Monday, August 30, 2010

When Can the Mediator Testify?

If there is a dispute about the contents or the existence of an agreement of the parties following a mediation, is it ever appropriate for the mediator to testify?  The California Second District Court of Appeal, in Radford v. Shehorn, said that such testimony would only be allowed if the parties agreed to it, meaning that it is hard to think of a situation where testimony by the mediator would ever be permissible or useful.  (But see this post by Vickie Pynchon on another (unpublished) case where the mediator was permitted to testify that a written agreement the insurance company was seeking to enforce conformed to what the parties agreed during the mediation.)

In the Radford case, there was a dispute between two sisters about whether the parties entered into a binding agreement at the mediation.  The disgruntled sister claimed she had only consented to the second handwritten page of a document prepared during the mediation, which was titled "settlement agreement," but which she contended was not intended to be binding unless and until a more formal agreement was prepared.  She denied that the first page of the document, which contained statutory language making the agreement enforceable, was part of the agreement that she signed.  Her sister introduced a declaration by the mediator stating that both pages of the document were distributed to the parties, therefore implying that their signatures on the second page applied to both pages. 

The Court of Appeal held that the first page did contain the necessary language that waived confidentiality, and thus would permit the mediator to testify.  Nevertheless, the Court held that the mediator was still barred from testifying about whether that page was included in the agreement the parties signed.  That would breach California's strict statute making the mediator incompetent to testify as to what occurred at the mediation.  In other words, if there was a valid agreement waiving confidentiality, the mediator could have testified.  But the mediator could not help prove whether there was in fact a valid agreement waiving confidentiality. All was not lost for the sister who supporting enforceability of the agreement, however, because the Court of Appeal was able to construe the remaining admissible declarations, including the declaration by the objecting sister, in such a way as to affirm the result below.

The lesson is that the parties may rely on the mediator to help them arrive at an agreement, but cannot count on the mediator's help to prove that an agreement was in fact entered into.  If the parties want the agreement to be enforceable, they should take adequate precautions to make sure it stands on its own.

(photo from aBitofAll)

Wednesday, August 11, 2010

The Value of Trials

As trials in civil cases have become increasingly rare, in part due to the rise of ADR, we sometimes forget that trials can serve a profound purpose.  There are few processes that can "decide" a contested factual issue like a trial. 

Below is a video of David Boies debating Tony Perkins, head of the Family Research Council.  Boies's explanation of  what happened at the recent Proposition 8 trial, makes me proud to call myself a trial lawyer, and reminds us of what courts can do at their best.  Even if you think the courtroom was not an appropriate place to determine the constitutional validity of a state initiative denying gay people the ability to marry, you have to admire trial lawyer Boies's description of the power of trials to expose the weaknesses of positions that are easy to support on, say, television.  By contrast, in a court of law, as Boies states, you have to support your opinions with actual evidence, and defend them under cross-examination:  "The witness stand is a lonely place to lie."  The reason Boies and Ted Olson won the Prop 8 case at trial was because their side had numerous empirical studies and other evidence showing that gay marriage has no harmful effects on society.  The other side seemed to be relying mainly on faith, which doesn't usually stand up well against an onslaught of empirical evidence.  (On the other hand, Clarence Darrow lost the Scopes case, which provided a similar opportunity for science to confront faith, but Darrow's position was eventually vindicated in subsequent court cases.)

Gay marriage would present an interesting issue to test in a mediation-like setting, that could perhaps open people up to consider opposing points of view.  I don't know what result would have been produced by a mediation, as opposed to a trial, of the validity of Proposition 8.  Perhaps a mediated result would have led to a solution that would command more of a consensus of public opinion.  But mediation does not produce law in the same way that appellate review of this trial result will produce law, and mediation would not have provided the plaintiffs' side in this case with the same ability to expose the factual weaknesses of their opponents' position.  In mediation, as on tv, parties can cling to false positions, and all participants' feelings are entitled to some weight.  On the other hand, I have been involved in some mediations in which parties did a pretty effective job of confronting the other side with evidence, or demonstrating the other side's lack of evidence.

As I have mentioned in previous posts, mediators sometimes seem to forget that we need trials to provide a measuring stick to assess the potential value of mediated claims.  We need trials to create law.  And we need trials to decide important issues that could perhaps be resolved in other ways, but don't seem to get "decided" in any other way.  Mediation should not be seen as a means of "replacing" trial.  Instead it should be seen as a way to help parties avoid or reduce the costs of litigation, and in appropriate cases (i.e., most cases), lead to a negotiated settlement instead of trial. 

In case it is not clear from this and other posts, I should reiterate that I remain a big proponent of mediation.  I enjoy serving as a mediator, and I think that in the vast majority of cases, mediation can reach an outcome that is better for both sides than trial.  That is the goal anyway.  But mediators should be aware of the limitations of the process, and keep in mind that some disputes are best resolved by more traditional means.  In fact, one way to encourage a settlement in a mediation is to remind the parties that if they go to trial, they are going to have to support their position with evidence that is persuasive to the fact-finder.

Sunday, August 1, 2010

More on ADR vs. Court

An article in the Harvard Negotiation Program newsletter (summarized here) reflects a common view that mediation and arbitration need to be "sold" more as an alternative to litigation.  In this view, it is seen as a problem that parties to business contracts often do not anticipate the likelihood of conflicts arising in the course of their relationship, and therefore fail to include as often as perhaps they should, clauses providing for alternative dispute resolution in the event of problems.  Because parties fail to anticipate the potential need for ADR, litigation becomes the default alternative when a conflict occurs.

This way of looking at a problem--here the problem of choosing a method of resolving disputes--itself reflects a view of the world as a series of conflicts.  In this case, the conflict is between litigation and ADR.  ADR practitioners tend to see litigation as "bad" and mediation or arbitration as "good."  Therefore they favor mechanisms to avoid the evils of litigation and steer disputes toward the better methods of ADR; they sometimes disparage litigation so as to encourage disputants to choose "better" methods of resolving disputes.  Perhaps some see themselves as competitors to the court system, and are simply trying to sell their services by painting their product as superior to the dispute resolution product offered by the courts.

I think this view is shortsighted and wrong.  As noted in my previous post, alternative dispute resolution may work best in conjunction with the court system, not in opposition to it. Moreover there are some practical difficulties with recommending pre-dispute arbitration clauses, or even mediation clauses, in commercial contracts, that should be considered before advising parties to limit their ability to file a complaint in court.  Mandatory pre-dispute arbitration clauses force parties to waive rights in advance of any dispute, most importantly the right to trial by jury but also the right to appeal. ADR proponents often denigrate the value of those rights because they come with some fairly significant costs.  They forget that the reason for protecting those rights is not necessarily that disputants want a jury trial or an appeal.  Rather, those rights provide parties with important legal protections that may guide the resolution of a dispute, and those rights also offer substantial leverage in any potential settlement.  To deny or delay a party the ability to sue, or threaten suit, in the event of a dispute, is to take away an important tool.

The court system is the foundation of ADR (you can't have an "alternative" system without the original); litigation should not be treated as an unwelcome competitor to ADR.  To remove the support of the court system from dispute resolution would be like sending people into the wilderness without a compass.  We take for granted a legal system that provides a frame of reference that helps answer such questions as whether a particular action constitutes a breach of contract.  We trust arbitrators because they agree to follow the law, even if we don't have the same ability to enforce their adherence to the law.  We often base settlement discussions in mediation on an effort to approximate the result that would be obtained at trial, minus the cost and risk.  If we remove that framework, we deprive parties of an authoritative source for answering such questions.  Without reference to legal rules or norms, it would be difficult to arrive at negotiated outcomes that they accept as fair.  That means it should not be the job of arbitrators or mediators to discourage people from using the courts.  We should instead be encouraging people to preserve that option when appropriate; but also to resolve disputes more peaceably or more cheaply when it is advantageous for them to do so.

Advising parties to disarm themselves before a dispute arises is like advising nations to disband their armies in advance of any conflict.  In some cases, both parties might be better off if diplomacy were the only tool they had for resolving conflict, but in other cases disarmament would grant a license to bad actors to act badly.  Some conduct calls for a declaration of war.  A summons sends a much more powerful message than an invitation to talk about the problem.  It tells the opposing party not only that you have a problem with their actions, but that they may have crossed the line, and that they may be facing serious legal repercussions if they do not make amends.  Why wouldn't a party entering into a business deal want to keep that hammer in reserve?

Forcing parties in advance of a dispute to choose arbitration or mediation may also, paradoxically, make some cases more difficult to settle.  Especially with arbitration clauses, a requirement to initiate alternative dispute resolution processes rather than allowing a disgruntled party the option of filing suit in court may send the case down the path toward choosing arbitrators and setting hearing dates.  Filing a complaint, on the other hand, may send a case to a preliminary conference with a judge who is likely to suggest, or may even be required to suggest, that the parties initiate some settlement discussions.  It's not always clear, therefore, that litigation is going to be more adversarial than arbitration.  These considerations do not apply as strongly to pre-dispute mediation clauses, the only cost of which may be to delay somewhat some inevitable conflicts.  At worst, a mediation clause merely mandates diplomacy in advance of declaring war.  In general, diplomacy should be encouraged, even if the prospects for resolving a dispute by talking about it are slim.

Most cases that are filed in court are eventually settled, so maybe litigation is the true alternative form of dispute resolution. While litigation does provide many opportunities to exacerbate disputes and impose costs on the parties, litigation also provides many opportunities to negotiate resolution of issues involved in the case.  Litigation should not be lightly cast aside as a pathway to dispute resolution. Instead, we should work on improving the court system so that it better incorporates the advantages of alternative dispute resolution methods.