California Confidentiality Statute Allows Clients to be Defrauded if Done During Mediation

Does this heading get your attention?  Because it is true, even if the statute allowing this was not designed to produce this outcome.

The strict California mediation confidentiality statute allows this outcome, according to the California Court of Appeals, the second such decision upholding the absolute ban on disclosure of any information if it originated in mediation. 

In two cases with egregious facts the California courts have held that the mediation confidentiality statute means what it states – that no evidence of any statement, act or writing prepared for a mediation is admissible in any subsequent court proceeding. Period. End of story.

I’ve blogged about this before, reporting on a decision by the California Supreme Court in Cassel v.Superior Court,  in which the Court held that private communications between an attorney and client that take place during mediation are confidential – even when the client waives the attorney-client privilege and requests disclosure.

The most recent case is Hadley et al. v. The Cochran Firm Cal. Court of Appeal, 2nd Appellate Dist., 8th Div., 2012  in which the California Court of Appeals held that the statute applied even when an attorney stapled an executed signature page from a confidentiality agreement to a supposed settlement agreement to which the clients had not agreed, thereby settling the case and dismissing their claims without the clients’ authority or knowledge.  Wow, talk about alleged malpractice and fraud.

The trial court dismissed the claims in response to a motion in limine to exclude the evidence of the alleged fraud and malpractice because this all happened during a mediation. The court was apparently following precedent from the Cassel decision by the California Supreme Court and a reading of the plain language of the statute.  The appellate court upheld the decision, holding that the mediation confidentiality statute compelled such a result.

This is no way to encourage mediation or engender client confidence in the mediation process.  These decisions clearly show the dangers of unintended consequences. When the mediation community drafted and supported a statute with an absolute bar, and opposed the Uniform Mediation Act, which takes a far more nuanced approach, I am certain there was no thought given to results such as this.