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Legal Mediation News Update – November 2014

Legal Mediation News Updates
Extensive Mediation Efforts Allow Detroit to Successfully Exit Bankruptcy
Detroit reduced its debt by $7 billion out of $18 billion and successfully exited from the largest-ever municipal bankruptcy in record time as a result of many months of mediation efforts that developed a “grand bargain” and minimized litigation.  The court-ordered mediation achieved settlements with all of the city’s major creditors, including city retirees and pension funds.  The final mediated settlements were reached during the lengthy federal court hearing on the plan. Among other things, the grand bargain avoided the assets of the Detroit Institute of Art being sold off.
New York Times (November 7, 2014); Reuters (October 22, 2014); Reuters (October 9, 2014); Detroit Free Press (September 2, 2014)

Party Who Could Have Participated in Mediation Not Entitled to Confidential Mediation Information
A subcontractor which declined to participate in mediation, but whose claims were impacted by the outcome, was not entitled to obtain any confidential mediation information in related litigation, as it did not meet any of the exceptions to the mediation privilege in Ohio’s Uniform Mediation Act.  The appellate court criticized the trial court’s plan to release privileged mediation documents along with non-privileged documents and invite litigants to seek a protective order and “claw back” the privileged documents to avoid harm. 
American Environmental Grp., Ltd. v. H.M. Miller Constr. Co., No. 100854 (C.A. Ohio, October 23, 2014)

Insufficient Term Sheet and Lack of Clear Intent to Settle Undermines Mediation Outcome
A federal court applying Illinois law concluded that a term sheet developed in mediation was not an enforceable settlement agreement because key terms were missing and there was no clear indication that the parties intended the term sheet to be enforceable, rather than just an agreement to agree.  The court noted that the term sheet had been hastily developed through a mediator’s proposal at the end of a long day, with the mediator shuttling between the parties and no direct communication over the terms. The court also considered the behavior of the parties after the mediation, as neither side promptly reported to the court that the case had been resolved as is typical when settlement has been achieved.
Craftwood Lumber Co. v. Interline Brands, Inc., No. 11 C 4462 (U.S.D.C. N.D. Ill., September 23, 2014)
Other Notable & High Profile Proceedings
Mediation confidentiality was violated by a pleading including the specific positions taken in mediation, but broad characterizations about the mediation – such as a “monumental gap” leading to impasse – were acceptable.  Procaps, S.A. v. Pantheon, Inc., No. 12-24356-CIV (U.S.D.C. S.D. Fla., October 22, 2014)
When parties agree in advance to mediate any dispute before resorting to litigation and fail to do so, courts may either stay or dismiss the litigation without prejudice.  The magistrate did not err in dismissing the case even though plaintiff argued that it had proposed mediation without response from defendant and that a stay was necessary to be able to compel mediation.  Hometown Services, Inc. v. Equitylock Solutions, Inc., No. 1:13-cv-00304 (U.S.D.C . W.D. N.C., September 5, 2014)
While mediation is generally favored strongly, the supreme court of Vermont held that requiring a counterclaim to be mediated that had only come to light during the litigation and the trial court had already granted a motion to permit it at trial, would have caused greater delay and expense to the parties, undermining the purpose of the mediation clause.  City of Newport v. Village of Derby Center, No. 2013-310 (S.C. Vt., September 12, 2014)
A dispute resolution clause in a contract calling for mediation and arbitration was unenforceable because it failed to inform signatories that they were giving up their right to go to court due to the arbitration provision, without discussion of severing and enforcing the mediation requirement.  Rosenthal v. Rosenblatt, No. A-3753-12T2 (Super. N.J., October 24, 2014)
Nonparty insurance companies who denied coverage to defendants could not be compelled to attend mediation, especially where the defendants themselves were attending mediation and the local rule requires either a party or its representative to attend mediation.  Booth v. Davis, Nos. 10-4010-RDR (U.S.D.C. Kan., August 29, 2014)
Counsel for policyholders in Superstorm Sandy insurance litigation challenged efforts by insurers’ counsel to cease mediations in order to pursue more site inspections.  Law360 (September 17, 2014)
The court required mediation despite an objection from the U.S. Department of Justice that it would be a waste of time; the court quoted research finding that settlement rates and party satisfaction are similar in both mandatory and voluntary mediation.  United States v. Tenacious Holdings, Inc., No. 12-00173 (U.S. Ct. Int’l Trade, September 2, 2014)
The supreme court in Washington held that the lender’s failure to mediate a home foreclosure case in good faith could be a compensable injury under the state Consumer Protection Act. Frias v. Assent Foreclosure Services, Inc., No. 89343-8 (S.C. Wash., September 18, 2014)
A federal court in Ohio imposed sanctions of one billable hour on opposing counsel who forgot to show up for a scheduled mediation and claimed that he simply failed to put the mediation on his calendar.  In imposing sanctions, the court noted that counsel also ignored the other side’s settlement demand, and made his excuses in a filing that itself was untimely.  Castro v. Los Camperos, Inc., No. 2:13-cv-1186 (U.S.D.C. S.D. Ohio, October 27, 2014)
A lawyer’s license to practice law was revoked for, among other things, conducting mediation, settling case, and signing a settlement agreement without ever informing his client that mediation was occurring or getting authority to take any action.  In the Matter of Disciplinary Proceedings Against Stubbins, No. 2014AP1622-D (S.C. Wis., October 14, 2014)
Cotton Association Launches New Mediation Service to Address Problem of Defaulters
The International Cotton Association is beginning to offer mediation services, claiming to be the first commodities association to do so.  The need for mediation arose as cotton prices surged in 2011 and then quickly fell, resulting in many contract breaches and a list of over 700 defaulters with whom association members are not allowed to deal without expulsion from the association themselves.  Both defaulting companies and the association are interested in resolving the underlying disputes and restoring relationships, and so are turning to mediation. 
Reuters (October 1, 2014)
Children’s Hospital Is Training Health Professionals to Spot Communication Breakdowns and Turn to Mediation
Six hundred health professionals in a children’s hospital have received training to spot signs of communication breakdown with parents and encourage mediation in the Evalina Resolution Project in the U.K., as part of a two-year pilot.  The goal is to make good medical decisions for the young patients by preventing conflicts from escalating into lawyers seeking decisions from judges.
Sky News (September 15, 2014)
North Dakota Mediation Program Recertified
The North Dakota Mediation Service was recently recertified by the U.S. Department of Agriculture to receive ongoing federal funding. The 30-year-old mediation program expanded beyond agricultural issues in 2011 to address property disputes related to energy development, as well as landowner disputes with the North Carolina Game and Fish Department. 

This is another in a series of updates on Legal Mediation News from News Editor, Keith Seat.

Farm & Ranch Guide (October 28, 2014)
ICC Commercial Mediation Competition Continues to Expand
The 10th International Chamber of Commerce (ICC) International Commercial Mediation Competition will occur February 6-11, 2015, in Paris with 66 business and law schools and over 500 students comprising the most diverse competition to date.  The competition includes about 200 mock mediation sessions, along with training programs and social events.  International Chamber of Commerce (October 24, 2014)

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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