California Mediation and Arbitration

Mediation Confidentiality: California Mediation Confidentiality Survives New Rule Requiring Reporting Of Professional Misconduct

California Supreme Court Approves New Rule of Professional Conduct On June 2, 2023.

        The California Supreme Court approved a much discussed Rule of Professional Conduct requiring lawyers, without undue delay, to report professional misconduct. 

        Much as lawyer misconduct in the Watergate Scandal resulted in professional ethics requirements and testing in California, the Girardi Affair has triggered a response from the State Bar and the California Supreme Court requiring the reporting of professional misconduct. Fortunately for mediators, the new rule does not override mediation confidentiality.

        Part (d) of the Rule, which is linked here, states: "This rule does not require or authorize disclosure of information gained by a lawyer while participating in a substance use or mental health program, or require disclosure of information protected by Business and Professions Code section 6068, subdivision (e) and rules 1.6 and 1.8.2; mediation confidentiality; the lawyer-client privilege; other applicable privileges; or by other rules or laws, including information that is confidential under Business and Professions Code section 6234."

        BONUS: From Wikipedia:  "An informant (also called an informer or, as a slang term, a "snitch", "rat", "stool pigeon", "stoolie" or "grass", among other terms) is a person who provides privileged information, or (usually damaging) information intended to be intimate, concealed, or secret, about a person or organization to an agency, often a government or law enforcement agency."
"" 

Mediation, Confidentiality, Settlement Agreement: CCA 1/2 Agrees Plaintiff Suing Doctor Failed To Perform Settlement Agreement After Mediation

Including Confidentiality Provision In Settlement Of Malpractice Lawsuit Did Not Violate Public Policy, Because Provision Did Not Prevent Reporting To State Medical Board.

        In Pappas v. Chang and Chang v. Pappas, Nos. A159792 and A160293 (1/2   3/3/22) (Richman, Miller; Kline, conc.), the Court of Appeal affirms the trial court in separate consolidated appeals. In Pappas v. Chang, the court affirms the trial court's denial of Pappas's efforts to enforce a settlement agreement, agreeing that Pappas failed to perform her part of a bargain by executing a confidentiality agreement in return for payment to her of $100,000. And in Chang v. Pappas, the Court of Appeal affirms the trial court's denial of Chang's request to recover attorneys fees, based on Pappas's denial of two requests for  admission.

        Helena Pappas sued Dr. Carolyn Chang, a SF plastic surgeon, for malpractice, and settled in mediation for payment to her of $100,000. However, the settlement agreement provide for execution of further settlement documents to include a waiver of Civil Code  § 1542, and a confidentiality provision. Chang was to pay $70,000.01, and her carrier was to pay $29,999.99. Attorneys, judges, and mediators will know that $30,000 is a magic number in malpractice actions, because settlements greater than $30K trigger a requirement to report to the California Medical Board. Pappas believed Chang was trying to use confidentiality to prevent her  from reporting to the Medical Board, and that would have violated Business and Professions Code §§ 2220.7 and 801.01. Pappas refused to executed a confidentiality provision unless paid an additional $425,000.

        The Court of Appeal reasoned that the way the settlement agreement was written, a confidentiality provision would not have prevented reporting to the Medical Board; that the settlement amount was $100,000; and that as worded, the settlement agreement did not hinder legal reporting obligations. Therefore, the settlement agreement agreement was enforceable, and Pappas failed to perform her  part, so she could not enforce the settlement agreement. Nor was the confidentiality provision severable, since it was agreed to and material.

        Because the requests for admission went to ultimate questions and Pappas denied them in good faith, Chang was properly denied attorney's fees.

        Justice Kline concurred, because in the end, the law had not been stymied. But he wrote separately, "because I feel my colleagues have not adequately described Chang’s and her lawyer’s repeated attempts to violate the Business and Professions Code and the whitewashing of those efforts by the trial judge."

        BONUS: "Blepharoplasty (Greek: blepharon, "eyelid" + plassein "to form") is the plastic surgery operation for correcting defects, deformities, and disfigurations of the eyelids; and for aesthetically modifying the eye region of the face." (Wikipdedia).

        COMMENT: Pappas might have spared some trouble by signing the confidentiality agreement, and receiving the $100,000. Perhaps she felt that she achieved some measure of victory by making her unhappiness with Chang a matter of public record in a published opinion. The concurring opinion gives her some measure of vindication. At the same time, it is now a matter of  public record that Pappas may be unhappy about the outcome of her cosmetic surgery. 

 

Confidentiality, Videoconferencing: What Information Does Zoom Keep?

Do You Know What Information Zoom Has About Your Communications?

        Mediators, arbitrators, litigators, and parties are rightly concerned about the confidentiality of communications. Mediators rely on the mediation confidentiality protections in the California  Evidence Code, sections 1119 et seq, and litigators and arbitrators rely on confidentiality agreements. Today, many of us are using online videoconferencing platforms to communicate, and we also seek assurances that those platforms preserve confidentiality. The widespread use of Zoom led to concerns about how Zoom communications were encrypted, and also led to the use of passwords and waiting rooms to  protect participants from unwanted intruders. And it is common at the beginning of  Zoom conferences,  if not  earlier, to insist that participants agree that they will not take screen snapshots, or record Zoom video or chat.

        But what information does Zoom preserve that might be reached by a government agency or a subpoena?

        There are several online sources that are helpful in answering this question:

        First and foremost, the Zoom Government Requests Guide is the place to go. The Guide discusses types of data Zoom has, data retention practices, preservation requests, U.S. and international government requests for user information, notification to users of requests for user or meeting information, details that must be included in information requests, production of documents, user consent, emergency requests, and expert witness testimony and authentication of  records.

        Zoom provides the following high-level summary of types of data it has: "We obtain data that users provide to us, as well as data that our system collects.  We may also obtain some data from visitors to our marketing websites.  . . .We have not built a mechanism to decrypt live meetings for any purpose, including lawful intercept, and we do not have the means to insert our employees or others into meetings without that person being visible as a participant.  As such, we do not collect or maintain information related to meeting content unless requested by the meeting host, for example, to record and store the meeting in our cloud. Zoom does not sell user data and we have no intention of selling user data going forward."

        Zoom's information about data it has should be read together with its Privacy Statement.

        Our takeaway is that metadata may be kept by Zoom, as well as video, audio, and chat recording that the user decides to store in the cloud. The limitations to accessing such information are set forth in greater detail in the Guide.

        Second, in addition to the policies described on the Zoom website, take a look at the Stored Communications Act, 18 U.S.C. sections 2701-2712. This is a law that addresses voluntary and compelled disclosure of "stored wire and electronic communications and transactional records" held by third-party internet service providers.

        Third, here are some articles still available online, at the time of this post, that are relevant to understanding the accessibility of Zoom's data:

• Dan Zelenko, Nimi Aviad, John Davis, Rukiya Mohamed and Bridget Carr, Anticipate Gov't Subpoenas of Your Zoom Recordings, April 23, 2020, Law360
• Suhauna Hussain, Is Zoom safe to use? Here's what you need to know, April 13, 2020, Los Angeles Times
• Nico Grant and Candy Cheng, Zoom Says Subpoena Is Needed to Work with Law Enforcement, June 5, 2020, Los Angeles Times

Mediation, Confidentiality: Is Your Mediation Confidential?

Mediator Jeff Kichaven Spoke About Whether Mediation Is Confidential To The Orange County Bar.

        On Friday, October 2, 2020, mediator Jeff Kichaven presented a Zoom webinar to the Orange County Bar on the subject: "Guess What? Your Online Mediation Is Not Confidential." Jeff's presentation was jointly sponsored by the ADR section and the Business Litigation section of the OC Bar. (Your blogger chairs the ADR section).

        In his fascinating, and provocative presentation, Jeff contrasted the extremes of mediation confidentiality, of which the antipodes are New York, where there is little  protection, and California, where mediation confidentiality is nearly absolute. Online mediation, more important since the onset of COVID-19, often brings together attorneys and parties in different locations. And this opens up conflict of laws issues: does the law govern where the arbitrator, the courts, the attorneys, or the parties are located? Jeff provided a war story in which the attorneys in a mediation were themselves divided over which laws governed mediation confidentiality.

        Jeff is a severe critic of California's "absolute confidentiality" rules, which he views as a lowering of professional standards, since mediators and attorneys cannot be successfully sued for wrongdoing that occurs during the course of the mediation, for the simple reason that evidence of communications will be inadmissible. Perhaps more controversially, Jeff does not make representations of confidentiality to participants in mediations that he conducts.

    COMMENT: Mediation is a voluntary process. Is there a drafting solution for parties voluntarily seeking mediation confidentiality in high-stakes litigation? Could the parties simply enter into a confidentiality agreement with a choice of law provision, and have the court  enter it as a protective order? It would seem that this would help the parties protect confidentiality of mediation in their lawsuit, but even so they might not be protected if a time came when a third party sought discovery of, for example, a settlement agreement that the  parties had entered into. For readers who are interested in learning more about Jeff Kichaven's thoughts about the confidentiality of mediation, check out this article linked to his website.

Arbitration, Mediation, Confidentiality: Statements Of Director, Who Had Served As Mediator And Arbitrator, Are Admissible In Evidence

Trial Judge Parsed Declaration To Determine Whether Statements Were Made By Judge DickranTevrizian (Ret.) In Capacity As Mediator, Arbitrator, Or Director.

        When an opinion begins, "Leo Tolstoy famously observed that every unhappy family is unhappy in its own way," you can be sure that you are in for a dismal tale. And the reader's expectations would not be disappointed in the case of Drake Kennedy v. Brian Kennedy & Regency Outdoor Advertising, Inc., B294398 (2/1  7/26/19) (Weingart, Johnson, Bendix) (unpublished). The case is part of the ongoing saga of the internecine legal strife between brothers Drake and Brian Kennedy, stemming from the family billboard business they co-own. The substance of this case concerns brother Drake's obtaining of an order appointing a receiver for sale of the family business, affirmed on appeal.

        But it is not the substance of this case with which this post is concerned. Nope, we're focused on a narrow evidentiary issue concerning mediators, arbitrators, and confidentiality.

        Judge Tevrizian had been appointed as a third director, presumably to avoid board statelemate of brothers Drake and Brian, and to help with the sale of the brothers' business. "Given Brian's repeated refusal to respect the board's oversight role, Judge Tevrizian resigned as a director as of September 25, 2018. The resignation was 'noisy,' that is, accompanied by an explanation of reasons set forth in the board minutes . . . " Those reasons included inability to obtain financial information, inability to get access to company books and records, refusal of management to comply with requests for information; and, "disrespect and lack of appreciation exhibited by senior management of the Company . . . " Once Judge Tevrizian resigned, the board was again deadlocked.

        Judge Tevrizian's statements -- some of them -- were admitted into evidence. Brother Brian objected that Judge Tevrizian's declaration should have been excluded, because Evid. Code section 703.5 prohibits arbitrators and mediators from testifying "as to any statement, conduct, decision, or ruling, occurring at or in conjunction with" an arbitration or mediation "in any subsequent civil proceeding." And, "Section 1121 prohibits mediators or anyone else from submitting to a court, and a court from considering, 'any report, assessment, evaluation, recommendation, or finding of any kind by the mediator concerning a mediation conducted by the mediator,' . . . "

        In fact, Judge Tevrizian had also acted as a mediator/arbitrator. But the trial court parsed the declaration, striking statements related to Tevrizian's role as an arbitrator or mediator, and "expressly noted it was receiving the remaining portions because they related to Judge Tevrizian's role as a company director."

        The lesson we draw from this (albeit unpublished) opinion is that if the court can sort out the different roles a person may play, and determine which statements were not made in that person's capacity as a mediator or arbitrator, then the remaining statements may be admissible in evidence. The Court of Appeal rejected the argument that the statements made by Judge Tevrizian in his different roles were so inextricably intertwined that they could not be sorted, and thus rejected the argument that the statements were cloaked in privilege. If Judge Tevrizian's roles and statements could not have been separated and sorted, then the outcome on the evidentiary issue could have been different.

William Blake. The Body of Abel Found by Adam and Eve. 1826. Wikimedia Commons. Public Domain.

Mediation Confidentiality: Senate Bill 954 Will Require Attorneys To Inform Clients Of Confidentiality Restrictions In Mediation

Senate Bill Requiring Disclosure Of Confidentiality Restrictions Is A Compromise That Does Not Require Loosening Of Confidentiality Restrictions.

    As a consequence of California's Evidence Code provisions, and the California Supreme Court's decision in  Cassel v. Superior Court, 51 Cal.4th 113 (2011),  mediation confidentiality prevents a party to a mediation from using confidential information obtained in the mediation to sue his or her attorney for alleged professional negligence occurring at the mediation. Senate Bill 954, which is expected to soon become law, will require attorneys, except in the case of a class or representative action, to explain mediation confidentiality restrictions to their clients to a mediation or mediation consultation and to obtain written acknowledgment from the client that he or she has read and understands the confidentiality restrictions.

     After seemingly endless debate about whether confidentiality restrictions should be loosened to allow clients to use information obtained in mediation to sue their attorneys for malpractice, Senate Bill 954 can be viewed as a compromise or perhaps a way to finesse the issue. It doesn't change the existing law concerning restrictions on confidential information obtained in mediation. Nor does it expand the client's rights. By requiring the client's written acknowledge that the client has read and understands the restrictions, Senate Bill 954 simply makes the client aware of the restrictions, resulting, hopefully, in informed consent. And if the client is really unhappy with the restrictions on the use of confidential information, the client can (theoretically, perhaps), choose not to mediate.

    The Senate Bill includes safe harbor language that will constitute adequate disclosure. Attorneys and mediators might want to take a look at the safe harbor language now, and even begin using it. Evidence Code section 1129(d) would contain the safe harbor language, and that proposed language can be viewed by clicking the link to Senate Bill 954 above.

Mediation Confidentiality: An Update On The Work Of The California Law Review Commission

Paul J. Dubow Provides Us With The Update.

 

        Paul J. Dubow is an experienced mediator and arbitrator  in San Francisco.  Mr. Dubow writes often about mediation and arbitration topics, serves as an editor for California Litigation, and has authored the arbitration section of the  annual update of California law for both the Litigation and Business Law sections of the State Bar of California (now, the California Lawyers Association) and the arbitration and mediation updates on the California Dispute Resolution Council website.  Mr. Dubow has also been assiduously following the California Law Review Commission's study of mediation confidentiality.  He has generously provided us with an update on the legislative status of efforts to create exceptions to mediation confidentiality:

 

 

For the past five years, the California Law Review Commission has been studying whether to create an exception from the strict confidentiality requirements of the Evidence Code that would permit admission of mediation communications in cases where clients are suing their attorneys for malpractice committed during the mediation. At the end of 2017, the Commission made a recommendation that permitted the admission of such evidence. It did so, notwithstanding the objections of the Judicial Council, the California Judges Association, the Consumer Attorneys of California, the California defense bar, the California Dispute Resolution Council, and about 30 other organizations. The only organization that supported it was the California Conference of Bar Associations, the organization that spurred the study in the first place. Normally, a proposal by the Commission is introduced as a bill in the Legislature at its next session and, in most cases, the bill eventually becomes law. The deadline for introducing legislation this year was February 16, but no bill was introduced. This may have been the result of the almost uniform opposition to the proposal. Instead, Senator Wieckowski introduced SB 954, which will require an attorney to inform a client about the confidentiality restrictions set forth in Evidence Code Section 1119 and obtain the client's written consent to the restrictions before agreeing to mediate. The bill is still a work in progress and we expect that there will be several amendments to it.

 

HAT TIP to Paul!

Confidentiality: When Non-Confidentiality Can Sometimes Facilitate Resolution Of A Dispute

Confidentiality and Sexual Harassment.

        Peter J. Marx, an experienced mediator and arbitrator affiliated with Alternative Resolution Centers (ARC) has written a short article entitled, "Confidentiality:  Special Considerations In Sexual Harassment Cases."  The article is available on the ARC website at this link.

        Mr. Marx recounts a mediation involving alleged date-rape, alcohol, and consent issues.  The key to settlement was a written apology of sorts, acknowledging inappropriate behavior, that the plaintiff was allowed to disseminate.  Mr. Marx concludes:  "[N]on-confidentiality may be explicitly utilized as a significant and in a given case essential aspect of the resolution of sexual harassment claims."  A rare use of non-confidentiality in a sexual harassment case!

Mediation Confidentiality: 4/1 CCA Holds That Mediator's Purported Threat To Tell Judge Plaintiffs Were Reason Case Did Not Settle Is Covered By Mediation Privilege

The Case, Though Unpublished, Is Timely, With California Law Revision Commission Considering Changes In Mediation Confidentiality.

        Chodosh v. Trotter, et al., D070952 & D070953 (4/1  9/13/17) (Benke, Haller, Dato) (unpublished) offers us a veritable mini-treatise on the mediation confidentiality privilege -- most timely, given ongoing efforts by the California Law Revision Commission to create exceptions to mediation confidentiality.

         In the trial court, members of a mobile home park sued the mobile park owner's Association alleging special assessments had been improperly assessed against plaintiffs.  After Judge Stock, the trial judge, retired and joined JAMS, the case was reassigned to Judge Moss, whereupon the plaintiffs moved to disqualify Judge Stock and to void her order for a jury trial retroactively.  Plaintiffs claimed that the mediator, Justice Trotter (ret.), allegedly threatened, in front of the Association's directors, to tell Judge Stock, "that plaintiffs were the reason the case did not settle."  Plaintiffs further complained about "the purported failure to disclose Judge Stock was joining JAMS."  Judge Moss denied the requests, plaintiffs filed a petition for writ of mandate to vacate his ruling, and the writ was denied.  Plaintiffs then filed the Chodosh lawsuit against Justice Trotter and JAMS for numerous claims, alleging mediator misconduct.  The trial court granted defendants' anti-SLAPP motion, and found the statements allegedly made by Justice Trotter to be inadmissible, because they were covered by the mediation privilege, quasi-judicial immunity, and the litigation privilege.  

        In their appeal, plaintiffs made many ingenious arguments in their attempt to pierce the mediation confidentiality privilege.  For example, they argued that a mediation had not occurred, because the mediator was not "neutral."  They argued that the mediation violated due process and led to an absurd result.  They claimed without evidence that the mediator's conduct was criminal.  They argued that defendants, by their silence, conceded illegality through an adoptive admission.  They argued that the trial judge had improperly sent the matter to Justice Trotter, at a time when she purportedly was engaged in discussions to move to JAMS after retirement.  They argued that they were extorted.    None of these arguments, however, held traction, and thus, the trial court's orders and judgment were AFFIRMED.   Chodosh shows once again that it is nearly impossible to pierce mediation confidentiality in order to build a case based on alleged mediator misconduct.

     COMMENT:  One of the more recondite provisions relied upon by plaintiffs to seek the disqualification of Judge Stock was California Code of Civil Procedure, section 170.1(a)(8), which supports disqualification if the judge has an arrangement concerning prospective employment as a dispute resolution neutral and directs the parties to participate in dispute resolution with the entity with which she is seeking employment.  There are good reasons for such a provision.  Here, however, it appears that there was a lack of evidence to show (a) that the trial judge had directed the parties to mediate with JAMS; and (b) that she was negotiating with JAMS while the matter was being mediated at JAMS.

Mediation and Arbitration Confidentiality: Acquaint Yourself With The EU-U.S. Privacy Shield If You Are Involved With Data Transfers From The EU To The US

The European Commission Has Deemed The Privacy Shield Framework Adequate To Enable Data Transfers To US Under EU Law.

     On July 12, 2016, the European Commission adopted the EU-U.S. Privacy Shield.  I am blogging about this because it relates to transfer of data from the EU to the U.S., and this impacts legal matters affecting the privacy rights of EU citizens, including mediations, arbitrations, and litigation in which a data transfer from the EU to the U.S. is required.  Also, the Privacy Shield provides for binding arbitration as one of several dispute resolution mechanisms for resolving privacy issues.

     The International Trade Administration of the US Department of Commerce has  created a website with information about the EU-U.S. Privacy Shield Program, intended to protect data flows from the EU to the US, and thus to protect the privacy of EU persons.  The protections offered by the Privacy Shield Program are more stringent than protections offered by an earlier Safe Harbor program.  Click here for a link to FAQs about the Privacy Shield program.

     United States companies that join the Privacy Shield Framework can benefit from an “adequacy determination”, meaning a determination that they have joined and committed to a framework deemed adequate by the European Commission to comply with EU data protection requirements when transferring personal data (e.g., names, addresses, telephone numbers) from the EU to the US.

     No doubt the push to satisfy EU concerns about the privacy of EU citizens was motivated, at least in part, by Edward Snowden’s revelations concerning the NSA surveillance of intelligence available in Internet communications.  Snowden’s choice to disclose secret information about US surveillance triggered a debate on privacy and surveillance.

     The EU-U.S. Privacy Shield provides a number of dispute resolution routes, in case a citizen of the EU believes his or her privacy rights have been violated.  These routes include contacting the company directly, going to an independent dispute resolution provider, submitting to EU Data Protection Authorities (DPAs), and binding arbitration.  In the case of national security issues, an ombudsman independent from US intelligence services is to be available. 

     Arbitration “is available to an individual to determine . . . whether a Privacy Shield organization has violated its obligations under the Principles as to that individual, and whether any such violation remains fully or partially unremedied.”  In short, the purpose of arbitration is to provide an equitable, rather than a monetary remedy, for an individual whose privacy rights have been violated.  “Once invoked, the individual forgoes the option to seek relief for the same claimed violation in another forum, except that if non-monetary equitable relief does not fully remedy the claimed violation, the individual’s invocation of arbitration will not preclude a claim for damages that is otherwise available in the courts.”  See Arbitral Model, Annex II, pp. 12 to 16 of 128. 

     Because the binding arbitration dispute resolution mechanism exists to protect privacy, it would make little sense if the Privacy Shield did not protect the confidentiality of the arbitration proceeding itself.  In fact, “Materials submitted to arbitrators will be treated confidentially and will only be used in connection with the arbitration.”  Furthermore, individual-specific discovery “will be treated confidentially by the parties and will only be used in connection with the arbitration.”