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Does a Prior Relationship With a Party Impair a Mediator’s Neutrality? California Says No

Few fans of the hit television series Law & Order are likely aware that the show gave rise to a real-life California divorce drama in which mediation played a central role.

In August 2003, the creator of Law & Order, Richard Wolf entered into a marital settlement agreement (MSA) with his then-wife Christine Wolf to dissolve their marriage. The MSA was the product of a voluntary mediation facilitated by a certain Martin Weinberg.

Problems started shortly after execution of the MSA when Christine learned that Richard and NBC (which aired Law & Order) had struck a billion dollar deal regarding profit participation in the series. Christine sued in state court to set the MSA aside on the ground that Richard had concealed assets. The court ruled that there was no concealment.

Christine subsequently sued the mediator (Weinberg) and his former employer in federal court for allegedly withholding critical information regarding the value of Richard’s assets during the mediation. The case was dismissed by the federal court on jurisdictional grounds, but refiled by Christine in California state court.

The allegation of misconduct by a mediator during a mediation implicated Section 1119 of the California Evidence Code, which renders any statement or writing made during the course of a mediation inadmissible in any subsequent civil proceeding, and further provides that “[a]ll communications, negotiations, or settlement discussions by and between participants in the course of a mediation or a mediation consultation shall remain confidential.” After Christine moved to compel production of certain documents from Weinberg, and Weinberg refused on the ground of mediation privilege, the trial court addressed whether Section 1119 rendered the documents sought by Christine inadmissible.

Christine argued that Section 1119 only protects individuals who qualify as a “mediator,” and Section 1115(b) defines “mediator” as a “a neutral person who conducts a mediation,” and “mediation” as “a process in which a neutral person or persons facilitate communication between the disputants to assist them in reaching a mutually acceptable agreement.” (emphasis added). Weinberg was not “neutral,” according to Christine, because he allegedly had a preexisting relationship with Richard and an interest in obtaining business from Richard after the marital dissolution. Christine contended that this alleged lack of neutrality deprived Weinberg of the protections of Section 1119.

The trial court rejected Christine’s definition of “neutral” as incorporating a “bias” element, and its decision was recently affirmed by a California appellate court. See Wolf v. Loring Ward Int’l, 2019 WL 1922920 (Cal. Ct. App. Apr. 30, 2019).

The trial court noted that the confidentiality protections afforded to mediations under California law are “zealously guarded” as essential to the success of the mediation process, and thus have been broadly construed to apply “even in situations where justice seems to call for a different result.” The appellate court concurred, noting that the mediation confidentiality statute is “not subject to a ‘good cause’ exception” such as where a party alleges bad faith or other misconduct during the mediation.

Given the broad protection afforded to mediation confidentiality, the trial court concluded that “the term ‘neutral person’ [in Section 1115] focused not on a person’s state of mind or subjective opinions regarding the parties’ positions, but instead on a role within the process of negotiation by both parties.” (emphasis added). The appellate court agreed, interpreting “neutral person” narrowly as a noun to mean a third party “who does not act as either party’s representative and who is not in a position to decide the dispute,” but who instead “performs the role of an intermediary to facilitate negotiations between the parties so as to enable them to mutually resolve their dispute.” (emphasis added).

At the same time, the appellate court rejected construction of the term “neutral” as an adjective that imposed impartiality standards on mediators. The appellate court found this conclusion was consistent with the legislative history surrounding a 1993 amendment of the statute that considered, but ultimately rejected defining a mediator as an “impartial third party,” as opposed to a “neutral person,” in connection with a pilot mediation project in Los Angeles County.

Additionally, legislative history from a 1996 amendment showed that the California legislature had considered, but declined to adopt a provision imposing standards for bias, conflicts of interest or disclosure on mediators. Nor was there any legislative history indicating any intent to “limit the definition of a mediator to exclude those who had any form of prior relationship with a party to the mediation.” To the contrary, the legislative history reflected a desire to enable a wide variety of individuals to serve as mediators under circumstances in which a mediator would likely have a prior relationship with a party.

Finally, the appellate court observed, “there is nothing in the entire statutory scheme governing the mediation privilege in section 1115-1128 that requires a mediator to disclose conflicts of interest, or that conditions the mediation privilege on the disclosure of such conflicts of interest or on their absence.” (author note: Section 1129 of the California Evidence Code, which became effective on January 1, 2019, requires an attorney representing a client participating in a mediation or a mediation consultation to “as soon as reasonably possible before the client agrees to participate in the mediation or mediation consultation, provide that client with a printed disclosure containing the confidentiality restrictions described in Section 1119 and obtain a printed acknowledgment signed by that client stating that he or she has read and understands the confidentiality restrictions.”).

The trial court found, and the appellate court concurred, that even were an “impartiality” requirement grafted on to the definition of “mediator” in Section 1115, the evidence in the record failed to support any inference that Weinberg was not impartial. Very interesting that both the trial court and appellate court undertook that additional analysis after already rejecting Christine’s proposed construction of the statute. One wonders whether the decision would have come out any differently had there been overwhelming evidence of bias, notwithstanding the appellate court’s clear holding that the mediation confidentiality statute is not subject to a “good cause” exception to correct perceived injustices.

Notably, the California mediation statute, as interpreted in Wolf, stands in contrast to Section 9 of the Uniform Mediation Act (UMA), which expressly (i) obligates a mediator to disclose “any known facts that a reasonable individual would consider likely to affect the impartiality of the mediator, including a financial or personal interest in the outcome of the mediation and an existing or past relationship with a mediation party or foreseeable participant in the mediation,” (ii) denies the mediation privilege under Section 4 of the UMA to a mediator who fails to provide such disclosure, and (iii) suggests language imposing an impartiality requirement.

Also standing in contrast to Wolf is a decision such as Hauzinger v. Hauzinger, 842 N.Y.S.2d 646, 647 (4th Dept. 2007), aff’d, 10 N.Y.3d 923 (2008), in which the New York Appellate Division, Fourth Department, affirmed a lower court’s order denying a mediator’s motion to quash the subpoena issued by the wife in a subsequent matrimonial action seeking the mediator’s appearance at a deposition and the mediator’s records in connection with the mediation he conducted with the parties before the commencement of the action. The New York appellate court observed that the parties were not represented by counsel when they participated in the mediation process that concluded with the execution of a separation agreement. It also noted that applicable provisions of New York’s domestic relations statute obligated the lower court to determine the fairness of the separation agreement at the time it was made. Based on the foregoing, the appellate court rejected the mediator’s argument that “the trial court abused its discretion in refusing to enforce the confidentiality agreement entered into by the parties as part of the mediation process, and in refusing to quash the subpoena as a matter of public policy.” In particular, the appellate court to declined the mediator’s invitation to apply the confidentiality provisions in the Uniform Mediation Act as a matter of public policy, noting that New York had not adopted the UMA (it still has not).

We invite readers to weigh in on the pros and cons of the strong protection afforded to mediation privilege in California versus the less stringent protection available under the UMA and jurisdictions like New York.

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