Panel Majority Ties Mediation Privilege To Parties’ Expectations At The Time Of The Mediation, Not To Later Time When Federal Claims Were Dismissed.
Timing can be everything.
Where there are federal question claims and pendent state law claims present, the federal law of privilege applies. Agster v. Maricopa County, 422 F.3d 836, 839 (9th Cir. 2005). See also Fed. R. Evid. 501. So does the law of federal or state privilege apply when a mediation occurs while federal and state law issues are pending, the federal claims are then dismissed, and only after the federal claims are dismissed, does a party seeks to introduce evidence from the mediation to prove that a settlement occurred? That’s the issue presented by In Re: TFT-LCD (Flat Panel) Antitrust Litig., No. 14-15916 (9th Cir. 9/1/16).
Sony and HannStar agreed to a settlement proposed by the mediator in an email exchange. HannStar refused to comply. Under California law, evidence of the agreement would be inadmissible, unless the parties had memorialized that the agreement was binding and admissible in evidence, and apparently they did not. At the time of the settlement, mixed questions of federal and state law were pending and under Agster, that meant that the federal law of privileges, rather than California mediation confidentiality rules would apply. By the time that Sony wanted to introduce evidence of the settlement, however, the federal claims had been dismissed, leaving only California claims. Because only California claims remained, the district court denied Sony’s motion for summary judgment, holding California Evidence Code’s mediation privilege bars introduction of settlement demands.
Reversed and remanded. Why? Expectations may be the key. “At the time of mediation, both parties would have expected to litigate both federal and state law issues.” So federal law of privileges applied.
Chief District Judge Lynn dissented, on the grounds that “only state law claims remained at the time Sony sought to admit evidence of the email exchange.”
But doesn’t it make sense to protect the parties’ expectations regarding confidentiality at the time of the mediation?