Law Shielding Mediation Communications Doesn't Make Malpractice Claim Unprovable

June 11 — A malpractice plaintiff who says his lawyer steered him into an inadequate settlement may be able to plead and prove his claim even though he is statutorily prohibited from disclosing the terms of the purportedly inadequate settlement or any communications that occurred during mediation, the Oregon Court of Appeals held June 11 (Alfieri v. Soloman, 2014 BL 161201, Or. Ct. App., No. A152391, 6/11/14).

A trial judge dismissed the case with prejudice after finding that Oregon's mediation confidentiality statute barred the plaintiff from disclosing three categories of information essential to proving damages:

• the terms of the underlying settlement;

• any “mediation communications,” including the lawyer's advice after the mediation conference but before the settlement was signed; and

• post-signing communications in which the lawyer failed to inform the client that the other party's noncompliance with certain settlement terms called into question the enforceability of the agreement.

The appeals court said that while the first two categories of information were properly struck from the complaint, the post-settlement discussions were not covered by the confidentiality statute.

In an opinion by Judge James C. Egan, the court also rejected the conclusion that the plaintiff could not establish damages without breaching the statute.

Impact of Mediation Confidentiality Laws on Malpractice Actions

The court's finding in Alfieri that the plaintiff conceivably could plead and prove his claim without breaching the state's mediation confidentiality statute allowed it to avoid a result that some authorities have decried as inequitable.

Courts and legislatures have expressed concerns that mediation confidentiality laws--which exist in some form in all jurisdictions--deprive malpractice plaintiffs who allege they were steered into bad settlements of essential evidence needed to prove their allegations.

In Wimsatt v. Superior Court, 61 Cal. Rptr.3d 200, 23 Law. Man. Prof. Conduct 314 (Cal. Ct. App. 2007), for example, a California appeals court said that when clients “participate in mediation they are, in effect, relinquishing all claims for new and independent torts arising from mediation, including legal malpractice causes of action against their own counsel.” The California Supreme Court later reached the same conclusion. See Casell v. Superior Court, 244 P.3d 1080, 27 Law. Man. Prof. Conduct 47 (Cal. 2011).

Those ruling were the impetus for a now-pending study by the California Law Revision Commission on “the relationship between mediation confidentiality and attorney malpractice and other misconduct.”

The commission is considering whether to adopt the Uniform Mediation Act--which, unlike California's and Oregon's current mediation statutes, includes an exception that strips confidentiality from any “communication that is … sought or offered to prove or disprove a claim or complaint of professional misconduct or malpractice filed against a mediation party, nonparty participant, or representative of a party based on conduct occurring during a mediation.”

The UMA has been adopted in the District of Columbia, Hawaii, Idaho, Illinois, Iowa, Nebraska, New Jersey, Ohio, South Dakota, Utah, Vermont and Washington.

Cutting the Complaint.

Phillip Alfieri hired attorney Glenn Solomon to file a wrongful discharge suit against a former employer. Alfieri was later granted a motion to add additional claims, but Solomon did not amend the complaint. Instead, he performed “only limited discovery” before proposing mediation, the court said.

After a conference, a mediator proposed a settlement that fell far below Solomon's initial estimate of the claim's value. Solomon then significantly reduced his estimate--and, over the next 16 days, urged Alfieri to accept the settlement.

Alfieri followed that recommendation. But he later expressed doubts and returned to Solomon to ask whether the settlement could be unwound. Alfieri said Solomon failed to advise him that his former employer's noncompliance with some settlement terms called into question the enforceability of the agreement.

Alfieri then sued Solomon for negligence and breach of fiduciary duty. The allegations in his complaint included the terms of the settlement, communications that occurred during the mediation process--including Solomon's advice to Alfieri before the settlement was signed--and the content of his communications with Solomon after the settlement was signed.

The trial judge struck those allegations. He pointed to Or. Rev. Stat. §§36.220 et seq., which provide that absent a written agreement to the contrary, “mediation communications” are both confidential and inadmissible in any subsequent proceeding. The judge then dismissed the malpractice complaint with prejudice, saying Alfieri could not state a claim without the challenged portions of the complaint.

Enough to Go Forward.

The appeals court said dismissal was premature. That conclusion followed from its determination that Alfieri's post-mediation discussions with Solomon were not confidential, and thus were improperly struck from the complaint.

“Although the communications between defendant and plaintiff during the post-signing period have some connection to the mediation because they concerned the settlement agreement, those communications occurred outside the mediation process and thus are not subject to the blanket nondisclosure rule” specified in the mediation confidentiality statutes, Egan wrote.

Egan also faulted the trial court for failing to give Alfieri a chance to replead his claim without incorporating any confidential information, including the amount of the settlement.

“[T]he allegations that are not confidential (and not stricken) are that defendant gave negligent advice to plaintiff post-signing, that is, after plaintiff had already obtained the settlement amount,” Egan stated.

“That posture does not necessarily require plaintiff to plead and prove the settlement amount to the jury because the jury would not need to compare a potential jury award to the settlement amount to determine which was more favorable,” he explained. “[R]ather the jury would compare zero (nothing in addition to the settlement amount) with the additional amount plaintiff proves he could have achieved if the settlement agreement had been challenged.”

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

To contact the editor responsible for this story: Kirk Swanson at

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