Mediation Confidentiality in California

In 2011, the California Supreme Court decided Cassel v. Superior Court, 51 Cal. 4th 113 (2011), in which it upheld the broad, unconditional scope of the mediation confidentiality protections afforded by Evidence Code § 1119 in the context of an attorney-malpractice case. In an underlying litigation dispute, Cassel was the plaintiff and, during a mediation, agreed to settle his claims. He then sued his attorneys for malpractice and related claims, and asserted that they provided bad advice during the mediation and were both deceptive and coercive towards him during the mediation. The Supreme Court held that the trial court properly granted motions in limine precluding Cassel from introducing any evidence which arose during the mediation, leaving Cassel with no evidence to prove his case.

The attorney-client context in which the scope of mediation confidentiality was tested not surprisingly invited a firestorm of negative publicity and public opinion. In response, Assemblyman Gorell introduced AB 2025 in 2012, which proposed to create an exception under Evidence Code § 1124 for “evidence of legal malpractice, breach of fiduciary duty or State Bar disciplinary action.” As proposed, the bill still barred the attorney from introducing testimony by other participants (such as the adverse party and the mediator) to defend against the malpractice claims. As such, the attorney could not show that the ultimate settlement was the result of information obtained from the mediator or the adverse party because these communications remained inadmissible. AB 2025 passed the Assembly in 2012, but then stalled in the Senate Rules Committee. When Gorell was unsuccessful in negotiating a compromise bill in the Senate, the matter was referred to the California Law Revision Commission (CLRC) to analyze the issue and make a recommendation.

The CLRC conducted a study, commonly referred to as “Study K-402 – Relationship Between Mediation Confidentiality and Attorney Malpractice and Other Conduct,” and conducted numerous public hearings where it received extensive comments in favor and against the proposed amendment. Those advocating for no exception to the broad confidentiality protection afforded by Evidence Code Section 1119, argued that the broad, blanket protection promotes candor, encourages the exchange of information and discussion about information, facilitates greater freedom in discussing possible settlement frameworks and terms, encourages parties to speak to each other directly in joint session, promotes finality / closure and discourages “buyer’s remorse” and post-settlement litigation. Those advocating for the exception legislation argued that it would encourage better behavior by all during mediation, promote public confidence in the integrity of the mediation process, and encourage greater decision making responsibility on the part of the client / party. They also argued that mediated settlements should not be “super contracts,” immune from attack on grounds of fraud, duress or coercion, and that attorneys should not be able to hide their incompetence or misconduct under the cloak of mediation confidentiality.

In November 2016, the CLRC proposed draft legislation in its “Memorandum 2016-58,” providing for new Section 1120.5 to be added to the Evidence Code that would create an exception to mediation confidentiality protection for “alleged misconduct” of lawyers when representing clients in mediation. The CLRC then took additional public comment and held additional hearings on the proposed legislation. Following intense opposition and debate, in December 2017, the CLRC voted 4 to 1 to send proposed Section 1120.5 to the Legislature in the form of a sponsored bill. According to an article that appeared on the front page of the Daily Journal on December 5, 2017, “[s]trong opposition is expected, with plans by opponents to introduce their own gut-and-replace legislation.” So, it would appear that

• (a) the debate is far from over, and
• (b) fate of the CLRC’s proposed Section 1120.5 is anything but certain.

As drafted, the CLRC’s proposed Section 1120.5 provides for an exception to mediation confidentiality that would allow disclosure / introduction of

• (1) evidence relevant to prove or disprove an allegation that a lawyer committed malpractice during a mediation, and
• (2) the evidence is sought or proffered in connection with resolving
  • (a) a complaint against the lawyer under the State Bar Act (Business & Professions Code §§ 6000 et seq.) or
  • (b) a claim of malpractice.

The proposed new Section 1120.5 includes specific language allowing a court to use a variety of tools to limit the publication of what would otherwise be a confidential mediation communication – e.g., sealing order, protective order, redaction, in cameral hearing, etc. It also includes a provision requiring that a notice of complaint must be reasonably provided to all mediation participants (regardless of their status as parties to the complaint or action) so as to allow them to protect themselves from disclosures. Importantly, proposed Section 1120.5 does not change or affect Evidence Code Section 703.5, which provides that mediators are incompetent to testify as witness.

The text of the CLRC’s proposed Section 1120.5 is set forth below:

Evid. Code § 1120.5 (added). Alleged misconduct of lawyer when representing client in mediation context

SEC. ____. Section 1120.5 is added to the Evidence Code to read:

1120.5. (a) A communication or a writing that is made or prepared for the purpose of, or in the course of, or pursuant to, a mediation or mediation consultation, is not made inadmissible, or protected from disclosure, by provisions of this chapter if both of the following requirements are satisfied:

• (1) The evidence is relevant to prove or disprove an allegation that a lawyer breached a professional requirement when representing a client in the context of a mediation or a mediation consultation.li>
• (2) The evidence is sought or proffered in connection with, and is used solely in resolving, one of the following:
  • (A) A complaint against the lawyer under the State Bar Act, Chapter 4 (commencing with Section 6000) of the Business and Professions Code, or a rule or regulation promulgated pursuant to the State Bar Act.
  • (B) A cause of action for damages against the lawyer based upon alleged malpractice.

(b) If a mediation communication or writing satisfies the requirements of subdivision (a), only the portion of it necessary for the application of subdivision (a) may be admitted or disclosed. Admission or disclosure of evidence under subdivision (a) does not render the evidence, or any other mediation communication or writing, admissible or discoverable for any other purpose.

(c) In applying this section, a court may, but is not required to, use a sealing order, a protective order, a redaction requirement, an in camera hearing, or a similar judicial technique to prevent public disclosure of mediation evidence, consistent with the requirements of the First Amendment to the United States Constitution, Sections 2 and 3 of Article I of the California Constitution, Section 124 of the Code of Civil Procedure, and other provisions of law.

(d) Upon filing a complaint or cross-complaint that includes a cause of action for damages against a lawyer based on alleged malpractice in the context of a mediation or a mediation consultation, the plaintiff or cross-complainant shall serve the complaint or cross-complaint by mail, in compliance with Sections 1013 and 1013a of the Code of Civil Procedure, on all of the mediation participants whose identities and addresses are reasonably ascertainable. This requirement is in addition to, not in lieu of, other requirements relating to service of the complaint or cross-complaint.

(e) Nothing in this section is intended to affect the extent to which a mediator is, or is not, immune from liability under existing law.