California's top court will schedule arguments soon on mediation confidentiality (Web)

A California state appeals court decision has led to another state Supreme Court take on mediation confidentiality.
 
Fair v. Bakhtiari , 19 Cal.Rptr.3d 591, Docket No. A100240 (Cal. App. 1st App. Dist. Div. 2 Oct. 12, 2004)(available at www.courtinfo.ca.gov/opinions/documents/A100240A.PDF) appears to be a simple enforcement case, revolving around a writing made in a mediation.
 
The facts are equally simple: one side says the writing was a settlement agreement, the other says that the writing wasn’t binding, merely setting out terms to be fleshed out later.

But the business divorce case calls into question, again, whether mediation efforts or products can be raised in court proceedings. The California Supreme Court looked at mediation evidence last summer in Rojas v. Superior Court, 15 Cal.Rptr.3d 643 (Calif. S.C. 2004), holding a hard line on discovery of mediation documents in subsequent litigation, and strongly backing nondisclosure.  Rojas has divided the mediation community, and could be a target of legislation next year. See articles at “A Straightforward Rojas Still Riles Some Practitioners,” 22 Alternatives127 (September 2004).
 
The Court accepted Fair for review, and the first brief was filed the second week of February.  An argument date will be set soon.
 
Fair relies on Foxgate Homeowners Ass’n v. Bramalea California Inc., 26 Cal.4th 1 (Calif. S.C. 2001), another case that is seen as holding the limits on mediation-related discovery.  But Fair focuses on a Foxgate exception that prohibits a disclosure of mediation communications unless it fits under a statutory exception.
 
The agreement in Fair, according to the opinion by Presiding Justice J. Anthony Kline, who was joined by Associate Justices Paul R. Haerle and Ignazio J. Ruvolo, fits within that narrow exception.  The 16-page opinion permits the plaintiff to take the writing to court, and attempt to enforce an arbitration clause it contains.  The arbitration provision was designed to iron out details that weren’t covered by the rest of the “settlement terms document,” as the agreement is called in the opinion.
 
The opinion “outs” the mediation by transcribing the settlement terms document’s nine numbered provisions.  The parties designated Jams Inc., a national ADR provider, to conduct the arbitration in the agreement, handwritten by plaintiff’s counsel.
 
Forcing arbitration is a way for the plaintiff to get a $5.4 million cash payment he was supposed to have received from his former business associate within 60 days of the March 21, 2002 , settlement terms document’s drafting. The adversaries, and others, were involved in defendant Burlingame , Calif.’s Stonesfair Financial Corp., which, along with several associated companies, manages apartment buildings.
 
Before the stark disagreement over the settlement terms document, the case was messier and nastier. One of the defendants is the plaintiff’s former wife, who also is a Stonesfair principal. Besides the contract allegations, plaintiff R. Thomas Fair alleged assault and battery against defendant and former business associate Karl E. Bakhtiari, and alleged intentional infliction of emotional distress against Bakhtiari and his former spouse, Maryann Fair. The defendants accused Fair in a cross-complaint of, among other things, misappropriating trade secrets and property, and conversion.
 
The October appellate division decision focuses on two issues: whether the settlement terms document satisfies a statutory exception to mediation confidentiality, and, if so, whether the settlement terms document constitutes a valid arbitration agreement. Shartsis says the decision incorrectly blends the issues.
 
The appeals panel quoted Foxgate in noting that California Evidence Code Section 1119 “unqualifiedly bars disclosure of communications made during mediation absent an express statutory exception.” But the appellate decision applies Section 1123, which states “A written settlement agreement prepared in the course of, or pursuant to, a mediation, is not made inadmissible, or protected from disclosure, by provisions of this chapter [e.g., Section 1119] if the agreement is signed by the settling parties and . . . [t]he agreement provides that it is enforceable or binding or words to that effect.”
 
The Fair appellate decision vacates an earlier opinion, Fair v. Bakhtiari, 18 Cal.Rptr.3d 208, (Cal.App. 1 Dist. Aug. 31, 2004 ).
 
Full details available in the December Alternatives, which is available for free in Members Only.  Hard copies by mail are available from Jossey Bass at 1-888-378-2537.