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Victoria Pynchon

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Mediator Testifies for Insurance Carrier and Court Enforces Mediated Settlement Agreement against Policyholder


This opinion -- Palmer v. State Farm - is wrong on so many levels that it's no surprise the appellate court ordered that it not be published.  The opinion therefore controls only the fate of the parties to the case and cannot be cited as authority.  The no-publication order does not, however, diminish my distress about the mediator's decision to file a declaration in support of State Farm's motion to enforce a formal settlement agreement that its insured refused to sign as contrary to the handwritten agreement drafted by the mediator during the mediation proceedings.  

The appellate court affirmed the trial court's enforcement of the post-mediation settlement agreement based, in large part, on the mediator's sworn declaration that State Farm's formal agreement accurately represented the one signed by the parties during the mediation --  a matter that, if true, should have appeared on the face of both documents.   See HANDWRITTEN SETTLEMENT SHOWS PARTIES' INTENT, CALIF. COURT FINDS for a summary of the Court's decision.

What's wrong with this opinion?  Let me count the ways.

In California, a mediator is presumed incompetent to testify under Evidence Code section 703.5.  A good thing, too, since mediators are bound by the confidentiality provisions contained in  Evidence Code section 1115 et seq. /1

Mediators are also required to be -- ahem -- NEUTRAL.  Why was this mediator providing a sworn declaration to support State Farm's case against the policy holder?  And does his drafting of the handwritten agreement at the mediation give him a personal or professional stake in its enforcement, thus further undermining his neutrality. 

I'm not going to mince words about this.  I believe it falls below the standard of care for a mediator to voluntarily provide a Declaration to the Court concerning anything anyone said during the mediation, including his opinion about what the parties an meant to say when they entered into a settlement agreement (an intuition that could only be based upon confidential communications).  I also believe that its below the standard of care for a mediator to voluntarily provide a declaration to one party in support of a motion against another party to the mediation.  The fact that the mediator provided a declaration in support of State Farm (and not the policyholder) is even more troubling when you consider the fact that insurance carriers are repeat players in ADR circles and hence a better source of business for mediators than single-player plaintiffs.

On the confidentiality issue, it is notable that the mediator-drafted agreement stipulated that:

The parties waive the provisions of [the] California Evidence Code relating to mediation confidentiality, rendering this agreement enforceable pursuant to . . . section 664.6.”  (Italics added.)

The language used suggests to me that the purpose of the clause was to render the written agreement admissible in evidence to prove its existence  -- "waive . . . mediation confidentiality [to] render[] this agreement enforceable."  I know it doesn't say that.  It says that the parties are waiving confidentiality  PERIOD.  It would surprise me if that's what the parties meant to do, i.e., open up to judicial scrutiny every communication uttered in the course of the mediation - in separate caucus and joint session.  Would a mediator be liable for an ambiguously drafted agreement that leads to the loss of mediation confidentiality for the parties?  I don't have an answer to the question but mediators might want to ask themselves whether they should be drafting the parties' agreements if they want their malpractice premiums to remain as low as they are today.

Hat tip to my husband Stephen Goldberg, who blogs at the Catastrophic Insurance Coverage Blog for the head's up on this. You should post on this one honey.  It gives you something else to rail against the insurance carriers about!


1/  It is not clear from the opinion whether the Court treated the mediator's declaration as one from an expert.  It does appear, however, that the mediator's declaration was in the form of a legal conclusion -- the formal written contract was the same as the handwritten contract -- testimony that is inadmissible to interpret the meaning the parties gave to the agreement at the time of contracting.  See the Construction Weblink Article Experts' Opinions on Contract Interpretation here by John W. Ralls of Howrey's San Francisco office.

Comments (8)

Read through and enter the discussion by using the form at the end
Christopher G. Hill - October 2, 2009 2:55 PM

WOW! I had no idea a mediator could even take sides! I, like you, thought neutrality was a part of the process.

Timothy R. Hughes - October 2, 2009 4:16 PM

That is unbelievable! We use a group here in Virginia that, in addition to falling within the typical common law privileges, has an agreement that all participants sign. The agreement includes express terms that the parties agree not to call the mediator or anyone at their company as a witness.

Who knows how enforceable the document would be, but mediators being forced to testify is a potential serious breakdown in the entire concept.

Vickie Pynchon - October 3, 2009 3:53 PM

Thanks Chris and Tim for stopping by to comment. I find the facts of this case shocking but emblematic of the standard (or lack of standards) of mediation practice generally.

Recently, The Jury Expert Journal published an article suggesting that mediators need LESS training, not MORE, based upon a study of mediation practices that I believe represent the lowest level of mediator competence. I, of course, support MORE education, training, and mentored experience.

In my practical experience, mediation advocates (litigators and trial attorneys) do not know the applicable laws controlling mediation confidentiality nor the necessary requirements for the enforcement of mediated settlement agreements. My conversations with mediators do not lead me to believe that most of them are well informed about these matters either.

We badly need best practices and a general standard of care to which we can aspire (and exceed) and on which litigators can rely when they hire a mediator to help them settle litigation.

From the standpoint of someone who prosecuted and defended commercial disputes for a quarter of a century, I am confident in predicting that there will be mediator blood in the form of malpractice suits unless we get our professional affairs in order.

Here's the link to The Jury Expert article: http://www.astcweb.org/public/publication/article.cfm/1/21/5/Observations-and-conclusions-on-civil-case-mediations

Jeff Bean - October 3, 2009 4:20 PM

Regardless of the confidentiality and privilege concerns, I go back to the Mediator Model Standards of Conduct ...

I suppose the mediator here could have had some thought that his testimony could have had some beneficial effect supporting the integrity of the mediation and the resulting agreement. But I can't square that with Standard I, (Client) Self-Determination.

Plus it appears directly addressed in Standard III, Conflict of Interest, para. (i): "A mediator shall avoid a conflict of interest or the appearance of a conflict of interest during and after a mediation. A conflict of interest can arise from involvement by a mediator ... from any relationship between a mediator and any mediation participant ... that reasonably raises a question of the mediator's partiality."

And Standard III, para. (vi): Subsequent to a mediation, a mediator shall not establish another relationship with any of the participants in any matter that would raise questions about the integrity of the mediation."

Vickie Pynchon - October 3, 2009 4:32 PM

Thanks, Jeff. You're talking about these 1994 Standards of Conduct for Mediators? http://www.acrnet.org/about/initiatives/QualityAssurance/standards-conduct.htm

I think I'd be safe in saying that more than half of all mediators practicing in Los Angeles are unaware of their existence.

Michael P. Carbone - October 6, 2009 5:18 PM

Was the mediator forced to testify?

What do you guys make of the following provision in the Settlement Agreement?

The parties waive the provisions of [the] California Evidence Code relating to mediation confidentiality, rendering this agreement enforceable pursuant to . . . section 664.6.”

It is not necessary to waive confidentiality in order to make a settlement agreement enforceable so long as it is in writing, but that is what they did. Not such a great idea.

Vickie Pynchon - October 6, 2009 7:43 PM


Thanks for dropping by. I believe the mediator voluntarily provided the Declaration since it was submitted in support of State Farm's enforcement motion. If a Court Order had been involved, I would have expected the appellate court to note it.

As you can see from my post, I think waiving confidentiality for the purpose of rendering the agreement enforceable goes beyond bad practice and all the way to negligence on the part of the drafter IF the sole purpose for the waiver was the enforcement of the Agreement.

A term sheet or skeletal agreement drafted during the mediation itself is enforceable under section 1123 so long as the detailed requirements of that section are met, i.e., the agreement "must include a statement that it is “enforceable” or “binding,” or a declaration in other terms with the same meaning." Fair v. Bahktiari, covered in this post with a link to the case itself: http://www.negotiationlawblog.com/2006/12/articles/settlement/cal-supremes-expressly-provide-that-mediated-settlement-term-sheet-is-enforceable/

Diane Levin - October 9, 2009 1:27 PM

Vickie, wow. This left me speechless for a moment or two before righteous indignation and outrage kicked in. Interesting comments here so far.

Here's a thought. I'd sure be curious to see the agreement to mediate - and what kind of contractual promises regarding confidentiality and neutrality it might contain. Makes me wonder whether Palmer, the losing party, might have both malpractice and breach of contract claims against this mediator.

By the way, I couldn't agree more about the lack of understanding on the part of mediators and lawyers about privilege and confidentiality. I've seen that all too often myself - even among mediation trainers, who frankly should know better.

I do have a question for you and your readers. I think we're all shocked to learn that a mediator here took sides - it flies in the face of the principles I think we all embrace. Putting the question of confidentiality aside, is there state law or court rule in California that would require the neutral in this case to be just that - a neutral? In Massachusetts, rules of conduct for mediators promulgated by our Supreme Judicial Court apply to mediators in court-approved programs only. They do not reach the conduct of mediators in private practice. The ACR-ABA rules of conduct for mediators cited above in the comments are aspirational only. That's why I'm asking. And this may be part of the problem - our so-called ethical standards are just smoke and mirrors. Another argument perhaps in favor of formal, state credentialing or licensing of mediators, which would mean (hopefully) better training, oversight, and disciplinary mechanisms.

Thanks again for posting about this case - and also for introducing me to your husband's blog.

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