Court of Appeal Concludes Binding Mediation Need Not Be An Oxymoron, Distinguishing Lindsay v. Lewandowski
The trial court enforced a settlement agreement, under Cal. Code Civ. Proc. section 664.6, resulting in a binding mediation award in favor of plaintiffs. Defendant appealed, contending that it never agreed to resolve the dispute through “binding mediation”, that the agreement was uncertain, and that binding mediation is not among the constitutionally and statutorily permissible means of waiving jury rights. Bowers v. Raymond J. Lucia Companies, Inc., Case No. D059333 (4th Dist. Div. 1 May 30, 2012) (McConnell, P.J., author) (certified for publication).
The Court of Appeal affirmed. Though “binding mediation” may at first blush seem like an oxymoron to you and to me, here, there was “substantial evidence” from which the trial court could determine what the parties intended by way of alternative dispute resolution. The evidence included a transcript of counsels’ comments to an arbitration panel, which was informed of the settlement, and a written settlement agreement with a written amendment. Despite the somewhat unusual use of the term “binding mediation,” it was apparent that the parties chose a mediator, that they mediated, that the framework involved each party submitting their “last and final offer which shall be some amount between $100,000 and $5,000,000”, and that “[t]he mediator shall then be empowered to set the amount of the judgment in favor of Plaintiffs against [Defendant] by choosing either Plaintiffs’ demand or Defendants’ offer, such binding mediator judgment to then be entered as a legally enforceable judgment . . . “
When the parties were unable to resolve the dispute themselves, the mediator resolved the dispute by choosing the $5,000,000 amount. (Compare baseball-style arbitration, “in which an arbitrator decides a monetary dispute by selecting from the parties’ final proposals”, which the Court of Appeal cites as “an example of binding mediation”.)
Along the way, the Court had to distinguish Lindsay v. Lewandowski, 139 Cal.App.4th 1618 (2006), a case in which the Court of Appeal refused to enforce an agreement requiring “binding mediation.” However, unlike the appellants in Lindsay, “the defendant in this case never objected to binding mediation or insisted it was entitled to a post-mediation arbitration hearing until after the mediator made an award in plaintiffs’ favor.” Also, unlike the parties in Lindsay, the parties in Bowers “elaborated on what they meant by the alternative dispute resolution method they chose.”
Finally, the Court of Appeal concluded that giving up a right to a jury trial through the ADR method chosen was not forbidden by the Constitution or by statutes. True, statutory rules prescribe how one can waive the right to a jury trial, and end up instead with a court trial. But the parties can choose a dispute resolution mechanism (such as settlement) that avoids trial altogether. And that, according to the Court, is what happened here: “In this case, the parties agreed to settle their dispute through binding mediation in a nonjudicial forum.”
So, unless “binding mediation” is truly an oxymoron in all circumstances, Bowers is indeed distinguishable from Lindsay, and hence, the result is different.