Legal Mediation News – January 2014

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

This is another in a series of updates on legal mediation news by Mediate.com News Editor, Keith Seat. See our related Newsletter Service for your clients and referral sources.

California Mediation Confidentiality Statute Prevents Enforcement of Settlement in Federal Court
A federal court in California “reluctantly” held that even though the parties settled in mediation by accepting in writing a mediator’s proposal, and the mediator stated in writing that the case was settled, since there was no express statement that the settlement agreement was binding or admissible, as required by California law, the agreement could not be admitted or enforced by the court.
In re TFT-LCD (Flat Panel) Antitrust Litigation, No. M 07-1827 SI (U.S.D.C. N.D. Cal., December 3, 2013)

Mediator Improperly Testified About Oral Settlement in Kansas Mediation, Absent Statutory Exception
A Kansas appellate court concluded that the trial court erred in permitting a mediator to testify that an oral agreement had been reached in mediation and what the terms of the purported agreement were.  The appellate court noted that several states, including Louisiana, Ohio, Wisconsin, Kentucky, Connecticut, Iowa and Wyoming, have express exceptions allowing mediators to testify about disputed agreements, but that Kansas does not have such an exception.  Thus, the general rule of mediation confidentiality applies as long as any party objects to admitting mediation communications, which occurred in this case.  Without the mediator’s testimony there was not sufficient evidence of the terms to enforce any agreement.  The appellate court urged parties to put settlement agreements in writing, citing a law review with a form checklist and term sheet.
Baraban v. Hammonds, No. 105,993 (Kan. Ct. App., October 18, 2013)

Oral Settlement Agreement Not Enforceable Due to Disagreement over Material Term
While the parties agreed that an oral settlement agreement had been reached in mediation, a Delaware court refused to enforce it because of disagreement over the scope of the release, which the court concluded was a material term.  Mediation confidentiality was waived by the parties relying on mediation communications.  However, statements of the mediator during the mediation were generally excluded as hearsay because the court found no applicable hearsay exception. 
United Health Alliance v. United Medical, CA No. 7710-VCP (Del. Ch., November 27, 2013)

Florida’s Sunshine Laws Override State Mediation Confidentiality, But Not Federal Court Mediation Provisions
A Florida state court held that confidential mediation sessions in a related federal case between city officials, union leaders and a Pension Board involved collective bargaining and thus violated the state’s Sunshine Laws because they were not open to the public.  The court rejected the argument that Florida’s mediation laws provide an exemption from the state’s Sunshine Laws, but noted that a federal court order requiring private mediation would override the Sunshine Laws.  The court enjoined the parties from negotiating pension benefits in any subsequent confidential federal mediation sessions, unless ordered to mediate in private by the federal court after the parties informed the federal court of the injunction and sought a waiver.
Denton v. Mayor Brown, et al., No 16-2013-CA-5799 (Fla. Cir. Ct. December 31, 2013)

Ontario Court Imposes Costs for Sham Mediation
An Ontario, Canada, court ordered defendant to pay C$60,000 in costs for “sham” mediation after a C$248,000 verdict was rendered against it.  Defendant’s counsel had agreed to briefly mediate but wrote that defendant was “not interested in settling” and then stood firm on its modest offer in the mediation.  The court did not rely on any other details from or about the mediation, but noted in imposing costs that a C$50,000 gap between the offer and demand required a six-day trial.
Ross v. Bacchus, 2013 ONSC 7773, No. 10-22627 (Ontario Super. Ct., December 16, 2013); Kluwer Mediation Blog (December 23, 2013)

Progress in Mediation of Massive Detroit Bankruptcy

• A settlement in Detroit based on the recommendation of the lead mediator was reached on Christmas Eve with banks who underwrote a controversial pension funding plan, which will reduce the amount Detroit owes by $128 million or 43% of the secured debt.  The settlement must be approved by the bankruptcy judge.  The Sacramento Bee (December 24, 2013)
• The lead mediator has proposed that nine nonprofit foundations create a fund to defend the Detroit Institute of Art, which has a 66,000 piece collection, and prop up the city’s pension funds.  Chicago Tribune News (November 14, 2013)
• The lead mediator required Detroit to disclose details of its proposal to spin off the water and sewer department which will be the focus of two days of mediation scheduled in New York.  Detroit Free Press (December 31, 2013)
• The lead mediator – a federal judge – is able to avoid scheduling challenges by simply ordering the parties to appear, including the session on Christmas Eve, at which lack of attendance could have resulted in immediate sanctions, including default judgment.  The Detroit News (December 19, 2013)

Other Notable & High Profile Proceedings

• Rulings in the Detroit bankruptcy, such as the bankruptcy court’s holding that pensions are not above other creditors, will impact the San Bernardino, California, bankruptcy which is also in mediation developing a term sheet for the bankruptcy plan.  The California mediation has made significant progress and eight additional mediation days are scheduled.  The Bond Buyer (December 10, 2013); San Bernardino County Sun (December 10, 2013)
• The West Virginia Supreme Court upheld a lower court decision to deny discovery into mediation relating to settlement of class actions that was sought by those objecting to the settlements.  The court held that the difference between the opening settlement offer and the final agreement was merely the normal give and take of negotiation, rather than evidence of collusion between the parties.  Allen v. Monsanto Co., No. 13-0418 (W. Va., November 22, 2013).
• The first four settlements have been reached in early mediation of Stryker hip recall cases; two other mediations did not reach settlement.  Additional mediations are scheduled.  Following the Stryker hip recall of 20,000 hip stems worldwide in 2012, over 500 lawsuits have been consolidated in New Jersey state court, with over 450 additional cases in federal multidistrict litigation in Minnesota.  The Sacramento Bee (December 18, 2013)
• After four years of litigation, Toyota is entering an intensive settlement process involving two-stage mediation in an effort to resolve 375 pending state and federal lawsuits over claims of unintended acceleration by its vehicles.  Law Times (December 16, 2013)
• The NCAA and a group of plaintiffs’ lawyers began mediation in November in a landmark concussion lawsuit.  A second set of plaintiffs is scheduled to begin mediating with the NCAA in February.  CBS Sports (November 4, 2013)
• Mediation of a securities class action lawsuit against Chanticleer Holdings has resulted in a class-wide settlement in principle, subject to final documentation and court approval.  MarketWatch (December 19, 2013)

New York Proposal for Mandatory Mediation of Commercial Cases in Comment Period
The Commercial Division Advisory Council of New York County’s trial court has recommended an 18-month pilot program which would send every fifth commercial case to mandatory mediation, unless a party shows that mediation would be ineffective or unjust, or all parties in a case opt out.  Parties would be able to choose their mediator or obtain a mediator from the court’s roster.  Comments on the proposal may be submitted through February 11, 2014.
New York Unified Court System Memorandum and Appendices (December 11, 2013)

Ontario Insurance Regulator Eliminates Mediation Backlog
Mediations sought by claimants in disputes with insurers before Ontario’s insurance regulator, the Financial Services Commission of Ontario (FSCO), had reached a backlog of 29,000 cases in March 2012, but has been eliminated by bringing in an outside mediation provider.  When mediation is not successful, however, the cases move on to arbitration, where there is now a backlog with parties waiting nine months or more for arbitration dates. 
Law Times (December 16, 2013)

Use of Planned Early Dispute Resolution
The ABA Dispute Resolution Section established the Planned Early Dispute Resolution Task Force in 2011 to encourage adoption of Planned Early Dispute Resolution (PEDR), a framework for using a variety of resolution processes tailored to the dispute at the earliest appropriate time.  PEDR includes direct negotiation, mediation, standing neutrals, arbitration and hybrid processes.  A User Guide has been developed to help parties tailor PEDR processes to their business needs.
PEDR User Guide; Mediate.com (November 2013)

Other Notable News & Programs

• A pilot mediation program has been approved by the Citizens Police Review Board to address complaints against the police department in Columbia, Missouri.  Funding is in place in the city budget and a Request For Proposals has been issued for mediation services.  Columbia Daily Tribune (November 16, 2013)
• The South Dakota Department of Agriculture Mediation Program is seeking mediators in various parts of the state and is offering mediation training.  Mediation is provided relating to agricultural lending, federal land grazing permits and surface depredation caused by oil and gas development.  Rapid City Journal (November 3, 2013)
• Virtual conferencing for mediations is being offered by a U.K. provider where the parties cannot easily come together to mediate, such as workplace disputes within global or multi-site companies.  PRWeb (November 28, 2013)
• A judge in Pima County, Arizona, is urging mediation to resolve consumer debt cases in her courtroom, with success in about 60 cases on her docket since 2012.  Arizona Daily Star (November 29, 2013)

Boosting International Commercial Mediation
The viability of international commercial mediation as a substitute for arbitration is examined in a law review article that not only looks at the value of mediation in international commercial disputes, but examines how public international law might be used to address deficiencies in international mediation and ensure its long-term success.  In particular, international mediation might be enhanced by international treaties to ease the enforcement of mediation agreements and settlement agreements, taking lessons from international commercial arbitration.
Professor S.I. Strong, Beyond International Commercial Arbitration?  The Promise of International Commercial Mediation, 42 Washington University Journal of Law and Policy (forthcoming 2014); University of Missouri School of Law Legal Studies Research Paper No. 2013-21

ICC Issues New Mediation Rules
The International Chamber of Commerce has released new Mediation Rules that went into effect on January 1, 2014, and replace the ICC’s Amicable Dispute Resolution rules.  The new Mediation Rules can also be used for conducting other processes, such as neutral evaluation and conciliation.  The ICC’s non-refundable filing fee is now $2,000, in addition to administrative expenses.  The accompanying Mediation Guidance Notes provide information on procedural and administrative issues relating to conducting mediations.
ICC Mediation Rules; Mediation Guidance Notes

                       

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 >