Ore. Mediation Confidentiality Law Gets Narrow Reading

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By Samson Habte

Dec. 11 — A client who filed a malpractice suit alleging his attorney mishandled the client's case while it was being mediated may introduce evidence of his private discussions with the lawyer outside of the actual mediation sessions, the Oregon Supreme Court declared Dec. 10.

The decision contrasts with rulings from other states where courts have found that their jurisdiction's mediation confidentiality statute prevents clients and lawyers alike from using mediation-related communications to prove or defend against a malpractice claim. E.g., Cassel v. Superior Court, 244 P.3d 1080, 27 Law. Man. Prof. Conduct 47 (Cal. 2011); Grubaugh v. Blomo, 359 P.3d 1008, 31 Law. Man. Prof. Conduct 568 (Ariz. Ct. App. 2015).

The opinion from Chief Justice Thomas A. Balmer resolves a question of first impression on the scope of Oregon's mediation confidentiality statutes—which, the court said, prevent a client who accuses a lawyer of mishandling mediation proceedings from using some, but not all, of the communications that occurred during the underlying mediation as evidence in a malpractice action against the lawyer.

The Oregon statutes protect “only communications exchanged between parties, mediators, representatives of a mediation program, and other persons while present at mediation proceedings,” the court said.

“Private communications between a mediating party and his or her attorney outside of mediation proceedings, however, are not ‘mediation communications' as defined in the statute, even if integrally related to a mediation,” Balmer wrote.

Taking Scalpel to Complaint

The ruling partially reverses and partially affirms an appellate opinion that revived Phillip Alfieri's negligence and breach of fiduciary duty claims against Glenn Solomon, who represented Alfieri in a wrongful discharge case.

Alfieri claimed Solomon failed to conduct meaningful discovery before proposing that Alfieri's case be resolved through mediation. He said Solomon then failed to argue for noneconomic damages before convincing Alfieri to accept a settlement he wanted to reject.

According to the complaint, Solomon then failed to advise Alfieri that his former employer's noncompliance with some settlement terms called the enforceability of the agreement into question.

A trial judge struck allegations in the complaint that referenced the settlement terms as well as all discussions Alfieri had with Solomon regarding the mediation.

The judge said the settlement terms and those discussions were confidential “mediation communications” and thus inadmissible in subsequent litigation under Or. Rev. Stat. §§36.220 and 36.222.

The judge then dismissed the complaint, saying Alfieri could not state a claim without the challenged portions of the complaint.

An appeals court reversed, holding that Alfieri's post-mediation discussions with Solomon—unlike those before the settlement agreement was signed—were not confidential, and thus were improperly struck from the complaint. The panel further held that Alfieri's suit could go forward because he was entitled to amend his complaint and could state and prove his claims without referencing the allegations that were properly struck. See 30 Law. Man. Prof. Conduct 408

The supreme court said the appellate panel interpreted the mediation confidentiality statute too broadly.

Private Talks Not Covered

“We agree that [Sections] 36.220 and 36.222 limit the subsequent disclosure of mediation settlement terms and certain communications that occur in the course of or in connection with mediation,” Balmer wrote. “We disagree, however, as to the scope of communications that are confidential under those statutes.”

Analyzing the statutory text, the court rejected the “contention that all communications that are related to the ‘mediation process' are confidential, regardless of when and where they occur.”

“Private discussions between a mediating party and his or her attorney that occur outside mediation proceedings, whether before or after those proceedings, are not ‘mediation communications' within the meaning of [Section] 36.110(7)(a), even if they do relate to what transpires in the mediation,” Balmer stated.

Accordingly, the court said, Alfieri may introduce evidence of private discussions he had with Solomon “outside the mediation session and without the involvement of either the mediator” or the opposing party.

Statements by parties, attorneys, or the mediator during mediation sessions remain confidential, Balmer said.

The court said Alfieri's malpractice action must be remanded so the trial court can decide whether the procedural rules permit the plaintiff to file an amended complaint that doesn't include material protected by the mediation confidentiality law.

Mark M. McCulloch of Farleigh Wada Witt, Portland, Ore., represented Alfieri. Thomas W. Brown of Cosgrave Vergeer Kester LLP, Portland, represented Solomon.

To contact the reporter on this story: Samson Habte in Washington at shabte@bna.com

To contact the editor responsible for this story: Kirk Swanson at kswanson@bna.com

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