potential employment as an ADR neutral can foreclose gaming their decisions by making disclosures at the outset of their assignment and obtaining CCP 170.3 waivers of 170.1(a)(8).

Note: Under CCP 1281.9(a)(1), for purposes of 170.1(a)(8), proposed neutral arbitrators need to disclose discussions within the preceding two years regarding “prospective employment or service” with a party.

3. Terry v. Conlan, 131 Cal. App. 4th 1445 (6thDist. Aug. 16, 2005).

A trial judge conducted periodic settlement discussions over the course of a 50-day bench trial. An apparent agreement was reached on the Friday evening after both sides rested and before final argument on the succeeding Monday. The judge put the purported terms of the agreement on the record. The parties then disagreed about a definitive agreement. The judge eventually entered a judgment that differed from the settlement agreement.

On appeal, held, reversed. Although the parties agreed to the goals of the settlement, they did not agree to the means of achieving the goals. The means were material, because they had a significant financial impact. Therefore, no enforceable contract was formed.

Moral: Attend to details even when you are operating under the pressure of time.

4. Regan v. Price, 131 Cal. App. 4th 1491 (3rd Dist. Aug. 17, 2005).

Defendant, who was appointed a discovery referee, demurred to a complaint by one of the lawyers in the matter that sought damages for, among other matters, alleged battery.

On appeal from a judgment sustaining the demurrer without leave to amend, held, reversed. Judicial immunity does not extend to the use of physical force. “A judge’s robe is not like a king’s.”

Moral: Stay cool, no matter how the parties or their lawyers act.

5. Doe 1 v. Superior Court, 132 Cal. App. 4th 1160 (2d Dist. Sept. 22, 2005).

The Archdiocese of Los Angeles prepared summaries of the personnel records of the priests whose conduct was at issue in the Travelers case noted above. The summaries were prepared for use in mediating the complaints. The priests involved moved for a protective order to prevent public disclosure of the summaries.

On remand from an order of the California Supreme Court on review of the appellate court’s summary dismissal of a petition for writ of mandamus reversing the trial court’s denial of the motion, held, writ granted.

Given that the trial court proceeding was a mediation, the summaries are protected by Evidence Code Section 1119. The priests had standing to object because they were “participants” in the mediation even though they were not parties to the lawsuit.

In reaching its decision, the court noted “the conceptual difficulties in distinguishing between a mediation and a settlement conference when a bench officer is presiding at the talks.” The court also observed that the Archdiocese was not limited from releasing the “underlying information.”

Note: The trial judge and the appellate panel were the same as in the Travelers case.

Moral: Mediators should be certain that all those involved, including the mediator, are clear on the form of proceeding in which they are engaged.

6. Stewart v. Preston Pipeline, Inc., 05 C.D.O.S. 10743 (6th Dist. Dec. 22, 2005). On appeal from a summary judgment enforcing a mediated settlement, held, affirmed. The agreement settling a personal injury case was signed by plaintiff, his lawyer and the defense lawyer, but not by the the defendant who (quite naturally) did not participate in the mediation or, for reasons that escape me, the defendant’s insurance carrier representative. The plaintiff sought to avoid the settlement by contending that, not having been signed by all parties, was not within the exception to Evidence Code

1119 inadmissibility created by Section 1123 even though it provided it was to be admissible and also that it was a “full and final settlement.” The court concluded that a waiver of confidentiality was “procedural” such that the signature of the defendant’s lawyer was sufficient to waive confidentiality.

Comment: A fair result in this case, but maybe a dangerous precedent.

B. Administrative Developments.

1. Rules of Court 1621, 1622, 1622.1, 1622.2 and 1622.3 were approved by the Judicial Council on November 6 and will become effective January 1, 2006.

The Judicial Council withdrew the most offensive of the rule changes previously proposed by it for court-connected mediations, which would have imposed upon mediators the obligation to begin mediations with an

extensive discussion of complaint procedures and a proposed waiver of

mediation confidentiality. It also limited potential complaints against mediators to those involving violation of the ethical requirements. However, it approved most of the proposed rule changes, including a requirement that mediators obtain a list of the names, addresses and telephone numbers of participants, retain the list for a period of two years and submit it to a court upon request.

The changes will affect the tone of court-connected mediations significantly. The only saving grace is that Rule 1620.1(a) continues to limit the application of the 1621, et. seq. to cases in which the mediator is notified by the court or parties that a case is “within that court’s mediation program.”

2. Rule of Court 1580.1 was also approved on November 6 and will become effective January 1, 2007.

3. Rule of Professional Conduct 1-720. If adopted by the Judicial Council, this would embed most of the ethical standards for mediators in court-connected mediations and those for neutral arbitrators in contract arbitrations in the Rules of Professional Conduct. This proposal and its companion Rule 1-710 that would be applicable to judicial arbitrators has not yet been published for public comment.

4. Article 1, Section 2 of the State Bar Rules and Regulations.

This proposal, which would require that lawyers who are mediators or arbitrators be active members of the State Bar, was revised from a version that was circulated early in the year. The revised version is no less offensive than the initial version and, what’s more, would discriminate in favor of those serving for a court or other governmental agency. The public comment period expired September 20, 2005. However, I have not been able to contact staff to ascertain the status of approval.