The California Supreme Court has ruled that private attorney-client communications related to a mediation remain confidential communications protected by California’s Evidence Code even during a legal malpractice lawsuit between the parties. In Cassel v. Superior Ct., No. S178914, (Cal. Jan. 13, 2011) Michael Cassel sued attorneys who represented him during a mediation settlement for malpractice, breach of fiduciary duty, fraud and breach of contract. Cassel alleged that his attorneys induced him to settle for less than the case was worth and less than he said he was willing to accept. The attorneys moved to exclude all evidence of private attorney-client communications made in preparation for and during the mediation, including communications related to mediation strategies and any attempts to persuade Cassel to reach a settlement. A trial court granted the attorneys’ motion. An appellate court reversed the ruling of the trial court reasoning that California’s mediation confidentiality statutes were not intended to protect attorneys against malpractice claims, but instead intended to protect mediation participants. The appellate court stated, The mediation confidentiality statutes do not extend to communications between a mediation participant and his or her own attorneys outside the presence of other participants in the mediation. The appellate majority also ruled that a malpractice suit removed the attorney-client privilege and prevented attorneys from using the confidentiality statutes as a shield against their former clients. Cassel’s former attorneys then appealed to the California Supreme Court. The Supreme Court first turned to the plain language of Section 1119 of the California Evidence Code. The Court noted that in drafting the provision the legislature “broadly provided for the confidentiality of things spoken or written in connection with a mediation proceeding” in order to “encourage the candor necessary” for successful mediation settlements. The Court also relied on an earlier ruling that the plain language of Section 1119 extends protection to all communications “for the purpose of” or “pursuant to” a mediation, including private communications between a disputant and his or her counsel. The Court next clarified that while the term “participant” was not defined in the statute, there was no reason to define the term so narrowly as to include only parties to mediation and exclude their respective legal counsel as separate participants. The Supreme Court disagreed with the appellate court’s holding that a party to mediation and his or legal counsel constituted a single “participant.” According to the California Supreme Court, legal counsel must agree to waive confidentiality protections for communications made under Section 1122 of the California Evidence Code. The Supreme Court also stated, application of the mediation confidentiality statutes to legal malpractice actions does not implicate due process concerns so fundamental that they might warrant an exception on constitutional grounds. According to the court, We therefore conclude that the evidence the trial court ruled nondiscoverable and inadmissible by reason of the mediation confidentiality statutes was not, as a matter of law, excluded from coverage by those statutes on the mere ground that they were private attorney-client communications which occurred outside the presence or hearing of the mediator or any other mediation participant. Instead, such attorney-client communications, like any other communications, were confidential, and therefore were neither discoverable nor admissible — even for purposes of proving a claim of legal malpractice — insofar as they were “for the purpose of, in the course of, or pursuant to, a mediation . . . . The California Supreme Court held Cassel’s private communications with his attorneys related to the mediation were confidential communications protected by California’s Evidence Code and could not be discovered during a legal malpractice lawsuit between the parties. In his concurrence, Justice Chin wrote, The court holds today that private communications between an attorney and a client related to mediation remain confidential even in a lawsuit between the two. This holding will effectively shield an attorney’s actions during mediation, including advising the client, from a malpractice action even if those actions are incompetent or even deceptive. Attorneys participating in mediation will not be held accountable for any incompetent or fraudulent actions during that mediation unless the actions are so extreme as to engender a criminal prosecution against the attorney. (See maj. opn., ante, at p. 28, fn. 11.) This is a high price to pay to preserve total confidentiality in the mediation process. He went on to state the outcome was a matter for the California Legislature, not the courts, to address, Accordingly, I agree with the majority that we have to give effect to the literal statutory language. But I am not completely satisfied that the Legislature has fully considered whether attorneys should be shielded from accountability in this way. There may be better ways to balance the competing interests than simply providing that an attorney’s statements during mediation may never be disclosed. For example, it may be appropriate to provide that communications during mediation may be used in a malpractice action between an attorney and a client to the extent they are relevant to that action, but they may not be used by anyone for any other purpose. Such a provision might sufficiently protect other participants in the mediation and also make attorneys accountable for their actions. But this court cannot so hold in the guise of interpreting statutes that contain no such provision. As the majority notes, the Legislature remains free to reconsider this question. It may well wish to do so. Technorati Tags: ADR, law, mediation

The 82nd Texas Legislature convened on Tuesday, January 11, 2011. Prefiling of bills before the Legislature began on November 8, 2010. According to the State Bar of Texas, a proposed new Chapter 161 of the Civil Practice and Remedies Code is in the works. The Uniform Collaborative Law Act, “Relating to the resolution of certain disputes by collaborative law procedures,” has not yet been assigned a bill number. A copy of the Uniform Collaborative Law Act drafted by the National Conference of Commissioners of Uniform State Law and approved in July 2009 may be viewed here. As of October 27, 2010, only Utah has enacted the law, but Texas is one of 13 states or U.S. territories with an introduction planned before its legislature this year. A recent nationwide legislative activity map is available here. In 2001, the 77th Texas Legislature was the first in the nation to pass a Collaborative Law Statute, § 6.603 of the Texas Family Code. You may monitor bills as they move through the Texas Legislature here. Additionally, you may view individually filed House and Senate bills. The last day of the regular Texas legislative session will be Monday, May 30, 2011. An 82nd Texas Legislature “Dates of Interest” calendar is available here. Stay tuned to Disputing for updates regarding legislative bills affecting ADR in Texas. Technorati Tags: arbitration, ADR, law

The Dallas Court of Appeals has vacated an arbitration award because the arbitrator failed to disclose that he served as arbitrator in another case involving one party’s representative and a related company. In Alim v. KBR (Kellogg, Brown & Root) – Halliburton, No. 05-09-00395-CV, (Tex. App. – Dallas, Jan 10, 2011), Mohammad Alim was employed by KBR (Kellogg, Brown & Root) – Halliburton (“KBR”) and filed “an arbitration claim for employment discrimination, breach of contract, and retaliation” against KBR pursuant to Halliburton’s Dispute Resolution Plan. The plan required employees of Halliburton and its subsidiaries to submit employment disputes to binding arbitration before a neutral chosen by the parties. The plan also expressly stated it was governed by the Federal Arbitration Act (“FAA”). The American Arbitration Association (“AAA”) appointed a neutral to the case who attested he performed a conflicts check, none of the party representatives appeared before him in the past and he fulfilled his duty to disclose “in accordance with the Rules of the [AAA], Code of Ethics for Commercial Arbitrators and/or all applicable statutes pertaining to arbitrator disclosures.” When arbitration began, however, the selected neutral admitted to “coming across” KBR’s party representative and attorney in the past. At the close of arbitration, the arbitrator issued an award denying all of Alim’s claims. Alim made an objection to the AAA based on the arbitrator’s past relationship with KBR’s representatives. KBR responded the relationship “was so attenuated and immaterial that it did not give rise to an obligation to disclose,” and stated Alim waived his right to object when he failed to do so at the outset of the arbitration. Alim filed a petition before a trial court to vacate the award. KBR counterclaimed with a motion to confirm the award and raised a defense of waiver to Alim’s petition. The trial court then heard evidence in the matter. The arbitrator testified that his statement at the beginning of arbitration was not meant to amend his written disclosure, he performed his conflicts checks from memory and he had no recollection regarding how many cases he arbitrated in the past in which Halliburton was a party. The trial court denied Alim’s petition to vacate the award and signed KBR’s motion to confirm. Alim then appealed to the Fifth District of Texas Court of Appeals. The Dallas Court began by stating, We review the trial court’s order de novo, apply the FAA to substantive matters, and follow Texas law for procedural matters. According to the court, Under the FAA, evident partiality of the arbitrator is a substantive ground for vacating an arbitration award. 9 U.S.C. § 10(a)(2). A neutral arbitrator exhibits evident partiality if he does not disclose facts that might, to an objective observer, create a reasonable impression of the arbitrator’s partiality. Burlington N. R.R. v. TUCO, Inc., 960 S.W.2d 629, 636 (Tex. 1997); Thomas James Assocs., Inc. v. Owens, 1 S.W.3d 315, 321 (Tex. App.—Dallas 1999, no pet.) (extending TUCO to arbitrations under the FAA). In TUCO, the supreme court emphasized that “evident partiality is established from the nondisclosure itself, regardless of whether the nondisclosed information necessarily establishes partiality or bias.” TUCO, 960 S.W.2d at 636 (emphasis original) (citing Commonwealth Coatings Corp. v. Continental Cas. Co., 393 U.S. 145, 147 (1968)). The court held that the arbitrator’s failure to disclose, was a fact that might, to an objective observer, create a reasonable impression of partiality. The nondisclosure of that fact—and the failure to amend or correct his answer to the question specifically inquiring as to that fact—constitutes evident partiality and is grounds for vacating the arbitration award under the FAA. See TUCO, 960 S.W.2d at 636. Next, the Dallas Court dismissed KBR’s waiver defense since the arbitrator’s comment did not establish “Alim had knowledge of the undisclosed facts sufficient to support a finding that Alim intentionally waived his right to object,” or “acted inconsistently with claiming that right.” Additionally, KBR offered no evidence to establish otherwise. Because the arbitrator’s failure to disclose his past relationship with KBR’s representatives constituted evident partiality and there was no evidence to support a waiver defense, the Dallas Court of Appeals reversed the trial court’s order, vacated the arbitration award and remanded the case. Technorati Tags: arbitration, ADR, law

Carrie Menkel-Meadow, A.B. Chettle, Jr. Professor of Dispute Resolution and Civil Procedure at Georgetown University Law Center and Chancellor’s Professor of Law at the University of California Irvine School of Law, recently published The NLRA’s Legacy: Collective or Individual Dispute Resolution or Not?, ABA Journal of Labor & Employment Law, October 19 2010; UC Irvine School of Law Legal Studies Research Paper No. 2010-28. In her article, Professor Menkel-Meadow reviews the effect the National Labor Relations Act has had on alternative forms of dispute resolution in the labor and employment context. Here is the abstract: In this brief essay I review the legacy of the NLRA for dispute resolution – which is a mixed legacy, for both employment and labor rights, as well as for other areas of human disputing. The processes which grew around labor rights, including collective bargaining, negotiation, arbitration, mediation, med-arb and other “impasse” breaking techniques are good developments, demonstrating that there are other forms of dispute resolution, rather than winner-take-all litigation, brute struggles of power within “unassisted” negotiation, or worse, violent conflict. Labor processes, beginning with collective bargaining and grievance arbitration that became hybridized and more complex, such as grievance mediation and med-arb, were important innovations that spawned a whole new field in dispute resolution – dispute system design. But, in what many regard as a distortion of using alternative processes to reduce the contentiousness of litigation, or to save costs, or to serve some other (usually, employers’) interests, arbitration placed in mandatory, pre-dispute contracts of employment (and now all other kinds of contracts) and then interpreted to be the only form of dispute resolution available, is a controversial legacy which is hardly producing labor “peace.” Indeed, the very goals of “collective” employment rights may be eroded as rulings from non-union individual employment matters (and commercial contracts more generally) are being “blended” with and eviscerating what were often intended to be collective rights. The legal processes that have developed around the separation of legal concepts and consciousness of “employment” (seen as individual rights) versus labor (seen as collective rights) is one of the major themes of this essay. In this examination of the NLRA’s legacy it is important to recognize how much processes used to deal with labor-management relations have given us, but also how different processes for different purposes might be essential for producing not only labor peace, but labor justice. As I have argued about processes in general – process pluralism – process choice and variety may be essential for delivering some form of justice in different contexts. Labor relations might benefit from learning that lesson – one size will not fit all, including limited (under current law and practice) labor negotiation and bargaining strategies, “mandatory” commitment to grievance or employment arbitration in different contexts, whether contractual or statutory, and in my view, insufficient attention to mediation, for both collective and union-management, as well as individual, issues and disputes. The article may be downloaded (without charge) from Social Science Research Network. Technorati Tags: ADR, law, mediation, arbitration