In Its Discretion, Court May Determine That A Voluntary Mediation Was Reasonably Necessary To The Conduct Of The Mediation.
"Mediation costs are not listed among the costs that are expressly allowable or expressly not allowable. (Code Civ. Proc., section 1033.5, subds. (a), (b).)" Berkeley Cement, Inc., v. Regents of the University of California, F073455, F073586 (5th Dist. 1/7/9) (Hill, Detjen, Snauffer) (slip. op. at 35). However, in its discretion, a court may determine that a cost item is recoverable if "reasonably necessary to the conduct of the litigation rather than merely convenient or beneficial to its preparation." Court-ordered mediation, for example, for cases involving less than $50,000, may be the easy case, because if the court orders mediation, then it is reasonably necessary to the conduct of the mediation. And in fact, an earlier case so held. Gibson v. Bobroff, 49 Cal.App.4th 1202 (1996) (cost award for court-ordered mediation could be made under discretionary provision of costs statute, Code of Civ. Proc., section 1033.5, subd. (c)(4)).
What about the harder case, which Gibson did not decide: "whether a party prevailing after a trial which is preceded by unsuccessful voluntary mediation would be entitled to such costs." Id. at 1209.
Berkeley Cement now holds that "mediation fees incurred for mediation that was not ordered by the court are not categorically nonrecoverable as 'not reasonably necessary to the conduct of litigation.'" (slip. op. at 37). In other words, it's up to the court, acting within its discretion, to determine based on the facts and circumstances, whether the voluntary mediation was reasonably necessary to the conduct of the litigation. In Berkeley Cement, the mediation fee award included $7,500 to University, representing 1/2 of the $15,000 mediator's fee, for a mediation canceled by Berkeley Cement on short notice, for which the mediator could not fill the time slot with a replacement, making the fee nonrefundable.
COMMENT: We can see this discretionary rule generating future fee disputes. "Reasonably necessary" based on the facts and circumstances, within the discretion of the court, is not a bright line rule. In the case of a court-ordered mediation, the rule is easier to apply, because the parties, while they can offer input that the court should consider in deciding whether to order the case to mediation, may themselves readily view mediation ordered by the court as reasonably necessary to the conduct of the litigation.
Cost-shifting of the mediation fee raises issues for the mediator. Mediator fees can be expensive, and thus, cost-shifting can add to the risk of the unsuccessful party if the mediation fails, or embolden a party that believes it has the upper hand. While attorney fee disputes often end up driving litigation, attorneys and parties may not be focused on cost-shifting of mediator fees and administrative costs incurred in an unsuccessful mediation. So what should the mediator tell the parties, especially if a party is unrepresented. It is not the mediator's role to offer legal advice, but the mediator can certainly educate a party or counsel if that will be helpful to move the matter toward resolution. Perhaps the best rule for the mediator to follow is to consider the facts and circumstances, and educate a party or counsel about the risk of cost-shifting if that seems reasonably necessary (or useful) for resolving the mediation – similar to the rule the court applied for shifting the cost of the mediation fee in Berkeley Cement.
Comments