Maryland Mediation Confidentiality Act: Invoking the Magic Words

The Maryland legislature recently passed the Maryland Mediation Confidentiality Act  that took effect on October 1, 2012. It created a new subtitle 18 of Article 3, Courts and Judicial Proceedings of the Annotated Code of Maryland. 

The Act requires mediators to certify, in writing, “that the mediator has read and, consistent with state law, will abide by the Maryland Standard of Conduct for mediators…” for the confidentiality protections to apply (See Article 3-1802 (A) (2))

The provision in the Act requiring mediators to certify adherence to ethical standards means that the statutory confidentiality protections can be lost if the mediator fails to so certify, in writing.  In essence the parties, not the mediator, are punished by a mediator’s failure to invoke the magic words. They can lose the confidentially protection in the Act, often the sine qua non of mediation.

Mediators in Maryland must be aware of with this statute because it affects our practice; failure to follow the Act could result in parties losing the confidentiality provisions of the statute and expose the mediator to liability.

It is not hard to imagine that a party, having lost the confidentiality protection because of the mediator, could be pretty unhappy.  Enough to sue the mediator.

Here is a brief summary of some other important provisions of the statute.

With certain exceptions, the Act applies to cases in which the parties have agreed in writing that the Act applies or when they are required to mediate by law, except in court-referred cases under Title 17 of the Maryland Rules of Procedure.

However, the Maryland act does not apply to:

·        Maryland Court-annexed mediation conducted under Title 17 of the Maryland Rules;
·        Collective bargaining disputes;
·        Actions to enforce agreements to arbitrate under common law and the various Arbitration Acts;
·        Lien foreclosure mediation under Maryland Rule 14-209.1;
·        Certain parental matters under Maryland Rules 2-541; 2-542, 2-543, or 9-205.2;  
·        Mediation cases conducted by a judge who might rule based on the dispute; and 

·        Cases in which the parties and the mediator agree in advance in writing to exclude all or parts of mediation communication from the application of the statute.       

  

The Act also provides that signed agreements between the parties are not confidential unless the parties agree otherwise in writing. 

Section 3-1804 (B) of the Act sets our specific exceptions to the confidentiality standard. Those are:

·        A reasonable belief that the disclosure is necessary to prevent serious bodily harm or death;
·        To assert or defend against allegations of mediator misconduct or negligence or attorney professional misconduct or malpractice; or
·        To deal with allegations that, because of fraud, duress, or misrepresentation (emphasis added), a contract arising out of a mediation should be rescinded or damages should be awarded.

Finally, Section 3-1804 (C) has a general exception to the confidentiality provisions in the Act that allows a court to order mediation communications disclosed:

“…only to the extent that the court determines that the disclosure is necessary to prevent an injustice or harm to the public interest that is of sufficient magnitude in the particular case to outweigh the integrity of mediation.”

This, ‘prevent an injustice’ provision to allows the courts to act, when necessary, to protect threats to the public health, to address rare cases of potential denial of civil due process and even to protect a criminal defendant's constitutional rights. Absent such a general exception, it is possible that the statute would allow an injustice in the name of protecting mediation confidentiality. For an example of how a statute written to absolutely prohibit disclosure can result in such injustices, see my blog posts here and here 

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.

Mediator Testimony

A recent New Jersey case is yet another example of why parties need to be careful when they pick a mediator.

And why there should be higher standards of mediator training – perhaps especially for judges.

Information about this case comes from the always interesting Business Conflict Management Blog by Peter Phillips in New Jersey.

According to Phillips’ blog, the New Jersey Superior Court Appellate Division recently approved for publication a decision in which a party to a mediation successfully sought to enforce a settlement agreement that was not fully reduced to writing. For purposes of this blog, the issue of whether the agreement was evidenced in writing is not particularly relevant.

What is relevant is that the plaintiff seeking enforcement of an alleged agreement, “supported the motion with a certification of their attorney and the mediator,” who also was deposed and testified at the hearing. A retired (and unnamed) New Jersey Superior Court Judge was the mediator.

As Phillips blogs, “(t)he trial judge on the motion found his former colleague’s testimony “highly credible.” Imagine that!”

The mediator submitted an affidavit and testified in support of a party’s motion. A mediator. Even though, as the court pointed out that both statute and rule, state that a mediator “may not disclose any mediation communication to anyone other than a participant in the mediation session,” and referred to that bar as “an evidentiary privilege.” The court justified the decision to allow the mediator’s affidavit and testimony because the privilege can be waived by the parties.

Even though the plaintiff unilaterally breached the confidentiality rule and statute, the court allowed (and relied on) the mediator’s evidence, perhaps because the defendants deposed the mediator. The trial judge ruled that confidentiality had been waived. But we don’t have any information about why or how.

Phillips succinctly sets out the concerns about this case:

What was the movant doing attaching a certification of the mediator to their opening papers, in open breach of statutory confidentiality obligations? What on earth was the former judge-cum-mediator doing executing a certification for that purpose? What was the trial judge doing putting himself in a position to rule on his former colleague’s credibility? Or the admissibility of his testimony as set forth in his certification? Was the opponent to the motion required not to depose the prospective witness and then argue no waiver?

The judge/mediator by allowing a party unilaterally to attach his certification and opinion about whether there was agreement in this case appears to have breached two of the cardinal rules of ethical mediation to not breach the confidentiality of the mediation and to not breach the duty of neutrality.

As Phillips writes, this case is a reminder a Mediation 101 lesson: Never Never Never Violate Mediation Confidentiality.

Frontiers of Mediator Confidentiality: Can You Reveal That an Offer Was Made?

Here is a link to an interesting discussion about the Frontiers of Mediator Confidentiality posted by Peter Phillips in his always interesting Business Conflict Blog.

As Phillips points out, nothing is as simple as it looks. He sets out an interesting hypothetical about mediator confidentiality and posits three questions.

Visit the blog and answer the three questions. My answers are yes to question 1 and no to question 3 (the easy questions) and in response to question 2 the mediator can send a copy of the letter faxed to plaintiff’s counsel. Plaintiff has a right to see that letter.

Read the hypothetical and answer the questions yourself.

Mediation Confidentiality Contract Clauses

I’ve blogged before about issues related to confidentiality in settlement negotiations and in mediation here, and here.

Recently the Maryland State Bar Association ADR Section sponsored a ‘Pizza and Professionalism’ panel discussion about “Confidentiality in Mediation...When YOU Get the Subpoena.” Moderated by Cecelia Paizs, with panelists John Bickerman, Roger Wolf and me, the panel discussed various aspects about mediation confidentiality – especially in Maryland which has no statute that provides clear protection for mediator confidentiality.

Because of the lack of a Maryland confidentiality statute, many practitioners provide for confidentiality by contract; this is good practice even if the state had such a statute.

During the panel discussion I promised to post some contract clauses related to confidentiality.

Here are some sample clauses. Not all of these clauses have come from the same agreement, but together I believe they cover many of the issues and concerns discussed during the panel discussion.

All information presented to the Mediator shall be deemed confidential and shall not be disclosed by the Mediator, his firm or by any party participating in this mediation process, except that evidence otherwise admissible shall not be rendered inadmissible because of its use in mediation. In the event the Parties do reach a settlement agreement through the mediation process, the terms of the settlement will be admissible in any court proceedings required to enforce it, unless the Parties agree otherwise.

The Parties, the Mediator and his firm agree that all proceedings in connection with the mediation process, including statements made and documents prepared by any Party, the Mediator, attorney or other participant for use in the mediation process are confidential and privileged and shall not be disclosed during or after the mediation process to any third party not present during the mediation process or in other judicial or administrative process, pending or subsequent to the mediation process or in any document, unless all Parties and the Mediator agree, and shall not be construed for any purpose as an admission against interest or for any other purpose outside of mediation process.

The Parties understand and agree that, as a result of participation by the City of xxx, laws governing the availability of public records will apply to any documents furnished by the City in the mediation process. The City agrees to assert that all offers, promises, or legal opinions (including proposed findings and conclusions) prepared by or provided to the City as part of the mediation process are exempt from disclosure as a public record as work-product prepared exclusively for adversarial administrative proceedings pursuant to (cite to relevant state statute) or such other exemptions as may apply. However, the Parties acknowledge that any factual documents, including but not limited to technical documents or data, historical records, and consultant reports shall be subject to disclosure by the City in accordance with applicable public records law. The mediation process shall be deemed as compromise negotiations for purposes of the Federal Rules of Evidence, with the exceptions as set out above under the confidentiality provisions.

The Parties agree that the Mediator and Press, Potter & Dozier, LLC are not necessary parties in any arbitral or judicial proceeding relating to this mediation process or to the subject matter of this dispute. The Mediator shall not voluntarily testify on behalf of any Party or participate as a consultant or expert in any federal or state judicial or administrative proceeding regarding this case or issue in or relevant to this case or the mediation and the Mediator shall provide notice to all Parties in the event the Mediator receives a request or subpoena to so consult or testify.

The Parties agree that the Mediator and Press, Potter & Dozier, LLC shall not be called as witnesses or experts in any pending or subsequent litigation or arbitration involving these parties and relating to any matter at issue in the mediation process. Moreover, the Mediator and Press, Potter & Dozier, LLC are disqualified as witnesses or experts in any pending or subsequent litigation or arbitration relating to this matter, or any underlying issue raised during the mediation process. The Parties agree not to subpoena the Mediator and Press, Potter & Dozier, LLC with regard to the Mediator’s notes, or any documents submitted to the Mediator. The Parties further agree that if the Mediator is subpoenaed by any party (whether or not a signatory to this Mediation Agreement) the Parties will pay for the Mediator’s time and his expenses to resist testifying and his time if he is compelled to testify.

Mediation sessions shall not be recorded verbatim, nor shall formal minutes of the proceedings be kept. Upon conclusion of the mediation process, whether or not an agreement has been reached, the Mediator shall, prior to or simultaneous with the final billing sent to the Parties, destroy all notes taken regarding the mediation and shall provide a certification that such destruction has occurred. Such a certification shall be a condition precedent to final payment by the Parties.

Each Party may share information from the mediation process with its insurers and its litigation consultants or experts to assist with the mediation and/or any existing or resulting litigation, and the United States may share information from the mediation process among its various departments, agencies, or instrumentalities for any appropriate purpose (including informing decision makers and making recommendations within the Department of Justice and its client agencies concerning settlement with respect to these matters or the case), providing that each insurer, consultant, expert or federal component is shown a copy of this Agreement, is informed of the confidential nature of the information disclosed in the mediation process, and agrees to comply with this Agreement. The United States also reserves the right to provide public notice of any final settlement achieved by, after, or as a result of the mediation process as may be required by law or established government policy, and to publish a press release concerning any final settlement achieved by or after the mediation process.

The confidentiality provisions of this Mediation Agreement shall remain in full force and effect without regard to whether any legal actions or issues arising out of the case are settled or concluded by final judgment or otherwise, and shall survive termination of the other provisions of this Mediation Agreement.

Another resource for those interested in confidentiality in mediation is the Uniform Mediation Act (the UMA) and the accompanying commentary promulgated by the National Conference of Commissioners on Uniform State Laws. It is a rich resource for those interested in statutes that protect mediation confidentiality.

I welcome any feedback, comments or suggestions about these clauses on the UMA.