Settlement: CA Court Exceeds its Power When Its Rules Force Construction Mediation (Web)

In Jeld-Wen Inc. v. Superior Court of San Diego County, et. al., No. D048782

(Jan. 4, 2007)(available at http://www.courtinfo.ca.gov/opinions/documents/D048782.PDF), California’s Fourth District, Division One Court of Appeal held that trial courts do not have the authority to order parties in a complex civil action to attend and pay for private mediation over their objection.

The unanimous panel opinion by Associate Justice James A. McIntyre focuses on mediation’s voluntary nature, and concludes that the trial court misused California’s expansive mediation referral rules for a multiparty construction defect case involving more than $500,000 in alleged repair costs.

Jeld-Wen, which makes doors and windows, is an uninsured cross-defendant in the case. In a case management order, the trial court classified the matter as a complex case under Section 19 of the California Standards of Judicial Administration for Complex Litigation. The court appointed a “Mediator and/or MSC [Mandatory Settlement Conference] Judge” to mediate and conduct settlement conferences for a maximum of 100 hours at a $500 hourly rate. The court also appointed a discovery referee.

Jeld-Wen objected to the proposed order’s mediation provisions, saying they were inconsistent with case law and violated court rule 3.1380, which allows a court to set only one mandatory settlement conference. The court overruled and issued the order.

After receiving a settlement demand and notice of two mediation dates from the real parties in interest, Jeld-Wen claimed it wasn’t liable because it didn’t install the products and no discovery had been conducted showing that its products were defective. The company said would not attend the mediation sessions, but “it invited further informal settlement discussions,” according to the appeals court opinion.

After Jeld-Wen failed to attend the mediation, the trial court ordered Jeld-Wen to attend the next mediation session and pay $200 in sanctions for violating the mediation order.

In refusing to uphold the sanction order, the Court of Appeals held that “while trial courts may try to cajole the parties in complex actions into stipulating to private mediation . . ., they cannot be forced or coerced over the threat of sanctions into attending and paying for private mediation as this is antithetical to the entire concept of mediation.”

The panel also observed:

  • The essence of mediation is its voluntariness and we reject the suggestion that trial courts presiding over complex cases have the inherent authority to force a party to attend and pay for mediation over the party's express objection because such an order conflicts with the statutory scheme pertaining to mediation.
  • The appeals panel outlined the case law and the rules under the Civil Action Mediation Program, which allows courts to order cases into mediation, provided the procedures and minimum mediator conduct standards are observed. The appellate decision noted that both the program and the cases emphasize mediation’s voluntary nature.
  • The panel observed that the trial court must consider the parties’ expressed views before ordering a case to mediation. Even after a case has been ordered the mediation, the rules require that the mediator respect the right of any party to withdraw from the mediation at any time under Rule 3.853(2)).
  • The opinion also outlined trial courts’ authority under court rules’ section 639 to appoint a referee to conduct a mandatory settlement conference. The appeals court was quick to point out that the referee in this case was not appointed under section 639, but was made under the mediator-appointment rule, and the parties were ordered to attend and pay for private mediation, not a settlement conference.

The Court concluded that a case management conference order requiring that parties in complex cases attend and pay for mediation is not authorized by the statutory scheme, and is contrary to mediation’s voluntary nature. The Court went even further to elaborate that even if Jeld-Wen had appeared at a court-sponsored mediation and asked to be excused, the mediator would have been obligated to comply (Rule 3.853(2)).

–Lauren A. Gray, CPR Intern