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Legal Mediation News – January 2013

This is another in a series of updates on legal mediation news by News Editor, Keith Seat.

Legal Mediation News Update 

Indiana Court Creates Exception to Mediation Confidentiality

An Indiana appellate court established a potentially large exception to mediation confidentiality by focusing on the reference in the Indiana Alternative Dispute Resolution rule to Indiana Rule of Evidence 408 on offers to compromise, which permits evidence relating to compromises to be admitted for other purposes.  On that basis, the appellate court permitted use of mediation communications in court to determine whether a mediated settlement agreement should be modified due to mistake.  While the issue arose in a family law matter, the analysis is not limited to such cases.  The court stated that its holding is consistent with the Uniform Mediation Act which provides an exception if the need for the evidence substantially outweighs the interest in mediation confidentiality.  After reviewing the mediation communications, however, the court found there had been no mistake in the agreement.  The case is on appeal to the Indiana Supreme Court.
Horner v. CarterNo. 34A02-1111-DR-1029 (Ind. App., June 13, 2012); Just Court ADR (December 4, 2012)
U.K. Court Does Not Penalize Refusal to Mediate Due to Frequent Offers to Negotiate

While unreasonably rejecting mediation in the U.K. can result in the successful litigant not being awarded its costs (including attorneys’ fees), the Technology and Construction Court concluded that the defendant’s rejection of mediation in ADS Aerospace Ltd. v. EMS Global Tracking Ltd. was reasonable.  The court recognized the many benefits of mediation, but was persuaded by the facts that the defendant had repeatedly sought to engage in direct negotiations which the claimant continually refused, mediation was only sought by the claimant shortly before trial, the offers exchanged revealed a huge gap in the parties’ positions, the claimant’s decision-maker would not have accepted a nuisance offer based on his trial demeanor, and the defendant reasonably believed it had a watertight case.  As a result, the court ordered a partial payment of costs of £525,000 while total costs were being calculated.
ADS Aerospace Ltd. v. EMS Global Tracking Ltd., [October 24, 2012] EWHC 2904 (TCC),
Heads of Agreement Settlement in Mediation Results in More Litigation

Mediation over the sale of a super yacht marina resulted in a settlement written up in a “heads of agreement” that was to be followed by a more formal document.  However, the final agreement was not completed before one party withdrew from negotiations and the other sued to enforce.  The trial judge found the heads of agreement binding and ordered specific performance, including terms that were in drafts of the incomplete formal agreement.  The appellate court agreed that the heads of agreement was binding, because one term referred to its “binding nature,” despite arguments that it should be void for uncertainty or incompleteness.  However, the appellate court concluded that there had not been any further binding agreements on particular clauses in the later drafting, so the agreement to be enforced was merely the terms in the heads of agreement plus mechanical provisions to implement it.
Malago Pty Ltd. v. AW Ellis Engineering Pty Ltd., [2012] NSWCA 227;International Law Office (November 6, 2012)
Mediation Alternative to Massachusetts Tax Appeals

The Massachusetts Department of Revenue (DOR) is beginning a pilot mediation program for protests over assessments, which is modeled in part on an IRS mediation program.  DOR appeals officers will act as mediators once they are trained, although taxpayers can bring in professional mediators at their own expense.  The pilot program requires a minimum of $1 million in dispute and has a four-month deadline for mediation.  Without mediation, an internal appeal generally takes a year and may be followed by an even longer and more expensive appeal to the state Appellate Tax Board.  Tax lawyers support the idea of mediation and are generally optimistic about the new program as they wait to see how it unfolds in practice.  DOR’s goal is to expand the mediation program to be able to address 35 cases at a time.
Boston Business Journal (November 5, 2012)
Domain Name Consultant Offering Dispute Resolution Services

Following ICANN’s announcement of a drawing process for assigning priorities to all new gTLD (generic Top Level Domain) applications, domain name consultant RightOfTheDot launched a mediation service and private auction for settling claims between applicants for the same new gTLDs.  Mediation requires agreement of all parties and is encouraged as the optimal way of resolving conflicting claims to avoid the time and cost of relying on an auction. 
Maryland Updates Rules for Court-Referred Mediation

The Maryland Court of Appeals has revised its rules for court-referred mediation, making numerous amendments to Title 17 which took effect on January 1.  These include changes in the court’s process for designating mediation and requires the maximum number of hours of required participation to be stated, along with an hourly rate that cannot be increased by the mediator even when the parties wish to mediate beyond the hours required; changes in the process for parties to alter the referral to mediation; changes in the timing of mediators’ continuing mediation-related education; and clarification in committee notes that mediators may “record” points of agreement but should not be “authoring” agreements.
Maryland Revised Title 17 (November 1, 2012)
Mediation Needed for White Collar Crime

White collar crime is increasing rapidly, to £1.5 billion annually in the U.K. alone, heightening the need for mediation to resolve challenging situations.  Mediation would provide for greater flexibility in addressing white collar crime, especially in complex cases and where there is significant ambiguity about what occurred.  Encouraging the parties to have frank discussions may avoid protracted legal battles trying to find unknowable answers about right and wrong.  Mediation would also reduce pressure on the court system, allow more options during plea bargaining, and reserve only the most serious cases for judicial attention.  Moreover, from the company perspective, mediation can help mitigate risks of future recurrence, can apply corrective measures, and in serious cases can help ensure business continuity.
Mediation World (December 13, 2012)
Third Time Is Charm for Mediation of NHL Dispute

A Federal Mediation and Conciliation Service (FMCS) mediator has succeeded in helping resolve the National Hockey League dispute, with an agreement in principle between the league and union announced on January 6 that is expected to salvage the rest of the season.  The NHL lockout began in mid-September, but the parties did not turn to mediation until late November when FMCS mediators were involved in two days of negotiations before suspending their efforts.  In early December, the NHL Players Association requested that the mediators return, but they were not immediately available because of the port strike.  [FMCS mediators helped avert a longshoremen’s strike that could have crippled cargo movement at 15 ports.  Sun Sentinel (December 28, 2012)]  The league agreed to further mediation, but meetings with the mediators were limited in mid-December.  Finally, the mediator got things moving with 13 hours of shuttling between the parties on January 4, and then reached agreement in an intense, 16 hour session through the night on January 5 and 6.  SBNation (December 6, 2012); Courier Journal (December 24, 2012); Washington Post (January 6, 2013)
Extreme Restorative Justice

A remarkable story of forgiveness and the unprecedented use of restorative justice in a murder case was featured in a lengthy article in the New York Times Magazine.  The murder of a young woman by her boyfriend occurred in the Panhandle region of Florida, known for law-and-order, but resulted in the young woman’s parents seeking to forgive the boyfriend.  Once they heard about restorative justice from a prison chaplain, the parents of both young people were interested in pursuing the deeper understanding, explanations and healing that can come from restorative justice, even though there was no way for the perpetrator to make things right.  The parents brought in an expert from California who guided the process, which involved a community conference attended by both sets of parents, the perpetrator, a victims’ advocate, lawyers and a priest.  The process also included the prosecuting attorney, who began the session by stating the charges and summarizing the police reports, followed by lengthy, uninterrupted statements by the victim’s parents, the perpetrator who explained in painful detail what had occurred, and his parents.  In structuring the process, one goal was to seek diversion from the traditional criminal justice path.  Such restorative-justice diversion occurs in several other places in the country, but was unknown in Florida.  The parties agreed to use the pre-plea conference for the restorative justice community conference, at which – after everyone’s statements – the victim’s mother and father ended up suggesting a sentence of 5-15 or 10-15 years, the perpetrator’s parents concurred, and the perpetrator declined to suggest a term.  The prosecuting attorney, aware of the likelihood of community concern, conducted additional inquiries before offering a plea bargain of 20 years on the charge of first degree murder, which if proven at trial would normally result in a mandatory life sentence.
New York Times (January 4, 2013)
New Twists in Online Dispute Resolution

A new website,, seeks to bring the power of crowdsourcing to alternative dispute resolution with a free process where individuals can each write up their side of a dispute (the latest posting: “My neighbor keeps staring when I’m tanning in my bikini”), including their proposed solutions, and then the public can weigh in with comments and votes, which may be persuasive but are in no way binding.  Each side is invited to use social media to encourage their friends to engage and cast votes.  For more serious disputes, the parties can use private baseball-style arbitration – either binding or non-binding – or mediation, relying on arbitrators and mediators listed on the site or other neutrals chosen by the parties. 
By contrast, a second new website,, invites consumers to post complaints at no cost about companies with which they have interacted and are dissatisfied, with the expectation that positive publicity from resolving the complaints – and negative publicity from failing to do so – will encourage action by the companies.  If companies do not respond quickly, consumers may ask their social media friends to provide support.  The Guardian, University of California, San Diego (November 19, 2012); The Star (December 16, 2012);;
Even New York Times Confuses Mediation and Arbitration

Despite ever growing use of mediation in the U.S. and around the world, basic confusion continues over the difference between mediation and arbitration.  But when the New York Times got it wrong in an article about arbitration last summer that included a headline stating that a mediator had taken action, consternation resulted among some.  A professor wrote an article about the resulting furor on a dispute resolution listserv she administers, along with a clarifying op-ed piece for the New York Times, which it chose not to publish.  City University of New York (December 19, 2012); Alt Newsletter (November 9, 2012); New York Times Article

Keith Seat

Keith L. Seat is a full-time mediator and arbitrator who can effectively assist parties in resolving a wide range of telecommunications, antitrust and other commercial disputes. With over twenty years of legal experience as a mediator, arbitrator, litigator, advocate before executive branch agencies, and key staffer in the legislative and… MORE >

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