Challenges to Mediated Settlement Agreements: Duress and Undue Influence
While Joe Francis sits in jail for misbehaving during a mediation, we take a moment to contemplate mediation's first principles: voluntariness and self-determination.
In their exhaustive review of appellate mediation case law Disputing Irony: A Systematic Look at Litigation about Mediation (Spring 2006) 11 Harv. Negot. L. Rev. 43, James R. Coben and Peter N. Thompson discuss the law to date on duress and undue influence.
As Coben and Thompson stress,
To make a successful duress defense the proponent must establish that a wrongful threat by the adverse party deprived the proponent of free choice, resulting in an unfair agreement benefiting the adverse party. As with other contractual defenses, the standard is quite difficult to meet in a mediation context. A mediation party was successful in claiming duress in only one of the thirty-six opinions [reported during the prior five year period].
That as many as seven of the thirty-six cases reviewed were directed at alleged mediator coercion is troubling, particularly in light of Magistrate Brazil's opinion in Olam v. Congress Mortgage Co. * which makes pursuing any claim of duress or undue influence seem a foolhardy mission. As Coben and Thompson note, although the plaintiff in Olam
was sixty-five years old, suffered from high blood pressure, headaches and abdominal pains, and testified that she was in pain, weak and dizzy, and that she was pressured by her lawyer, the defendants and their counsel, the court found that this agreement obtained at 1:00 A.M. after fifteen hours of mediation was not obtained by undue influence.
Coben and Thompson revisited the issue of duress under the rubric of mediator misconduct, citing ten opinions where a party charged the mediator with exerting undue pressure to obtain agreement. Most of these charges will look familiar to lawyers, who might ask themselves what they look like to the man or woman on the street:
the gist of the complaint in several cases was the mediator's recitation of a list of "horribles" that the parties would suffer if they did not settle and had to experience the dreaded civil trial (called "reality-testing" by the authors)
one claim was based upon the alleged coercive statement by the mediator that if the party "didn't sign the agreement [he] would ruin [the mediator's] record of being always able to settle the case."
another claim (this one successful) was based upon the mediator's alleged threat "to tell the judge that she was the cause of the settlement failure, speculat[ion] that the court would rule against her, and [pr]offered opinions about the potential legal costs[, as well as] how refusing to settle would affect her pensions.
We are bound to see more claims of mediator misconduct, duress and coercion. The problem is clear. We'll discuss potential solutions in future posts.
* Note that the District Court's order requiring the mediator to testify would likely not stand up under the current law in California. See In re Marriage of Kieturakis (2006) 138 Cal.App.4th 56.