Foxgate Homeowners' Ass'n v Bramalea Cal., Inc., 26 Cal. 4th 1, 108 Cal. Rptr. 2d 642 (2001).
The trial court ordered sanctions after admitting into evidence the mediator's report detailing defendant's misconduct during mediation sessions. The court of appeal reversed the sanctions order and remanded to the trial court to disregard anything in the mediator's report or party declarations that went beyond information reasonably necessary to describe the sanctionable conduct and place the conduct in context.
The California Supreme Court unanimously affirmed the reversal of the sanction order, but held that the court of appeal improperly created a nonstatutory exception to the mediation confidentiality requirements. The language of Evidence Code sections 1119 and 1121 is clear and unambiguous; neither mediators nor parties may reveal communications made during mediation and, while a party may do so, mediators cannot report to the court about conduct during mediation that might warrant sanctions. The submission to the court, and the court's consideration of, the mediator's report violated sections 1119 and 1121. On remand to the trial court, plaintiff may pursue the sanctions motion, but the court may consider only the plaintiff's assertion of defendant's misconduct and evidence offered in support of that assertion.
COMMENT by Judge George Schiavelli: In Foxgate, the supreme court dealt with two increasingly important issues. The first is the level and breadth of confidentiality required of a mediator. The second, which is a corollary of the first, is the amount of input — if any — that a mediator may have into proceedings to sanction a party's refusal to participate in court-ordered mediation, or, as the court put it, "the intersection between court-ordered mediation, the confidentiality of which is mandated by law . . ., and the power of a court to control proceedings before it." 2001 Daily Journal DAR at 7037.
The trial court had appointed a retired superior court judge as a special master to handle discovery proceedings, but also gave the special master the power to act as a mediator. With respect to mediation, the appointment order specifically provided that all documents and communications were protected by all applicable law. 2001 Daily Journal DAR at 7037 n3. Under the authority granted him by the court, the mediator ordered a five-day mediation and ordered the parties to appear with their expert witnesses.
On the first day of the scheduled mediation, defendant's counsel appeared late and failed to bring the required expert witnesses. When asked about the failure to bring any experts, defense counsel purportedly replied, "This is your mediation, you can handle it any way you want. I'm here, you can talk to me." 2001 Daily Journal DAR at 7038. After half a day, the mediator cancelled the remaining sessions based on his conclusion that they would be pointless in the face of the defense's failure to produce experts.
The mediator then filed a report with the court setting forth what had occurred and suggesting that defense counsel had spent "the vast majority" of his time trying to "derail" the mediation. The report went on to specify actions and comments of defense counsel allegedly demonstrating a pattern of obstruction. The mediator recommended that the court sanction the defense for the unnecessary expense and delay caused by the alleged tactics. The trial court admitted the mediator's report into evidence and ordered sanctions.
The first issue addressed by the Supreme Court was the propriety of the mediator's report. For mediation to be a viable form of dispute resolution, participants in the process must feel free to impart confidential information to the mediator to enable him/her to assist the parties in reaching a resolution.* When parties or their counsel view the mediator as an antagonist or have concerns that the mediator will not preserve confidences, the mediation dynamic will quickly break down. Resolution in such circumstances becomes unlikely. The court noted that "confidentiality is essential to effective mediation." 2001 Daily Journal DAR at 7041.
Evidence Code sections 703.5 and 1119-1121 govern the confidentiality rules covering mediation proceedings and especially communications by and to the mediator. Section 1121 prohibits the mediator from submitting reports compromising the information disclosed during the mediation process. In addition to protecting confidentiality, the Law Revision Commission recognizes an additional purpose for the section:
Rather, the focus is on preventing coercion . . . . [A] mediator should not be able to influence the result of a mediation or adjudication by reporting or threatening to report to the decision maker on the merits of the dispute or reasons why mediation failed to resolve it. Similarly, a mediator should not have authority to resolve or decide the mediated dispute, and should not have any function for the adjudicating tribunal with regard to the dispute, except as a non-decision making neutral.
Comment to Evid. Code § 1121. The Foxgate court made clear that these statutory limitations on disclosure by the mediator are clear on their face and will be enforced. 2001 Daily Journal DAR at 7041.
In reaching its decision, the Supreme Court had to confront the second issue, the conflict between the trial court's interest in the orderly proceedings of the cases before it and the duty of confidentiality imposed on the mediator. The court of appeal had concluded that it was necessary to construe the statutory scheme so as to accomplish its legislative purpose. That court concluded that the purpose of mediation, i.e., to expedite dispute resolution, would be thwarted if parties could simply refuse to participate in such proceedings with impunity.
The Supreme Court rejected this position. It concluded instead that the statutes protecting confidentiality are clear and, accordingly, are not subject to judicially created exceptions to carry out the legislative purpose. The Court reasoned that the purpose underlying the legislative requirement of confidentiality is to "promote 'a candid and informal exchange regarding events in the past . . . . This frank exchange is achieved only if the participants know that what is said in the mediation will not be used to their detriment through later court proceedings and other adjudicatory process.'" 2001 Daily Journal DAR at 7041 (citations omitted). Therefore, the court concluded that any exception to the legislative requirement of confidentiality in the mediation context must come from the legislature.
The question remaining now is whether the legislature will act to prevent willful abuse of the mediation process by creating exceptions to the confidentiality requirements. Mediation is becoming increasingly popular as an ADR tool. When parties enter into mediation with a good faith intent to seek resolution and compromise, mediation is a very effective means to efficiently and inexpensively determine even the most complex issues. However, it is not uncommon for parties and/or their counsel to approach mediation, not from a sincere desire to end the litigation, but as a means to avoid time deadlines imposed by delay reduction requirements and thereby impede the expeditious resolution of the case. It may be the case that this improper goal will be revealed only in communications to the mediator outside the presence of other parties. Conduct obstructing the mediation process should be sanctioned. Possible means of doing so — while also preserving the legitimate confidentiality expectations of parties engaging in the process in good faith — should be explored.
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*A trial court may, on its own motion, impose sanctions for a party's obstruction of a settlement conference. Civ. Proc. Code § 177.5. Amicus curiae in Foxgate requested that the court clarify the difference between a mediation and a settlement conference. The court declined to do so. 2001 Daily Journal DAR at 7040 n8. This distinction is the subject of considerable misunderstanding and would benefit from judicial clarification.