The Confidentiality Of Mediation In New York May Not Be Assured

New York mediator, Richard S. Weil, poses the question in his New York Law Journal article, dated October 25, 2012, “Is Mediation Confidential in New York?”

As Mr. Weil observes, confidentiality is a critical element in a mediation. Confidentiality allows participants to speak frankly without fear that their statements and admissions will be used against them if the case goes to trial. However, mediation may not always be confidential in New York and prudent measures may be appropriate in certain instances to assure the confidentiality of a mediation proceeding. There is no state statute that assures confidentiality.

Local court rules, in both state and federal courts, offer varying and often different levels of confidentiality protection. Similarly, private mediation agreements vary in their terms. the court decisions that have addressed mediation confidentiality do not provide clear guidance. What exactly is subject to confidentiality? What can or cannot be used outside of the mediation? In the EDNY and the SDNY, there are broad guidelines concerning what must remain confidential and litigants in these courts can be assured that  the confidentiality of mediation proceedings will be protected.  But many mediations are not court-annexed proceedings.

What about proving and enforcing mediated settlement agreements? A well-drafted settlement agreement provides that settlement agreements are admissible in evidence as an exception to confidentiality in order to enforce them, but may a party use confidential information to prove the existence of an oral agreement? Do rules concerning mediation confidentiality permit the court to admit evidence of what occurred during the mediation if one party claims to have settled as a result of fraud, duress or mistake during the mediation?

In summary, there is no iron clad guarantee. The practitioner should not take confidentiality for granted, but review the rules of the court or administrative organization (eg. JAMS, CPR, NAM) in advance of a mediation to evaluate how comprehensive those rules are.

As a practical matter, Mr. Weil recommends several ways to protect confidentiality: (1) disclosing confidential information to the mediator only in private caucuses; (2) labeling documents “Confidential Prepared for Use in Mediation Only”; and (3) incorporating the elements of confidentiality in settlement agreements, but with an exception for enforcement. Even in court-annexed mediation, there is no reason why the parties cannot enter into a private mediation agreement if the parties believe that the court’s rules do not afford adequate protection.

 

E-Discovery and New Federal Rule of Evidence 502

 On September 19, 2008, President Bush signed S. 2450 into law and new Evidence Rule 502  was added to the Federal Rules of Evidence.  The new rule provides for protections against waiver of the attorney-client privilege and work product immunity. The practical effect of the new legislation should be to reduce the often staggering legal costs corporations often incur in complex litigation, particularly in producing electronic discovery.  In drafting the legislation, the Advisory Committee of Evidence Rules recognized that lawyers spend significant time and effort preserving the attorney-client privilege and work product.  Under the prior rule, if a protected document was produced, even accidentally, there was a risk that a court would find a subject matter waiver that would apply, not only to the instant case and document, but to other cases and documents as well.  Thus, lawyers placed an enormous amount of effort (and expense) into pre-disclosure document review to protect against inadvertent disclosure.  Although waiver issues always have been a concern in document-intensive litigation (and will no doubt continue to be in the future), the increased discovery burden created by e-discovery brought this issue to the boiling point over the past two years.  Under the new rule, the jeopardy to corporations (and their law firms for permitting a waiver) is substantially mitigated.

The new rule does not address the scope of the attorney-client privilege or work product protection.  Rather, the new rule covers issues of scope of waiver, inadvertent disclosure, and the controlling effect of court orders and agreements. 

Limitation of Scope of Waiver.  Pursuant to Subdivision (a), if a waiver is found, it applies only to the information disclosed.  (Exception: If the party seeking the protection of the rule has made an intentional waiver or is seeking to use the privileged information in a misleading manner, Subdivision (a) may not apply. 

Protections Against Inadvertent Disclosure. Pursuant to Subdivision (b), an inadvertent disclosure of privileged or protected communications or information does not operate as a waiver at the federal level, IF the holder took reasonable steps to prevent such disclosure and employed reasonably prompt measures to retrieve the mistakenly disclosed information.

Effect on State Proceedings and Disclosures Made in State Courts. Pursuant to Subdivision (c), if there is disclosure of privileged or protected communications or information at the federal level, then state courts must honor Rule 502 in subsequent state court proceedings.  In the event that the disclosure of privileged or protected information occurs in a state proceeding, then admissibility in a subsequent federal proceeding is determined by the law that is most protective against waiver.

Orders Protecting Privileged Communications Binding on Non-Parties.  Pursuant to Subdivision (d), if a federal court enters an order providing that the disclosure of privileged or confidential information does not constitute a waiver, that order is enforceable against all persons and entities in any federal or state proceeding. 

Agreements Protecting Privileged Communications Binding on Parties.  Pursuant to subdivision (e), parties in a federal court proceeding can enter into a confidentiality agreement for mutual protection against waiver in that proceeding.  Such an agreement would not bind third-parties unless incorporated into a court order.