CA Supreme Court Takes on Mediation Confidentiality (Web)
January 22, 2005
Fair v. Bakhtiari: On January 12th, the California Supreme Court granted review in the case of Fair v. Bakhtiari. The appellate court had previously held that a writing produced during a mediation was admissible because the writing’s arbitration clause demonstrated the parties’ intent that the writing be enforceable or binding as a mediated settlement agreement.
California Supreme Court to take on Mediation Confidentiality
On January 12th the California Supreme Court granted review and superseded the appellate panel’s opinion in Fair v. Bakhtiari. The case turns on the admissibility of a writing prepared during and signed by the parties in a mediation. One side argues that the writing was a settlement agreement, and therefore admissible under a statutory exception to the inadmissibility of communications made during mediation. The other side argues that the writing was preliminary in nature and merely set out terms to be decided upon later. Ultimately, the parties never reached an agreement on the proposed settlement terms.
Under California Evidence Code Section 1119, communications made during mediation cannot be disclosed “absent an express statutory exception.” Section 1123 of the Code provides such an exception where “[t]he agreement provides that it is enforceable or binding or words to that effect.” The First District Court of Appeals found the exception applicable, holding that “the inclusion of [the] term requiring resolution of all disputes under JAMS arbitration rules… demonstrates that the parties necessarily intended the settlement terms document to be ‘enforceable or binding.’” Fair v. Bakhtiari, 19 Cal.Rptr.3d 591, 596 (Cal.App. 1 Dist. 2004). The final numbered paragraph of the nine paragraph writing states that “[a]ny and all disputes subject to JAMS arbitration rules.”
The appellate decision contrasts with the California Supreme Court’s strong support of nondisclosure of mediation documents announced in Foxgate Homeowners Ass’n v. Bramalea California Inc., 26 Cal.4th 1 (2001) and reiterated last year in Rojas v. Superior Court, 15 Cal.Rptr.3d 643 (2004). Those decisions noted the importance of mediation confidentiality in “promot[ing] a candid and informal exchange regarding events in the past.” Rojas, 15 Cal.Rptr.3d at 649. In finding for the admissibility of the writing, the lower court’s opinion, authored by Judge Kline, relied on the statutory exception’s “words to that effect” language in finding that the exception’s applicability is determined “not [by] the precise words used in a settlement agreement.” Rather, the court held that the writing need only “unambiguously signify the parties’ intent to be bound.”
The appellate decision can be found at 19 Cal.Rptr.3d 591 and also at http://california.lp.findlaw.com/ca02_caselaw/10_2004ca.html. It was featured in the ADR Brief Section of the December 2004 edition of Alternatives to the High Cost of Litigation. Review was granted and the lower court’s opinion superseded at 2005 WL 170633 (Cal. Jan. 12, 2005).